"I used to think that the world was shaped by love. I'm sorry, but that's nonsense. It's shaped by money. Money, avarice and greed -- these are the three main constants."
—Former Deutsche Bank CEO Hilmar Kopper
In "Money Needs Laws," an interview worth reading in Der Spiegel, December 29, 2011.
(Swans - January 2, 2012) CURRENCY WARS: For decades the U.S. has hugely benefited from having the dollar be the reserve currency of the world, as practically all worldwide commerce was made out in the greenback controlled by Washington and Wall Street. Then, in 2002, the euro was introduced among various members of the EU, creating for the first time an alternative to the dollar, at least at the beginning within the EU -- and gradually expanding its influence in the international markets. Washington and its British ally never looked kindly to the development. London refused to adopt the new currency and join the eurozone. Washington gave its benediction -- since it could not stop the project -- but expressed circumspection about the future of the euro. Ten years or so later, all of a sudden, the eurozone is threatened to unravel due to its member states' public debt.
ANOTHER PLAYER, however, has entered the arena and is slowly and quite diplomatically posing a threat to the dominance of the dollar. Everyone is familiar with the famous lines by Carl von Clausewitz (1780-1831): "War is a mere continuation of politics by other means," and "War is thus an act of force to compel our enemy to do our will." They have been used and acted upon by American policymakers for ages with varying results. But this time around the policymakers ought to think of another line, possibly less famous, uttered by Zhou Enlai (1898-1976), the late Chinese diplomat and former premier of the People's Republic of China: "Diplomacy is a continuation of war by other means."
THE CHINESE ARE INDEED acting quite diplomatically, but nevertheless, they want to break the dominance of the dollar, though without diminishing the value of the greenback in the short term (the Fed does a good job at this on its own) since they hold 2/3 of their overall reserves (about $3.5 trillion) in US dollars. Still, in the recent past, China concluded financial agreements with Russia and Brazil (as well as with Thailand and Pakistan), to pay their respective commercial exchanges in their local currencies, thus abandoning the dollar altogether. Now, the trade between China, Russia, and Brazil is rather insignificant in the order of things within international commerce -- a blip on Washington policymakers' radar screen. The exceptional nation is much too preoccupied with the sex of the angels as debated by the imbeciles (with the exception of Jon Huntsman) that seek the Republican nomination to the 2012 presidential election -- should we lower taxes, refuse gay marriage, make abortion illegal, cut Social Security and Medicare, stop food stamps and unemployment benefits, bomb Iran, defend Israel to the hilt, build a wall along the Mexican border, expel all "illegals"?
WHILE THE Republican candidates, whose only distinction is sheer silliness and stupidity (or utter cynical hypocrisy, cf., Newt Gingrich), were debating nothingness, the Chinese and the Japanese agreed a week ago to use their respective currencies, the yuan and the yen, for bilateral trade. So here are the second and third economic powers in the world eschewing the dollar. Slowly, patiently, step by step, the Chinese are internationalizing their currency to the detriment of the dollar, which is not particularly surprising because the Chinese have been saying for several years that the dollar should no longer dominate the global economy and ought to lose at least part of its seigniorage. This Sino-Japanese agreement, which is not a threat in the short term (it has yet to be implemented) will in time weaken the US economy, as it will make it harder for the U.S. to attract international savings that are direly needed to finance the chronic deficit of the balance of payments and of the federal budget. We are entering uncharted waters, indeed.
THE SINO-JAPANESE MOVE, quite a legitimate and rational one, was ignored by the Republican candidates, received little coverage from the American MSM, and little comment from the US administration. In Europe, however, it was front-page news on most newspapers, and politicians noticed the danger it incurred to the eurozone. German finance minister Wolfgang Schäeuble (an ardent proponent of the EU and a sincere Francophile) put it this way: "These are developments that show it's good that we have a unified Europe. A united Europe is the strongest economic area in the world. We have good chances to pursue our interests and then the opportunity to implement them in the world."
YET, THE EUROZONE is being relentlessly attacked through the combination of recurring downgrades of its members' credit ratings by the three American-based credit rating agencies and the speculation of the financial markets (hedge, pension, insurance, sovereign funds, wealthy investors...) that seek the short-term highest possible financial returns -- which is their legitimate right in our current socioeconomic system. Yet, there is no euro crisis per se. And, I would surmise, there is not even a debt problem, with the exception of Greece, which is a basket case, but weighs almost nothing in the economy of the EU and the eurozone. (What I have persistently asserted is that what exists both in the EU and in the U.S. is a revenue -- or lack thereof -- problem.) The EU is actually less publicly indebted than the U.S. And, if one takes into account households' personal debts as well as the debts of US states, the EU is in far better shape financially than the U.S. So, what's going on? I suppose Schäeuble, Merkel, Sarkozy, and other European leaders are fully aware of the tremendous forces at play, but cannot diplomatically speak openly about the currency war that is going on between the U.S., China, and the European Union.
SO LONG AS the socioeconomic system remains as is the situation will get worse and eventually more violent.
FINALLY, A PERSONAL NOTE: Gentle Blackie, our 20-year-old wonderful cat, had to be put to sleep on Friday, December 30, 2011. She had become frail, but still managed well, until Thursday when she began losing her sight. I did not notice it immediately, but the next morning I saw her hitting her head against the railing of the deck, against the wooden chair where she used to peacefully rest. She could not even find the bowl where her food was served. It's Jan who alerted me to Blackie's condition. She said, "Blackie is blind. See..." Jan, with her right hand, made threatening gestures in front of Blackie's beautiful head. Blackie did not react or even blink. We pondered what to do. How can we take care of an ailing blind cat? And, of course, the weekend was upon us. So, we felt we had to act swiftly. Jan placed Blackie in a cat carrier and drove in a hurry to Ukiah (20-some miles) to the veterinary clinic that takes care of our adored companions (dogs and cats). They were super busy, so Jan drove to another clinic. There, they confirmed that Blackie was blind -- her blood pressure was extremely high, causing her retinas to detach; she was probably hyperthyroid, and likely had kidney damage. They said that $1,000 worth of tests would need to be spent to find out the reason, or reasons for her condition. They added that the chances of having Blackie recover her vision were remote, and the other conditions would require daily medication. Jan called me on her cell phone to relate the situation. I answered that money, even if we could afford it, would not make a 20-year-old cat be young again. She had reached the end of the road. The choice, now, was between buying a cage in which I could keep her inside the house until she peacefully passed away or to put her to sleep. We decided on the latter, and after some time, Jan left her behind. On Saturday morning, Jan called the nurse at the clinic. She said that Blackie was friendly, quiet, and purring as she went to her final sleep. We used to call her the "purring one" as she would purr time and again the moment you caressed her. I am heartbroken.
JAN WROTE a wonderful piece about our three cats in November 1996, "A Party of Diversity." All three of them -- Bijou, Luigi, and Blackie -- are now dead. I wrote about Bijou, Kurt Vonnegut, and kindness in April 2007. And, of course, Blackie's passing reminds me of our loving Priam... Here is a picture of these cherished companions. From bottom to top: Blackie, Bijou, and Luigi.
Blackie, Bijou, & Luigi (2005)
I KNOW THAT in comparison to the misery and mayhem, and human death around the country and the world, the lives of these little beings, these caring companions, are of little import. But think another way: What if instead of creating misery, mayhem, and human death all over the world for "money, avarice and greed" we would take care of those loving companions and live accordingly in the first place?
. . . . .
C'est la vie...
And so it goes...
La vie, friends, is a cheap commodity, but worth maintaining when one can.the life line won't hurt you much, but it'll make a heck of a difference for Swans.
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