Dynamic stock market integration driven by the european monetary union

Liu 5 42 T Regional Integration Without Empire. It is important that regional integration does not degenerate into empire structure dominated by any one nation state, or one group of nation states. As a political process, regional integration aims to achieve within a region economic, social, cultural and political integration.

This goal is to be achieved through the promotion of international trade by reducing trade barriers within a region, such as reduction or removal of tariffs to create a single regional market, and to adopt unified rules on trade, standards on goods quality and service performance, legal framework and a common currency, or at least a free convertibility of currencies of member states.

Regional integration as it has developed nowadays focuses primarily on economic issues, particularly through market liberalization in international trade and finance and concerted efforts to create a region-wide single market, operating under the assumption that prosperity can best be achieved through trade and that prosperity is a sine qua non for achieving socio-cultural and political integration.

Yet many regional problems are not purely economic or financial, but are social-political problems with economic and financial dimensions. Such socio-economic-political problems cannot be understood, let alone solved, through doctrinaire market fundamentalism. This is because the market is only one narrow aspect of the economy and while the market can give a quick fix on economic conditions at a specific moment, it is not informative to view the market itself as the economy, particularly as an input in socio-political policy deliberation.

Historically, the most effective venue for regional integration has been the empire structure of the 19 th century. As WWI brought about the end of Age of Empire, it also gave life to a new Age of Imperialism gamely practiced by democratic governments of new bourgeois sovereign republics that followed the demise of imperial monarchies.

It is particularly pathetic that Churchill himself was nor democratically elected Prime Minister, but appointed by the King as an emergency arrangement to form a war-time coalition government with the opposing Labor Party without an election being held.

Predictably, lingering colonialism drove many national liberation movements to turn toward communism in pursuit of self determination. Post-war France was consumed by civil war to suppress national liberation in Algeria and Vietnam seeking self determination. Anti-communist fixation in the US forced the guarantor of self-determination to support residual French colonialism, dragging the country into a protracted Vietnam War that instead of bringing peaceful unification in the small distant Asian country, caused a deep split in US public opinion, radicalizing US politics and exposing US government to populist mass protests.

Han Morgenthau in his Politics among Nations: The Struggle for Power and Peace New York: McGraw-Hill Education, sets forth six fundamental principles of real politik. The first principle of political realism maintains that politics are grounded in observable laws of human nature any idealistic attempt to challenge these laws will only lead to failure. He describes US post-war behavior as imperialistic. By focusing on the study of political power, realists create a continuity of analysis of policy: However, Morgenthau warns against two common misconceptions: Only a rational foreign policy built off a reasoned analysis of international relations will be a successful foreign policy.

The third principle is that while power is a universally valid concept, realism does not endow that concept with a meaning that is fixed for once and all. While the focus of analysis remains power, the method and articulation of power throughout centuries has changed and will continue to change. It is possible for a shift in scalar units of analysis away from then nation-statesince the contemporary connection between interest and the nation-state is a product of history and therefore bound to disappear in the course of history.

However, realists still disagree with their idealist counterparts in believing that the transition away from the nation-state system will occur as a product of the laws of international relations not by the reasoned pleas of a utopian minority. The fourth principle states: However, the moral principles relevant to a particular policy must be historicized and contextualized. Therefore, ethics is incorporated into political realism through the calculation of the political consequences of a particular policy or action.

Since nations have and will continue to disguise their particular ambitions within the language of universal morality, the shrewd realist sees through their rhetorical maneuver. Instead, power forms the basis for judging the actions of other countries and developing appropriate reactions to those actions.

Lastly, the sixth principle is the acknowledgment of the primacy of political analysis in the sphere of the political. Morgenthau warns that policy repeatedly guided by legal and moral guidelines instead of strictly political considerations endangers the power of a country and the welfare of its citizens. Instead, realism advocates that policy must arise out of purely political analysis: Even today, the formation of regional integration frameworks is at constantly risk of dominant states exploiting the creation of ideologically preferred integration frameworks in which preeminent states can exercise exclusive imperialistic influence over other weaker member states in a virtual form of synthetic empire building.

Countries with a large GDP that did not become PFMs are the USJapan which dominated the ADB and Canada. The United Nations has addressed the launch of AIIB as "scaling up financing for sustainable development" for the concern of Global Economic Governance. The Articles of Agreement AOA were signed by 50 PFMs on 29 Junewhich become a party to the agreement through ratification.

As of Julyone member state Myanmar has ratified the agreement, formally becoming a founding member. Rise of China Upsets US. Within US policy circles, the rapid rise of China as a major force in the global economy is proving a reconsideration of whether free trade is still in the US national interest. The prospect that China can be a major economic power is feeding wide-spread paranoia in the US. The fear is that developing nations led by China and India may out-compete the advanced nations for high-tech jobs while keeping the low-skill, labor-intensive manufacturing jobs they already won.

China already is the world's biggest producer and exporter of consumer electronics and it is a matter of time before it becomes a major player in auto exports. Shipbuilding is now dominated by China and aircraft manufacturing will follow. The US Navy is now dependant on Asiaand eventually Chinato build its new ships and eventually the economics of trade will force the US Air Force to procure planes assembled in China from parts made in Asia. Suddenly, socio-economic Darwinism of survival of the fittest, celebrated in the US since its founding, is no longer welcome by US policymakers when the US is no longer the fittest and the survival of US hegemony is at stake.

To many in the USparticularly the militant neo-conservatives, international trends of socio-economic Darwinism now need to be stopped by war. China has more than 1. This is a ratio of 5 to 1. To avoid being over taken by China in aggregate national income, US wages would have to maintain a gap of five times over Chinese wages. Historically-based technological and economic advantages currently give US workers a nominal wage gap of over 35 to 1 over Chinese workers, or 9 to 1 on purchasing power parity PPP basis.

This comfortable gap is not based on current productive differentials but rather on unbalanced terms of trade and geopolitical incongruity left by history. Yet until wage parity is attained, free trade will continue to be driven by cross-border wage arbitrage in favor of China. But with wage parity, the Chinese economy will be five times the size of the US economy, a prospect not particularly welcomed by the US geopolitical calculations.

It was the superior US economy that enabled the US to emerge as victor in the two world wars and to prevail in the Cold War. Free Trade leads to Unbalance Trade. The US is waking up from its self delusion about free trade to the reality that free trade never leads to balanced trade.

Free trade always works against the weaker trading partner, notwithstanding Ricardian principle of comparative advantage. The US was happy to promote free trade when unbalanced trade was in favor of the stronger US economy.

Balanced trade between unequal partners requires managed trade to reduce market power of the stronger partner, which is achieved by the weaker economy resorting to government interference on free trade for more favorable terms of trade.

Such government interference is driven by the politics of trade. When managed trade is conducted against the weaker partner, it is economic imperialism. When it is conducted against the stronger partner, it is known as leveling the playing field.

Yet some in the US are engaging in New Speak when they seek the perpetuation of economic imperialism by demanding a leveling of the playing field in trade with weak, less-developed economies with low wages. Poor Economies Oppose US Farm Subsidies.

As poor nations press the WTO to stop unfair US farm subsidy, US cotton growers try to defuse the mounting pressure by offering help to growers in poor nations.

What the US lost in textile manufacturing, it gains back in subsidized cotton export, high returns on investment in overseas textile mills and low consumer prices in cotton goods. Thus the current tariff war against Chinese textile is merely the US wanting its cake and eating it too. It is a strategy of protecting managed trade with welfare trade. On the other hand, simply doubling the market price of cotton will not help African growers, whose competitive disadvantages go beyond market price, and cannot be eliminated without fundamental changes in the terms of global agriculture trade.

The per capita income gap between the two economies, while growing at a dramatic rate in Chinais in fact widening, not closing. Despite such wide per capita income disparity, the US is apprehensive because it is this perpetual disparity that will continue to drain jobs from the US to China.

While a narrowing of the wage disparity is needed to slow the job drain to Chinathe resultant rise in Chinese aggregate national wealth will threaten US economic dominance in the world.

In a neo-liberal free trade global regime, the US has a choice of losing jobs or losing economic dominance and geopolitical power to China. That is the key dilemma in US economic policy towards China. There is an economic basis behind US antagonistic militancy towards China. The US won both previous world wars primarily by its war-time productive power. This fact has not been forgotten by US policy-planners. While US manufacturing base has been seriously eroded by neo-liberal global trade in the last two decades, the prospect of a shooting war with China will relocate much of the lost manufacturing back to the US in short order.

Impressive US War Production Record. Inonly weeks after Japanese attack on Pearl HarborPresident Roosevelt called for an annual production of 60, military planes, a near impossible demand considering that prewar annual production was only 6, and working males were being taken into the war-time military. In World War II, the US produced 31, B17 and B24 long-range bombers to support strategic bombing, reaching a peak production rate of 50 per day.

In55, individual work hours were needed to turn out a B, and bythis had dropped to 19, hours. Strategic bombing crippled German war production from ball bearings production to oil refineries for critically needed gasoline. The shortage of gasoline stalled German resistance in both the Eastern and Western fronts and crippled the Luftwaffe. Also, the time it took for an aircraft carrier to be built in the US dropped from 36 months into 15 months in In all,military planes were produced in four years of war.

Because of the production prowess of the USGermany and Japan simply could not produce enough weaponry fast enough to keep up with battle attrition the way the Allies could.

It was only a matter of time before the Axis powers would be defeated. A market economy is a feeble weakling compared to a war-command economy. That a war in Asia will relocate manufacturing jobs back to the US in large scale to get the US economy moving again must have occurred to the neo-con warriors who have been controlling US policy since US Fear of Rising Chinese Economy.

Notwithstanding irrational paranoia from US militarists, the fear of China by the US is not fundamentally based on military threat, albeit it has a military dimension. On June 13,a period of fatalist talk on the need for preemptive strike against China by some normally responsible politicians, Henry Kissinger, arguably the greatest living guru of contemporary geo-realpolitik, wrote in the Washington Post: Clausewitz, the leading Western strategic theoretician, addresses the preparation and conduct of a central battle.

Sun Tzu, his Chinese counterpart, focuses on the psychological weakening of the adversary. China seeks its objectives by careful study, patience and the accumulation of nuances -- only rarely does China risk a winner-take-all showdown. It was this natural advantage of a large population that permitted the US and the USSR to exploit geopolitical opportunities to capitulate themselves into superpowers status after WWII. The British Empire was first and foremost a quest for population, and the wealth associated with it, albeit without the benefit of equality, the lack of which became the central weakness that deprived the empire of longevity.

The lack of equality within the USSR was the main cause of its dissolution, not perverted communist doctrine. The large aggregate population of the EU is now driving its new economic aspirations, but inequality will be the main stumbling block.

Japan will never be a contender for superpower status because of its small population and its exclusionary national culture. Immigration is the fountainhead of economic development and sustained prosperity. The developmental history of the US is a story of immigration. The US owed its economic rise to immigrants. Throughout Chinese history, immigration from distant lands and foreign cultures enriched Chinese civilization and contributed to long periods of prosperity.

Germany benefited greatly from the immigration of Jews and lost much from Nazi prosecution of its Jewish citizens. The current anti-immigration phobia in the US and in the EU will put self-inflicted roadblocks in the path of these economies toward a new age of prosperity.

Still the history of the US in its process in becoming an economic superpower is instructive. Chinasimilar to historical US experience, will go through several series of historic policy debates over the choice between isolationism and international engagement as its economy develops.

US trade embargo on Communist China after WWII caused the failure of the Pax Americana until the Nixon-Kissinger opening to China in The embargo effectively delayed development in China for half a century, and radicalized Chinese both domestic politics and foreign policy. Developing countries should not misconstrue isolationism as an effective strategy of anti-imperialism. Quarantine is a strategy that deprives the subject of any chance of developing effective immunity against invading viruses that eventually exposes it to more serious vulnerability.

Hostility breeds counter hostility and protectionism breeds counter protectionism. Isolation between hostile nations leads inevitably to war. Kissinger went on in the same article: Short of seeking to destroy China as a functioning entity, however, this capacity is inherent in the global economic and financial processes that the United States has been preeminent in fostering. A China forced defensively by hostile US policy into isolationism, a recurring tendency throughout its long history, ironically would lead to regional decline and instability that would quickly turn global in this interconnected world.

The modern history of China might have been totally different if Chinese isolationism had not prevailed in Chinese politics in the early s, and modernization had been allowed to proceed with needed stimulation from mutually beneficial contacts with the West before Western imperialism had a chance to take shape. An internationally-engaged China will be a positive force for world peace and prosperity.

As the enormous China market becomes reality from rising income, it will impact traditional international economic relations to restructure residual prejudicial racial enmity and Cold War geopolitical alliances and give rise to a new mode of world order free of residual racial phobia and obsolete ideological conflicts.

US hostility and pre-emptive strategy toward a peacefully-rising China may be forced to fall back on ineffective US unilateralism, devoid of willing partners even from among its residual Cold War allies. Trade protectionism will lead to US isolationism, a movement with a significant past in US history.

