Special Alert: U.S. Currency Exchange Controls

~bumped

March 31, 2009

Special Alert: U.S. Currency Exchange Controls

Could President Obama and Treasury Secretary Geithner suddenly impose currency exchange controls on the United States and the U.S. dollar? It might save globalization but it could devastate thousands of Americans.

Could President Obama and Treasury Secretary Geithner suddenly impose currency exchange controls on the United States and the U.S. dollar? This report will explore this notion and its possible consequences.

World leaders have been begging for a global currency for several weeks now. With global trade falling apart and national economies in continued meltdown, these leaders view the resurgence of global trade as the only salvation for economic recovery. Within that demand is the realization that the only enablement is a new global currency that everyone can agree on.

Today, China is calling for the SDR (Special Drawing Right, or some variation) to replace the dollar as the globe's primary reserve currency. Russia is also calling for the SDR and some type of gold peg to add further legitimacy. Other leaders around the world are calling for a global currency without suggesting exactly what it should be.

The SDR is exclusively issued and controlled by the International Monetary Fund.

The August Review has previously presented reports on the International Monetary Fund, the Bank for International Settlements, and the World Bank, all of which have a stake in global currency exchange and control.

Note: It is strongly suggested that you read or re-read all three of these papers (written in 2005-2006) if you want to understand the issues of global currency. If implemented, any scheme for a global currency would be a major stepping stone to global economic and political governance.

In the paper, Global Banking: The International Monetary Fund, this writer concluded the section Currency, Monetary Roles and Gold by stating,

"Suffice it to say that if so many organizations have conspired to keep "gold as money" out of the public mind, then gold is not dead but just temporarily on the shelf. When fiat currencies have been drained dry by the global cartel, gold will likely be brought back by the same people who told us it was forever a dead issue."

In the paper, Global Banking: Bank for International Settlements paper, this writer further stated,

"There is no doubt that the BIS is moving the world toward regional currencies and ultimately, a global currency. The global currency could well be an evolution of the SDR, and may explain why the BIS recently adopted the SDR as its primary reserve currency."

Bankers and heads-of-state that comprise the G20 conference in London this week will very likely produce some resolution to the global currency debacle. At the very least, the SDR will be offered as the stepping-stone to global currency because it is already in place and in use throughout the world.

The dilemma will be how can the holders of dollars (e.g., China) convert them into SDR's?

Since the dollar is already part of the basket that makes up the SDR, it will be easy enough for China to turn over their dollars to the IMF to get SDR's in exchange. But, they will have to take some hit for doing so. To overcome their resistance, adding a gold component to the SDR might be just the carrot that assures a China (and others) buy-in.

But, what will the IMF do with all these dollars? This could be the big rub. They can't just return the excess dollars to the U.S. Treasury because it would cause massive hyperinflation at home. They can't just burn them, either. So legislating them to be part of the SDR would make some sense, but that may not be enough to control the slush.

This writer's conjecture is: Could Obama/Geithner, without any advance notice, slap currency exchange controls on the U.S. that would prevent the repatriation of these excess dollars, and effectively land-lock the dollars already here?

Such a move would immediately set up a two-tiered system of currency for the U.S.: Internal and External.

The pain this would put on America would be sacrificed for the greater global good. Otherwise, it could simultaneously solve several problems:

Currency manipulation - countries like China would be hard-pressed to manipulate the Yuan without the dollar

Currency fluctuations - the SDR would be buffered by component currencies that usually trade in the opposite direction to each other
Global trade - international partners would have an agreed-upon medium of exchange monitored by the IMF

Trade financing - the SDR would have the support of the World Bank and the Bank for International Settlements to resuscitate and facilitate global shipping

While good for global trade, the impact could be potentially devastating to wealthy and semi-wealthy Americans who have sought financial safety by spreading their assets around the world via currencies, foreign gold deposits, Swiss bank accounts, etc., because they might not be able to get their assets back into the United States or U.S. assets out of the country.

For globalists like Jim Rogers, the billionaire former partner of George Soros (a major Obama financier), he could live in any part of the world he desired. Rogers recently told the BBC that "There will probably be exchange controls in the US in their (his children) lifetime. I have given up on the US dollar and sterling." This is long-range thinking, but he is thinking it nonetheless.

In November 2007, John Dizard wrote in The Financial Times,

"Within the stream of coded language and doubletalk coming from officialdom these days, you can find louder signals of preparations for exchange control regimes in the developed world. This is bad news for almost everyone, but in particular for the investment community. When exchange controls - no doubt in another name - are imposed in Europe or the US, the official targets will be "speculators" or financial manipulators lurking in the shadows."

Indeed, the speculators are now the likes of the hedge fund industry and the manipulators are countries like China who have manipulated their currency for years.

The greatest danger of exchange controls is that there is never advance notice. Rather, they are just suddenly announced and then you are trapped for the duration.

