and the winner is...

Friday evening and the success story you have been waiting for all week: it is well worth a reminder what brilliant development China has been going through, a Developing Country supported by the UN and other global organisations to support it achieving all this and more...

It is hard to determine what it is one should wish China to be developing to the next years or even months. Anything you wished would be a catch-22 as it is directly related to the rest of the globe's well being, not to mention survival.
Certainly, to feed the masses providing food and energy the traditional ways by copying how we did it really needs the above development to not change much from what it is. Low cost labour, a soft currency and regulations concentrating on winning any kind of global competition for all kinds of resources are the basis for keeping the momentum; and, of course, vast parts of the globalised economy jump(ed) on the same train.

Carpe diem!

the race for the weakest currency...

has only just begun!

We live in a globalised world where all have access to the same means and tools to compete in what is running for labour, market shares and hopefully heaps of money.

While the US very openly seek an advantage in keeping the greenback at the low side the Chinese just piggybacked their paper money called Renminbi to ensure their exports staying competitive which at the same time enables them to massively import labour; the trick with holding more than two trillion soft bucks in cash is not really that bad as those dollars buy access to energy and plenty of shares in i.e. African countries and companies that are used to even weaker currencies.

What is likely to happen in the not so far future is the EURO, which so far endured and tolerated - of course, lacking an alternative - the dominant but weakening world currency ending is some kind of programmed implosion.

With Greece more than insolvent, Spain, Portugal, Italy and Belgium not far behind and in general terms very overstressed French and German budgets and economies the once so-called hoard of stability, the EURO, is about to fail dramatically. And if it is not failing in one go we will see it stretched until it does.

A scenario where one EURO country goes bust has not been taken into any kind of consideration in Maastricht when the artificial currency was imposed not to mention an ugly event where a number of EURO economies are becoming insolvent in a matter of months. What a coincidence, at the same time the once leading and ever so strong economies like France and above all Germany are virtually running out of paper to print the buckets of money they need to bail out or rather pump up banks, run scrappage schemes or fill up tax revenue holes.

A bursting EURO will automatically open the currencies' race downwards; the battle to export what is produced and to minimise cost but still put people into jobs is fought at the low end of a currency's value, see China. With only two plus two major and globally traded currencies left - $, €, and ¥, £ - it will be interesting to see who will win that race.

I dare say we will all loose.

Carpe diem!

flood of weak pound equals inflation

source

telegraph: Bank of England's 'nerves' to be tested as inflation jumps most on record

The sharp rise in the annual rate of consumer price inflation from 1.9pc to 2.9pc was driven by exceptional events in December 2008, as the VAT cut and high street discounting at that point were not repeated last month.

Fine, but here are the two really significant reasons:

• The weak Pound is automatically importing inflation as imports generally became more expensive; classic example: automobile and energy import prices;

• bailing out the banks was flooding them with liquidity; € 1,5 trillion in 2009 Europe wide alone - passing those sums on into the economies has not happened at all - but the liquidity has helped to transform what had begun as a bank crunch into a credit crunch. That is per se bad enough, but the real damage is done by the fact that the banks, flooded with cash, had and have to find lucrative investments; so they did what they know best, had done before and what has proved most profitable to achieve ROI figures of 25% (> Josef Ackermann); they buy gold where they produce no jewels, they buy oil without producing energy and food not for feeding anyone; they gamble and speculate as before and very obviously can hardly get enough highly paid gamblers on board.

The Bank of England certainly is the expert; so what is the hidden agenda behind favouring a weak pound in order to boost an almost not existing and really diminishing export industry and of throwing cheap money at failed banks that then dry up the credit markets, chase commodity prices higher and higher and couldn't care less?

It can hardly make sense to get oneself into the either... or...

NYT

Carpe diem!