Fiscal Study

Once again, Russia is in the crosshairs of U.S. policy. Rather that an intentionally Russia-wary position, it results from a 21st-century form of "benign neglect" by Washington -- a term last widely used to describe the attitude of U.S. Treasury Secretary John Connally regarding the plight of the dollar in 1971, The Moscow Times reports:

Russia is in good company. Central Bank head Sergei Ignatyev and his colleagues are the unintended victim of Washington's economic policy, along with the European Central Bank, China and most of the world, which has long relied on the United States for the key currency anchor of the international financial system in the form of a relatively stable dollar.

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Posted by fiscalstudy at 1:13 AM | Permalink | Comments (0)

The dollar posted its biggest weekly drop against the euro since April 2006 as a slumping housing market and upheaval in Pakistan made U.S. financial assets less attractive to international investors, Bloomberg reports:

The U.S. currency fell against all 16 most-actively traded currencies except Mexico's peso this week as traders raised bets that the Federal Reserve will cut borrowing costs in January. The dollar has lost 10.4 percent against the euro and 5.7 percent versus the yen in 2007, and the European currency is up 5.2 percent versus the yen, its eighth annual increase.

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By most indicators, 2007 was yet another bang-up year for China. The country's economy continued to sizzle, and President Hu Jintao was re-anointed as Chinese Communist Party (CCP)general secretary for another five years, Asian Times reports:

In addition, a proud nation launched its first lunar probe, further staking its claim in space, and is preparing to host next summer's Olympic Games. In short, this year's events serve as a further reminder that China, after suffering a bloody and tumultuous 20th century, has arrived on the world stage as a nation respected by the developed world and envied and copied by the developing one.

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Posted by fiscalstudy at 1:15 PM | Permalink | Comments (0)

China and the United States opened thorny trade talks Wednesday amid rising frustration by Washington over Chinese trade barriers and implied threats by Beijing that U.S. protectionist moves would cut both ways, The Businessweek reports:

Both sides stressed the countries' growing economic interdependence, but differed on what steps were needed to shrink China's massive trade surplus.
The start of the two-day China-U.S. Strategic Economic dialogue follows a similar forum in Beijing on Tuesday that produced wide-ranging agreements on boosting Chinese tourism to the U.S., increasing safeguards over Chinese products and opening up mid-sized Chinese cities to American imports.

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Posted by fiscalstudy at 9:29 AM | Permalink | Comments (0)

Rising incomes in Asia and ethanol subsidies in America have put an end to a long era of falling food prices:
ONE of the odder features of last weekend's vote in Venezuela was that staple foods were in short supply. Something similar happened in Russia before its parliamentary election. Governments in both oil-rich countries had imposed controls on food prices, with the usual consequences. Such controls have been surprisingly widespread—a knee-jerk response to one of the most remarkable changes that food markets, indeed any markets, have seen for years: the end of cheap food, The Economist reports:

In early September the world price of wheat rose to over $400 a tonne, the highest ever recorded. In May it had been around $200. Though in real terms its price is far below the heights it scaled in 1974, it is still twice the average of the past 25 years. Earlier this year the price of maize (corn) exceeded $175 a tonne, again a world record. It has fallen from its peak, as has that of wheat, but at $150 a tonne is still 50% above the average for 2006.

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Posted by fiscalstudy at 9:06 AM | Permalink | Comments (0)

Over the weekend, China again hiked the reserve ratio for commercial banks by 100 basis points to 14.5% beginning Dec. 26 as a high-level planning meeting promised both lower growth and inflation next year, The Market Watch reports:

The National Development and Reform Commission, China's top planning agency, said on Friday it aimed to hold growth at 10% in 2008 and cap full year inflation at 4 to 4.5%.

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Posted by fiscalstudy at 11:23 AM | Permalink | Comments (0)

The International Energy Agency's World Energy Outlook 2007 paints an alarming picture of the future of global warming and energy security, reporting that the world's energy needs will increase by over 50% by 2030, The Forbes reports:

Energy demand, imports, coal use and greenhouse gas emissions have all increased since last year's accounting.

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Posted by fiscalstudy at 10:31 AM | Permalink | Comments (0)

U.S. President George W. Bush unveiled a plan aimed to avoid more looming subprime mortgage problems that threaten to derail the economy, CBC News reports:

At a White House news conference, Bush said the plan will freeze interest rates on some qualifying subprime mortgages for five years.
The rate freeze will apply to subprime loans made between the start of 2005 and July 30, 2007, with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

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Posted by fiscalstudy at 6:51 AM | Permalink | Comments (0)

U.S. President George W. Bush unveiled a plan aimed to avoid more looming subprime mortgage problems that threaten to derail the economy, CBC News reports:
At a White House news conference, Bush said the plan will freeze interest rates on some qualifying subprime mortgages for five years.
The rate freeze will apply to subprime loans made between the start of 2005 and July 30, 2007, with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

Posted by fiscalstudy at 6:51 AM | Permalink | Comments (0)

Bank Indonesia (BI) Senior Deputy Governor Miranda S Goeltom said the country`s inflation rate in 2008 would show a downward trend and was expected to drop to below this year`s figure, ANTARA News reports:
"Inflation next year will be lower than this year when the figure is estimated to range between 6.33 percent and 6.7 percent," according to Miranda.
She said BI`s studies on next year`s inflation rate had used pessimistic assumptions such as high oil and commodity prices.

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Posted by fiscalstudy at 5:45 AM | Permalink | Comments (0)

The elite banks financing the £11.1bn takeover of the retailer Alliance Boots may see their fees go up in smoke as an incipient credit crunch spreads though the capital markets, The Telegraph reports:

The cost of money for leveraged buy-outs has vaulted since the near-collapse of two Bear Stearns hedge funds exposed the deep rot in mortgage securities linked to the US property slump. Banks have been left holding a hot potato as they search for investors willing to stump up £9bn by the end of this week to cover the deal.

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Posted by fiscalstudy at 5:19 AM | Permalink | Comments (0)

The Canadian economy added 11,300 jobs in July — enough to drop the country's unemployment rate to a 33-year low of 6.0 per cent, The Economist reports:

The net job creation numbers came in below the 20,000 figure some analysts had been expecting.
The biggest employment increase came in professional, scientific and technical services, where 25,200 jobs were added. Trade, transportation and warehousing also saw job growth.

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The Association of South-East Asian Nations (ASEAN) hopes to compete negotiations for free trade agreements with six partners by 2013, according to the regional bloc's secretary general, ANTARA news reports:

The 10-member ASEAN is currently holding talks for FTAs with China, Japan, South Korea, India, Australia and New Zealand.
ASEAN Secretary General Ong Keng Yong said the FTA with South Korea was expected to be completed in 2008, followed by China in 2010, India in 2011 and Japan in 2012.

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Posted by fiscalstudy at 5:25 PM | Permalink | Comments (0)