The G20 leaders are desperate for some political solution to the global economic crisis. Both PM Gordon Brown and President Obama are grasping at straws in an attempt to maintain their leadership roles and keep globalization alive. With 20 very opinionated countries trying to reach some ordinary consensus (very unlikely), the presentation of a "shock and awe" solution could break the log jam.

In light of this possibility, investors, exporters and businesses would do well to rethink their domestic and overseas strategies.

In the meantime, keep a sharp eye on the G20 meeting in London.

http://www.augustreview.com/issues/global_banking/global_banking%3a_the_bank_for_international_settlements_200510147/

http://www.augustreview.com/issues/global_banking/global_banking%3a_the_world_bank_200602014/

http://www.augustreview.com/news_commentary/global_banking/special_alert%3a_u.s._currency_exchange_controls_20090330116/

Russia, China cooperate on new currency proposals:

March 30, 2009

Russia, China cooperate on new currency proposals:

Russia and China are coordinating proposals on a new global currency that could replace the US dollar as a reserve currency to prevent a repeat of the global economic crisis, the Kremlin said on Monday.

"We have received proposals from our colleagues in China, detailed proposals," President Dmitry Medvedev's top economic adviser Arkady Dvorkovich said. "Our positions are very similar.

"We have similar positions on the development of the international financial architecture," he told reporters.

Ahead of the Group of 20 summit in London later this week, the Kremlin has published a raft of proposals to overhaul the global economic order, including plans for a supra-national currency that could replace the US dollar.

China has come forward with similar ideas.

US President Barack Obama has said he does not see why the dollar should be replaced and British Prime Minister Gordon Brown said the summit would have more immediate issues to discuss.

"So far, not everybody is ready for that," acknowledged Dvorkovich. "We will insist on that at all levels."

Medvedev has said the international community should have a say when the world's richest countries make decisions with global implications, as in the US financial crisis, sparked by the collapse of the market for subprime or higher risk mortgages.

Moscow also understood however, that many countries were not ready to undertake additional "political obligations," said Dvorkovich, expressing hope that major economies would at least be open to consultations on the subject.

Dvorkovich said he hoped Russia and other major developing economies would also get an equal say and the attention they deserve during the G20 meeting.

"We are hoping that our voice will be heard but I would like to stress that we do not have a desire to pit our voice against that of our partners," he said, referring to developing economies Brazil, India and China who join Russia in what is known collectively as 'BRIC.'

"There will be no separate joint (BRIC) communique, nor should there be," Dvorkovich said. "This is the summit of the leaders of the G20 countries."

Critics have suggested China and the United States, whose economies are closely intertwined, would likely steal the show by promoting their own agenda and turning the G20 forum into a 'G2' summit.

Dvorkovich said the US and China would have ample time to discuss bilateral issues on the summit's sidelines

Separately, Dvorkovich said Medvedev would meet Australian Prime Minister Kevin Rudd on April 1, just before the summit. Medvedev was also scheduled to meet US President Barack Obama, China's Hu Jintao and Britain's Brown that day.

http://www.breitbart.com/article.php?id=CNG.7e6cab4fec704a0fdd135ecdac00673b.9c1

***United Nations Panel says World should Ditch the Dollar

U.N. panel says world should ditch dollar

Wed Mar 18, 2009

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.

Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.
It has significantly reduced the dollar's share in its own reserves in recent years.

GOOD TIME

Persaud said that the United States was concerned that holding the reserve currency made it impossible to run policy, while the rest of world was also unhappy with the generally declining dollar.

"There is a moment that can be grasped for change," he said.

"Today the Americans complain that when the world wants to save, it means a deficit. A shared (reserve) would reduce the possibility of global imbalances."

Persaud said the panel had been looking at using something like an expanded Special Drawing Right, originally created by the International Monetary Fund in 1969 but now used mainly as an accounting unit within similar organizations.

The SDR and the old Ecu are essentially combinations of currencies, weighted to a constituent's economic clout, which can be valued against other currencies and indeed against those inside the basket.

Persaud said there were two main reasons why policymakers might consider such a move, one being the current desire for a change from the dollar.

The other reason, he said, was the success of the euro, which incorporated a number of currencies but roughly speaking held on to the stability of the old German deutschemark compared with, say, the Greek drachma.

Persaud has long argued that the dollar would give way to the Chinese yuan as a global reserve currency within decades.

A shared reserve currency might negate this move, he said, but he believed that China would still like to take on the role.

Video:
http://www.reuters.com/news/video?videoId=100494&newsChannel=newsOne

Ditch the dollar?

(03:14) Interview

Mar 18 - Currency specialist Avinash Persaud, says the panel will recommend next week that the world should ditch the dollar as its reserve currency in favor of a shared basket of currencies.

