Archive for the ‘Foreign Affairs’ Category
Posted by Larry Doyle on April 7th, 2009 10:08 AM |
The stream of data and market moving news is non-stop. I found these items of interest and look to share them with you as I believe they provide interesting insights and perspectives from around the world. I beg your indulgence if some of these items are not news to you, but if they are I hope they help you “navigate the economic landscape.”
1. Australia’s central bank cut its overnight lending rate to 3%, the lowest level in 49 years. While that rate is one of the highest rates in the developed world, it was widely expected to be left unchanged. Australia has had one of the strongest economies in the world. This cut is an indication the Australian central bank believes their economy is slipping into a recession.
2. Japan’s exports are reported to be down 40% versus a year ago. Additionally, Japan’s industrial production is reported to be down 30+% during the same time period. These economic figures are significantly weaker than most other developed economies. As a frame of reference, most other developed economies’ industrial production is down 10-15%. Clearly, Japan is so dependent on exports and it is now paying the price of not having more fully diversified its economic foundation.
3. Gold is now trading near $880/oz. A month ago this precious metal was trading slightly above $1000/oz. Why is gold down recently? Coming out of the G-20, there are expectations that the IMF may sell some gold reserves to raise funds for low-income countries. I commented the other day that gold is not perfectly correlated with inflation due to changing fundamentals and technical variables in the gold market. This development with the IMF is a perfect case in point of my assertion. (more…)
Tags: Add new tag, AIG, AIG selling asset management division, Australia cuts overnight lending rate, earnings for S&P 500, G20, gold, gold price declines, Japan's exports and industrial production declines, Japanese economy, Ken Rogoff, rating agencies receiving government assistance
Posted in AIG, Australia, Bailout, Banking Institutions, Barack Obama, Business, Current Affairs, Economic Stimulus, Economy, Equity Markets, Foreign Affairs, G20, General, Global Finance, S&P 500, Wall Street | 2 Comments »
Posted by Larry Doyle on March 24th, 2009 12:52 PM |
I wrote earlier today about the ongoing pressure being applied on our senior financial representatives in Washington by their counterparts in China. In Congressional testimony this morning, both Secretary Geithner and Fed chair Bernanke have discounted China’s call for a new international reserve currency.
The Obama administration is not only being pressured by China prior to the upcoming G-20. Our European allies also have a decidedly different tact on the appropriate financial maneuvers for global governments at this time. While the United States is currently promoting the need for massive fiscal stimulus on a global basis, the WSJ reports from Europe, ECB Chief Says Stimulus Not Needed.
(more…)
Tags: China, Chinese government surpluses, ECB Chief Trichet, Fed chair Bernanke, fiscal stimulus, G20, Germany, hyper-inflation, IMF, Obama Administration, Secretart Geithner
Posted in Barack Obama, China, Current Affairs, European Union, Foreign Affairs, Germany, Obama Administration | 1 Comment »
Posted by Larry Doyle on March 23rd, 2009 11:12 PM |
In ten days, the leaders of the G-20 will meet for the most highly anticipated financial conference since Bretton Woods in 1944. In a bold and aggressive move prior to this conference, China’s central bank called today for the replacement of the U.S. dollar as the international reserve currency.
I have written about the tension in U.S.-Chinese relations over the last few months. The essence of this tension is captured in the Prisoner’s Dilemma and A Question of Honor.
Make no mistake: the timing, tone, and substance of this message so close to the start of the G-20 is another major shot across our bow. The ramifications for a change in this international reserve currency are enormous, both politically and economically. Check out current, worthwhile discussions on this topic collected from a variety of sources at Memeorandum.com. In addition, I recommend reading the following article from the Financial Times:
China calls for new reserve currency
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund. (more…)
Tags: Bretton Woods, China, China's Central Bank, China's fear of inflation in U.S., China's foreign reserves, G20, IMF, Inflation, international reserve currency, Prisoner's Dilemma, Question of Honor, U.S. -Chinese relations
Posted in China, Economy, Foreign Affairs, Foreign Policy, General | 3 Comments »
Posted by Larry Doyle on March 13th, 2009 1:00 PM |
On January 31st, I wrote a lighthearted piece, Know Your Customer, about my personal experience with an Asian counterparty. The lesson I learned from that experience back in the late 1980’s was that business dealings in Asia are ultimately “a question of honor.” Are you honorable in your manner? Are you honorable in your engagement? Are you honorable on a going forward basis? Are you honorable in both word and deed? Obviously in a meaningful relationship, this code of honor must run both ways.
