Miscellany: 1/09/11

Quote of the Day

The various religions are like different roads converging on the same point. What difference does it make if we follow different routes, provided we arrive at the same destination.
Mahatma Gandhi

Currency War?

The Financial Times reports that Brazil finance minister Guido Mantega is upset by what he regards a "currency war", particularly by China and the US and is threatening a trade war. (I remember during my 1995 work trips to Brazil how absurdly overvalued the real was; generally an overvalued currency makes exports more expensive and imports cheaper. An undervalued currency has the opposite effect.) Most people believe that China's currency, pegged to an offset of the US dollar, is undervalued; in fact, China has started moving interest rates up, given inflationary pressures in commodities (including oil, which it now net-imports). This has become a significant as many low-income Chinese are dealing with food inflation.

Some believe that Fed Reserve chair Ben Bernanke has been indirectly devaluing the US dollar through his quantitative easing, pumping hundreds of billions into the US economy, with near-zero interest rates. The idea is that a cheaper dollar makes American exports more competitive and imports less competitive; the increased demand for American goods and services should boost profits and jobs. The downside is that imports are more expensive. This might sound initially sound good, since American companies can more flexibly price their products and services and protect profits. But it also affects imported resources for which the US is not self-sufficient--including the 75% of oil we currently import and one of the hottest commodities, used in advanced technology products: rare earth; currently, China produces over 90% of rare earth materials and announced restrictions on exports, no doubt to promote its own value-added goods. (The reader may recall a spat between China and Japan a few weeks back where China responded using the export supply of rare earth materials as an economic weapon.)

In the meanwhile, Brazil is peeved at the US, where Brazil has gone from a small trade surplus to a deficit; it seems to believe that the US is artificially deflating its currency for competitive advantage. In fact, when one engages in devaluation policies, the other players can meet your devaluation and raise it. "Beggar thy neighbor" is a ruinous strategy that can send the global economy in a vicious circle downward spiral.

Ben Bernanke's rationale seems to be that the global economy is still too soft, and interest rate increases would risk the fragile economic recovery. However, I disagree (along with others whom have bid up gold and silver, precisely because they worry all this money slushing around the economy will ignite ruinous inflation); I'm worried that we haven't learned our lesson from the stock market and real estate bubbles (that maintaining artificially low interest rates encourages economy speculative activity and builds up yet another unsustainable asset bubble). If health care, food, materials and energy price spikes can't convince Bernanke, he may need to worry about a different problem: what happens when Treasury funds suddenly find no takers? You have to bid up interest rates anyway: probably not at a time of your choosing, and big enough rate jumps can tank the economy. I would argue it's in the best interests of the country for Bernanke to defend the dollar, particularly with a clueless President refusing to produce more domestic oil. The market just doesn't equate quantitative easing or maintaining artificially low interest rates as defending the dollar. What Bernanke has been doing is borrowing from Peter to pay Paul. Ironically I think the markets would react positively to the Fed's taking a tougher, more realistic stance on inflation.

The Aftermath of the Congresswoman Griffiths Assassination Attempt

There have been some attempts to link an anti-Semitic motive to yesterday's tragedy; Ms. Griffiths is one of a small number of Jewish legislators in Congress. (The fact that Hitler's "Mein Kampf" is one of the accused assassin Loughner's reported favorite books certainly may add some fuel on the fire, although I haven't seen any reports of him linked to a neo-Nazi organization, relevant posted rants, or any references by him to Griffiths' heritage.)

I wasn't thrilled with the British Guardian posting its story under the headline "Griffiths' Shooting Reignites Row over Rightwing Rhetoric in US". Strictly speaking, that's true in the sense that leftists immediately started exploiting the tragedy for political purposes. It's a sore subject in the conservative community; for example, there was the 2009 well-known advisory by DHS warning of possible violence from right-wing radicals, returning soldiers, etc. Why right-wing rhetoric versus left-wing rhetoric? Take, for instance, the threats or violent actions by the Greeks, French, and British malcontents over austerity measures; were those right-wing extremists? How many riots during the 1960's and later were headed by right-wing extremists? Conservatives are not the ones engaging in class-warfare rhetoric on taxes.

In fact, Drudge Report listed some links suggesting that leftists were furious that Congresswoman Gabrielle Griffiths was one of the 19 or so Blue Dog Democrats refusing to support Nancy Pelosi in the recent Speaker vote with some related inflammatory posts on a prominent progressive Democratic website.

If there's anything predictable about tragedies like these, it emboldens gun-control advocates to come crawling out of the woodwork. Now, to be honest, I do not know why a semi-automatic weapon is necessary for the self-defense right under the Second Amendment. But I'm not sure how one enforces something like a mental-wellness mandate; it's one thing if someone has been diagnosed or has been prescribed relevant meds, but it seems many mass murderers don't show any obvious clues before they actually perform the act.

I'm not going to blame the victim here, but, to quote the Boy Scout motto: "Be Prepared." There are no guarantees in life, but one must understand there is a risk to public figures, including celebrities (e.g., John Lennon). We have to rely in part on prudent government officials and tips by observant private citizens--e.g., public rants on the government exercising mind control should have tipped off some of Jared's acquaintances.

But getting gun control measures through the current GOP-controlled House? I would put money against it happening.

Political Humor

"Now that the Republicans have taken over the House, they're going to repeal everything President Obama has done. They even told Michelle Obama that her vegetable garden has to go." –David Letterman

[Well, not exactly, but she's no longer going to qualify for a farm subsidy...]

An original:

• We have the Congress' New Year's resolution: to lose hundreds of billion pounds of obsolete, redundant, or bloated government operations. (as of Friday, a dollar purchased 0.643 British pounds.) We knew how those well-meant resolutions have ended in the pass.... Governments quickly put the pounds back on....

Gerry Rafferty, RIP

Last Tuesday, the pop musician who hit the Top 10 twice in 1978 passed away from alcohol-related liver disease. It's a sad reminder for us to respect our bodies and to exercise our liberty responsibly. Gerry was a superb singer/songwriter; also associated with a number of rock classics (including "Stuck in the Middle with You"), Gerry's signature ballad is "Baker Street" with instantly-recognizable, memorable sax solos by Raphael Ravenscroft:




Musical Interlude: One-Hit Wonders/Instrumentals

Joey Scarbury, "Believe It or Not (Greatest American Hero)"