Persaud, a member of the U.N. Commission of Experts on International Financial Reform speaking at the 2009 Reuters Funds Summit in Luxembourg on Wednesday, says the recommendation will be just one of a number delivered to the United Nations on March 25.

Speaker: Avinash Persaud CEO, Intelligence Capital
Presenter: Ruben Ramirez - Luxembourg

http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318

United Nations to Lift All Sanctions on Iraq in March

This falls right in line with everything going on right now, (i.e.,Geitner saying 3 weeks to start seeing progrss with new "bank" plan, including help for the mortgage dilemma, which would take us to mid-March. Also, Secretary General of Union of Arab Banks Reveals a Pan Arab Initiative to Reduce Repercussions of Global Financial Crisis will start seeing results and improvements mid-March. Asian markets setting new monetary policy at a meeting that will convene on February 27th - March 1st, to be ratified. And, for all of this to happen, we need Iraq to be free from sanctions --Iraq is the lynchpin. I also think we will see Iraq's budget passed by then. It looks like everything should be in the works and ready to go before the April 2nd G20 meeting in London.

United Nations next month, March, the lifting of all sanctions imposed on the country.

February 21, 2009

The United Nations is seeking to lift all international sanctions imposed on Iraq Decision that the United Nations next month, a report on the many positives of the situation in Iraq, including the lifting of all sanctions imposed on the country. Sources close to the government about the presence of positive signals confirmed by the UN Secretary-General Ban Ki-moon during his recent visit to Baghdad, near the lifting of all sanctions on Iraq.

The Ban Ki Moon visited Baghdad this month, and it was announced following a meeting with President Jalal Talabani and Prime Minister Nuri al-Maliki, the organization's intention to review all the resolutions imposed on Iraq since 1990.

The United Nations Secretary-General Ban Ki-moon visits Baghdad

United Nations Secretary-General (UNSG) Ban Ki-moon visited Iraq on 6 February 2009, following the provincial elections held on 31 January 2009. He was last in Baghdad in March 2007. A keen follower of the electoral process from the early days of the parliamentary debate, UNSG Ban Ki-moon came to congratulate the people and government of Iraq on their achievements towards democracy by holding provincial elections and to express support of the international community. The elections marked the progress made in Iraq, as the elections showed its ability to manage the entire process, implement security measures and ensure lack of fraud. Very little violence was reported on elections day.

The Secretary-General met with several top Iraqi officials, including President Jalal Talabani, Prime Minister Nuri Al Maliki, both Vice Presidents Adel Abdul-Mahdi and Tareq Al-Hashemi, and the Chairman of the Independent High Electoral Commission (IHEC) Faraj Al-Haydari. He also met with a number of Baghdad based foreign diplomats.UNSG Ban Ki-moon expressed his delight at the progress made towards democracy, and commented that “Millions of Iraqis exercised their right to vote in an environment free of violence, a remarkable achievement in a country that has known so much conflict in recent years”. He commended the courage and determination of the Iraqi people, and congratulated the IHEC, and the thousands of Iraqi elections workers and monitors, for having organized and conducted elections so effectively, despite logistical challenges.

The Secretary-General highlighted the significance of participation, saying, “This marks an important event, these being the first polls to affect the day-to-day lives of Iraqi voters. In fact these elections are about real power, in the sense that local leaders are nominated to be accountable for the delivery of basic services.”Several themes were highlighted in UNSG Ban Ki-moon’s remarks, including: national reconciliation, regional dialogue and the continued commitment of the United Nations. On national reconciliation, he said, “Security has improved and Iraq has asserted its sovereignty; but with more sovereignty comes more responsibility.

With more responsibility should come less impunity and a greater feeling on the part of the Iraqi people that there are steps towards rule of law, with increased confidence in the state institutions.” He added, “Striking a compromise on the core outstanding and constitutional issues at the heart of Iraq’s system of governance is essential for establishing stability in the country and a vital process of national reconciliation in Iraq”.UNSG Ban Ki-moon also highlighted the role of the United Nations in regional dialogue and integration by engaging with regional powers to help improve Iraq’s relations with neighboring countries.

He was especially pleased by the recent opening of embassies by Kuwait, Bahrain, Oman, United Arab Emirates, Jordan, Syria and the Arab League, adding that the UN will continue with their technical assistance to support a mechanism for regional cooperation based in the Ministry of Foreign Affairs. The Secretary-General also thanked the Prime Minister and the Iraqi government for their generous contribution of $25 million towards building the new UN mission headquarters in Baghdad. His hope is that the safety and security of the UN staff at their new office will be ensured. During a meeting with President Talabani, the Secretary-General reiterated the UN’s strong commitment to the people and government of Iraq towards achieving full democracy, security, safety and development.

At the joint press conference with Prime Minister al Maliki, the media questioned the Secretary-General about his evaluation of the democratic process in the provincial elections, the role of the UN in removing international sanctions imposed on Iraq, and if the UN will scale up its role in Iraq.

