UN calling trade deficit a privilege


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Interesting! At least a small sign of the world beginning to figure it all out.

>   
>   The United Nations called on Tuesday for a new global reserve currency to end dollar
>   supremacy which has allowed the United States the “privilege” of building a huge trade
>   deficit.
>   


UN calls for new reserve currency

Oct. 6 (Breitbart) — The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the “privilege” of building a huge trade deficit.

“Important progress in managing imbalances can be made by reducing the reserve currency country?s ‘privilege’ to run external deficits in order to provide international liquidity,” UN undersecretary-general for economic and social affairs, Sha Zukang, said.

Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: “It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.”

He said: “Greater use of a truly global reserve currency, such as the IMF?s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes,” he said.

The SDRs are the asset used in IMF transactions and are based on a basket of four currencies — the dollar, euro, yen and pound — which is calculated daily.

China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington-based IMF.


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Geithner- more innocent subversion


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This is the party line and both sides agree.

We are our own worst enemy of our standard of living

As our real terms of trade continue to deteriorate.

How hard is it to understand that exports are real costs and imports real benefits???


Geithner Says Americans Will Have to Save More

Oct. 1 (Reuters) — Americans will have to save more in the future, transforming the global economy, and Europeans and Japanese must work to boost domestic demand, U.S. Treasury Secretary Timothy Geithner was quoted as saying on Wednesday.

“Everyone is going to have to come to terms with the fact that we are going to save more in the United States,” Geithner said in an interview with German weekly Die Zeit, conducted on Sunday in Istanbul, and due to appear on Oct. 8.

“If the U.S. starts saving more, that changes the whole world’s economic reality,” he said, according to the German text of the interview.

Geithner said China was already doing a lot to consider how to put growth on a more sustainable path.

“In China, the government is at the forefront of thinking about new ways to reduce the dependence of the economy on export and investments,” he said.

“But it is not just about the U.S. and China. Europe and Japan make up 40 percent of the global economy.”

Geithner said the U.S. could not force Europe to boost domestic demand to adapt to the new economic reality, but he saw it as the only viable strategy to guarantee lasting growth.

“They have to decide themselves how to adapt. I am not aware of any other strategy that promises success.”

He also said that the recovery was in a very early phase, and there were many risks ahead.

“If you look at past crises, politicians mostly made the mistake of tightening the purse strings too early,” he said.

“The private sector needs to start growing on its own for a sustainable recovery to take place.”


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Investors Plan to Go Overweight Commodities, Credit Suisse Says


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Turning into a stampede?

People want it.

They are scared of the fed ‘printing money’ even in the face of obvious excess capacity?

Watch for storage costs to go up/contangos where there is not a monopolist setting price?

Good market for producers who sell forward, getting paid by investors paying up for forwards/storage?

Investors Plan to Go Overweight Commodities, Credit Suisse Says

By Chanyaporn Chanjaroen

Oct. 7 (Bloomberg) — More than half of investors surveyed
by Credit Suisse Group AG said they plan to hold an overweight
position in commodities in the next 12 months, double the
proportion with such a weighting now.

Of the 180 investors surveyed last month, 51 percent said
they expected to hold an overweight position in the next year,
34 percent a neutral weighting and 13 percent underweight. That
compares with 25 percent overweight now, 38 percent neutral and
30 percent underweight.

The most popular route for commodity investment will likely
be active indexes or funds, followed by exchange-traded funds,
according to the survey, e-mailed by the bank yesterday. Of
those surveyed, 44 percent were from hedge funds and 22 percent
from institutional funds.

The Reuters/Jefferies CRB Index of 19 commodities posted a
record 36 percent decline last year and rebounded 13 percent
this year. Assets under management at commodity hedge funds
increased 6 percent this year to $60.61 billion as of the end of
August, according to Hedgefund.net.

Expectations that inflation will accelerate and the dollar
weaken contributed to investor demand for commodities this year,
Kamal Naqvi, head of global commodity investor sales at Credit
Suisse in London, said by phone today.

Thirty-nine percent said natural gas would be the best
performer among energy products over the following 12 months,
with 32 percent picking crude oil.

Among industrial metals, 59 percent expected aluminum to be
the worst performer over the period, while 51 percent thought
copper would advance the most.


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Fate of the US Dollar?


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I think they want to accumulate financial assets and would like to get a currency they could feel good about to do that.

And at the same time they want to net export.

The only way they could do that is to somehow ‘force’ us to borrow their new currency in order for us to net import from them.

It would be easier for them to instead come up with an inflation index and only sell their exports in exchange for financial assets linked to their new inflation index. As long as the financial assets are linked to their index the currency of denomination isn’t critical. But credit worthiness would be critical.

>   
>   (email exchange)
>   
>>   The following was printed in the Independent in the UK. Doesn’t this move
>>   threaten the US Dollar as the world’s reserve currency?
>   

Doesn’t matter what anything is ‘priced in’ as that is just a numeraire. What matters is what the ‘save in’ which determines trade flows.

>   
>   Interesting. A political move.
>   Seems a clumsy project though: they need to find a name for this ‘basket
>   currency’ (petrodollar?) and then accept payments in any ‘real’ currency
>   equivalent to the value of the ‘petrodollar’ at the time of payment.
>   Possible that all will continue to use dollars for payment.
>   Economic consequences will depend on whether this has any effect on the
>   willingness of foreigners to hold the given amount of dollars they own.
>   

>>   
>>   â€œIn the most profound financial change in recent Middle East history, Gulf
>>   Arabs are planning – along with China, Russia, Japan and France to end
>>   dollar dealings for oil, moving instead to a basket of currencies including
>>   the Japanese yen and Chinese yuan, the euro, gold and a new, unified
>>   currency planned for nations in the Gulf Co-operation Council, including
>>   Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already
>>   beenheld by finance ministers and central bank governors in Russia, China,
>>   Japan and Brazil to work on the scheme, which will mean that oil will no
>>   longer be priced in dollars.”
>>   


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Obama Weighs Spending to Stem Job Cuts Without Second Stimulus


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This does not do much for ‘jobs’ but it is pretty good for financial markets.

Low wages, high productivity growth and a bit of top line growth makes for happy management and investors. And a continuing flow of real wealth from the bottom to the top.


Obama Weighs Spending to Stem Job Cuts Without Second Stimulus

By Mike Dorning and Nicholas Johnston

Oct. 6 (Bloomberg) — President Barack Obama is considering a mix of spending programs and tax cuts to respond to widening job losses that would amount to an additional economic stimulus without carrying that label.

Contradictory Missions

In considering the measures, the administration has to reconcile two potentially contradictory missions: combating rising unemployment through government intervention and the need to hold deficits down.

White House Press Secretary Robert Gibbs yesterday highlighted those political sensitivities, saying there “were no plans” for a second stimulus like the $787 billion package passed earlier this year. Instead, he said, the administration is looking at “extensions” of existing programs.

The Obama administration isn’t near a final decision on additional measures, said Jen Psaki, a White House spokeswoman.

“As they continue to explore the best options, any notion that we are any farther along than preliminary discussions about new proposals is wildly inaccurate,” she said.


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