How to Make Euro Collapse

Believe your eyes! The title reads “How to Make Euro Collapse”.  They are on the way, if nothing is done to buck the trend, to collapse. Greece is seriously sick; Germany’s bonds auction was a mess, Portugal’s credit rating was reduced to Junk status and that of France still hangs in the balance. To make that happens; they need to redouble their efforts on initiating Euro-stability bonds and sticking to the old role played by European Central Bank.

Euro bonds would only make the situation worse at this time. They failed (again and again) to reach a consensus on what measures should be taken to get Europe back on track. The bonds will not only prove to be effective unless they first solve political crisis at all costs.

If the troubled countries don’t grow, it will only add fuel on the fire. Just solve political crisis first, both within each country and within Eurozone member, and everything will be attacked. There has been speculation the Two Technocrats in Italy and Greece will make different. It still makes on different if they still subscribe to Germany’s advice.

Structural adjustment programs, spending cut, and competitiveness are words I usually come across once reading news related to Europe.  I once put those are not counterproductive. Time is ripe for them to reverse it. If things are to stay the same, they have to change. It will be counterproductive, if they are still doing what they are doing.

Spending cut means higher unemployment, less investment, less spending and fewer taxes for Government. Spending cut doesn’t mean cut in defects. What they really gain is competitiveness through tructural adjustment programs.  Things are turning worse and it may offset the gain.

Euro bonds at this time will only bring down creditworthiness of countries blessed with AAA rating. Unfortunately, France and Germany blocked it.  No one is interested in helping Europe and they are of course capable of helping themselves.  Europe is not running out of ammunitions. But it won’t be long.

God bless, they are not working on a plan how to grow Europe. And Germany is not going to soften her position easily. Germany is not willing to solve the problems. Weak Euro is weakening competitors in both Eurozone and outside countries. It also creates more export opportunity for Germany’s companies, especially within the zone. Crises are striking back. Merkel may give it a second though.

Redefining the role of ECB will takes years to get it done.  I don’t think there’s a notable different between Euro bonds and disaster bonds, in case political crisis is not fixed. Euro bonds, supposed they agree on how to grow, will helps buying time as they are trying to expand the role of Central Bank.

My goodness, they overlooked it. Let us hope that they never take it account, let alone approve it. Hey, email me when you learn they succeed in making Euro collapse. My email is on your right side. Thanks in advance.  Somehow, I’m praying I don’t get any mail.

 

Obama’s Secret Business: Why America Can (Can’t) Win Over China

He recently said China needed to behave like a grown up. It may be the toughest rhetoric he made to China. I’ve been followed that development for a while too.  There was somewhat strong backlash from China. It invited unnecessary anti-Chinese sentiment in the States.

I read articles and analyses on Renmibi undervaluation. Very, very few articles impressed me. Some are misleading, some are biased. From economic viewpoint, they are partially right. But from the political point of view, they are totally wrong.  I don’t disagree Chinese currency has been kept undervalued.

China uses trade surpluses getting from trading with US to buy US’ debt to keep Yuan undervalued. It’s back and forth. That’s a point that most of them get it right.  Senator Obama spoke out loud about China’s currency manipulation and President Obama softened the tone on that. No, I’m not criticizing him.

Bush and Obama didn’t take hard action against China. This is not to say that they fear China. It’s because the large trade deficits is a self-inflicted wound. Punishing China would hurt them the most. The problem is about their expensive lifestyle.

It’s well known China is manipulating it currency. Thus, there’s no coincidence costs of Chinese goods are lower that those of other developing countries. Supposed that the Yuan is now not kept undervalued, the costs the goods and services imported will rise. Yes, they can buy from other countries, but the prices should be higher. Inflation is also low because of that. The most effective way to punish China is to change the level of their consumption.

Make no mistake; America is not facing a dilemma over China’s currency manipulation. But I think I found two mistakes American leaders made. Some GOP presidential candidates are talking about bringing jobs back to America. They are wrong.

Jobs that lost to China, in particular and developing economies, in general, will never come back to America. What they need to do is to educate their workforce and to invent sophisticated jobs here. Chinese can’t do or steal those kinds of jobs. An America that could win over China is an American that possesses of high-tech manufacturing jobs.

Some are still dreaming of bringing jobs back. No need, they can’t win. Investing new jobs in the United States is far better than trying to bring jobs back from China. Second, they are still not thinking about it (or they have been thinking about it.) It’s a real win-win solution for both countries.

What should America do? I already offered solutions. Leave the How Question to Americans. I’m sure that are much more solutions. But I’ still stick to the view America can’t bring those jobs back and they needs to invent new ones.

China is not the real problem for American deficits. But Mr. Obama needs to attack to gather votes. Chinese people need to know about this and American media also needs not to add fuel to the fire.

America will never win over China unless they are able to change the pattern of their consumption and are able to invest new jobs here.