The Secretary-General emphasized that Iraq has made progress towards democracy and that the elections were a tribute to the growing effectiveness of the Iraqi Security Forces and testified to the increasing stability in Iraq.

As for lifting the sanctions, he said “the UN Secretariat is now in the process of reviewing all the resolution and upon my return, I will discuss this issue with the Security Council and I hope we will make progress.” Reiterating the organizations’ support, UNSG Ban Ki-moon said the UN is expanding its mission by having nine agencies present in Iraq, and noted the UN’s continuing role in mobilizing humanitarian assistance and promoting and protecting human rights.

He highlighted the implementation of the Millennium Development Goals, gender empowerment, and education as key areas of potential collaboration between the UN and the Iraqi government. In addition, the UN will continue to coordinate and consort with member countries on the International Compact with Iraq (ICI) to promote socio-economic development, national security, regional cooperation and Iraq’s full participation with the international community. The preliminary results of the provincial elections were released a day prior to UNSG Ban Ki-moon’s visit.

Global Currency (Super Currency) ...

16 Mar 2009

IMF poised to print billions of dollars in 'global quantitative easing'

The International Monetary Fund is poised to embark on what analysts have described as "global quantitative easing" by printing billions of dollars worth of a global "super-currency" in an unprecedented new effort to address the economic crisis.

Alistair Darling and senior figures in the US Treasury have been encouraging the Fund to issue hundreds of billions of dollars worth of so-called Special Drawing Rights in the coming months as part of its campaign to prevent the recession from turning into a global depression.

Should the move, which is up for discussion by the summit of G20 finance ministers this weekend, be adopted, it will represent a global equivalent of the Bank of England's plan to pump extra cash into the UK economy.However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system.

The idea has been suggested by a number of key figures, including billionaire investor George Soros and US Treasury adviser Ted Truman. Simon Johnson, former chief economist at the IMF, said: "The principle behind it is that everyone would get bonus dollars and instead of the Federal Reserve having to print them, everyone gets them. "The objective is to create a windfall of cash.

However if everybody goes out and spends the money it could be very inflationary

News Video:

http://link.brightcove.com/services/link/bcpid3469232001/bctid16618136001

Two Meetings Coming Up - Very Important Changes Being Implemented

MONTERREY CONSENSUS – DOHA CONFERENCES - March 30th and 31st - 2009

This is a huge Meeting. It's all about the global economy, WTO, etc......I provided a link (at bottom of page).

There is so much information and there have been so many extensive meetings over the past 10-years. The "Monterrey Consensus" and the "Doha Round" have been the foundation of a new financial order. There are links and info. provided below. Check it out.

Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus Doha, Qatar, 29 November - 2 December 2008

General Assembly resolution 62/187 mandates the Follow-up International Conference on Financing for Development to "assess progress made, reaffirm goals and commitments, share best practices and lessons learned and identify obstacles and constraints encountered, actions and initiatives to overcome them and important measures for further implementation, as well as new challenges and emerging issues".

Substantive Background InformationDoha draft outcome document Calendar of drafting sessions (October - November 2008) documents

http://www.un.org/esa/ffd/doha/

going to post (add) links here....Topics worth reading.

This one is really good. lot's of information

http://www.un.org/esa/ffd/doha/press/11NOV08PressRelease_Crisis.pdf
And......Another Huge Meeting...

G20 Meeting In London April 2nd - 2009

The game plan for the G20 is to have everything completed before the April 2, 2009 meeting in London. We will probably see an unusual amount of meetings and activity during the next 3 weeks. IMO, they want to begin implementing their plans for the the new world/global economy as soon as possible. Be prepared for major changes. I wouldn't be surprised if we find out this week which banks will become nationalized (or partially nationalized or become "bad" banks). IMO

(well it's 7 months later now...??)

What is the London Summit?

The London Summit brings together world leaders and financial institutions on April 2 to reach agreement on how to revive the world economy.

The summit aims to find solutions to the current global economic crisis and build upon the action plan agreed at the Washington Summit last November.

G20 pledges all action to fix the system

Finance chiefs from the G20 leading old and new economies yesterday pledged to take all necessary action to protect major financial institutions, fix the global financial system and revive lending.

That will include maintaining liquidity support, ensuring banks have adequate capital and dealing with impaired assets, finance ministers from the Group of 20 countries said in a statement at the end of a meeting preparing for a G20 leaders' summit on April 2.

They also said central banks will maintain expansionary policies as long as is needed and that governments' fiscal commitments already pledged should be implemented without delay. The G20 said its "key priority" was to restore lending, adding it was "committed" to help developing economies cope with the reversal of capital flows, in a final communique at talks yesterday.

The G20 also agreed to "regulatory oversight" of all credit ratings agencies, which are under fire for being too slow to alert investors to the dangers of high-risk investments.

