Britannia Radio

American Pretension In Korea

From the desk of Johnny Fincioen on Tue, 2010-11-16 09:55

At the end of last week, during the G20 conference in Seoul, the world delivered Obama a stunning defeat. He had the arrogance to accuse China of currency manipulation, while he himself is engaged in a big devaluation of the US dollar. The world leaders told him flat out his policy of huge government debt while debasing the value of the dollar, will not work to strengthen the US economy. They called Obama’s policy also highly damaging to the economies of the other countries, and to world trade.

While he was now in Korea anyway, Obama wanted to dominate the Koreans. Three years ago President Bush negotiated a trade pact with South Korea. As a Senator Obama opposed this deal, and the Democratic Congress refused to ratify the treaty. Last week Obama counted on all his personal charms to sign a new trade deal. He had already sold in the US his big coming success. Hubristic as he is, he added a bunch of new conditions to the trade accord, without giving the Koreans ample time to evaluate his new demands. Obviously the Koreans sent Obama home empty handed.

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The Euro: Chronicle Of The Currency Crisis Milton Friedman

Foretold

From the desk of Paul Vreymans on Mon, 2010-11-15 20:09

Interest differentials between European government bonds and credit default swapsscore new records almost every day. Greece, Ireland, Portugal and Spain face increasing difficulties in financing their public debt. Financial markets fear the situation is untenable and are becoming nervous. Politicians and the ECB all with their own preferences and interests feverishly search for a solution. The dispute between Sarkozy and Trichet is not likely be resolved soon.

Who pays the piper?
Political leaders favor a scenario of debt restructuring with a rigorous "haircut" for the bondholders, including the already shaky bank sector. Banking circles and the ECB obviously shun such a scenario. For Trichet the idea that an EMU member state would fail to fulfill its obligations is unthinkable. It would undermine the credibility of the euro project even further. An earlier proposal to create European bonds as a funding vehicle for individual member states has already been dismissed. For obvious reasons, banking circles favor a solution in which the European taxpayer would come to the rescue and would guarantee faltering government bonds.

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