Zhou's speech shows that the issue is a pressing one for China, whose top officials regularly bemoan the volatility of the dollar and what they see as U.S. economic mismanagement.
Creating a new, widely accepted reserve currency may take a long time, Zhou acknowledged. It would be a "bold initiative that requires extraordinary political vision and courage".
SDR ADVANTAGES
Allocating more SDRs would give the IMF more resources and help it address imbalances in power within the fund, where big emerging economies like China muster a fraction of the votes cast by Europe and by the United States, which wields a veto.
As well as a further allocation of SDRs, Zhou proposed a series of steps to broaden the unit's use so it can evolve into a reserve currency:
Look who is border hopping now. It's not your typical cheap labor, literally referred to as cargo by illegal employers and smugglers, but instead Mexico's middle class and well to do are taking that desert stroll:
As a drug war rages throughout Mexico and along its northern border, an increasing number of Mexicans are crossing into the United States to flee the killings, extortion and kidnappings that have plagued places like Juárez and Tijuana.
The escalating war near America's southern border is driving embattled Mexicans to seek safety in the United States. What if the tide of violence follows them?
Came across this on Forbes. Its an interesting piece on our latest favorite financial goody, the Credit Default Swap. Good read for those unfamiliar, though it isn't a complete primer. Nick, want to chime in?
Who's Afraid Of Credit Default Swaps? Robert Lenzner, 03.19.09, 6:00 PM ET
Credit default swaps, the "exotic" financial instruments at the heart of the collapse of AIG, are about to be tamed, regulated, rehabilitated and turned into the kinds of debt-based securities that respectable institutional investors will buy, hold and trade. Their frontier days are ending. Welcome to civilization.
The headlines are ablaze of Geithner's plan. The Treasury Secretary is on CNBC, the cable news, even conference calls with select bloggers (I wonder if Krugman was invited?), are they twittering too? The markets react, the Dow up almost 500 pts! Astounding, magical, we have the cure....or do we?
I already wrote my own overview of the toxic asset plan and believe it fatally flawed with the same assumptions that got us into this mess, home values must drop to be in alignment with income and Americans are tapped out, the great debt fueled Ponzi scheme has collapsed.
We are at the end of an era – the end of cheap oil, the end of suburban sprawl, the collapse of the world’s “shadow banking system”, the end of Wall Street’s arrogation of our nation’s financial system, the end of treating our natural environment as a “free” externality that corporations and consumers can ravage at will. In this time, as we transition from one era to another, billions is the mark of a mere politician.
While the free trade religious agenda pundits scream from the roof top, oh that's protectionist and it is conveniently ignored that pouring trillions of U.S. taxpayer dollars to financial institutions is the ultimate protectionism, this little headline blips across the news aggregators:
Global trade will plunge 9 percent this year, the most since World War II, as the recession deepens, the World Trade Organization said.
“Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies -- particularly those in Asia -- make for an unusually bleak 2009 trade assessment,” the Geneva- based WTO said in its annual assessment of world trade.
The government finally approved an exchange for trading Credit Default Swaps. With so many financial institutions, from banks to hedge funds, holding on to these things, the question has been how to finally close out all these trades. A lot of the issuers can meet their obligations on these trades, and a lot of buyers of CDSes tied up a lot of their capital into these instruments. Everyone wants out, but there hasn't been an exit until now.
Frankly, I'm glad we're going to have an exchange, it should have been done this way from the beginning. Everyone's stuff will be in the open, let the various market participants do this, not the government. I would rather these folks close out their trades between themselves than having the government buy them and deal with it. Also, this will open the way for a future Credit Defualt Swap product that would be more fungible.
On June 24, 1982, four bank examiners from the Federal Reserve Bank of Kansas City walked into the rear of a small shopping mall in Oklahoma City.
This unlikely location marks the start of a series of events that have brought us to the brink of a global economic collapse and a second Great Depression.
In order to reform the broken financial system you must first come to terms with the fundamental reasons for the current dysfunction. To do that we must go all the way back to the first instance that this dysfunction manifested itself, in the same way that a medical researcher must trace a mutating virus back to its origin in order to find a vaccine.
We're not called The Economic Populist for nothing. This story is going to outrage you. Institutions receiving your tax money are making campaign contributions to the very Congressional representatives who are supposed to oversee your money.
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