G20 finance ministers have agreed to a cash boost for the IMF but no new stimulus plan, ahead of next month's key summit on the economic crisis, a European source said. Politicians from the world's richest countries – the United States, China and Japan – plus wealthy European nations and emerging powers held a day of talks to pave the way for the April 2 G20 London summit on tackling the downturn.

Major Meetings Coming Up - Economic

Meetings That Could Change our Economic Landscape

*EU-GCC political dialogue in Brussels -- March 15-21-2009

*EU Summit in Brussels -- March 19-20-2009

*World’s Biggest Banks to Meet in London --- March 24, 2009 - Nikkei

*GCC plans working conference to tackle inflation -- March 23-24 20009

*9th GCC Banking Conference to be held in Bahrain March 24-25, 2009

**Re: Implementation-Monterrey Consensus - Concluded - High Level Meeting - March 30-31-2009 - DOHA

**The Arab Socio Economic Council discussed a number of socio-economic issues to be included in the agenda of the Arab Economic Summit to be held in Doha in end-March 30-31-2009.

**April 2, 2009 G20 Meeting in London

** EU-US summit with Obama on April 5 in Prague: Czech PM(BRUSSELS) - US President Barack Obama is to meet with EU leaders at a summit set for -- April 5 in Prague

Additions to the list:

*March 31st - 73 Nation Meeting Netherlands

*April 3-4 - NATO Summit in France

Did You Know That George Bush is Big in Asia?

George Bush is Big in Asia

3-18-2009

Ex-presidents seem to follow a protocol that requires them to disappear for a few years after they leave office. Jimmy Carter was barely heard from after being beat by Ronald Reagan; he only emerged (as an unwelcome gadfly) when Bill Clinton became president. George H.W. Bush also disappeared, only to reappear in public when his son asked him and Clinton to spearhead the tsunami relief effort. To everyone’s amazement, even Bill Clinton stepped off center stage until the call came from the Oval Office.

Considering his low approval ratings, George W. Bush might be expected to be even more low-key than his predecessors. But I would like to argue a different line for the former president to take. While showing proper deference to his successor, he still can have a very positive continuing role where it counts most for the American economy: in India and China.

As it turns out, the former president’s approval ratings abroad are not as low as people might think. In India, Bush is the most popular American president in history. Future historians may look at Iraq as a blip on the screen (an expensive blip, yes, but still a blip) and count the president’s success in courting India as the major foreign policy turnaround of the early 21st century. Because of it, Bush could become one of the most influential and respected ex-presidents in the nation’s history. If he succeeds, Dallas as his operating base will reap many of the benefits.

Bush is not known as a man who indulges in retrospection. So while he suffered many “disappointments” (his word) during his two terms, don’t expect him to dwell on them. He will write the obligatory memoir, but that will be an effort directed at his first priority (after overseeing the fundraising of his presidential library at SMU): repairing his own family’s fortunes. The sale of the Texas Rangers brought him an after-tax return of about $12 million, which no doubt increased substantially in the bull markets during his time in public service. But there’s also little doubt that he, like everybody else, has seen those gains disappear in the market collapse. To begin the repair program, he gave his first post-presidential speech in Calgary in mid-March, probably netting him an easy $150,000, and there’s little doubt more will follow. Even so, Bush is likely to be considerably more circumspect than Bill Clinton in this regard (as in others). The Clintons have reportedly amassed a $100 million fortune since leaving office.

America’s preeminence in the post-Cold War era and its dominance of the global economy have given ex-presidents a prestige abroad that Americans at home cannot really grasp. Bill Clinton has not been shy about using it, which is why so many governments and sovereign funds are donors to his foundation. While Bush is not likely to follow Clinton’s lead in grasping after every available dollar, he could not ask for a better model in forging his post-presidential identity.

Like Jimmy Carter, Clinton established a nonprofit foundation, named it after himself, and began leveraging his name to do good works. His HIV/AIDS initiative—an issue Bush cares deeply about—has provided free, life-saving medicine to 1.4 million people, mostly in Africa. His climate initiative is working with 40 of the world’s largest cities to reduce greenhouse gas emissions. His foundation is now tackling childhood obesity.

Bush is in a position to do more than promote good causes, important as that is. His strength is in Asia, and he should use Bill Clinton’s model to leverage it.

China, of course, does not encourage public opinion polls. But a recent Los Angeles Times story found indications of affection for Bush everywhere, especially in Beijing, where his image dominates an exhibit hall in the Cultural Palace of Nationalities. Bush extended a hand to China immediately after 9/11 and backed it up with free-trade policies that enabled China to become the third-largest economy in the world. He sealed the deal by attending the 2008 Summer Olympics in the face of criticism over China’s human rights record. No one action could have been more important to the face-conscious, still-insecure Chinese. The Times quotes a retired nuclear scientist: “We will never forget that the leader of the most developed country in the world stood up to pressure to come to the Olympics.”
GOOD MATCH: President Bush with Indian Prime Minister Manmohan Singh

photography courtesy of Getty ImagesLike Japan, China is an export-driven economy. Japan’s severe contraction this year shows the risks of building an economy based on other people’s purchasing power and subject to the ups and downs of the energy market. Indeed, China will manage to maintain its growth in 2009 only by pumping a huge stimulus investment into the economy (10 times ours relative to GNP), and even then growth is expected to fall from 9 percent to barely 5 percent.