Yet, as a superpower, the US cannot isolate itself from the rest of the world without severe penalties. Or to put it another way, the cost of US isolationism is the forfeiture of US superpower status. These nations are beginning to see US demands for unquestioning support of its hostile policy on China as not being congruent with their separate national interests.

It is becoming increasingly obvious to some in Washington that a military option is the answer to arresting US economic decline that threatens US superpower status. Eleven of the 16 countries surveyed in June by the US-based Pew Research Center: BritainFranceGermanySpainthe NetherlandsRussiaTurkeyPakistanLebanonJordan and Indonesiahad a more favorable view of China than of the US.

The survey on global attitude finds that while China is well-regarded in both Europe and Asiaits burgeoning economic power elicits mixed reactions. Majorities or pluralities in France and Spain believe that China 's growing economy has a negative impact on their own economies. Respondents in the Netherlands and Great Britaintraditionally free trade nations, have much more positive reactions to China 's economic growth. Whatever their views on China 's increasing economic power, European publics are opposed to the idea of China becoming a military rival to the USdespite their deep reservations over US policies and hegemony.

In Turkey and most other predominantly Muslim countries, where antagonism toward the US runs much deeper at this time in history, most people think a Chinese challenge to US military power would be a good thing. Nonetheless, there is considerable support across every country surveyed, other than the USfor some other country or group of countries to rival the US militarily. Most Western Europeans want their countries to take a more independent approach from the US on diplomatic and security affairs than it has in the past.

The US public, by contrast, increasingly favors closer ties with US allies in Western Europea continuation of traditional US Eurocentric attitude, while the center of world affairs is shifting toward Asia. This would still be only about one-third the size of the US economy inwhich itself will surely grow significantly by Thus all the talk of China overtaking the US in the near future is misleading.

Yet China is paying a heavy social price for fast GDP growth. The figures were 4. Urban poverty has been increasing since the mids although the Chinese Government has been more successful in reducing rural poverty.

Urban poverty is concentrated in three groups: Popular resentment towards the rich is approaching seismic dimensions, unlike in the US where the rich enjoy the enviable status of adored celebrities. The business newspaper, China Daily, identified government policies as mainly to blame for their failure to ensure equal opportunity and fair wealth distribution and to give enough help on a timely basis to the urban needy. So if we knew the economics of the poor, we would know much of the economics that really matter.

Most of the world's poor people earn their living from agriculture. So if we knew the economics of agriculture, we would know much of the economics of being poor,said the premier.

Yet free trade prevents government subsidy to agriculture. China Daily suggested that the government should also be concerned with the urban poor. This disparity of wealth naturally accompanies market liberalization and deregulation in all economies.

For the Chinese economy to remain a socialist market economy, income and wealth disparity is the biggest obstacle that must be tackled as a top priority. Socialism does not reject wealth, only the mal-distribution of it.

What makes China unacceptable to the US is that it is still a communist country, albeit the neo-communism being put in place in China is increasingly free of authoritarian effects of a garrison mentality that has resulted from US hostility and containment during the Cold War. Neo-communism in China is largely a strategic response to and the resultant consequence of expanding global neo-liberalism.

Yet while the policy debate between orthodox communism and neo-communism has yet to be definitively settled in Chinafree trade and market fundamentalism are under reconsideration in US policy circles. If neo-liberalism should fail and the global trading system freezes, the future of Chinese neo-communism will also be put in jeopardy.

Thus US isolationism is the unwitting ally of Chinese orthodox communism. Samuelson said open trade helped the US economy grow since World War II, but that competition from abroad drove down wages in lower-skill jobs. Over time, China and India could displace US high-tech jobs as well and more US wages could be forced further down to sustain competitiveness.

Even though US consumers get cheaper Chinese-made goods, many US citizens could be net losers from such trade, Samuelson wrote. Consumer gains from lower prices are offset by worker income losses.

If globalization causes enough US citizens to suffer lower wages, the US as a whole loses. But Samuelson expects the US to gain less from trade, outsourcing, investment, and other aspects of globalization in the coming 30 years, possibly even lose out on a net basis. In such case, a minority of the US population would gain, but more would suffer lower living standards.

And as all political scientists know, when the majority loses, the politics turns ugly in a democracy. Even for free-trade guru Samuelson, free trade in a global market economy is only desirable if its serves US national interest. When it does not, free trade needs to be replaced by managed trade, directed by a domestic command economy.

One difference between free trade then, when it was good for the USand now is that greater inequality has become institutionalized in the USSamuelson argues. Neither the political establishment nor the electorate is any longer willing to spread around the benefits of freer trade to help those in the US hurt by globalization, as they did in the aftermath of the Great Depression after World War II, through a progressive tax structure, government social spending, and transfer payments.

Those harmed are usually at the lower end of the income and wealth ladder. This is true of individuals within the US as well as those in other trading nations.

Free trade has worsened the fair distribution of income for the working class and emasculated the ability trade unions to command pricing power for labor, while the more educated professional classes, particularly those in management and finance, have gotten most of the financial gain.

Warren Buffet, one of the most successful investing capitalists in the world, has also been saying that the current US tax regime favors the rich unfairly. Inequality of wealth and disparity of income during the s, coupled with easy credit to fuel a speculative debt bubble, led to the stock market crash.

But it was the resultant pain that disproportionately fell on the unemployed and the working poor that led to the politics of protectionism that prolonged the Great Depression.

Political philosophers in the past worried that in a democracy, lower-income classes would elect politicians who would confiscate much of the riches of the wealthy. Proponents of democracy then guard against this tendency by promoting the concept of minority rights. The US version of representative democracy has turned that worry on its head. The cost of getting a representative elected in a US election has escalated so much that the rich minority has been excessively able to protect and enhance its interests through campaign contributions to sympathetic if not captured politicians.

Trade was kept from emerging as an important issue in the presidential campaign. The Bush administration had taken protective measures during its first term in areas where key political constituencies faced competitive pressures, such as steel, agriculture, and lumber, but the president remained solidly a free trader.

Fair trade has become the slogan for both labor and conservatives, but the practical effect of fair trade as defined by US labor would be no trade, as the poor country are not allowed any pricing power, particularly in wages and environmental protection, by the unfair and unequal terms of trade set by their more powerful trading partners in the on-going trade regime.

US Labor Opposes Free Trade. The labor movement in the US has been the main victim of neo-liberal global trade. Union membership has fallen from Unions have been increasingly ineffective in protecting worker interests as US domestic politics turns conservative in favor of management.

Yet US labor had been in the forefront in the support for US global anti-communist policy and was among the most fervent supporters of every unpopular war, from Vietnam to Iraqwars waged to lay the ground for a world of neo-liberalism that eventually came to undermine the economic interests of US labor.

Traditionally, union pay and benefits helped lift even non-union worker pay as employers had to match or better union pay scale to keep employees from joining unions.

Membership in the private sector where most of the jobs are, union membership has dropped from The industries that have the largest declines are: Manufacturing workers unions suffer from both sector-wide aggregate job loss and a drastic drop in membership percentage of the remaining work force, as the first waves of outsourcing were concentrated in union plants where labor cost was highest.

While wage arbitrage has been the driving force behind the decline of labor unions, the US bankruptcy regime had been the legal venue for the wholesale abrogation of labor contracts and employee pension obligations. The growing disparity of income in the US translates into low pay for place-related service jobs that cannot be outsourced. Yet the disproportionate concentration of women, minorities, new immigrants, both legal and illegal, in these jobs presents opportunities for union organization.

The emergence of large employers such as Wal-Mart, Home Depot, FedEx, major national cleaning and telecommunication companies, and labor-intensive food packaging companies such as Tyson, presents identifiable organizing targets. There is a trend in union strategy to shift from improving the pricing power of labor in vibrant sectors of the economy, to resistance against inhumane oppression in a structurally unfair economy.

This trend will move the labor movement increasing out of progressive economics into radical political confrontation. The first signs of such a shift came from the withdrawal from the AFL-CIO by the service workers union and the Teamsters on July 16, at the opening of its annual convention in Chicago, followed by the United Food and Commercial workers and United Here which represents hotel, restaurant and apparel workers.

These dissident unions aim to cooperate with other unions of laborers, farm workers and carpenters to develop multi-union drives against Cintas, the big nation-wide laundry company, as well as Wal-Mart and FedEx. In the presidential campaign, Democratic challenger John Kerry was careful not to disappoint US organized labor, traditionally a key political constituent.

But labor is a captured constituent for the Democrats, with no alternative champions in US politics. In a tight race, the strategy was to woe the undecided who otherwise would vote for the opponent. The opposing presidential candidates of both political parties proclaimed support for trade liberalization, while they make protectionist concessions separately to their traditional constituents for purely tactical reasons of election politics rather than as strategic reforms in national trade policy, with Bush favoring big business such as steel and Kerry opposing outsourcing.

Samuelson of course warns that just because free trade sometimes hurts does not mean that trade barriers in the form of tariffs can help. Most efforts at protectionism are self-defeating, Samuelson says. US Politicians Critical of Chinese Trade Posture. Many politicians whose own fates are dependent on voter sentiments, are less sanguine. Liberal Senator Charles Schumer D - New Yorkand Conservative Senator Lindsey Graham R - South Carolinawith broad-based bi-partisan support reflective of popular sentiment, introduced the China Currency Bill S.

The pro-free-trade Senate leadership attempted to have the amendment struck down, but was defeated by an overwhelming margin of Similar bi-partisan legislation was also introduced in the US House of Representatives by Reps.

Duncan Hunter R - CA and Tim Ryan D - OH. Chinese Export Revenue Go es To Foreign Investors. In the past decade, Chinese exports have increased 6. And even that dollar goes to the Chinese central bank to buy US Treasuries to finance the US debt economy, and cannot be spent inside China. This is why economists say Chinese GDP growth is supporting the global economy, which is dominated by the dollar economy. China is significant not only because it is the most populous nation with the fastest growing economy, but also because it is one of the poorest and thus has much prospect and room for basic growth with a huge appetite for imports.

Blessed with a long history of a rich culture, the economic revival of China can proceed at lightning speed and bring with it a new world of plentitude. The whole world now wants to trade and interact with the Chinese economy because under the current trade regime, trade with China benefits the foreign trading partners more than its does China itself. The question of the exchange value of the Chinese yuan in relation to the US dollar is a minor technical issue within the peculiar regime of dollar hegemony.

It has no fundamental macroeconomic significance. The day will come when this technical issue will become mute, when the Chinese yuan will naturally become a reserve currency for trade with Chinareflecting the reality of changing global trade patterns.

What is not generally recognized is the fact that Chinese monetary and trade policies are defensively driven by US policy. Proposed tariffs against Chinese goods and other forms of protectionism would significantly lower US living standards and would not save jobs in the USGreenspan told members of the Senate Finance Committee. Greenspan testified that he was aware of no credible evidence that revaluing the Chinese currency would significantly increase manufacturing activity and jobs in the US.

Many of the goods sold in the U. If the yuan, and therefore Chinese labor, were more expensive in dollar terms, those goods would be assembled elsewhere in Asiaat no net benefit to the USGreenspan said. Few, if any, jobs in the US would be protected. In this respect, CAFTA Central America Free Trade Agreement is linked to the China trade issue. Greenspan credited the relatively free flow of goods and services across national borders with enabling the global prosperity of the last six decades.

For lawmakers worried about US job losses, Greenspan recommended that they bolster job retraining programs and improve education in middle and high schools. Instead, China will move to a managed float of the RMB, pegging the currency's exchange value to a basket of currencies. In an effort to limit the amount of volatility, China will not allow the currency to fluctuate by more than. The basket will be composed of the euro, yen and other Asian currencies as well as the dollar.

The valuation shift to a basket of currencies is only a superficial move because the exchange rate of the dollar in an efficient foreign exchange market already reflects the equilibrium of the exchange rates of major currencies around the dollar. This equilibrium is the function of the market by definition, sustained by the complex workings of hedging through derivative trading with the dollar as the base.

By a managed float for its currency, China will enjoy the flexibility of leading the market, but it cannot go against the market as soon as the yuan becomes freely convertible, which according to current policy intention, may not become reality for some years. Companies such as Wal-Mart and Motorola, which buy from Chinaand LVMH Moet Hennessy Louis Vitton, which sells to Chinaface opposite impacts from a stronger yuan, with Wal-Mart losing on higher import cost and LVMH gaining on more Chinese purchasing power for foreign goods.

Non-deliverable forwards NDF have been an instrument of choice for professional currency traders. The NDF market allows traders to speculate on the value of currencies whose fluctuation is restricted by government fiat.

Following the news of the yuan revaluation, NDF traders were taking bets for further revaluation ranging from 2. In Singaporeone day after the news, one-year RMB NDF rose to about 7. Big international banks routinely act as counterparties between opposing bets to generate risk-free fees. Merrill Lynch forecast that the renminbi would rise to 7. Other analysts were more conservative.

Bank of America saw the reminbi being held at 8. When market participants disagree, the market becomes active. China Daily warned that expectation of a revaluation bigger than the 2. As this article is being written, the flood of hot money into China and Hong Kongwhich had begun some two years earlier when the market was anticipating eventual adjustments, has continued to accelerate.

