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Central banks engaged in international currency battle 'to the pain'

From Dick Eastman

From various sources:

Behind the scenes, shifting political power and global economic influence from US, the European Zone, and Japan. “Everybody has to keep in mind this mantra that there is no domestic solution to a global crisis.” Strauss-Kahn -- imbalances between creditor countries like China -- whose currency policies are nearly warlike in intent and effect, plus Brazil and Germany; and that of debtor nations like the US and Britain -- currency policies volatile, managed and highly leveraged Western financial "markets," and rapacious fiscal ploicies by US and European central banks coercive "begger-thy-producers in the national domestic economies to stifle their growth and prudent economic stewardship to benefit and reward the wayward economic policies of its financial benefactors (eg, London Zurich, Frankfort, Shanghai, Sigapore, Dubai, and Wall Street) -- the City and Wall Street want China, to have more representation at the expense of European seats on the IMF and World Bank the BIS, the IMF, World Bank, Basel Committee -- independent and international Federal Reserve has adopted an expansionary monetary policy , or what is called ‘Quantitative Easing,’ intended to stimulate the international economy the weakening of the dollar against other currencies -- Chinese exports less expensive and American exports more expensive increasing the trade imbalance through more debt-financed imports of Chinese goods while raising prices for Americans who who find their most basic necessities priced at the mercey of foreign exchange rate worsened by the excesses of their own central bank. The Renminbi’s exchange rate in the global currency war ‘beggar thy domestic economy’ approach

G20 seek supervision of financial sectors of high-debt nations.

The G20 put supervision of financial sectors on its agenda, and any changes were to be implemented through the Financial Stability Board (FSB) and the Bank for International Settlements (BIS) in Basel.

The BIS was formed in 1930, the main actors in the establishment of the BIS were the then Governor of The Bank of England, Montague Norman and his German colleague Hjalmar Schacht.

While avoiding examination of its cause, the spate of currency collapses now under way could lead to new foreign investment and speedier recovery.

Currency collapses tend to spur a resumption of economic growth rather than fueling a decline in gross domestic product, according to the Bank for International Settlements.

The BIS was formed in 1930, the main actors in the establishment of the BIS were the then Governor of The Bank of England, Montague Norman and his German Weimar Republic colleague Hjalmar Schacht.

Currency collapses are associated with permanent output losses of about 6 percent of GDP, on average, though the drop tends to appear beforehand, the Basel, Switzerland-based BIS said in its quarterly review yesterday.

“This suggests that it may not be the currency collapse that reduces output, but rather the factors that led to the depreciation.

The positive effects of a weaker currency for international investors is that local assets become very cheap leading to massive foreign investment in rental housing and taking over and acquiring small businesses that were mismanaged into bankruptcy. . Currency collapses occur when the annual exchange rate drops by about 22 percent, according to the BIS, which identified 79 such episodes, “more commonly in Africa than in Asia or Latin America,” since 1960. “They also occurred under all types of currency regimes, except possible floating-exchange-rate regimes, where there are simply too few observations to obtain meaningful estimates,” the BIS said.

Greek Prime Minister George Papandreou pledged budget cuts worth almost 14 percent of GDP to bring the deficit within the EU limit of 3 percent by the end of 2014. European Central Bank Executive Board member Lorenzo Bini Smaghi said on May 28 that there are “no alternatives” for Greece beyond following the austerity program.

“Before drawing policy conclusions we should emphasise that these results are subject to a number of caveats,” the BIS said in the report. “Most importantly, the analysis does not address the reasons why currency collapses occur in the first place. Our analysis also has little to say about the mechanisms involved after the currency collapse takes place.

From Dick Eastman oldickeastman@q.com

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