India, on the other hand, depends little on exports. Its is a service economy. While India, too, has been hit by the global meltdown, growth is only expected to fall to 7 percent from 9 percent last year. (A report by the Federal Reserve of Dallas last August predicted that India’s economic growth would be more resilient because of its mix, and so it has proven to be.)

In the world’s largest democracy and now fastest-growing economy, we have tangible proof of Bush’s popularity. During his time in office, polls in India routinely gave him approval ratings in the high 50s up to the low 70s, even while Indians expressed disapproval of such policy decisions as the Iraq War.

To understand why Bush is so popular, we have to understand a little about India’s recent history. After independence in 1947, India kept three vestiges of its colonial past, one that would serve it very poorly and two that would serve it very well. The first was a state-managed economy, brought to India by English graduates of the London School of Economics and maintained by Indian graduates of the London School of Economics. We know how well that worked. The second vestige, which worked considerably better, was the British educational system. The third was, as every educated Indian’s second tongue, the English language.

Anti-colonialism and a socialist ideology in the first 50 years of the new country’s independence tilted India toward the Soviet Union. In response, American policy makers adopted Pakistan as our proxy in the region, which only pushed India further into Moscow’s open arms. As the Cold War heated up, India became perhaps the most anti-Western country in the world not directly under Soviet or Maoist control.

The Soviet Union was India’s largest trading partner, and when it collapsed, one or two Indian states—which have a great deal of autonomy in the Indian federal system—started gingerly experimenting with loosening business regulation, encouraging entrepreneurship, and allowing free trade. The experiments were so successful that even the orthodox socialists in New Delhi had to wake up. Even so, Indian hostility was so deeply ingrained that, three years after the fall of the Berlin Wall, Tom Clancy could write a best-selling novel envisioning a scenario in which India would ally with a Japanese business cartel to take down the United States in the Pacific.

With three moves, Bush reversed this decades-old antipathy. First, in the immediate aftermath of 9/11, he threw the Taliban out of Afghanistan, removing an Islamicist putsch in a nation long friendly with India. Second, he abolished restrictions on India’s access to civilian nuclear technology and nuclear fuel, which was viewed as sign of India’s maturity as a world power. Third, he visited India in 2006 to establish new bilateral relations, a personal touch that was welcomed as a sign of America’s new respect for India’s emergence in the world economy. Meanwhile, the Bush presidency coincided with the rapid rise of outsourcing by American companies, which fueled enormous employment growth in India.

For his willingness to embrace this recalcitrant emerging power and overturn a half-century of American policy toward the subcontinent, Bush is regarded, if not as the father, at least as the rich uncle of the Indian economic miracle.

The former president could do no greater service to his country than to continue to build on the foundation he laid in Indo-American and Sino-American relations. The Bush library complex will include a policy institute that, I hope, will focus on his most notable foreign policy success, the new bilateral relationship with India. By bringing together Asian and American policy elders, business leaders, and opinion leaders, the institute could continue the work he began. Under the president’s leadership, the Bush institute has the opportunity to become the place where conversations between the world’s two fastest-growing economies and the world’s largest economy take place and where bilateral policy questions can be addressed in a less formal, more collegial, and more creative environment than allowed by diplomacy through official channels.

The high regard for Bush in Asia could be a major asset as Dallas becomes an international player. Dallas already has a direct stake in the success of the major Asian economies. China’s shipping containers are unloaded at the Port of Long Beach onto railway cars headed to the Dallas Inland Port for breakup and delivery across the country. Major Dallas employers such as Texas Instruments, Kimberly-Clark, Hewlett-Packard’s service division (formerly EDS), AT&T, and Verizon have made major investments in China and India. Dallas already is blessed with vibrant and prosperous Chinese and Indian communities. (The Chinese have a Dallas daily newspaper; Indians here have their own glossy monthly magazine.)

With social and business connections already so well established in Dallas, the Bush institute is perfectly positioned to strengthen the intellectual and public policy connections that smooth the way for friendly relations and increased trade. That would be a lasting legacy—for George W. Bush, for Asia, for America, and for Dallas.

http://www.dmagazine.com/Home/2009/03/23/Welcome_Home_No_43.aspx?redirected=1

U.S. Injecting Billions Into Foreign Central Banks ('09)

Bumped ~ This is worth reviewing, imo, part of the plan for the redistribution of wealth?