The central bank later clarified that the remark did not mean there might be more adjustments to come. China is caught between market pressure and US political pressure in that moves to quell market pressure to push up the yuan will increase political pressure from the US to push up the yuan. China should stay quiet to avoid agitating more US political reaction and let actions deliver the message to the market.

The most effective way to manage the market is to make speculators lose money. Despite its recent rhetoric, the Chinese central bank itself is widely seen in Beijing as favoring a more substantial revaluation than was announced, and is suspected of accepting the 2. Yuan credit and interest rates are mostly administered by Chinese government policy which is normal for a national banking regime.

In such a regime, state-owned enterprises are not affected by the short-term market cost of loans. Also, the large foreign-exchange inflows into China affect the flexibility of PBoC to set interest rates to manage the credit needs of the domestic economy.

A stable currency has macroeconomic merits, but a currency kept below market expectations produces inflationary fallouts. But China is still in a transition stage between national banking and central banking. Whether a shift to a central banking regime in the context of global dollar hegemony is good for an economy that cannot print dollars at will is another question. A central banking regime for China serves only the interest of foreign capital denominated in dollars.

In market economies operating under central banking, interest rate is the main means by which central bankers manage aggregate demand, fight inflation and reining in unruly financial markets when the economy overheats, and fighting deflation and stimulating economic activities when the economy slows. This approach remains controversial as it can lead to liquidity traps under certain conditions, as in Japan in the last decade, or debt bubbles as in the US in recent years.

Yet most neo-liberal monetary economists continue to view interest rate policy as the best tool for managing aggregate demand in market economies. In the late s, China used fiscal policy to stimulate the stalled economy and to fight deflation. Treasury-bond issuance rose, and in the central bank encouraged Chinese banks to lend more, leading to huge credit expansion and an investment boom that the government now is trying to slow down.

Fiscal stimulant worked in China and not in Japan because the Chinese economy had not yet been saturated with built infrastructure, as was the case in Japan where new unneeded expressways were built that led to points of no economic significance. Fiscal spending in Chinaeven if indiscriminately applied, while suffering from less than optimum effectiveness, still produced positive impacts on the vastly underdeveloped Chinese economy.

Year-on-year annual M2 growth in China hit Bythe government was compelled to curb over-investment and speculation, particularly in the real-estate sector. Over-investment was creating overcapacity, causing a new wave of nonperforming loans for the banks. As monetary policy had repeatedly proved ineffective in directing market trends, raising rates was decidedly not a policy option, as such broad-brush measures would hurt the healthy sectors along with the speculative sectors. Instead, the government administratively managed its fiscal stimulus and imposed planned-economy measures.

National Development Reform Commission NDRC approval was required for all new investment, with some on-going projects suspended in midstream. Control over land development rights was tightened, and banks were instructed to curb their lending selectively, instead of responding to market demand by lending only to borrowers who were prepared to pay high interests.

Instead of raising interest rates which would put all projects in distress, the government chose to selectively turn off the funding source for undesirable projects. The PBoC was allowed to raise bank rates just once, in Octoberby 27 basis points, perhaps just enough to signal rates could rise. Apart from that, it has played a subsidiary role in macro-policy over the past 18 months.

With that experience, one would think that Chinese policymakers would learn the lesson of the ineffectiveness of central banking with its fixation on keeping banks profitable at the expense of the economy, and revert back to a national banking regime to support industrial policy for effective development of the Chinese economy. State-owned enterprises will be forced to manage their operations with an eye on quarterly earnings for repayment of short-term loans, preventing them from making long-range plans for growth.

They are subjected to the unpredictable short-term fluctuation of the market cost of funds, while they are still at a stage of undercapitalization which puts them at structural disadvantage in the global arena of market capitalism. As more state-owned enterprises are privatized and sold off at fire sale prices to foreign competitors, political pressure to keep rates low for the remaining state-owned enterprises wanes, making them more vulnerable to foreign takeovers.

More private companies are accessing credit in the open market and be rate sensitive in the business decisions. Recent upstream imported raw materials inflation is pushing interest rates up and slowing economic expansion generally, rather just in overheated sectors. In a global regime of financial liberalization based on dollar hegemony, it is not wise for a nation such as China, which lacks capital denominated in dollars, to expose its economy to market capitalism, a game in which those with less capital always loses.

As the yuan is not a freely convertible currency, there is no market basis to judge if the yuan is undervalued or overvalued.

The trade imbalance, as many economists has pointed out, is a complex phenomenon of which exchange rate is only a last resort compensating factor.

Besides, the US-China trade imbalance is only nominally in favor of Chinawith China earning a foreign fiat currency that can only be spent in the dollar economy and not the yuan economy. And for a currency that is not freely convertible, fixed exchange rate has no basic effect on trade balance except as a positive stabilizing force against price volatility. Usually, undervalued currencies, even if nor freely convertible, cause domestic inflation, thus making export prices higher even if the exchange rate remains unchanged.

This is because a cheap currency means more exports than imports, and the resulting current account surplus causes net inflows of money from overseas. These inflows add to the monetary base, allowing banks to lend the added money out to new customers.

Prices will rise as a result of more money chasing goods and services which expand at a slower rate than money supply expansion. Domestic inflation translates into higher export prices. But for Chinathe bulk of the profit from higher export prices goes to pay unlimited returns on foreign capital, not to higher domestic wages. Even then, there are domestic economic benefits from this inflow of funds if it goes to facilitating domestic economic expansion beyond the export sector.

It is a classic example of the poor lending their meager wages received from the rich back to the rich to enable the rich to make the next pay day, with the rich demanding that the money they pay the poor should buy less in the neighborhood where the poor live. The US is confusing the spread of freedom with an expanding collection of freebies. This came on an accelerated basis, meaning the rate of inflow increased toward the end of the year. The PBoC uses open market operations, mainly selling PBoC bills, to deal with these inflows.

These bills allow the PBoC to take high-power money from the commercial banks in exchange for bills that the banks cannot re-lend to customers, thus stopping the creation of new money by banks issuing loans on partial reserve requirements.

This was the equivalent of In addition, the PBoC issued In total, the PBoC sterilized China Raises Banks Reserve Ratio. Another tactic the PBoC used to control forex reserve inflows was higher required reserve ratios, RRR which banks are required to place with the central bank in proportion to their deposits. The PBoC also issues guidance to banks on which sectors and regions to lend and which to restrict credit, less to cement plants and real estate, and more to agriculture and small- and medium-sized enterprises and less to the coastal regions and more to the interior west.

Investments in PBoC paper and most other forms of debt, which carry no capital requirement, are now preferable to loans to corporate borrowers. This is causing banks to draw back lending. Faced with massive forex inflows, fast-growing bank deposits and limited profitable investment options, commercial banks are eager buyers of PBoC paper. The overnight borrowing rate in the market is now hovering around 1. For a more in-depth analysis of the exchange rate issue, see: China steady on the peg.

The revaluation move by China is basically a political gesture to appease US pressure on an allegedly over-valued Chinese currency against the dollar. The market was expecting a lot more from China.

Key Asian currencies will now float with the RMB yuan. As global trading began after the initial news of the yuan revaluation, the dollar was falling against other major currencies. The dollar dropped to Minutes after China announced its decision on the evening news, Malaysia said it was also un-pegging its currency, the ringgit, from the dollar, replacing it with a managed float in a move similar to that of China.

That left Hong Kong as the only major economy in Asia that pegs its currency to the U. As long as the yuan is still not freely convertible, Hong Kong can keep its currency peg to the dollar, albeit at a high cost. Eventually, as the yuan fluctuates against the dollar, the HK peg to the dollar will create transactional inefficiencies and instabilities and possibly new manipulative attacks from hedge funds.

In South Koreathe news was received in stride, and government officials said they didn't expect it to have a big impact on the nation's economy, the third largest in Asia following Japan and China. Philippine central bank Governor Amando Tetangco said the move was expected to strengthen all regional currencies, including the Philippine peso. The yuan will now be allowed to trade in a tight 0. Under the new system, the yuan immediately jumps to 8. But once off this starting block, it could, in theory anyway, rise or fall as much as 0.

Each step is tiny, but over time they add up. Yet gradualism is a key to stability. China Revalue RMB to Appease US Pressure. A deal was worked out months ago to postpone a vote in exchange for a Senate hearing to be followed by a token gesture by China, so everyone could claim they won something without any real changes.

China has now officially adopted the Singapore manage float model rather than the HK currency-board model. This is a significant move. The smug Hong Kong Monetary Authority has been emanating false pride of superior monetary wisdom by stubbornly hanging on to its currency board arrangement pegged to a volatile dollar mistaken as a stable currency.

The blind error left by the parting British colonial rulers launched Hong Kong into a bubble economy when the dollar was undervalued throughout much of the s that burst with unprecedented disaster in as part of the Asian financial crisis a day after the British left Hong Kong. The same currency board regime kept the Hong Kong economy from recovering for more than seven years after when Hong Kong was returned to Chinauntil the dollar began to fall in During that painful period,the Hong Kong equity market was exposed to earn money filling survey attacks by hedge funds in that required massive government incursion in the market to foil.

The Singapore dollar is managed against an undisclosed basket of currencies of its main trading partners and competitors. It allowed Singapore to devalue its currency immediately after the Asian financial crisis to moderate unnecessary pain on its economy.

John Williamson, the neo-liberal economist who coined the term Washington Consensus, is credited with developing the BBC model in the s. The Monetary Authority of Singapore asserts that the BBC policy has given it flexibility in responding how to earn pocket money wikihow changes in local, regional and global conditions to maintain export competitiveness and control inflation. The composition of the currency basket is revised periodically to take into account changes in trade patterns.

The secret disable sleep mode windows xp registry band is also ig forex reviewed how to make money developing wordpress plugins ensure it remains consistent with economic changes, with adjustments every six months if needed.

Singaporewhose currency was first pegged to the US dollar and then floated in the s, chose the BBC regime because of a close link between exchange rates and interest rates in a small bmw performance parts miami open economy.

Whether the BBC system will work for a gigantic, relative closed economy like China remains an open question. The city-state of Singapore has since guided monetary policy through exchange rates instead of directly adjusting interest how do you transfer money from paypal to bank account. This in theory has the advantage of insulating borrowers from interest rate risks.

But for an international finance center, exchange rate risks are equally problematic. In recent years, derivatives have been the instruments of choice in hedging both interest rate and foreign exchange rates. But there are several obvious differences. The bloodstock metal market significant is that the yuan is not freely relative strength index forecasting and trading strategies. The currency trading bands in China and Malaysia are narrower than in Singaporewhich means smaller currency movements.

The fundamental difference for China lies in the option of administrative measures to manage both interest rates and exchange rates, with consistency between the two less critical because the yuan remains not freely convertible. The International Monetary Fund has listed about 40 countries that use some type of managed float system. But Singapore officials say their system is in some ways unique since it is used also to control monetary policy, while policy statements provide a clear indication to the markets of where the currency is headed.

Some neo-liberal shift forex llc have argued that a BBC regime could provide the basis for the how does tv programs make money ukash adoption of a common Asian currency.

Supporters of floating exchange rates argue that Singapore has strengths, such as a well regulated banking and financial system and large fiscal reserves that many other countries do not have to support a BBC system.

A managed float system for a freely convertible currency largely rests on gaining the confidence of the markets.

Only if other macroeconomic policies are consistent with a managed float will it be a success. Many economists and market participants believe China faces a potential challenge in introducing a managed float since a small revaluation would continue to attract speculative foreign capital in anticipation of further currency appreciation. As a result, China may have to widen its currency trading band eventually to gain market acceptance.

Reality shows a very different picture. High dollar interest rates will lift the exchange value of the dollar, pushing to problem back to square one. There is a possibility that US consumer spending will hold in dollar terms, but the actually amount of goods sold will be reduced, lowering US living standards while not reducing the US trade deficit. The dollar value of US-China trade may remain the same, with more Chinese goods available for export bloodstock metal market other countries or staying in the Chinese domestic market, raising Chinese living standards, and shrinking the relative size of the US economy.

And if the US Federal Reserve further accommodates consumer credit to absorb the rise in import prices to prevent a real reduction in consumer product sales, the US trade deficit may actual increase while US standard of living remains unchanged. Even if US trade deficit with China should moderate, it would only lead to a corresponding reduction in US capital account surplus with China. With a slower growth of Chinese holdings of dollars, China will buy less US sovereign debt, pushing US interest rates higher, possibly bursting tradersway binary options review already precarious US debt bubble.

With a yuan pegged to a basket of currencies of which the dollar is only one among several, China will have less of a need to hold dollars. With a drop in Chinese export to the Making money with turnkey websitesChina may see its ability to buy US sovereign debt reduced.

And with the uncertainty of the exchange values of the dollar against the other volatile currencies in the Chinese basket, the market price of the yuan may at times fall as well as rise against pivot point indicator metatrader 4 dollar.

If market forces should act against the yuan and push the dollar higher against the yuan, US political pressure on letting the market determine the value of the yuan would have proved to be counterproductive toward its goal of a stronger yuan against the dollar.

And the adverse making money with turnkey websites the misguided cure can be significantly worse than the current malady.

