Currency Wars
Research for Online Investors

by John Dalt

10/06/10

It seems countries can only be accused of manipulating their currency if you have a trade surplus.  The U.S. announced quantitative easing last year, and the Fed bought $1.7 trillion in mortgage backed securities and treasuries.  The Bank of Japan sold Yen two weeks ago because the value of their currency was ‘hurting their export companies.’  But, they are not “manipulators.”  China ties the Yuan to the dollar for the past two years, and they are accused of manipulation?

The Federal Reserve announced in August and again in September they may have to print more money to flood the market with dollars to keep the U.S. economy from sliding into a ‘double dip’ recession.

Michael Pento, senior economist at Euro Pacific Capital in New York, said "Our Treasury, Fed and administration still don't understand that you can't print jobs, and devaluing your currency doesn't boost exports or balance the trade deficit, all it does is send everything priced in dollars up, while creating huge imbalances in the economy."

Pento called the US "the chief currency manipulator" and said the current conflicts are less a currency war than "a skirmish between the U.S., Japan and China. But it may become WW III if Geithner doesn't close his mouth."

Brazil announced a doubling of the foreign tax (4%) on interest earned from local bonds.  Brazil’s finance minister called the present situation an “international currency war.”  The International Monetary Fund’s (IMF) managing director Dominique Strauss-Kahn was quoted in The Financial Times.  Strauss-Kahn cautioned against using exchange rates "as a policy weapon" to undercut other economies and boost a country's own exporters.  These actions "would represent a very serious risk to the global recovery."  Finance ministers from the Group of 20 meet this Friday to discuss monetary policy and trade.

The Nobel Committee is slated to announce the 91st Peace Prize winner on Friday.  Since they have already recognized Obama and Al Gore, who could be left?  It looks like the front runner is jailed Chinese democracy activist Liu Xiaobo.

China is openly pressuring the Nobel Committee’s director Geir Lundestad.  China’s deputy foreign minister Fu Jing met him last month to deliver a warning that the “unfriendly gesture” honoring Liu “would have negative consequences” for relations between China and Norway.

Asia Times reports that Liu is serving an 11-year prison sentence for “inciting subversion of state power.” The pressure is being applied overtly. China’s Foreign Ministry confirmed pressure was being exerted. China argues that Liu never promoted “peace between peoples, international friendship and disarmament.” China states that awarding the peace price to Liu would be contrary to the ideals of the Nobel Prize’s founder, Alfred Nobel.

What are, or were Liu’s crimes?  Liu Xiaobo was politically active in China.  He participated in the Tiananmen Square protests in 1989.  He received his Bachelors degree in literature and Masters Degree from Beijing Normal University in 1984, and has been a visiting scholar at the University of Hawaii, Columbia University and the University of Oslo.

He signed a document known as “Charter 8” along with more than 300 Chinese citizens.  Charter 8 calling for greater freedom of expression, human rights and free elections.  He was arrested on Dec. 8, 2008, two days before “Charter 8” was publicized.

Liu was convicted of “inciting subversion of state power” on Dec. 25, 2009 and sentenced to 11 years in prison with an additional 2 years deprivation of political rights. You may ask, ‘What political rights?’ but we would be unable to answer. When signing a petition for greater political freedom lands you in prison for eleven years, political rights seem to be an afterthought.

Quote:
One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project. Most people are a little reluctant to oppose anything that suggests medical care for people who possibly can't afford it.--- Ronald Reagan, 1961

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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