"The program was launched in December 2007 and initially engaged in relatively small swaps with the European Central Bank and the Swiss National Bank"

March 17, 2009

U.S. Injecting Billions Into Foreign Central Banks

For more than a year, the U.S. Federal Reserve System has been increasingly acting as the world's central bank, injecting hundreds of billions of dollars into foreign government treasuries in an effort to increase liquidity in those countries.

The foreign central banks have used the U.S. currency to bail out financial institutions within their borders. The Fed program links its balance sheet directly to the fates of foreign central banks at a time when they're on the ropes.

The program has so far gone unreported in the mainstream media and is a major expansion of Federal Reserve involvement in the global economy. It represents a stark break from the prior role of the Fed, moving it into territory more traditionally occupied by the International Monetary Fund (IMF).

The program puts both the Fed and the foreign central banks at increased risk. If the bailed-out banks can't repay the loans, the foreign central bank is still on the hook to the Fed. It would have to raise the money by selling debt -- which most Europeans are finding difficult today -- or raise taxes or cut spending, actions that further exacerbate the economic crisis. Or, the foreign central bank could default, leaving the U.S. holding a bag of foreign currency of plummeting value.

The U.S. taxpayer has also bailed out foreign banks indirectly by pumping billions into American Insurance Group, which announced Sunday that it had forwarded that cash to counterparties that include foreign banks such as Societe Generale, Deutsche Bank, Calyon, Credit Suisse, the Royal Bank of Scotland and Barclays.

"I'm concerned about Europe," Paul Krugman wrote in Monday's New York Times. "Actually, I'm concerned about the whole world -- there are no safe havens from the global economic storm. But the situation in Europe worries me even more than the situation in America."
Meanwhile, European countries are still unable to sell joint bonds.

The Fed program adds up to serious money. The most recent balance sheet released by the Fed shows that $314 billion U.S. dollars are currently doled out to foreign central banks under the foreign exchange program. That's down from a December peak of nearly $600 billion, as central banks have repaid some of the loans.

In exchange for U.S. dollars, the Fed has received foreign currency of equivalent value in an exchange known as a swap. To protect the Fed from losses due to currency fluctuation, the deals include a provision that when the moneys are swapped back, the transaction will be done at the same exchange rate as the initial transaction.

The swaps are listed by the Fed on its balance sheet as "central bank liquidity swaps." The only reference to such swaps in Nexis or Google News comes in the trade paper Market News International, which publishes periodic summaries of fluctuations in the Fed balance sheet. The Fed hasn't hid the exchanges and even sports an FAQ about the transactions on its Web site.

The Fed has established relationships with some major banks, such as the European Central Bank and the Bank of Japan, but also with central banks overseeing smaller, more volatile economies, such as the Banco Central do Brasil.

"It is important which countries are getting it and which don't," said Ralph Bryant, a currency exchange expert at the Brookings Institution. During the 1970s, he was director of the Fed's Division of International Finance and lead international economist for the Federal Open Market Committee, which has authorized the swaps.

"What happened last fall, when the credit markets seized up so badly, was really a departure because some additional countries that would not have been in the Federal Reserve swap network in earlier years at all were brought in, like the central bank of Brazil, Bank of Mexico, and some smaller ones like the bank in New Zealand, the Norwegian central bank and so on."

The full list of participating banks, according to the Fed, includes the Reserve Bank of Australia, Bank of Canada, Danmarks Nationalbank, Bank of England, Bank of Korea, Banco de Mexico, Reserve Bank of New Zealand, Norges Bank, Monetary Authority of Singapore, Sveriges Riksbank, and Swiss National Bank.

The program was launched in December 2007 and initially engaged in relatively small swaps with the European Central Bank and the Swiss National Bank.

On September 15, 2008, Lehman Brothers filed for bankruptcy, sending a shock through the global financial sector and freezing credit markets.

While the media focused on the U.S. government's domestic response -- a $700 billion bank bailout -- it missed the global response. Between Sept. 15 and October 1, the U.S. nearly quadrupled its swaps with foreign central banks, increasing the amount to $233 billion.

Two weeks later, the total was $398 billion and a week after that it was $480 billion. Two months after the Lehman bankruptcy, the Fed had swapped $572 billion.

In 1994, the U.S. provided Mexico with $20 billion in loans and guarantees to stabilize its financial sector. Congress refused to authorize the money and President Clinton instead used the Exchange Stabilization Fund, at the time a controversial decision. Today's swap is nearly 30 times larger.

A Democratic congressional aide who asked Fed officials about the swaps says he was told they are "essentially riskless" to the U.S. taxpayer -- unless, of course, a central bank defaults, at which point the value of the currency held as collateral would be called into serious question.

"The only conceivable risk is if you think some foreign central bank was going to go bust and not honor its commitment, but given this is only for larger countries, that's a very small probability," said Bryant.

