What an interesting world.

Competitive devaluations reflected in modern day highs in the price of gold in US dollars, the state being the source of last resort to keep the economy moving forward as households and companies rush to save, Ireland facing default, China's neighbours waking up to the consequences of its fusion of politics and economics, reports of a new Great Game that include China moving outside of its already considerable Empire, and Israel not extending its moratorium on building on pre-June 1967 territory.

Welcome to the second decade of the 21st century.

Also interesting articles on which countries women have a decent chance at a decent life, and how to scalp the scalper.

The ever insightful Ambrose Evans-Pritchard on how much of the world is repeating the great policy error of the 1930s beggar-thy-neighbour currency devaluation, and paper money debasement.

Look carefully are those Chicken Nuggets from Wendy's $1399 or $13.99?

We live in an amazing world. Everybody has big budget deficits and big easy money but somehow the world as a whole cannot fully employ itself,” said former Fed chair Paul Volcker in Chris Whalen’s new book Inflated: How Money and Debt Built the American Dream.  http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8026324/Gold-is-the-final-refuge-against-universal-currency-debasement.html

"Currency wars" -- Guido Mantega, Brazil's Finance MInister.

The world is in an “international currency war” as governments manipulate their currencies’ value to improve their export competitiveness, Brazilian Finance Minister Guido Mantega said on Monday.  http://www.theglobeandmail.com/report-on-business/economy/world-is-in-currency-war-brazil/article1728151/

Remember that US debt is now $100 trillion, and that post the Gold Reserve Act of 1934, and Nixon's decision to break the US dollar from its gold peg in 1971, the current purchasing power of a US dollar is approximately 5 cents.

The debt nightmare in the United States.

We all know that Americans have more debt now than they did decades ago. In our consumer-driven culture, buying new gadgets, clothes, and other "must-have" items has been made quite easy with credit cards. The college-for-all culture has also encouraged many young people go take on thousands of dollars in student loans. And of course, there was the housing bubble. But how much more debt do Americans have now than they have historically? The numbers are pretty incredible.  http://www.theatlantic.com/business/archive/2010/09/how-americans-love-affair-with-debt-has-grown/63552/

 

But Martin Wolf contends that in the long process of deleverage underway the borrower of last resort must be the state because countries that need to run current account surpluses can't. Otherwise the Great Recession will become a deflation ridden Depression. Pick your poison.

“You can’t cut debt by borrowing.” How often have you read or heard this comment from “austerians” (a nice variant on “Austrians”), who complain about the huge fiscal deficits that have followed the financial crisis?  http://blogs.ft.com/martin-wolf-exchange/2010/09/26/we-can-only-cut-debt-by-borrowing/

At the beginning of the year investors had to navigate the risk of a Greek default, now it is Ireland.

Default déjà vu.

So soon after Greece’s economic crisis erupted earlier this year, one cannot but help getting a déjà vu. Markets have begun to ask questions about Ireland’s solvency, but European policymakers appear to be in the same sort of denial as were their Greek counterparts. This denial may be the prelude to the same sort of grave policy mistakes that characterised last May’s Greek bail-out package from the International Monetary Fund and European Union.   http://www.ft.com/cms/s/0/d9e0c3ba-c6fb-11df-a806-00144feab49a.html

Related.

Another nice mess you have gotten me into!   http://www.youtube.com/watch?v=UKJuEINgxa4

China reaction extremis to Japan's two-week detention of an otherwise unknown fish trawler captain has done two things.

First, reminded anyone who did not already know that the state controls the market in China.

Second, that the development of a blue water navy, interest in Kashmir, and the strategic relationships the country is forming along key shipping lanes -- affectionately known as the  'string of pearls' -- may have something to do with extending itself outside of its own Empiric borders.

Rethinking strategic mineral dependency in the United States.

The US is trying to resume production of raw materials vital for defence equipment and green technology in response to rising fears about Chinese dominance of the sector.  http://www.ft.com/cms/s/0/0fdd6c48-c990-11df-b3d6-00144feab49a.html

Related.