For one thing, with a stronger dollar, US assets not directly related to import prices, such as real estate, will suffer a price collapse, adding a last straw effect to the already precarious housing bubble. A strong yuan may not be a blessing for the US economy. On the Chinese side, a stronger yuan will have to be compensated with lower Chinese wages, or a slowdown of rising wages, in order that Chinese exports remain price competitive and profitable.

Lower Chinese wages will slow the development of a vibrant Chinese domestic market for US exports to China. The better option would be to let the peg stand, and push China to raise wages. In a global market dominated stock brokers central coast nsw dollar hegemony, it is idiotic to expect that the complex problems of the US economy can be solved by the exchange value of one single foreign currency.

Dollar hegemony by definition eliminates the impact of the exchange value of the dollar on the dollar economy. Just as the Plaza Accord on the Japanese yen destroyed the Japanese export economy and brought stagflation to the US that led to the crash, forcing the yuan off its decade-old dollar peg now may well be the spark that will ignite a raging forest fire in the US debt-infested economy in the coming years.

US geopolitical hostility toward China will manifest itself first in trade friction, which will lead to a mutually recriminatory trade war between the two major economies that will attract opportunistic trade realignments among the traditional allies employer deduction stock options the US.

US multinational corporations, unable to steer US domestic politics, will increasingly trade wyndham stock options China through their foreign subsidiaries, leaving the US economy with even less jobs, and a condition that will further exacerbate anti-China popular sentiments that translate into more anti-free-trade policies generally and anti-China policies specifically.

This in turn will validate US apprehension of a China threat, increasing the prospect for inevitable armed conflict. A war between the US and China can have no winners, particularly on the political front.

Even if the US were to prevail militarily through its technological superiority, the political cost of military victory will be so severe that the US as it currently exists will not be recognizable after the conflict and the original geopolitical aim behind the conflict would remain elusive, as the Vietnam War and the Iraq War have demonstrated.

By comparison, the Vietnam and Iraq conflicts, destructive as they have been on US social fabric, are mere minor scrimmages compared to a war with China. US policymakers have an option to make China a friend and partner in learning how to invest in stock market peaceful world for the benefit of all agencies issue binary options investor alert. To do so, they must first recognize that the az stockbroker fraud lawyers can operate on the principle of plentitude and that prosperity is not something to be fought over by killing consumers in a world plagued with overcapacity.

Even today, the formation of regional integration frameworks is at constantly risk of dominant states exploiting the creation of ideologically preferred regional frameworks in which preeminent powers can exercise exclusive imperialistic influence over other weaker member states in a virtual form of synthetic empire building. Exclusion of a particular country does not mean that the excluded country will perpetually remain outside the framework.

In fact, TPP holds the door ajar for positive engagement with Chinashifting from the current balancing strategy to purposeful engagement, holding better behavior as admission requirement. The beginning step of such imperialistic policy is the establishment of a neoliberal regional framework from which a target country is conditionally engaged and proactively encouraged to reform in the direction courses in stock trading uk by the hegemonic power.

Regional integration can be a trap for creeping ideological empire building by dominant member states. Through international trade denominated in dollars, the US has been waging an imperialistic trade war on its trading partners, using dollar hegemony as weapon.

The productivity boom in the US in the past three decades was as much a mirage as the money that drove the apparent boom. There was no productivity boom in the US in the final two decades of the 20th century; only an import boom. What's more, this boom was driven not by the spectacular growth in productive activities in the American economy; it was driven by debt borrowed from the low-wage countries producing wealth for export to US markets, paid for with unlimited supply of fiat dollars that the US can print at will with no adverse consequence because these fiat dollars has no place to go except return to the US to buy US sovereign debt instruments, i.

Thus the US current account deficit caused by imports is extinguished by capital account surplus bulging with returned trade deficit dollars. This economic boom made possible US currency hegemony, fueled by payments of tribute from vassal states kept perpetually at the level of subsistence poverty by their own addiction to exports for paper forex signals review peace army. It is the economics of empire in the Age of Free Trade.

Such market equilibrium, if distorted by regulatory regimes in the name of the common good of society, will in fact be harmful to economy, causing it to fail in its function of allocation resources efficiently. This fanatic view is summed up by Margaret Thatcher's infamous declaration that there is no such thing as society in a market economy. The fact is that in a Westphalian World Order of sovereign states that has been functioning since its creation inall sovereign nations have managed to retain their sovereign prerogative of command on their own economies until economic globalization through international trade driven by the integration of markets that all nations must develop trading economies to remain prosperous and strong.

As a process, regional how much does a stockbroker at scottrade make aims to reduce barriers of international trade within a region, such as removal or reduction of tariffs and adoption of a common currency for trade.

The process also orchestrates multilateral governmental support from all sovereign states in a region for joint tackling of common regional problems that transcend national borders, such as protection of the environment, maintenance of public health, safeguard of cross-border water purity and supply, setting standards for food safety, policing of transnational crime, particularly illegal cross-border traffic of narcotic drugs, undocumented immigration, financial fraud and illicit money laundering.

President George W Bush declares that "open trade is a moral imperative" to spread democracy around the world. Administratively, the White House Council of Economic Advisers is organizationally subservient to the National Security Council. The exchange rate policy of the dollar is set by the US Treasury, not the Federal Reserve, the central bank, and certainly not set by the market beyond a safe range.

Phyllis Schlafly, syndicated conservative columnist, responded to the President three weeks later in an WSJ op-ed article: Free Trade is an Economic Issue, Not a Moral One.

Jesus did not tell us to follow Him along the road to free trade. Nor is there anything in the U. Constitution that requires us to support free trade and to abhor protectionism. In fact, protectionism was the economic system believed in and practiced by the framers of our Constitution. Protective tariffs were the principal source of revenue for our federal government from its beginning in until the passage of the 16th Amendment, which created the federal income tax, in Despite the ascendance of neo-imperialism in Best tips for day traders foreign policy, protectionism remains strong in US political culture, particularly among conservatives and in the labor movement.

The sole superpower views the world as its oyster, and global trade is to replace foreign trade in a global economy the rules for which are set by a World Trade Callya sms option 120 kündigen dominated in the hegemonic dollar as reserve currency freely printed at will by the sole superpower.

Market fundamentalism helps no economy. It helps only gangs of select elites in economies that subscribe to it. It is another tool for building a new form of empire. Washington Consensus is a term coined in by John Williamson of the Institute for International Economics to summarize the synchronized ideology of Washington-based establishment neoliberal economists, reverberated around the world for a quarter of a century as the true gospel of reform indispensable for achieving growth in a globalized market economy.

Economic neoliberalism has turned most trade-dependent nations into failed states. Please see my AToL article: World Order, Failed States and Terrorism - PART 1: It promotes macroeconomic control, trade openness, pro-market microeconomic measures, privatization and deregulation global stock market administration pty/ltd support of a dogmatic ideological faith in the market's ability to solve all socio-economic problems more efficiently, and to assert a blanket denial of an obvious contradiction between market efficiency and poverty eradication.

Under monetarism, financial capital growth is to be achieved at the expense of human capital growth. Sound money, undiluted by inflation, imposed on all by US monetarists who ironically are the most flagrant violators of the sound money principle, is to be maintained by keeping wages low through structural unemployment and cross-border wage arbitrage.

Pockets of poverty in the periphery are the necessary price for prosperous centers in the global economy. All economic activities are to be governed by profit incentive. Such dogmas grant unemployment and poverty, conditions of economic failure, undeserved conceptual respectability.

Structural unemployment then becomes the vaccine against inflation that would lead to massive unemployment. Pockets of poverty become the venue to contain the systemic spread of poverty in the whole economy. State intervention has come to focus mainly on reducing the market power of labor in favor of market power of capital in a blatantly predatory market mechanism.

The set of policy reforms prescribed by the Washington Consensus is composed of 10 propositions:. These propositions landed the world economy in recurring economic and financial crises every decade, each crisis bigger than the previous one, until the current crisis that began in mid which is now being described as the crisis of a century.

The creation of the World Trade Organization WTO on January 1, was a crucial reform landmark in international trade since the end of Second World War. It also reversed the failed attempt in stock market crash president hoover create an International Trade Organization ITO.

In Decemberrepresentatives of 15 sovereign nations held talks to reduce and set customs tariffs in the great depression stock market game era.

With the Second World War only recently ended, these sovereign nations wanted to give a timely boost to liberalization of international trade, and to erase the lingering legacy of counter-productive protectionist bloodstock metal market of the early which remained in place at the end of the war.

The group had expanded to 23 sovereign states by the time the deal was signed on October 30, The 23, part of the larger group negotiating the ITO Charter, accepted some of the trade rules of the draft Protocol of Provisional Application in order to safeguard the result of the tariff concessions they had negotiated. They spelled out how they envisaged the relationship between the new GATT and the ITO Charter, but they also allowed for the possibility that the ITO might not be created, which turned out to be the case.

The Havana conference began on November 21,less than a month after GATT came into existence. The ITO Charter was finally agreed to in Havana in Marchbut ratification in many of the 23 dynamic stock market integration driven by the european monetary union legislatures proved impossible.

The fatal blow came from most serious opposition in the US Congress, even though the Truman Administration had been one of the driving forces behind the effort to form ITO. Inthe US government announced that it would not continue to seek Congressional ratification of the Havana Charter, rendering the ITO was effectively dead. GATT then was left to be the only multilateral; instrument governing international trade from until the WTO was established in The WTO governs global rules of trade between nations.

Its main function is supposed to ensure that trade flows as smoothly, predictably and freely as possible. In fact, the effect of WTO rules can be manipulated by the dominant member to misuse as empire building algorithms. During that period of 47 years, the world trading system operated under GATT, salvaged from the aborted attempt to create the ITO.

From tothe General Agreement on Tariffs and Trade GATTa provisional agreement and organization, provided rules for world trade and presided over periods of high growth rates in international commerce. IMF loans are short and medium term and funded mainly by the pool of quota contributions that its members provide.

IMF staff are primarily economists with wide experience in macroeconomic and financial policies. The mandate of the World Bank is to promote long-term economic development and poverty reduction by providing putty command line options password and financial support to help countries reform particular sectors or implement specific projects, such as building schools and health clinics, providing clean water and electricity, fighting disease, and protecting the environment.

World Bank assistance is generally long stock market coffee beans and is funded both by member country contributions and through development bond issuance in the credit market. World Bank staff are generally specialists in particular issues, sectors, or techniques in development.

The objective is to help low-income countries achieve their development goals without creating future debt problems. While PRSPs continue to underpin the Do put options expire worthless Initiative, the World Bank adopted in July a new approach to country engagement that no longer requires PRSPs while focusing on george marechal stock market elimination of extreme poverty and promotion of shared prosperity.

The Fund continues to rely on the PRSP to provide the link between a Fund-supported program and the poverty reduction and growth objectives of a member country. Monitoring progress on the MDGs. According to the final MDG report launched on July 6, by United Nations Secretary-General Ban Ki-moon, the MDGs have produced the most successful anti-poverty movement in history and will serve as the jumping-off point for the new sustainable development agenda to be adopted this year.

The Millennium Development Goals Report found that the year effort to achieve the eight aspirational goals set out in the Millennium Declaration in was largely successful across the globe, while acknowledging shortfalls that remain. The data and analysis presented in the report show that with targeted interventions, sound strategies, adequate resources and political will, even the poorest can make progress. Goals and targets work. The MDG report confirms that goal-setting can lift millions of people out of poverty, empower women and girls, improve health and well-being, and provide vast new opportunities for better lives.

Only two short decades ago, nearly half of the developing world lived in extreme poverty. The number of people now living in extreme poverty has declined by more than half, falling from 1. The world has also witnessed dramatic improvement in gender equality in schooling since the MDGs, and gender parity in primary school has been achieved in the majority of memahami pergerakan harga forex. More girls are now in school, and women have gained ground get 5k monthly income using put option spreads ebook parliamentary representation over the past 20 years in nearly 90 per cent of the countries with data.

The average proportion of women in parliament has nearly doubled during the same period. The rate of children dying before their fifth birthday has declined by more than half, dropping from 90 to 43 deaths per 1, live births since The maternal mortality ratio shows a decline of 45 per cent worldwide, with most of the reduction occurring since Inequalities persist The report highlighted that significant gains have been made for many of the MDG targets worldwide, but progress has been uneven across regions and countries, leaving significant gaps.

Conflicts remain the biggest threat to human development, with fragile and conflict-affected countries typically experiencing the highest poverty rates. New Sustainable Development Goals SDGs will replace the MDGs in as the basis for the post development agenda. The Fund and the Bank will support the implementation of the new SDGs and contribute to monitoring progress toward their achievement. The IMF and the World Bank are also working together to make financial sectors in member sovereign states resilient and well regulated.

Over 50 countries participated in the failed negotiations to create an International Trade Organization ITO as a specialized agency of the United Nations.

The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services. The aim was to create the ITO at a UN Conference on Trade and Employment in HavanaCuba in But by the s the GATT system needed a thorough overhaul. The Final Act of the Uruguay Round was signed by participants in MarrakeshMoroccoon April 15,marking the formal end of the most far-reaching liberalization in world trade history.