As with every other bailout, the swaps are justified by citing the cost of doing nothing. "If the rest of the world goes down the tubes, that's really bad for the US financial system and the US economy," Bryant said.

The IMF has been relatively inactive during the financial crisis, a vacuum the Fed has filled. IMF lending comes with a certain international stigma and central banks are generally happier to arrange transactions with the Fed. Moreover, since the Asian financial crisis in the late 1990s, the IMF has lacked the capital reserves to engage in currency swaps at the same magnitude as the Fed.

Despite the lack of public scrutiny, the Fed's decisions are at root political. "There is an issue as to which countries they decided to do this for and which ones they didn't. That is a political decision," said Dean Baker, an economist with the liberal-leaning Center for Economic and Policy Research. "The fact that they help certain countries hurts the ones they don't help, since they get viewed as less safe. "Read more at:

http://www.huffingtonpost.com/2009/03/17/us-injecting-billions-int_n_175454.html

Riding the Money Train ... US President Obama and UN Gen'l Ban Ki-moon address global coordination ...

March 11, 2009

US President Barack Obama and UN Secretary General Ban Ki-moon have issued a joint call for global coordination to help the world's poorest nations weather the economic crisis.

Obama met Ban at the White House for the first time since becoming president, amid widening concern over the impact of the crisis on developing states in the run-up to the G-20 economic summit in London in April.

"We talked about the economic crisis and how that's affecting not only developed countries but very poor countries around the world," Obama said.

The president added that the crisis was a "potential threat to food supplies if it continues to worsen" and mentioned the need for "international coordination."

Ban made a strident appeal for the world's richest nations not to forget the most destitute, as they battle to revive their own economies.

The plight of the poorest nations as the world faces its worst economic downturn for generations is expected to feature on the agenda of the G20 developed and developing nations summit in London.

"What I'd like to emphasize, as Secretary General of the United Nations, is that leaders of G20 should not lose sight of the challenges and plight of hundreds of hundreds of millions of poorest people of the developing countries who have been impacted by this economic crisis," Ban told Obama.


In a "make or break" year for the world, the developed bloc should keep commitments on development aid, food security and climate change," he said.

British Prime Minister Gordon Brown, who visited Obama in Washington last week, has said he will push the G20 for the creation of a World Bank fund to help cushion the impact of the crisis on the most vulnerable countries.

The World Bank said in a study published on Sunday that developing countries face a financial shortfall of 270 to 700 billion dollars this year.

The shortfall comes "as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty," the Bank said in statement.

"We need to react in real time to a growing crisis that is hurting people in developing countries," said World Bank Group president Robert Zoellick.
Zoellick in February called for a fund to which each developed country would contribute 0.7 percent of its stimulus package to help poorer countries.

Source: AFP American Edition

'Arab States Should Adopt a Currency Basket'

Arab states should adopt a currency basket'

Wednesday, March 18, 2009

The Gulf and Arab countries should drop the dollar peg of their currencies and adopt a currency basket, since the dollar has damaged both global and American economies, said delegates at the fourth Dubai Police Academy International Conference.

The event, which discussed the legal, economic and security aspects of the global financial crisis, called on decisionmakers in Gulf countries to convince the US to accept a new financial and monetary world order that is governed by a basket of currencies, where the dollar's share does not exceed 25 per cent.

It proposed a new gold standard against a basket of currencies to replace the free dollar standard. And, as a first step, it said oil producers should revoke their 1970s commitment to price oil in dollars, devising a new mechanism instead in which the dollar has no big effect.

This would ensure that the financial and monetary policies of oil producers are free from the control of the dollar, said delegates at the conference. Oil producers should gradually work to end the link between the Arab and Gulf currencies and the weak US economy.

The conference also called for a serious agricultural strategy that would meet local market needs for basic commodities, especially of staples such as wheat and rice. Also, customs restrictions should be imposed on the export of these basic commodities.

Participants also called for a total halt to the privatisation or listing of public sector companies after two decades of feverish sales of such units, stressing that the crisis has highlighted the need for public ownership to strike a balance between market considerations and those of social justice.

The delegates stressed the need for steering the Gulf's sovereign wealth funds and capital towards investment in the regional environment.

In a lecture at the conference, Economic Adviser to the Saudi Industrial Development Fund Dr Ridha Abdul Salam spoke of a move to build a new economic order through a capitalist system where the state retains a basic role.

Abdul Salam said in the wake of the crisis the world is looking forward to a compromise that ensures protection of private investment and market freedom while achieving social justice at the same time. This would be possible through ensuring the state played some role in everyday economic life. He said six months into the crisis, international financial organisations, such as the IMF and the World Bank, are yet to play a role to match the size of the disaster that has hit the world.

http://www.business24-7.ae/articles/2009/3/pages/03182009_7b1aebe9df0244aeaaf64d09a165dbea.aspx