China has stepped up customs inspections of goods shipped to and from Japan, slowing trade, logistics companies said Monday, amid a spat over the detention of a Chinese fishing boat captain near disputed islands.  http://www.theglobeandmail.com/report-on-business/china-slows-handling-of-japanese-goods/article1727328/

The US takes advantage of 'China-angst'.

For years, US policymakers have watched uneasily as China grew more assertive, fearing that the emerging power would cut into Washington's clout in one of the world's most dynamic regions.  http://www.google.com/hostednews/afp/article/ALeqM5hQ90l2xRVs0IVED-7Vuo0QuTcbQQ

 

The comparison of the pressures on the US economy from a serial mercantilist are useful. China fears the consequences of a new Plaza Accord and will not allow their currency to rise like Japan did after 1985. In addition, the strategic interests of Japan and China are completely different.  In Japan, the state does not have control of the market and civil society like China.

When the Plaza Accord was reached on September 22, 1985, Japan was dead in the water amid a raging tide of trade protectionism in the United States, its biggest export market across the Pacific Ocean. Twenty years later, China is in the same boat.   http://www.atimes.com/atimes/Global_Economy/GI21Dj01.html

Related.

Tensions between Japan and China continued to simmer even after Japan bowed to Beijing's demands to release a detained Chinese fishing-boat captain, suggesting the episode could mark the start of a new period of friction between the Asian neighbors, with unpredictable consequences for regional stability.   http://online.wsj.com/article/SB10001424052748704082104575515093333231112.html?mod=WSJ_hp_us_mostpop_read

 

Japan has decided to return the Chinese fishing vessel captain it had detained over an incident involving two Japan Coast Guard ships.  http://the-diplomat.com/china-power/2010/09/24/china%e2%80%99s-pyrrhic-victory/

North and Central Asia have always presented the Great Powers with great opportunity. Today as much as ever.

Two “great games” currently roil South Asia. In the West, Afghanistan – and what Henry Kissinger calls “Islamist Jihadists” – challenges the international order. In the East, a large number of Chinese troops have entered Pakistani-held territory high in the mountain fastness of the Kashmir Karakorams, in the picturesque Gilgit-Baltistan region, not far from the glacial battlefield of Siachen, where India and Pakistan confront each other.   http://www.project-syndicate.org/commentary/singh6/English

 

Kashmir borders China.

There is an obvious disconnect between the tehreek on the streets of Srinagar, Baramullah and Sopore and the leaderspeak in the havelis of the Geelanis, Farooqs and Andrabis.  http://timesofindia.indiatimes.com/home/opinion/edit-page/Kashmirs-Difficult-Choice/articleshow/6630880.cms

 

 

Russian and Chinese mutual economic dependence.

The leaders of China and Russia are due Monday to celebrate the completion of the first oil pipeline between the giant neighbors, heralding a new era of energy cooperation and another symbolic step in the eastward shift in the balance of global economic power.  http://online.wsj.com/article/SB10001424052748704082104575515543164948682.html?mod=WSJ_hp_us_mostpop_read

I wonder how those homes being built by Israel on pre-1967 land will be advertised? Starting in the low 500s?

Israel’s freeze on Jewish settlement construction in the West Bank expired at midnight, but Palestinians did not immediately carry out a threat to quit peace negotiations as several settlements resumed limited home building on Monday and American-led efforts to save the talks moved into high gear.   http://www.nytimes.com/2010/09/28/world/middleeast/28mideast.html?_r=1&ref=global-home

The Women's Opportunity Index.

Women’s economic empowerment has been a defining feature of the last century. Yet while women today comprise more than half of the global workforce, their wages and economic opportunities still lag behind those of men. This column takes a closer look at the economic landscape for women and how it compares across countries, using the Economist Intelligence Unit’s new Women’s Economic Opportunity Index as a guide.   http://www.voxeu.org/index.php?q=node/5562

 

And how to the get the best seats at the best price.

I love going to concerts and sporting events. But I hate paying full price for tickets. Instead, I wait until the day of the event and try to buy tickets from scalpers at a big discount.   http://blogs.hbr.org/cs/2010/09/how_a_pricing_expert_negotiates.html