It lasted 2, days, cutting tariffs, opening markets and bringing new areas of cross-border economic activity under international rules for the first time. In the early years, the GATT trade rounds concentrated on further reducing tariffs.

Tape reading stock trading, the Kennedy Round in the mid-sixties brought about a GATT Anti-Dumping Agreement and a section on development. The Tokyo Round during the seventies was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system.

The eighth, the Uruguay Round ofwas the last and most extensive of all. It led to the WTO and a new set of agreements. The Tokyo Round lasted from tohow to calculate profit in forex trading countries participating. In other issues, the Tokyo Round had mixed results. Nevertheless, a series of agreements on non-tariff barriers did emerge from the negotiations, in some cases interpreting existing GATT rules, in others breaking entirely new ground.

In most cases, only a relatively small number of mainly industrialized GATT members subscribed to these agreements and arrangements. Codes were not multilateral, but they were a beginning. Several codes were eventually amended in the Uruguay Round and turned into multilateral commitments accepted by all WTO member states.

InWTO members agreed to terminate the bovine meat and dairy agreements, leaving only two. GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable.

The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform. But all was not well. As time passed new problems arose. The Tokyo Round in the s was an attempt to tackle some of these new problems, but achievements were limited.

This was a sign of difficult times to come in the global trade system. High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with 1 long term binary options strategy and to embark on a subsidies race to maintain their holds on agricultural trade.

The problem was not just a deteriorating trade policy environment. By the early s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the s. For a start, world trade had become far more complex and important than four decades before.

The globalization of the world economy was underway, trade in services, not covered by GATT rules, was of major concern to increasing more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world binary options strategies for directional and volatility trading download trade.

GATT was ill equipped to handle trade in agriculture Loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade were unsuccessful. GATT originated with make money signs your car to advertiser wanted for pepsi meeting of 22 nations meeting in in GenevaSwitzerland. Bythere were member nations, with another 30 countries ebook on options trading admission.

The detailed commitments by each country to limit tariffs on particular items by the amount negotiated and specified in its tariff schedule is the central core of the GATT system of international obligation. The obligations relating to the tariff schedules are contained in Article II of GATT. For each commodity listed on the schedule of a country, that country agrees to charge a tariff that will not exceed an amount specified in the schedule.

It can, if it wishes, charge a lower tariff. The WTO heavily influences the workings of the GATT treaties through the efforts of various committees. Representatives of member countries of the WTO comprise the Council for the Trade in Goods Goods Councilwhich oversees the work of 11 committees responsible for overseeing the various sectors of GATT.

The committees focus on such issues as agriculture, sanitary measures, subsidies, customs valuation, and rules of origin. SPS measures stock broker hartford county at the protection of human, animal and plant life and health from preventable risks.

The WTO sets constraints on policies of member-states relating to food safety bacterial contaminants, pesticides, inspection and labeling of products as well as animal and plant health phyto-sanitation with respect to of pests and contagious diseases.

Three organizations set standards that WTO members states are obliged to adopt for SPS methodologies. As provided for in Article 3, the three are:. World Organization for Animal Health OIE and. Secretariat of the Forex fibonacci tutorial Plant Protection Convention IPPC.

The TBT emerged from the Tokyo Round and was negotiated with the aim of ensuring non-discrimination in the adoption and implementation of technical regulations and standards.

The TBT exists to ensure that technical regulations, standards, testing, and certification procedures do not create unnecessary obstacles to trade. The agreement prohibits technical requirements created in order to limit trade, as opposed to technical requirements created for legitimate purposes such as consumer or environmental protection. In fact, its purpose is to avoid unnecessary obstacles to some good stock options crossword clue trade and to give recognition to all WTO members to protect legitimate interests according to own regulatory autonomy, although promoting the use of international standards.

The list of legitimate interests that can justify a restriction in trade is not exhaustive and it includes protection of environment, human and animal health and safety. All members of the WTO are signatories to the GATS. However, upon accession, Members may introduce temporary exemptions to this rule. While the overall goal of GATS is to remove barriers to trade, members are free to choose which sectors are to be progressively "liberalised", i. Members' commitments happens share options takeover governed by a "ratchet effect", meaning that commitments are one-way and are not to be wound back once entered into.

The reason for this rule is to create a stable trading climate. However, Article XXI does allow Members to withdraw commitments, and so far two members have exercised this option USA and EU.

In NovemberBolivia gave a notification that it will withdraw its health services commitments. Some activist groups consider that GATS risks undermining the ability and authority of governments to regulate commercial activities within their own boundaries, with the effect of ceding power to business interests ahead of the interests of citizens. For countries that like to attract trade and investment, GATS adds a measure of transparency and legal predictability. Legal obstacles to services how do you get money on yoville for free can have legitimate policy reasons, but can also be an effective tool for large scale corruption.

WTO member-government spokespersons are obliged to dismiss such criticism because of prior commitment to perceived benefits of prevailing commercial principles of competition and 'liberalization'. While national governments have the option to exclude any specific service from liberalization under GATS, they are also under pressure from international business interests to refrain from forex strategia sk any service "provided on a commercial basis".

Important public utilities such as water and electricity most commonly involve purchase by consumers and are thus demonstrably "provided on a commercial basis". The same may be said of many health and education services which are sought to be 'exported' by some countries as profitable industries. This definition defines virtually any public service as being "provided on a commercial basis" and is already extending into such areas as police, the military, prisons, the justice system, public administration, and government.

This process is currently far advanced in most countries, usually and intentionally without properly informing or consulting the public as to whether or not this is what they correctly registered for binary options brokers. WTO Members are however permitted to enter into such arrangements under specific conditions which are spelled out in three sets of rules:. Other non-generalized preferential schemes, for example non-reciprocal preferential agreements involving developing and developed countries, require Members to seek a waiver from WTO rules.

Such waivers require the approval of three quarters of WTO Members. This is attributable to the financialization of the economy, a term the describes not just expanding monetary value of the financial sector relative to the rest of the economy, but also the increasing central role of finance in economic activities, particularly the use of high leverage to create high returns on equity and the securitization of debt, turning liability into tradable asset as collateralized debt obligations CDO legitimate work from home calgary steady flow of debt service payments legitimized by deregulation.

This has led to under-pricing of risk in the financial system. The success or failure of the financial sector has a disproportionate impact on the rest of the economy, especially when the combination of too much speculation and too little regulation starts inflating and bursting bubbles.

And its returns flow almost exclusively to high earners. Please see my June 24, article: US Plunge Protection Team saving Free Market. PPT, officially created to make urgent financial and economic recommendations to various sectors of the economy in times of extreme market turbulence, consists a team of top policymakers and market regulators that include the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission.

The PWG Report raised alarm over excessive leverage and the opaque risks of the Over the Counter OTC derivatives market that trade outside of exchanges, but called for only one legislative change -- a recommendation that unregulated affiliates of brokerages be required to assess and report their financial risk to government regulators. Fed Chairman Greenspan dissented even on that vague recommendation on the ground that self regulation was preferred in financial markets.

Forbes Magazine in its August 24, issue headlined an article: Plunge Protection Team Out In Force This Morning, by Jay Somanev: One of the most important things in this sort of market environment is capital preservation. So, if you are buying or adding do it in small increments and save your firepower for the days and weeks ahead where you might see better prices than what we are seeing right now. More importantly, China is not just going to reverse and bounce back from here on out.

Four persons as appointed members of PPT can control all US financial markets through the use of dangerous and explosive derivatives.

They are empowered to risk the assets and retirement funds of forum earnings on binary options without attachments US citizens. Because of their manipulations, especially sinceUS financial markets are now based on speculative whims of a special fraternity of Federal Government derivatives dealers.

PPT works closely with all US exchanges and Wall Street banks, including large derivative risk players such as Citibank and JP Morgan Chase.

Few are aware of Executive Order signed by Ronald Reagan 60 seconds binary option trading March 18, which delegates "authority" to four individuals to trade derivatives since Executive Order - Working Group on Financial Markets - Mar.

The Working Group shall be composed of:. The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible. US financial markets showed an astounding - yet confounding and puzzling - rise for good stocks to invest in the stock market game 4 months proceeding the terrorist attack.

US media dubbed it a "patriotic rally". The European Press called it a "PPT rally". Obviously, US markets sterling canadian dollar exchange rate graph manipulated and rigged to an inflated value in advance of the disaster, after which there were at least three major long-term stock market rallies. In all 3 instances, when the markets opened, all the indices began to quickly plunge.

In each incidence, by early afternoon the markets were brought back from the brink of collapse to the surprise of everyone, including historical analysts.

On September 16,The Guardian reported "that a secretive committee The Fed, supported by the banks it regulates, will buy equities from mutual funds and other institutional sellers The Financial Times of London quoted an anonymous US Fed official who stated that one of the extraordinary measures "considered" in January was "buying US equities". On Feb 21,the Financial Times featured an article about Japan 's Stock Buying Body.

The article stated that " Plunge protecting the world's markets may be a hazardous pursuit. Another event that should have sent markets spiraling downward was the Enron corporate accounting scandals. Here is the timeline on Eron collapse:. December - Enron announces that Skilling, then president and chief operating officer, will succeed Kenneth Memahami graf forex as CEO in February Lay will remain as chairman.

Lay says, "We will cooperate fully with the SEC and look forward to the opportunity to put any concern about these transactions to rest. The company's auditor, Arthur Andersen LLP, says it has destroyed tons of Enron documents.

Skilling bws trading hours christmas day Fastow and Kopper invoke Fifth Amendment rights.

March 14 - Former Enron auditor Arthur Andersen LLP indicted for destroying Enron-related documents to thwart investigators. April 9 - David Duncan, Andersen's former top Enron auditor, pleads guilty to obstruction for instructing his staff to destroy documents as per company policy.

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June 15 - Andersen convicted. He identifies a string of partnerships designed to falsely portray Enron as financially healthy while enriching him, Fastow and others. They are fighting extradition. Yet an unprecedented across-the-board markets rally began on July 24, Once again, the European Press called it a "PPT rally".

In each of these events, a large "no-name" buyer in the futures market secretly plunged in and bought up massive quantities of derivatives through big banking groups such as JP Morgan. These were trades that were prepared to suffer losses not sustainable by the average market participant, neutralizing Keynes famous warning that market can stay irrational longer than investors can stay selling call options scottrade. PPT successfully brought the markets back each time from sharp correction despite the inflated financial realities that existed.

Each time, the large purchase of derivatives at a huge loss transformed developing market crises into a irrational rallies. Each time, such manipulation of the derivative market further inflated highly overvalued market indices to set up the next more severe crisis. Supranational Institutions in Regional Integration. Intergovernmentalism refers to a theory of regional integration originally formulated by Stanley Hoffmann of Harvard in his influential book: The New European Community: Decisionmaking and Institutional Change broker forex canada, co-edited with Robert O.

Keohane, Westview Press, As a broad political concept, Intergovernmentalism sees semi-autonomous state governments and their national governments in particular, as the primary actors in the integration process of a region. A monetary union, the eurozone, was established in and is composed of 17 member states. Intergovernmentalism represents a way for limiting the conferral of option trading message board upon supranational institutions, halting the emergence of common policies.

The term "supranational" occurs in an international treaty for the first time twice in the Treaty of Paris, 18 April In the treaty, it relates to a new democratic and legal concept. This Europe remains open to all nations. We profoundly hope that other nations will join us in our common endeavour. It was made to recall future generations to their historic duty of uniting Europe based on liberty and democracy under the rule of law. Thus, they viewed the creation of a wider and deeper Europe as intimately bound to the healthy development of the supranational or Community system.

It would have replaced the existing European Union treaties with a single text, given legal force to the Charter of Make that money lyrics a night at the roxbury Rights, and expanded Qualified Majority Voting into policy areas which had previously been decided by unanimity among member states. The Treaty was signed on 29 October by representatives of the then 25 member states of the European Union.

It was later ratified by 18 member states, which included referendums endorsing it in Spain and Luxembourg. However the rejection of the document by French and Dutch voters in May and June brought the ratification process to an end. Following a period of reflection, the Treaty of Lisbon was system trading company gazebo to replace the Constitutional Treaty.

This contained many of the changes that were originally placed in the Constitutional Treaty but was formulated as amendments to the existing treaties. Signed on 13 Decemberthe Lisbon Treaty entered into force on 1 December The EU has supranational competences, but it possesses real estate agents stockholm sweden competences only to the extent that they are conferred on it by its member states Kompetenz-Kompetenz.

The supranational Community moneymaker shake ya has a chamber for organized civil society including economic and social associations and regional bodies. Unlike states in a federal super-state, member states in a supranational Community retain ultimate sovereignty, although ig forex sovereignty is shared with, or ceded to, the supranational body.

Supranational agreements encourage stability and trust, because governments cannot break international accords at a whim. The supranational action may be time-limited. Supranational accords may be permanent, such as an agreement to outlaw war between the partners. A supranational union, because it is an agreement between sovereign states, is based on international myer chadstone easter trading hours 2014. The European treaties in general are different from classical treaties as they are constitutionalizing treaties, that is, they provide the basis for a European level of democracy and European rule of law.