Our relationship with the People’s Republic of China hinges on American consumers’ purchase of Chinese exports and ongoing Chinese purchase of U.S. government debt. As I just highlighted in my most recent piece, Chinese exports fell 26% in February 2009. Numbers like that will make any government uneasy. During challenging economic periods, the tenuous nature of any economic relationship is captured in understanding the nuances of the Prisoner’s Dilemma. (more…)
Tags: Asia, business dealings, exports, G20, government debt, honor, IMF, People's republic of China, Prisoner's Dilemma, surplus nations, Treasuries
Posted in Banking Institutions, China, Current Affairs, Economy, Foreign Affairs, International Monetary Fund | 2 Comments »
Posted by Larry Doyle on March 13th, 2009 10:35 AM |
If I go to a comedian, I look to be entertained. I do not look for piercing insights on global issues. Alternately, when I want cogent financial analysis I don’t go to an entertainer. The following photo and captions from the New York Post are self-explanatory:
If you want to review a topic which is less entertaining, but much more critically important in navigating the economic landscape, let’s take a quick look at how the Chinese export engine is humming. Uh-oh!! Chinese exports in February dropped almost 26% from a year earlier. That decline displays an acceleration in the 17% drop experienced in January. Thank you John Mauldin, one of our Economic All-Stars (left sidebar), for providing us this less than entertaining but extremely insightful perspective, China: Exports Drop.
LD
Tags: Chinese exports, exports, Jim Cramer, John Mauldin, Jon Stewart, New York Post
Posted in China, Commerce, Current Affairs, Economy, Foreign Affairs, Risk, Wall Street | 2 Comments »
Posted by Larry Doyle on March 2nd, 2009 6:00 AM |
The other day I highlighted the fact that 12 eastern European countries would solicit a bailout from the European Union over the weekend in Brussels. I defined this bloc of eastern European countries as currently the Weakest Link in the global economy. Well, if they were the weakest link then they just got weaker as they were rebuffed in their request for aid.
The dynamic at work in the weekend’s emergency meeting held in Brussels is a play on beggar-thy-neighbor policies implemented during times of economic stress.
There are actually a number of factors influencing the European Union’s refusal to provide bailout money to these eastern European nations. Included in these factors are the following: (more…)
Tags: Bailout, beggar-thy-neighbor, Brussels, coordination, Eastern Europe, economic stress, Economy, Euro, European Union, global economy, Hungary, instability, International Monetary Fund, Ireland, Poland, Portugal, Weimar republic
Posted in Bailout, Commerce, Credit Risk, Current Affairs, Deficit, Economic Stimulus, Economy, Equity Markets, Euro, European Union, Foreign Affairs, Foreign Policy, General, Germany, Government funds, Hungary, Russia, Ukraine, Wall Street | 2 Comments »
Posted by Larry Doyle on February 18th, 2009 11:07 AM |
It is often difficult, if not near impossible, for an individual, company, institution, or even a government to provide a measured, honest, and unbiased perspective of a difficult situation. Given one’s proximity and emotional attachment to the situation, human nature clouds one’s viewpoint and, in turn, one’s reactions and responses.
How great it is when we can receive the sage wisdom of a neighbor, a retired executive, a former coach, or on the international level a true statesman. While we may find it difficult to hear and deal with a tough message, ultimately the greatest form of “tough love” is simple truth and honesty.
A good friend of mine was gracious enough to share some video clips of a recent interview with Paul Keating, former Prime Minister and Treasurer of Australia. Mr. Keating speaks from experience and does not sugar coat the current economic turmoil. While the three video clips (listed below) run approximately 20 minutes in total length, please allow me to provide a bullet point overview of some of the highlights. When you do have some spare time, I strongly encourage you to view these clips and gain the benefits of his wisdom. I do not think you will be disappointed, although you may be a bit dismayed as to his blunt honesty. In the meantime, here’s a brief overview: (more…)
Posted in American Consumers, Australia, Bad Bank, Banking Institutions, Barack Obama, China, Current Affairs, Democratic Party, Economy, Foreign Affairs, Foreign Policy, General, Global Finance | 3 Comments »
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