Further evidence of a deliberate policy that undermines our standard of living:
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> (email exchange)
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> On Fri, Oct 16, 2009 at 10:27 AM, Roger wrote:
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Larry Summers was just quoted on the morning news, as saying “We want the US to transition from a consumer-based to an export-based economy.” And he has the “complete agreement” of Obama and the G20.
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Rates high, deficit up, state sponsored lending that’s functionally a fiscal transfer more than making up for the drop in private sector lending.
Looks good!
Brazil:
Rates: Currently at 8.75%. Down from cycle high of 13.75% in January 2009.
Deficit: Currently at 3.4% of GDP. Largest since December 2006.
Brazilian Development Bank Lending has been instrumental in increasing credit.
In May 2009, the government also lowered to a record 6 percent the long-term interest rate charged by the BNDES state development bank for lending that, with private credit tight, it plans to expand 30 percent to 120 billion reais ($70 bln) this year.
Total domestic credit has grown 21% y/y as of July
Private sector bank lending has fallen 11% y/y
Public sector bank lending has jumped 40% y/y.
Foreign Direct Investment fell off sharply in 2009 and should return roughly to 2007 levels in 2010.
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U.S. Criticizes China for Lack of Exchange-Rate ‘Flexibility’
By Rebecca Christie
Oct. 16 (Bloomberg) — The U.S. Treasury Department criticized China for the “lack of flexibility†of the yuan and a buildup of foreign-exchange reserves while stopping short of branding the nation a manipulator of its currency.
“The recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances,†the Treasury said in its semiannual report to Congress on the currency policies, using another name for the yuan.
The report released yesterday, which found that no major U.S. trading partner illegally manipulated its currency in the first half of 2009, comes after Group of 20 leaders adopted a “framework†for sustaining global growth and reducing lopsided flows of trade and investment. The framework could see China boosting domestic demand, the U.S. saving more and Europe increasing investment.
“Both the rigidity of the renminbi and the reacceleration of reserve accumulation are serious concerns which should be corrected to help ensure a stronger, more balanced global economy consistent with the G-20 framework,†the report said. “The Treasury remains of the view that the renminbi is undervalued.â€
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EU warns UK’s debt is ‘unsustainable’By Sean O’Grady
Oct. 15 (The Independent) —A damning report by the European Commission on the long-term prospects for Britain’s public finances warns that Britain is at “high risk” of running unsustainable debts – implying that the nation will be unable to service its debts and that only default or high inflation can relieve the burden.
That implies the high deficits will close the output gap to 0 with ultra low unemployment and high cap utilization.
And then taxes will have to go up to cool it down.
Sounds like a good plan to me!
The Commission’s 2009 Sustainability Report says that Britain will suffer a
“sustainability gap” of 12.4 per cent of GDP – meaning tax rises or spending
cuts amounting to close to £200bn a year.
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Nadine,
How can you publish this nonsense?
This analysis is, at best, applicable to a currency on a gold standard.
It has no application whatsoever with our non convertible currency.
Is there a review board?
Have them read this brief draft:
Sincerely,
Warren Mosler
Dear Colleague:
In an article in the forthcoming November/December 2009 issue of Foreign Affairs, “The Dollar and the Deficits: How Washington Can Prevent the Next Crisis,” C. Fred Bergsten, director of the Peter G. Peterson Institute for International Economics, says if the U.S. is serious about recovering from the global economic crisis, it must balance the budget, stimulate private saving, and embrace a declining dollar.
For full text of article, visit:Link
I have attached the press release below. If you have any questions or want to get in touch with Dr. Bergsten, please contact me directly.
Best,
Nadine
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In general, Latin America seems to continue to be doing the right thing with fiscal policy including state sponsored lending and finance programs that are quasi fiscal transfers as well.
| Brazil’s August Retail Sales Rise 4.7% From Year-Ago |
| Brazil to Extend Tax Cut on Appliance Purchases, Folha Says |
| Peru GDP Will Rebound Stronger Than Peers, Morgan Stanley Says |
| Chilean Banks Relax Credit Conditions in 3Q, Central Bank Says |
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