The latter provides a higher degree of institutional scrutiny both via the Parliament and through the Consultative Committees. A supranational authority can have some independence from member state governments in specific areas, bunnings stafford opening hours new years day not as much independence as how much money does a nba basketball coach make a federal government.

Supranational institutions, like federal governments, imply the possibility of pursuing agendas in ways that the delegating states did not initially envision. Democratic supranational Communities, however, are defined by treaty and by law.

Their activity is controlled by a Court, democratic institutions and the rule of law. It is minimum lot binary option brokers with no to the individual governments to assure that they have full democratic backing in each of the member states. Because decisions in some EU structures are taken by majority votes, it is possible for a member state chores to make money for kids be obliged by the other members to implement a decision.

The states retain the competence for adding stock trader la jolla hours additional supranational competence.

European Integration originates from How to place a forex order Integration.

The six founder States, FranceItalyGermanyThe Netherlands, BelgiumLuxembourg agreed on the goal: They agreed about the means: They agreed on the European rule of law and a new democratic procedure. The five institutions besides the High Authority were a Consultative Committee a sahm how to make money representing civil society interests of enterprises, workers and consumersa parliament, and a Council of government ministers.

Ozforex yearly average rates Court of Justice would decide disputes coming from governments, public or binomial tree call option calculator enterprises, consumer groups, any other group interests or even an individual.

A complaint could be lodged in a local tribunal or how to calculate profit in forex trading courts, where appropriate.

Member states have yet to fulfil and develop the articles in the Paris and Rome treaties for full democracy in the European Parliament and other institutions such as the Economic and Social Committee and the Committee of Regions.

Schuman described supranational unions as a new stage in human development. It contrasted with destructive nationalisms of the nineteenth and twentieth centuries that began in a glorious patriotism and ended in wars. He traced wow blacksmithing make money beginning concept of supranationality back to the nineteenth century, such as the Postal The stock market cannot be beat caddyshack when youve got, and the term supranational is used around the time of the First World War.

Democracy, which he defined as 'in the service of the people and acting in agreement with it,' was a fundamental part of a supranational community.

However, governments only began to hold direct tiffany and co stock history to the European Parliament inand then not according to the treaties. A single electoral statute was specified in the treaty for Europe 's first community of coal and steel in Trade Origin of the EU.

Today supranationalism only exists in the two European Communities inside the EU: Supranational Communities provide powerful but generally unexploited and innovatory means for democratic foreign policy, by mobilizing civil option binary options easy money to the democratically agreed goals of the Community.

The first Community of Coal and Steel was agreed only for fifty years. Opposition, mainly by enterprises which had to pay a small European tax of less than one percent and government ministers in the Council, led to its democratic mandate not being renewed.

Its jurisprudence and heritage remains part of the European Community system. The supranational Community method came under attack, not only from de Gaulle but also from other nationalists and Communists. In the post-de Gaulle period, rather than holding pan-European elections under a single statute as specified in all the treaties, governments held and continue to hold separate national elections for the European Parliament. These often favour the major parties and discriminate against smaller, regional parties.

Two pillars governing External policy and Justice and Home affairs are not subject to the same democratic controls as the Community system. In the Lisbon Treaty and the earlier nearly identical Constitutional Treaty, the democratic independence of the five key institutions is further blurred. This moves the project from full democratic supranationalism in the direction of not just intergovernmentalism but the politicization of the institutions, and control by two or three major party political organizations.

The Commission defines key legal aspects of the supranational system because its members must be independent of commercial, labor, consumer, political or lobby interests Article 9 of the Paris Treaty. The Commission was to be composed of a small number of experienced personalities, whose impartiality was beyond question. The idea in the Constitutional and Lisbon Treaties is to run the European Commission as a political office.

The original concept was that the Commission should act as a single impartial college of independent, experienced personalities having public confidence. One of the Communities was defined in the treaty with a Commission with fewer members than the number of its member states.

Thus, the members of the Commission are becoming predominantly party-political, and composed of sometimes rejected, disgraced or unwanted national politicians.

They came from diverse liberal professions, having made recognized European contributions. Governments also wish to retain the secrecy of their deliberations in the Council of Ministers or the European Council, which discusses matters of the most vital interest to European citizens. While some institutions such as the European Parliament have their debates open to the public, others such as the Council of Ministers and numerous committees are not.

The European Union, the North American Free Trade Agreement, the Association of Southeast Asian Nations, the South Asian Association for Regional Cooperation, the Common Market of the South MERCOSURthe Australia-New Zealand Closer Economic Relations Agreement, and so on. The surge in these agreements has continued unabated since the early s.

Makeup artist jobs lancashire Julya total of had been notified to the WTO and its predecessor, GATT. A committee is keeping an eye on developments.

Regional agreements have allowed groups of countries to negotiate rules and commitments that go beyond what was possible at how much money does drug trafficking make time multilaterally. In turn, some of these rules have paved the way for agreement in the WTO. The groupings that are important for the WTO are those that abolish or reduce barriers on trade within the icici bank forex account. The WTO agreements recognize that regional arrangements and closer economic integration can benefit countries.

It also recognizes that under some circumstances regional trading arrangements could hurt the trade interests of other countries. In particular, the arrangements should help trade flow more freely among the countries in the group without barriers being raised on trade with the outside world. In other words, regional integration should complement the multilateral trading system and not threaten it.

Article 24 says if a free trade area or customs union is created, duties and other trade barriers should be reduced or removed on substantially all sectors of trade in the group. Non-members should not find trade with the group any more restrictive than before the group was set up. Other provisions in the WTO agreements allow developing countries to enter into regional or global agreements that include the reduction or elimination of tariffs and non-tariff barriers on trade among themselves.

Its purpose is to examine regional groups and to assess whether they are consistent with WTO rules. The committee is also examining how regional arrangements might affect the multilateral trading system, and what the relationship between regional and multilateral arrangements might be. Eurozone Sovereign Debt Crisis. The Eurozone sovereign debt crisis is rooted in the dysfunction of a monetary union without political union.

The fundamental cause for the crisis lies in the arrangement under which the euro is legal tender for all member states in the eurozone, yet monetary policy for the eurozone is the exclusive responsibility of the European Central Bank, for which common representation of all member states, governance and fiscal policy union in support of currency union does not formally exist. This essentially makes sovereign debt of eurozone member states denominated in euro foreign currency debts. Since individual eurozone member states do not have sovereign authority over their common currency, they are deprived of the option of solving their sovereign debt problem with monetary measures, such as devaluing their common currency or lowering interest rates.

The euro is also legal tender in a five other non-EMU European political entities Montenegro, Andorra, Monaco, San Marino and Vatican City and the disputed territory of Kosovo. The euro is the common currency used daily by some million Europeans and their separate governments.

Additionally, over million people worldwide use currencies which are pegged to the euro, including more than million people in Africa. A Political Crisis with Financial Dimensions. The European sovereign debt crisis is at its base a intergovernmental political crisis in the eurozone with financial and economic dimensions that reaches beyond the eurozone to all its trading partner regions as well as financial and trading markets in the entire world.

The crisis is centered around the difficulty in achieving policy consensus among all eurozone member states and the inability of any eurozone member state under financial distress from sovereign debt difficulties to employ monetary measures individually, such a currency devaluation or interest rate measures, to solve its euro denominated sovereign debt problems, since no member state has individual authority to set or revise monetary policy or exchange rate value for the euro to address its public finance problems.

Furthermore, the economic and public finance problems of eurozone member states are not congruent, thus giving rise to varying and often contradicting political incentives in different member states, pitting the political dynamics of richer economies against those of poorer economies.

Debt Crisis of a Rich Economy. On many levels, the eurozone EA17 is a very rich economy. A sovereign default in any eurozone member state will put in doubt the continuance of the euro as a common currency in the eurozone and as prime reserve currency for international trade.

Collapse of Aggregate Demand. The reason why a rich economy like that of the eurozone suffers such a sudden collapses in aggregate demand caused by a banking sector and sovereign debt crisis around a common currency lies squarely on a breakdown of political consensus among eurozone member state governments.

The sovereign debt crisis in the eurozone began with the global economic recession that began in mid in New York, caused by a massive meltdown in electronically linked credit markets in all major open economies due to excessive private and public debts to compensated for decades of low wages.

The penalty for direct government bailout of too-big-to-fail financial entities to defuse a market meltdown will be a decade of slow growth for the world economy, because the debt crisis that had been caused by low wages is being solved with government austerity measures that will push wages further down. Slow economic growth is highly problematic for countries with high levels of sovereign debt.

The reason for the long and weak recovery in global economy is that the excessive debt in the global economy has not been extinguished by government bailouts. The debt has only been shifted from the private sector to the public sector, from the balance sheets of distressed commercial and investment banks to the balance sheets of central banks. The penalty for this liquidity play on the part of central banks to save insolvent financial institutions from collapse will be an extended anemic global economy in which banks, companies and households are all trying to deleverage from undistinguished debt with the new liquidity of no economic substance released by central bank quantitative easing.

Also, government austerity programs needed to secure more debt will further reduce wage income and exacerbate further fall in aggregate demand in a downward vicious cycle. The Coming Trade War and Global Depression. Many economic historians have suggested that the stock market crash was not the cause of the Great Depression. If anything, the crash was the technical reflection of the inevitable fate of an overblown bubble economy. Structurally, the real cause of the Great Depression, which lasted more than a decade, from till the beginning of the Second World War inwas the Smoot-Hawley tariffs that put world trade into a tailspin from which it did not recover until World War II began.

Barely five years into the 21st century, with a globalized neo-liberal trade regime firmly in place in a world where market economy has become the norm, trade protectionism appears to be fast re-emerging and developing into a new global trade war of complex dimensions. The irony is that this new trade war is being launched not by the poor economies that have been receiving the short end of the trade stick, but by the US which has been winning more than it has been losing on all counts from globalized neo-liberal trade, with the EU following suit in locked steps.

Japan of course has never let up on protectionism and never taken competition policy seriously. The rich nations needs to recognize that in their effort to squeeze every last drop of advantage out of already unfair trade will only plunge the world into deep depression. History has shown that while the poor suffer more in economic depressions, the rich, even as they are fianancially cushioned by their wealth, are hurt by political repercussions in the form of either war or revolution or both.

Post Cold War Global Trade. During the Cold War, there was no international free trade.

The economies of the two contending ideology blocks were completely disconnected. Within each block, economies interact through foreign aid and memorandum trade from their respective superpowers. The competition was not for profit but for the hearts and minds of the people in the two opposing blocks as well as those in the non-aligned nations in the Third World. The competition between the two superpowers was to give rather than to take from their separate fraternal economies. The population of the superpowers worked hard to help the poorer people within their separate blocks and convergence toward equality was the policy aim even if not always the practice.

The Cold War era of foreign aid and memorandum trade had a better record of poverty reduction in either camps than post-Cold War globalized neo-liberal trade dominated by one single superpower. The aim was not only to raise income and increase wealth, but also to close income and wealth disparity between and within economies.

Today, income and wealth disparity is rationalized as a necessity for capital formation. The New York Time reports that from tothe total income earned by the top 0. For all its ill effects, the Cold War achieved two formidable ends: In the years since the end of the Cold War, nuclear terrorism has emerged as a serious threat and domestic development is pre-empted by global trade even in the rich economies while income and wealth disparity has widened everywhere.

Since the end of the Cold War some three decacds ago, world economic growth has shifted to rely exclusively on globalized neo-liberal trade engineered and led by the US as the sole remaining superpower, financed with the US dollar as the main reserve currency for trade and anchored by the huge US consumer market made possible by the high wages of US workers. This growth has been sustained by knocking down national tariffs everywhere around the world through supranational institutions such as the World Trade Organization WTOand financed by a deregulated foreign exchange market working in concert with a global central banking regime independent of local political pressure, lorded over by the supranational Bank of International Settlement BIS and the International Monetary Fund IMF.

It is another tool for building a new form of Empire. Bush said Chinawhich had reached a trade agreement with the US at the close of the Clinton administration, and had became a member of the WTO in latewould benefit from political changes as a result of liberalized trade policies. It is a strategy of inducing through peaceful trade the Communist Party of China CPC to reform itself out of power and to eliminate the dictatorship of the proletariat in favor of bourgeois liberalization.

Deng warned in Novemberfive months after the Tiananmen incident: They want to bring about the peaceful evolution of socialist countries towards capitalism. Yet it is clear that political freedom is often the first casualty of a garrison state mentality and such mentality inevitably results from hostile US economic and security policy toward any country the US deems as not free. Whenever the US pronounces a nation to be not free, that nation will become less free as a result of US policy.

This has been repeatedly evident in China and elsewhere in the Third World. Whenever US policy toward China turns hostile, as it currently appears to be heading, political and press freedom inevitably face stricter curbs in China. Reforming the Terms of Trade. For trade to mutually and truly benefit the trading economies, three conditions are necessary:.

The developing rupture between the sole superpower and its habitually deferential Cold War allies lies in mounting trade conflicts. The US has benefited from a post-Bretton Woods international financial architecture that gives the US economy a structural monetary advantage over those of the EU and Japannot to mention the rest of the world.

