Yang Yao, Editor of the China Economic Quarterly, points out that Obama’s health budget calculations may depend on Chinese savings
“Stopping the sale of Treasury bonds to China would benefit the US. First, it would prevent Chinese savings depressing demand for American goods. Second, it would discourage the US government from deficit spending and prevent skyrocketing government debts. Third, it would avoid a trade war, which would benefit no one. The inconvenient truth, however, is that the Treasury needs cheap Chinese savings to finance many more urgent spending needs, including the new healthcare plan.” Extract from FT.com
But it’s impossible to ignore the significance of this continuing internationalization of the remminbi.
“Although it has no short-term implications for the full convertibility of the renminbi, the announcement provides ballast to the volley of political signals Beijing has been sending in recent months over its dissatisfaction with the US dollar.” Extract from Financial Times
So much for the Government’s “Operation Sunshine” that was supposed to make budget program expenditure more transparent and accountable.
On the biggest single program item, Defense—a staggering 2.3% of GDP or $27 billion dollars next year alone—it seems to be a case of re-negging and obscurity.
“As the first budget after a new Defence White Paper, there is a glaring absence of substantive information on funding, investment and reform. The best that can be said is that the budget is consistent with a White Paper that’s silent on when anything will occur or what things will cost. All we are offered is a vision of what the defence force will look like in 2030.” Extract from Australian Strategic Policy Institute
The ASPI’s chief analyst has described the Budget papers as “deliberately vague”.
The budget to be introduced next Tuesday will be the first to fully implement the recommendations of the (former Senator Andrew) Murray Review on cutting gobbledygook and sloppiness out of budget estimates and on enforcing more rigorous reporting and audit of government use of our money.
All of this is a good thing. It is being managed by Lindsay Tanner’s Ministry of Finance. But the program still falls some way short, in my view, of where the Australian government should be in reporting public expenditure; especially considering the amount of our cash that they’re slopping around in the name of ‘stimulus’.
Lenin recommended it. Now Simon Johnson moves from blaming the elites to organizing against them.
“We have to break up any bank that’s ‘too big to fail’ so that we can have a functional free market. We need serious reform that fixes the root causes in our political and economic system: excessive influence of banks, dangerous compensation systems, and massive consolidation that does nothing to serve the public interest.” Extract from A New Way Forward
When ‘Uncle Joe’ Stiglitz criticizes a program for ‘socializing losses’, there must be something seriously wrong.
The Geitner Plan for the U.S. banking system appears on the surface to be a way to create and isloate bad banks. These new institutions will be built by a partnership of government and private investors who will buy-up and hold the ‘toxic’ assets pending the market placing a firm and less panicky valuation on them.
Once removed from the mainstream—so the theory goes—the toxic assets will have a less poisonous effect on the financial system. Meanwhile, time will drain the toxin from the assets of the bad banks. If the government’s private partners in the deal price the toxic-asset-purchases cannily,they will make a profit from their eventual re-sale and the government could even make a profit on it’s credit-subsidies. A ‘win-win‘.
p>But that’s a myth as <a href=”http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=3&partner=rss&emc=rss&pagewanted=all” title=”Op-Ed Contributor – Obama
A development worth watching:
“Economists say the SDR plan is unfeasible for now but see Beijing’s currency swap deals [with Argentina, Malaysia, Indonesia, South Korea, Belarus] as pieces in a jigsaw designed to promote wider international use of the renminbi, starting with making it more acceptable for trade and aiming at establishing it as a reserve currency in Asia, something that would also enhance China’s political clout” Extract from Financial Times