Why China won't revalue the yuan: exclusive by Loretta Napoleoni

Author Loretta Napoleoni has kindly written this guest post for Madam Miaow who requested that she draw pictures to explain what all the fuss is with the US demanding that China revalues its currency.

It could alternatively be titled "Economics for Dummies" but here it is made easy (easier/easyish). Many thanks, Loretta.

BTW, 1 Chinese yuan = 0.0948186692 British pounds

China, the US, and the Renminbi currency

The 1930s depression became ‘great’ because nations used protectionism to defend their export industry. As barriers came up the economy began to shrink and the world was planed into a global recession. Today the monetary wars waged by nations aim at increasing the competitiveness of the industry by reducing the value of domestic currency and the outcome could well be to add the world ‘great’ the current recession.

At the centre of the currency war one finds China. The world wants the renminbi to revalue but the Chinese, we are told, refuse to do that to keep flooding our markets with their products. But the real reasons are otherwise. China is still a developing country and although, as Japan in the 1960s, it is fast moving towards a sophisticated industrialization, a considerable part of its economy is constituted by companies that produce basic goods and operate with very low margins. A revaluation would force them out of business. China is also experiencing a rise in wages, much needed and welcomed by the rest of the world, which is reducing the profit margins of companies. A revaluation would halt such process. Finally, China is currently in a key transition. The 15 year plan is coming to an end and the new one has not been announced yet, no major decision will be taken in this period.

China will in the near future appreciate its currency but it will do it according to the needs of the domestic economy not to satisfy the demand of the international markets. Such process may prove too slow for the globalised economy.

The real problem is not the renminbi but the dollar. Its weakness is producing great imbalances and the rush to devalue. Korea has de facto devalued its currency to be more competitive and is now planning to increase its gold reserves to safeguard them against the unstoppable weakening of the dollar. For months the Swiss have tried to intervene on the exchange rate markets to keep their currency from appreciating against the dollar and recently thanks to the contraction of exports have managed to stabilize the exchange rate.

Because volatility in the forex market is very high, speculators use this market to gamble their money — as in the past they gambled in the property market — hence the formation of a new bubble.

What we need to prevent another credit crunch is a new monetary system, but it is unlikely to happen in the near future, until China makes the renminbi convertible.

Loretta Napoleoni is the best-selling author of Rogue Economics, and Terror Inc: Tracing the terror dollars. Tonight, she is the guest speaker at the opening gala of the Global Banking Alliance for Women Summit held in Washington DC.

Why China won't revalue the yuan: exclusive by Loretta Napoleoni

Author Loretta Napoleoni has kindly written this guest post for Madam Miaow who requested that she draw pictures to explain what all the fuss is with the US demanding that China revalues its currency.

It could alternatively be titled "Economics for Dummies" but here it is made easy (easier/easyish). Many thanks, Loretta.

BTW, 1 Chinese yuan = 0.0948186692 British pounds

China, the US, and the Renminbi currency

The 1930s depression became ‘great’ because nations used protectionism to defend their export industry. As barriers came up the economy began to shrink and the world was planed into a global recession. Today the monetary wars waged by nations aim at increasing the competitiveness of the industry by reducing the value of domestic currency and the outcome could well be to add the world ‘great’ the current recession.

At the centre of the currency war one finds China. The world wants the renminbi to revalue but the Chinese, we are told, refuse to do that to keep flooding our markets with their products. But the real reasons are otherwise. China is still a developing country and although, as Japan in the 1960s, it is fast moving towards a sophisticated industrialization, a considerable part of its economy is constituted by companies that produce basic goods and operate with very low margins. A revaluation would force them out of business. China is also experiencing a rise in wages, much needed and welcomed by the rest of the world, which is reducing the profit margins of companies. A revaluation would halt such process. Finally, China is currently in a key transition. The 15 year plan is coming to an end and the new one has not been announced yet, no major decision will be taken in this period.

China will in the near future appreciate its currency but it will do it according to the needs of the domestic economy not to satisfy the demand of the international markets. Such process may prove too slow for the globalised economy.

The real problem is not the renminbi but the dollar. Its weakness is producing great imbalances and the rush to devalue. Korea has de facto devalued its currency to be more competitive and is now planning to increase its gold reserves to safeguard them against the unstoppable weakening of the dollar. For months the Swiss have tried to intervene on the exchange rate markets to keep their currency from appreciating against the dollar and recently thanks to the contraction of exports have managed to stabilize the exchange rate.

Because volatility in the forex market is very high, speculators use this market to gamble their money — as in the past they gambled in the property market — hence the formation of a new bubble.

What we need to prevent another credit crunch is a new monetary system, but it is unlikely to happen in the near future, until China makes the renminbi convertible.

Loretta Napoleoni is the best-selling author of Rogue Economics, and Terror Inc: Tracing the terror dollars. Tonight, she is the guest speaker at the opening gala of the Global Banking Alliance for Women Summit held in Washington DC.

Ken Loach & Michael Heseltine debate Tory cuts on Newsnight

Ken Loach pwns Michael Heseltine over Tory lies on cuts.

I'm listening to BBC Radio 4's Today programme right now, horrified that the consensus that those at the bottom of society have to pick up the deficit bill goes almost entirely unchallenged. It's as if we've forgotten the bankers until someone like Loach speaks up.