Rebooting American Economy

  

I just finished a new book by Bill Clinton. The title reads: Back to Work: Why We Need Smart Government for a Strong Economy. In this book, he offers advice and some criticisms for Obama. He regrets that Obama didn’t raise debt ceiling when Democrats hold majority voice in the Congress. OK, leave that story to the historians.

There are two points I’m really interested in. Firstly, he argues The Gramm–Leach–Bliley Act he signed into law in 1999 didn’t play a major role in causing an economic crisis in America. But I’m still skeptical about that. But I have to revisit two chapters I touch on financial deregulation in my book.

He urges Obama administration to reduce principle for homeowners who are underwater. He should have done this. That’s just a point I would be disappointed with him, if I were an American. It’s been long overdue. It’s not a time to argue who is right, who is wrong. It’s a time to save the economy; I often herd this argument when the big corporations in US were being bailed out. I think it’s a time to get the economy going again by reducing principle.

It’s not only Clinton who proposed that kind of initiative. When their homes are underwater, they tend to choose to default. And the default will drive down the home prices and the vicious cycle continues.  That’s why housing market never recovers. Never expect that American economy will recover unless the housing crisis is fixed.

It’s a political suicide to do so. But politicians should love their country not their job. Mr. Obama should do what he should do for the sake of his country. I think the anemic recovery of American economy was, in a part, the result of unwillingness of his administration.  He was a scapegoat.  In economic area, he did a better job, not a good one, than Bush.

I said months ago that American economy should have been recovered by 2015.  I still hold that view. Why? It usually takes 5 to10 years for a crisis caused by cash crashes to recovery. It should take roughly ten years for America. This crisis is both cyclical and structural. Some Americans don’t possess 21 century skills and naturally they become unemployed. 

I don’t expect any bold moves by Obama until 2013. I think he is going to elected again. He would be more careful about his legacy for his second term.

 I came across an OWS slogan: I don’t mind you being rich; I mind you buy my Government.  Income for Middle Class Americans barely increased over the last 30 years, adjusting for inflation. The Mega rich Americans, like Warren Buffets, Bill Gates, and George Soros, to name a few support tax hide. They understand well about this.

We can’t have a strong economy without a strong middle class. The rich are not paying enough tax. Make no mistake; I’m waging a war class for anyone.

Market can’t provide education, ports, bridges, roads and so on. What would happen when the Government doesn’t have enough money to invest in America’s future?  Million Americans now lack the skills and knowledge to compete in 21^st century economy. The money the Government gets from the rich will be used to build roads on which they would take the goods to the market, build the ports they ship goods to sell abroad, and educate workforce that eventually work for them.  Income inequality turned a cyclical crisis into a structural one. 

The rich can’t provide those things but the Government can. But the Government needs money to do that. The rich should pay enough tax to get America going again. Rebooting American economy!!!

Surprisingly Inspiring: First Impressive Impression with Mr. Siv Sichan

I attended seminar lectured by Mr. Siv Sichan more than a week ago. The lecture was delivered under the banner “From the Killing Fields to the White House”.  He is a killing field’s survivor, an author, and also a former US ambassador to United Nations.

His story is more than inspiring. The only thing I regret is that there weren’t many participants. It was held at night and there were roughly 60 people who got there. It’s a kind of motivational story and that story needs to be shared.

He authored an autobiography titled “Golden Bone”. According to Khmer superstition, people who are born with golden bone are really, really lucky. He said it was luck that made his life successful. But you had to create your own luck, he went on. I love it. You are lucky become you had create your own luck.

He fled to Thailand, where he was jailed for illegal border crossings, to escape the killing of Khmer Rouge before he made way to the United States. He had two dollars, a bag of rice and a scarf of his mother when he was in US for the first time. He speaks French and English. So, being a taxi driver was not hard for him. It was his first job in the State.

He campaigned for Bush senior in 1990. And Bush junior appointed to be the ambassador to UN in 2001. He is serving as a State Commissioner in Texas. He was offered a scholarship from Columbia Universality holding a Master degree in International Affairs. I’m also doing that major.

His book, available in Khmer, English and Portuguese, was published in 2008. Interestingly, he was invited to speak in the White House about his book. The audiences were dead silent. It was getting more and more interesting. He was the first Asian American to serve the Post. This shows we can also do big things. 

I love his concluding remark: When you are doing well, don’t forget to do good. I think he implied we should do good to unleash the potential of our poor people. They are not stupid. They just don’t enjoy the opportunities. All we need to do is to release their potential.

He advised us not to give up, no matter what happens, your H.O.P.E. H.O.P.E stands for Honest, Optimistic, Perseverance and Extraordinary.

He has come this far with little resources he got.  Our world is better than his world. We are supposed to do a better job. He has been very lucky. And he is lucky because he knows how to create our own luck.