A week or so ago, I mentioned the fact that Russia was lobbying for a new international currency to replace the dollar and opined that it most likely wouldn’t have any legs. By itself, Russia just didn’t have enough clout to bring about such a change. But apparently Russia was only the beginning. Later that same week, the UN came out in favor of a new currency option:
A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
“It is a good moment to move to a shared reserve currency,” he said.
But does the UN have enough leverage to push something like this through? Probably not without some fairly powerful backers of the idea. And speaking strictly of the UN, any such proposal would have to pass through the Security Council, and it’s unlikely the US would sanction such a change.
Today, though, China came out in favor of doing exactly what Russia and the UN recommend:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
As was noted last week, China has some concerns about the US economy:
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
And that’s a valid concern. With the Fed pumping out trillions of freshly printed dollars, inflation is almost assured.
In case you haven’t noticed, Russia and China are two of the four countries known as BRIC (Brazil, Russia, India, China). These emerging economies feel they deserve more clout than they now enjoy. And they’re meeting in advance of the upcoming G20 meeting in April of this year:
Finance ministers and central bankers from Brazil, Russia, India and China will convene ahead of the Group of 20 finance chiefs’ meeting in London on Friday, a Russian delegation source told Reuters on Thursday.
The source said the four will discuss the reform of international financial organizations such as the International Monetary Fund and the Financial Stability Forum, anti-crisis policies and preparations for the G20 summit in April.
Take a look again at China’s proposal for basing the international reserve currency in the IMF and the topic of their upcoming meeting in advance of the G20. Suddenly Russia’s proposal has some legs.
What clout does BRIC bring to the proposal? Well they are the holders of vast portions of the currency reserves around the world:
China runs the world’s biggest reserves, Russia comes 3rd, India 4th and Brazil 7th, as of last autumn.
Keep an eye out for Brazil and India weighing in on this. Should they come out in favor of such a change, as has China, it could portend some fireworks at the G20.
In the meantime, read this by Mikkel Fishman. It will explain some of the deeper and less evident problems we face. Then take a moment to look around and reflect. In my estimation, this truly is the calm before the storm.
Because the Secretary General has it – and demonstrates again why we ought to let the Third World Debating Club on the Hudson find a new home:
A day after his White House meeting with President Barack Obama, U.N. Secretary-General Ban Ki-moon called the United States a “deadbeat” donor to the world body while making the made the rounds on Capitol Hill.
“He used the word ‘deadbeat’ when it came to characterizing the United States. I take great umbrage (over) that,” Ileana Ros-Lehtinen, the panel’s senior Republican, said after an hour-long, closed-door meeting. “We certainly contribute a whole lot of U.S. taxpayer dollars to that organization. We do not deserve such a phrase.
Interviewed after the session, Ban said he had wanted to draw attention to the fact that the U.S. agrees to pay 22 percent of the U.N.’s $4.86 billion operating budget, but is perennially late with its dues — and now is about $1 billion behind on its payments.
That figure is “soon to be $1.6 billion,” Ban emphasized. Asked if he’d used the word ‘deadbeat’ during the meeting, he replied, “Yes, I did — I did,” then laughed mischievously.
The ultimate deadbeat institution which can, unsurprisingly, find more ways to waste money than the US government, calls the country that pays 22% of its cost and host to the parasites that represent their backwater potentates the “deadbeat” ?
Ban certainly demonstrates a lot of respect for the country and the new administration doesn’t he? So far this new relationship with the world is going swimmingly, as the UK can attest.
But there’s a glimmer of hope apparently. Ban has given Obama some budget advice:
Obama seeks a 9.5 percent increase in international affairs spending, which Yeo said would be enough to cover not only next year’s U.S. dues to the U.N., but also $1 billion in arrears.
Amazing. And we’ll end up handing it all over, just watch.
Al Sharpton must sniff a payoff somehere. He’s protesting in front of Bernie Madoff’s place.
Bill Press pushes for a redefinition of “public interest” to include making terrestrial radio stations carry a format that fails everywhere it is tried to the detriment, naturally, of one that succeeds.
After years of pandering to them, John McCain makes the staggering discovery that Democrats are no more bi-partisan than the GOP.
The Taliban release a video of them cutting off a Polish engineer’s head. The Obama administration mulls a change in strategy which would have them essentially abandon the Karzai government in Afghanistan and negotiate with the Taliban. And, unsurprisingly, some on the left just want to know why we’re still there.
Larry Sabato, director of the University of Virginia’s Center for Politics says there’s a good reason the “stimulus” bill is so big: “It’s just irresistible,” he said. “Congress says, ‘This is a freight train.’ They have to jump on because there might not be another for years.”.
The U.N. agency for Palestinian refugees suspended aid to the Gaza Strip on Friday? Why? Because representatives of the Palestinian’s government were stealing relief supplies from the UN. Well, at least, unlike ours, the Palestinian government makes no bones about what they are.
Smartphone sales were up 68% while iPhone sales topped 101% in 2008. No recession there.
Bush is gone but the left still can’t let him go. Will Ferrell demonstrates his case of BDS in a classless Broadway show. Yeah, I know, everyone’s a critic.
So how’s Obama doing so far? Well let this Brit clue you in.
In the modern world, the Left, who claim to be the romantic rebels and lovers of liberty, have become the dogmatic spokesmen of remote power. The Right, who are derided as supporters of dictatorship and closet ‘fascists’, are the real revolutionaries and romantics.