And, no, a mild-mannered Mark Steel right at the end of the programme is no counter-balance for the skewing of facts by Nick Robinson, Robert Peston, John Humphries, "Sir" John Tusa, et al.

Tory cuts: How to solve the crisis in one easy move

Here's a wise and wonderful post from someone's Facebook I noted last month.

HOW TO SOLVE THE CRISIS IN ONE EASY MOVE

A report in the Independent shows that the richest 1,000 people in the UK could pay off the whole of the £159 billion public deficit tomorrow, just from the profits they have made last year out of the economic crisis.
The collective wealth of the country's 1,000 richest people rose 30% last year in the wake of the economic crisis.
Their combined wealth rose by more than £77bn to £333.5bn, the biggest annual increase in the 22-year history of the Sunday Times rich list.

Sadly, I can't find the report but if anyone can shed further light, it would be most appreciated.

Sunday Times rich list here.

George Monbiot on the Tories seeing this as a long-awaited opportunity.

UPDATE: I'd also like to point out that the left has been worse than fucking useless. Where is the debate? It's been business as usual for these phonies. One demo on the day of the cuts and one at the weekend? A bit late, don't you think? The "leaders" of the left want all the glory and will do none of the slog to ensure there's been a challenge in the media, so the government and the right-wing argument has set like concrete in the minds of the public. YOU DO NOT ALLOW THEM TO SET THE AGENDA!

Thanks to Bilus for the link to this report on taxing the rich to settle the deficit.

How the richest 1,000 could clear the deficit here

Tory cuts: How to solve the crisis in one easy move

Here's a wise and wonderful post from someone's Facebook I noted last month.

HOW TO SOLVE THE CRISIS IN ONE EASY MOVE

A report in the Independent shows that the richest 1,000 people in the UK could pay off the whole of the £159 billion public deficit tomorrow, just from the profits they have made last year out of the economic crisis.
The collective wealth of the country's 1,000 richest people rose 30% last year in the wake of the economic crisis.
Their combined wealth rose by more than £77bn to £333.5bn, the biggest annual increase in the 22-year history of the Sunday Times rich list.

Sadly, I can't find the report but if anyone can shed further light, it would be most appreciated.

Sunday Times rich list here.

George Monbiot on the Tories seeing this as a long-awaited opportunity.

UPDATE: I'd also like to point out that the left has been worse than fucking useless. Where is the debate? It's been business as usual for these phonies. One demo on the day of the cuts and one at the weekend? A bit late, don't you think? The "leaders" of the left want all the glory and will do none of the slog to ensure there's been a challenge in the media, so the government and the right-wing argument has set like concrete in the minds of the public. YOU DO NOT ALLOW THEM TO SET THE AGENDA!

Thanks to Bilus for the link to this report on taxing the rich to settle the deficit.

How the richest 1,000 could clear the deficit here

The Inception Matrix: reality in the movies

If the Age of Enlightenment was about proving certainties, we're entering the time of unravelment when everything falls apart.

Talk about the centre not holding! My cinematic popcorn experience has been more interesting of late than for ages. We may no longer have the agitprop output of the post-World War II cultural boom, but serious issues are creeping in where Hollywood mainstream normally dreads to tread.

New World Orders are all very well, but they carry the chaos of realignment at every level, with yer actual fabric of reality dropping its stitches in a veritable plain-and-perl harbour disaster of perception slippage. We can't even rely on those pesky film-makers to give us cosy reassuring reflections like they did in the 1950s. Sci-fi novelist Philip K Dick is Deity in Chief as his two key questions — what is real? who is human? — get assessed, processed and re-presented while opposing strands of society try to nail down who and what we are. And Leonardo de Caprio graduates from the permanence of Big Love in Titanic to the transient consciousness of Inception, joining Keanu Reeves as the poster boys for the anxiety at the dark heart of society, as we try to keep a grip on our disintegrating collective take on what is true.

They say we are now underclass, chavs, whiny-middle classes no longer of any value. We say, hell no: we are Neo in The Matrix asserting our humanity by taking the red pill. We are Little Leonardo in Inception, a cosmic matador dancing in and around the "realities" coming at him like trains down a track.

Even though he came unstuck in Shutter Island, another hit movie juggling illusion and actuality, he was still able to make a moral decision at the end and do a better thing than he had ever done, taking his self-imposed fate like a manly Man and not as a lab rat. As did Donny Darko and the protagonist of the multi-layered The Butterfly Effect.

Film historian Jasper Sharp reminds me that these films borrow heavily from Japanese anime. "Matrix was pretty up front on its debt to the original Ghost in the Shell film, which posited a totally 'wired' society back in 1995 before the internet was really a thing of the masses." And Inception was influenced by Satoshi Kon's anime, Paprika, chucking our nightmares right back at us.

Given what happened in Nagasaki and Hiroshima, it's no wonder the Japanese are seriously good at this. Or that William Gibson, whose Neuromancer gave us the founding cyberpunk text back in the 1980s, is so popular in Japan.

I wonder what the developing nations in transition out of third world poverty make of our grizzling: they've been putting up with assaults on their reality for centuries. Mostly from the western powers or, at any rate, those in the driving seat. When you have no power, others – meaning the seriously rich – get to define your world. That's one bit of reality that never changes. Anyone told Hollywood?