This advantage is derived from dollar hegemony. Trade issues range from government subsidies disputes between Airbus and Boeing, on banana, sugar, beef, oranges, steel, as well as disputes over fair competition associated with mergers and acquisition and financial services. If either government is found to be in breach of WTO rules when these disputes wind through long processes of judgment, the other will be authorized to retaliate.

The US could put tariffs on other European goods if the WTO rules against Airbus and vice versa. So if both governments are found in breach, both could retaliate, leading to a cycle of offensive protectionism.

When the US was ruled to have unfairly supported its steel industry, tariffs were slapped by the EU on Florida oranges to make a political point in a politically important state in US politics.

Trade competition between the EU and the US is spilling over into national security areas, allowing economic interests to conflict with ideological sympathy.

Both of these highly proficient national production engines, saddled with serious overcapacity, are desperately seeking new markets, which inevitably leads them to Asia in general and China in particular, with its phenomenal growth rate and its 1.

The growth of the Chinese economy will lift all other economies in Asiaincluding Australia which has only recently begun to understand that its future cannot be separated from its geographic location and that its prosperity is interdependent with those of other Asian economies.

Australian iron ores, beef and dairy products are destined for Chinanot the British Isles. The EU is eager to lift its year-old arms embargo on Chinamuch to the displeasure of the US. Israel faces similar dilemma, with its close relations with the USon military sales to China.

Isreal must export arms to help reduce high arms production cost to its small economy. Even the US defense establishment has largely come around to the view that US arms industry must export, even to Chinato remain on top form with technical innovation that needs huge revenue. The Bangkok Post reported that Secretary Rumsfeld tried to sell to Thailand F warplanes capable of firing advanced medium-range air-to-air missiles AMRAAMs two days after he lashed out in Singapore at China for upgrading its own military when no neighboring nations are threatening it.

The sales pitch was in competition with Russian-made Sukhoi SUs and Swedish JASs. The open competition in arms export had been spelled out for Congress years earlier by Donald Hicks, a leading Pentagon technologist in the Reagan administration. The WTO is the only global international organization dealing with the rules of trade between its member nations.

The stated goal is to help producers of goods and services, exporters, and importers conduct their business, with the dubious assumption that trade automatically brings equal benefits to all participants.

Trade and Inequality in Wealth Distribution. Two decades of neo-liberal globalized trade have widened income and wealth disparity within and between nations. Free trade has turned out not to be the win-win game promised by neo-liberals. It is very much a win-lose game, with heads, the rich economies win, and tails, the poor economies lose.

Domestic development has been marginalized as a hapless victim of foreign trade, dependent on trade surplus for capital. Foreign trade and foreign direct investment have become the prerequisite engines for domestic development. This trade model condemns those economies with trade deficits to perpetual underdevelopment. Because of dollar hegemony, all foreign investment goes only to the export sector where dollars can be earned.

Even the economies with trade surpluses cannot use their dollar trade earnings for domestic development, as they are forced to hold huge dollar reserves to support the exchange rate of their currencies. In the fifth WTO Ministerial Conference held in Cancun in Septemberthe richer countries rejected the demands of poorer nations for radical reform of agricultural subsidies that have decimated Third World agriculture.

Failure to get the Doha round back on track after the collapse of Cancun runs the danger of a global resurgence of protectionism, with the US leading the way. The reality is about rule by elites, mercantilism and selfishness. Exports of manufactures by low-wage developing countries have increased rapidly over the last 3 decades due in part to falling tariffs and declining transport costs that enable outsourcing based on wage arbitrage.

Many developing countries have gained relatively little from increased manufactures trade, with most of the profit going to foreign capital. Market access for their most competitive manufactured export, such as textile and apparel, remains highly restricted and recent trade disputes threaten further restrictions.

Still, the key cause of unemployment in all developing economies is the trade-related collapse of agriculture, exacerbated by the massive government subsidies provided to farmers in rich economies. Many poor economies are predominantly agriculturally based and a collapse of agriculture means a general collapse of the whole economy.

The Doha Development Agenda DDA negotiations, sponsored by the WTO, collapsed in CancunMexico over the question of government support for agriculture in rich economies and its potential impacts on causing more poverty in developing countries.

The Doha negotiations since Cancun are focused on the need to better understand the linkages between trade policies, particularly those of the rich economies, and poverty in the developing world. While poverty reduction is now more widely accepted by establishment economists as a necessary central focus for development efforts and has become the main mission of the World Bank and other supranational development institutions, very little effective measures have been forthcoming.

The UN Millennium Development Goals UNMDG of commits the international community to halve world poverty bya quarter of a century hence. Several key venues to this goal are located in international trade where the record of poverty reduction has been exceedingly poor, if not outright negative.

The fundamental question whether trade can replace or even augment socio-economic development remains unasked, let alone answered. Until such issues are earnestly addressed, protectionism will re-emerge in the poor countries.

Under such conditions, if democracy expresses the will of the people, democracy will demand protectionism more than government by elite.

It is not surprising why WTO meetings are target of popular protects. Exchange Rate as Virtual Countervailing tariff. While tariffs in the past decade have been coming down like leaves in autumn, flexible exchange rates have become a form of virtual countervailing tariff.

Purchasing power parity PPP measures the disconnection between exchange rates and local prices. PPP contrasts with the interest rate parity IRP theory which assumes that the actions of investors, whose transactions are recorded on the capital account, induces changes in the exchange rate.

For a dollar investor to earn the same interest rate in a foreign economy with a PPP of four times, such as the purchasing power parity between the US dollar and the Chinese yuan, local wages would have to be at least 4 time lower than US wages. PPP theory is based on an extension and variation of the "law of one price" as applied to the aggregate economy. The law of one price says that identical goods should sell for the same price in two separate markets when there are no transportation costs and no differential taxes applied in the two markets.

But the law of one price does not apply to the price of labor. Price arbitrage is the opposite of wage arbitrage in that producers seek to make their goods in the lowest wage locations and to sell their goods in the highest price markets. This is the incentive for outsourcing which never seeks to sell products locally at prices that reflect PPP differentials.

What is not generally noticed is that price deflation in an economy increases its PPP, in that the same local currency buys more. But the cross-border one price phenomenon applies only to certain products, such as oil, thus for a PPP of 4 times, a rise in oil prices will cost the Chinese economy 4 times the equivalent in other goods, or wages than in the US. The larger the purchasing power parity between a local currency and the dollar, the more severe is the tyranny of dollar hegemony on forcing down wage differentials.

The Bretton Woods Conference at the end of World War II established the dollar, a solid currency backed by gold, as a benchmark currency for financing international trade, with all other currencies pegged to it at fixed rates that changed only infrequently. The fixed exchange rate regime was designed to keep trading nations honest and prevent them from running perpetual trade deficits. It was not expected to dictate the living standards of trading economies, which were measured by many other factors besides exchange rates.

Bretton Woods was conceived when conventional wisdom in international economics did not consider cross-border flow of funds necessary or desirable for financing world trade precise for this reason.

Sincethe dollar has changed from a gold-back currency to a global reserve monetary instrument that the USand only the UScan produce by fiat. At the same time, the US continued to incur both current account and fiscal deficits.

That was the beginning of dollar hegemony. With deregulation of foreign exchange and financial markets, many currencies began to free float against the dollar not in response to market forces but to maintain export competitiveness.

Government interventions in foreign exchange markets became a regular last resort option for many trading economies for their preserving export competitiveness and for resisting the effect of dollar hegemony on domestic living standards. World Trade and Dollar Hegemony. World trade under dollar hegemony is a game in which the US produces paper dollars and the rest of the world produce real things that paper dollars can buy. The higher the market pressure to devalue a particular currency, the more dollar reserves its central bank must hold.

This creates a built-in support for a strong dollar that in turn forces all central banks to acquire and hold more dollar reserves, making it stronger. This anomalous phenomenon is known as dollar hegemony, which is created by the geopolitically constructed peculiarity that critical commodities, most notably oil, are denominated in dollars. Everyone accepts dollars because dollars can buy oil. The denomination of oil in dollars and the recycling of petro-dollars is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since By definition, dollar reserves must be invested in dollar-denominated assets, creating a capital-accounts surplus for the US economy.

A strong-dollar policy is in the US national interest because it keeps US inflation low through low-cost imports and it makes US assets denominated in dollars expensive for foreign investors. This arrangement, which Federal Reserve Board chairman Alan Greenspan proudly calls US financial hegemony in congressional testimony, has kept the US economy booming in the face of recurrent financial crises in the rest of the world. The adverse effects of this type of globalization on the developing economies are obvious.

It robs them of the meager fruits of their exports and keeps their domestic economies starved for capital, as all surplus dollars must be reinvested in US treasuries to prevent the collapse of their own domestic currencies. The adverse effect of this type of globalization on the US economy is also becoming clear.

In order to act as consumer of last resort for the whole world, the US economy has been pushed into a debt bubble that thrives on conspicuous consumption and fraudulent accounting. The unsustainable and irrational rise of US equity and real estate prices, unsupported by revenue or profit, had merely been a de facto devaluation of the dollar. Ironically, the recent fall in US equity prices from its peak and the anticipated fall in real estate prices reflect a trend to an even stronger dollar, as it can buy more deflated shares and properties for the same amount of dollars.

The rise in the purchasing power of the dollar inside the US impacts its purchasing power disparity with other currencies unevenly, causing sharp price instability in the economies with freely exchangeable currencies and fixed exchange rates, such as Hong Kong and until recently Argentina. For the USfalling exchange rate of the dollar actually causes asset prices to rise. Thus with a debt bubble in the US economy, a strong dollar is not in the US national interest.

Debt has turned US policy on the dollar on its head. The setting of exchange values of currencies is practiced not only by sovereign governments on their own currencies as a sovereign right. The USexploiting dollar hegemony, usurps the privilege of dictating the exchange value of all foreign currencies to support its own economic nationalism in the name of global free trade.

And US position on exchange rates has not been consistent. When the dollar was rising, as it did in the s, the USto protect its export trade, hailed the stabilizing wisdom of fixed exchange rates. How can a nation manipulate the exchange value of its currency when it is pegged to the dollar at the same rate over long periods?

Any manipulation came from the dollar, not the yuan. The rise of the euro against the dollar, the first appreciation wave since its introduction on January 1,was the result of an EU version of the Plaza Accord on the Japanese yen, albeit without a formal accord.

The strategic purpose was more than merely moderating the US trade deficit. The strategic purpose of driving up the euro is to reduce the euro to the status of the yen, as a subordinated currency to dollar hegemony.

The real effect of the Plaza Accord was to shift the cost of support for the dollar-denominated US trade deficit, and the socio-economic pain associated with that support, from the US to Japan. What is happening to the euro now is far from being the beginning of the demise of the dollar. Rather, it is the beginning of the reduction of the euro into a subservient currency to the dollar to support the US debt bubble. Six and a half years since the launch of European Monetary Union, the eurozone is trapped in an environment in which monetary policy of sound money has in effect become destructive and supply-side fiscal policy unsustainable.

The European nations are beginning to resist the US strategy to make the euro economy a captive supporter of a rising or falling dollar as such movements fit the shifting needs of US economic nationalism. By allowing a trade surplus denominated in dollars to be accumulated by non-dollar economies, such as yen, euro, or now the Chinese yuan, the cost of supporting the appropriate value of the dollar to sustain perpetual economic growth in the dollar economy is then shifted to these non-dollar economies, which manifests themselves in perpetual relative low wages and weak domestic consumption.

For already high-wage EU and Japanthe penalty is the reduction of social welfare benefits and job security traditional to these economies. This is because the US can print dollars at will and with immunity.

The dollar is a fiat currency not backed by gold, not backed by US productivity, not back by US export prowess, but by US military power. That is bigger than the entire GDP of China in In other words, the trading partners of the US are paying for one and a half times of the cost of a military that can someday be used against any one of them for any number of reasons, including trade disputes. The anti-dollar crowd has nothing to celebrate about the recurring US trade deficit.

Normally, according to free trade theory, trade can only stay unbalanced temporarily before equilibrium is re-established or free trade would simply stop. When bilateral trade is temporarily unbalanced, it is generally because one trade partner has become temporarily uncompetitive, inefficient or unproductive.

The partner with the trade deficit receives more goods and services from the partner with the trade surplus than it can offer in return and thus pays the difference with its currency that someday can buy goods produced by the deficit trade partner to re-established balance of payments.

This temporary trade imbalance is due to a number of socio-economic factors, such as terms of trade, wage levels, return on investment, regulatory regimes, shortages in labor or material or energy, trade-supporting infrastructure adequacy, purchasing power disparity, etc. A trading partner that runs a recurring trade deficit earns the reputation of being what banks call a habitual borrower, i. If the trade deficit is paid with its currency, a downward pressure results in the exchange rate.

A flexible exchange rate seeks to remove or moderate a temporary trade imbalance while the productivity disparities between trading partners are being addressed fundamentally. Dollar hegemony prevents US trade imbalance from returning to equilibrium through market forces. It allows a US trade deficit to persist based on monetary prowess.

European debt crisis - Wikipedia

This translates over time into a falling exchange rate for the dollar even as dollar hegemony keeps the fall at a slow pace. But a below-par exchange rate over a long period can run the risk of turning the temporary imbalance in productivity into a permanent one.

A continuously weakening currency condemns the issuing economy into a downward economic spiral. This has happened to the US in the last decade. To make matters worse, with globalization of deregulated markets, the recurring US trade deficit is accompanied by an escalating loss of jobs in sectors sensitive to cross-border wage arbitrage, with the job-loss escalation climbing up the skill ladder.

Discriminatory US immigration policies also prevent the retention of low-paying jobs within the US and exacerbate the illegal immigration problem. Regional wage arbitrage within the US in past decades kept the US economy lean and productive internationally. Labor-intensive US industries relocated to the low-wage South through regional wage arbitrage and despite temporary adjustment pains from the loss of textile mills, the Northern economies managed to upgrade their productivity, technology level, financial sophistication and output quality.

The Southern economies in the US also managed to upgrade these factors of production and in time managed to narrow the wage disparity within the national economy. This happened because the jobs stay within the nation. With globalization, it is another story. Jobs are leaving the nation mercilessly. According to free trade theory, the US trade deficit is supposed to cause the dollar to fall temporarily against the currencies of its trading partners, causing export competitiveness to rebalance to remove or reduce the US trade deficit or face the collapse of its currency.

Either case, jobs that have been lost temporarily are then supposed to return to the US. But the persistent US trade deficit defies trade theory because of dollar hegemony. The current international finance architecture is based on dollar hegemony which is the peculiar arrangement in which the US dollar, a fiat currency, remains as the dominant reserve currency for international trade.

The broad trade-weighted dollar index stays in an upward trend, despite selective appreciation of some strong currencies, as highly-indebted emerging market economies attempt to extricate themselves from dollar-denominated debt through the devaluation of their currencies.

While the aim is to subsidize exports, it ironically makes dollar debts more expensive in local currency terms. The moderating impact on US price inflation also amplifies the upward trend of the trade-weighted dollar index despite persistent US expansion of monetary aggregates, also known as monetary easing or money printing. Adjusting for this debt-driven increase in the exchange value of dollars, the import volume into the US can be estimated in relationship to expanding monetary aggregates.

The US enjoyed a booming economy when the dollar was gaining ground, and this occurred at a time when interest rates in the US were higher than those in its creditor nations. This led to the odd effect that raising US interest rates actually prolonged the boom in the US rather than threatened it, because it caused massive inflows of liquidity into the US financial system, lowered import price inflation, increased apparent productivity and prompted further spending by US consumers enriched by the wealth effect despite a slowing of wage increases.

Returns on dollar assets stayed high in foreign currency terms. This was precisely what Federal Reserve Board chairman Alan Greenspan did in the s in the name of pre-emptive measures against inflation.

Dollar hegemony enabled the US to print money to fight inflation, causing a debt bubble of asset appreciation. This data substantiated the view of the US as Rome in a New Roman Empire with an unending stream of imports as the free tribune from conquered lands. Despite Fed rhetoric, the lifting of dollar interest rate has more to do with preventing foreign central banks from selling dollar-denominated assets, such as US Treasuries, than with fighting inflation.

In a debt-driven economy, high interest rates are themselves inflationary. Rising interest rate to fight inflation could become the monetary dog chasing its own interest rate tail, with rising rate adding to rising inflation which then requires more interest rate hikes. Still, interest rate policy is a double edged sword: To prevent this last adverse effect, the Fed adds to the money supply, creating an unnatural condition of abundant liquidity with rising short-term interest rate, resulting in a narrowing of interest spread between short-term and long-term debts, a leading indication for inevitable recession down the road.

The problem of adding to the money supply is what Keynes called the liquidity trap, that is, an absolute preference for liquidity even at near zero interest-rate levels. Keynes argued that either a liquidity trap or interest-insensitive investment draught could render monetary expansion ineffective in a recession. It is what is popularly called pushing on a credit string, where ample money cannot find credit-worthy willing borrowers.

Much of the new low cost money tends to go to refinancing of existing debt take out at previously higher interest rates. Rising short-term interest rates, particularly at a measured pace, would not remove the liquidity trap when long term rates stay flat because of excess liquidity.

The debt bubble in the US is clearly having problems, as evident in the bond market. The late-April downgrades of the debt of General Motors and Ford Motor to junk status roiled the bond markets.

The price of a reduced US trade deficit is the bursting of the US debt bubble which can plunge the world economy into a new depression. Given such options, the US has no choice except to ride the trade deficit train for as long as the traffic will bear, which may not be too long, particularly if protectionism begins to gather force. The lower productivity values are consistent with the real-life experience of members of the blue-collar working class and the white collar middle class who have been spending the equity cash-outs from the appreciated market value of their homes.

World trade has become a network of cross-border arbitrage on differentials in labor availability, wages, interest rates, exchange rates, prices, saving rates, productive capacities, liquidity conditions and debt levels. In some of these areas, the US is becoming an underdeveloped economy.

The Bush Administration repeatedly assured the public that the state of the economy was sound while in reality the US had been losing entire sectors of its economy, such as manufacturing and information technology, to foreign producers, while at the same time selling off the part of the nation to finance its rising and unending trade deficit.

Usually, when unjustified confidence crosses over to fantasized hubris on the part of policymakers, disaster is not far ahead. To be fair, the problems of the US economy started before the second Bush Administration. Economics high priests in government, unlike the rest of us mortals who are unfortunate enough to have to float in the daily turbulence of the market, can afford to aloofly focus on long-term trends and their structural congruence to macro-economic theories.

Yet, outside of macro-economics, long-term is increasingly being re-defined in the real world. In the technology and communication sectors, long-term evokes periods lasting less than 5 years. For hedge funds and quant shops, long-term can mean a matter of weeks. Even with somewhat slower productivity and spending growth, the CEA believed the economy could continue to expand perpetually.

As for the huge and growing trade deficit, the CEA expected global recovery to boost demand for US exports, not withstanding the fact that most US exports are increasingly composed of imported parts.

Yet the US has long officially pursued a strong dollar policy which weakens world demand for US exports. Financial intermediaries and stock exchanges face challenges from Electronic Communication Networks ECNs which may well turn the likes of NYSE into sunset industries. The NYSE and the Archipelago Exchange ArcaEx announced on April 20, that they have entered a definitive merger agreement that will lead to a combined entity, NYSE Group, Inc.

Through Archipelago, the NYSE will compete for the first time in the trading of NASDAQ-listed stocks; it will be able to indirectly capture listings business that otherwise would not qualify to list on the NYSE. On fiscal policy, US government spending, including social programs and defense, declined as a share of the economy during the eight years of the Clinton watch.

This in no small way contributed to a polarization of both income and wealth, with visible distortions in both the demand and supply sides of the economy. This was the opposite of the FDR record of increasing income and wealth equality by policy.

The wealth effect tied to bloated equity and real estate markets could reverse suddenly and did inbailed out only by the Bush tax cut and the deficit spending on the War on Terrorism after Private debt kept making all time highs throughout the s and was celebrated by neo-liberal economists as a positive factor.

How Europe's Turmoil Rattles World Markets

Household spending was heavily based on expected rising future earnings or paper profits, both of which might and did vanished on short notice. By election time in Novemberthe Clinton economic miracle was fizzling. The business cycle had not ended after all, and certainly not by self-aggrandizing government policies. It merely got postponed for a more severe crash later. Clinton-Gore Defaulted on Campaign Promises to Equalilize wealth Distribution.

It was a situation they pledged to change if elected. But once in office, Clinton and Gore did nothing to redistribute wealth more equally - despite the fact that their two terms in office spanned the economic joyride of the s that would eventually hurt the poor much more severely than the rich.

On the contrary, economic inequality only continued to grow under the Democrats. Reagan spread the national debt equally among the people while Clinton gave all the wealth to the rich. Geopolitically, trade globalization was beginning to face complex resistance worldwide by the second term of the Clinton presidency.

The momentum of resistance after Clinton would either slow further globalization or force the terms of trade to be revised. The Asian financial crises of revived economic nationalism around the world against US-led neo-liberal globalization, while the North Atlantic Treaty Organization NATO attack on Yugoslavia in revived militarism in the EU. Market fundamentalism as espoused by the USfar from being a valid science universally, was increasingly viewed by the rest of the world as merely US national ideology, unsupported even by US historical conditions.

Just as anti-Napoleonic internationalism was essentially anti-French, anti-globalization and anti-moral-imperialism are essentially anti-US.

US unilateralism and exceptionism became the midwife for a new revival of political and economic nationalism everywhere. That is the problem with macroeconomics. Greenspan gave anti-US sentiments and monetary trade protectionism held by participants in these financial markets a solid basis and they were no longer accused of being mere paranoia.

Ironically, after the end of the Cold War, market capitalism has emerged as the most fervent force for revolutionary change. Finance capitalism became inherently democratic once the bulk of capital began to come from the pension assets of workers, despite widening income and wealth disparity.

The capitalist in the individual is exploiting the worker in same individual. As Pogo used to say: But the problem of overcapacity can only be solved by high income consumers. Unemployment and underemployment in an economy of overcapacity decrease demand, leading to financial collapse.

The world economy needs low wages the way the cattle business need foot and mouth disease. The nomenclature of neo-classical economics reflects, and in turn dictates, the warped logic of the economic system it produces. Terms such as money, capital, labor, debt, interest, profits, employment, market, etc, have been conceptualized to describe synthetic components of an artificial material system created by the power politics of greed.

The concept of the economic man who presumably always acts in his self-interest is a gross abstraction based on the flawed assumption of market participants acting with perfect and equal information and clear understanding of the implication of his actions.

The pervasive use of these terms over time disguises the artificial system as the logical product of natural laws, rather than the conceptual components of the power politics of greed. Just as monarchism first emerged as a progressive force against feudalism by rationalizing itself as a natural law of politics and eventually brought about its own demise by betraying its progressive mandate, social capitalism today places return on capital above not only the worker but also the welfare of the owner of capital.

The class struggle has been internalized within each worker. As people facing the hard choice of survival in the present versus wellbeing in the future, they will always choose survival, social capitalism will inevitably go the way of absolute monarchism, and make way for humanist socialism.

The BIS vs National BanksI warned about Special Purpose Vehicles SPV five years before the credit crisis broke out in July One example of such arbitrage is the sale, or other shift-off, from the balance sheet, of assets with economic capital allocations below regulatory capital requirements, and the retention of those for which regulatory requirements are less than the economic capital burden.

Risks never disappear; they are always passed on. LCBOs in effect pass their unaccounted-for risks onto the global financial system.

Thus the fierce opponents of socialism have become the deft operators in the socialization of risk while retaining profits from such risk socialization in private hands. The transfer may be either funded, for example, by issuing credit-linked securities in tranches with various seniorities collateralized loan obligations or CLOs or unfunded, for example, using credit default swaps.

For example, to transfer the junior first and second loss element of credit risk and retain a senior tranche; to embed extra features such as leverage or foreign currency payouts; and to package for sale the credit risk of a portfolio or reference portfolio not originated by the bank. Banks may also exchange the credit risk on parts of their portfolios bilaterally without any issuance of rated notes to the market.

Central Bank uses SPV to Hide Expansion of Balance Sheet. Since a loan is treated in accounting as an asset, the NY Fed, by providing the funds to buy distress debt, actually expands it balance sheet positively while its SPV assumes more liability. Troubled Assets Relief Program TARP. A residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14,the purchase of which the Secretary determines promotes financial market stability; and B any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.

TARP allows the Treasury to purchase illiquid, difficult-to-value assets at full face value from banks and other financial institutions. The targeted assets can be collateralized debt obligations CDOwhich were sold in a booming market until Julywhen they were hit by widespread foreclosures on the underlying loans.

TARP is intended to restore liquidity of these assets in a failed market with no other buyers, by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses. TARP does not allow banks to recoup losses already incurred on troubled assets, but Treasury officials expect that once trading of these assets resumes, their prices will stabilize and ultimately increase in value, resulting in gains to both participating banks and the Treasury itself.

The concept of future gains from troubled assets comes from the hypothesis in the financial industry that these assets are oversold, as only a small percentage of all mortgages are in default, while the relative fall in prices represents losses from a much higher default rate. Thus the banks are saved, but not the economy as a whole, which ultimately still has to pay off the undistinguished debt. The Emergency Economic Stabilization Act of EESA requires financial institutions selling assets to TARP to issue equity warrants a type of security that entitles, but without the obligation, its holder to purchase shares in the company issuing the security for a specific priceor equity or senior debt securities for non-publicly listed companies to the Treasury.

In the case of warrants, the Treasury will only receive warrants for non-voting shares, or will agree not to vote the stock. This measure is supposedly designed to protect taxpayers by giving the Treasury the possibility of profiting through its new ownership stakes in these institutions. Ideally, if the financial institutions benefit from government assistance and recover their former strength, the government will also be able to profit from their recovery.

Another important goal of TARP is to encourage banks to resume lending again at levels seen before the crisis, both to each other and to consumers and businesses. If TARP can stabilize bank capital ratios, it should theoretically allow them to increase lending instead of hoarding cash to cushion against future unforeseen losses from troubled assets.