Friday 30 March 2012

Emerging economies rage against quantitative easing

The world is changing. The old order is falling apart. Europe no longer holds centre stage in the global economy. Brazil, Russia, India and China - the BRICs - are growing at a phenomenal rate. In the emerging economies, there are few debt problems, and certainly no stagnant growth.

The BRICs are also getting extremely annoyed at the reckless monetary policies of the so called advanced world. Brazil is leading the charge....

(Reuters) - Brazil will push for its large emerging-market peers including China to denounce what it sees as unfair monetary policies by Europe and the United States, raising the stakes in a global confrontation over economic imbalances.

Brazilian Trade and Industry Minister Fernando Pimentel told Reuters on Wednesday his country would seek such language in a communique at this week's BRICS summit, which brings together Brazil, Russia, India, China and South Africa.

Many analysts believe that Beijing artificially manipulates its currency but Pimentel said the biggest policy problems now are in the rich world.

"Today's (problem) doesn't have to do with China," he said in a 30-minute interview on the eve of the summit in New Delhi. "It has to do with the dollar and the euro."

Brazil accuses rich countries of causing a "monetary tsunami" by engaging in expansionist policies such as low interest rates and bond-buying programs.

12 comments:

Stevie b. said...

do the Brazilians want those of us who can still buy their stuff to do so or what? Now let me see - what's the opposite of "expansionist policies"? Wait a minute - wouldn't it mean buying less (Brazilian) stuff than we do already? Good for us maybe.....but for Brazil?

Alice Cook said...

Steve,

Maybe QE isn't expansionary for Brazil. If the BoE prints more cash than its Brazilian counterpart, sterling depreciates and the real appreciates. Not good for Brazillian exports.

Alice

Stevie b. said...

hi Alice - fair enough - I guess the brazilians should get used to it....

Stevie b. said...

p.s. my excuse for this ungodly hour is that i'm in central Otago - (wot's yours Alice?)

Alice Cook said...

I was waiting for the Galloway result. Total shock, yet now seems obvious.

Electro-Kevin said...

Stevie b.

The Brazilians should get used to it ?

Well now.

I think we shall see the BRICs buying up our essential infrastructure quite soon - and having the political and economic clout to do it.

Then we shall see precisely who is going to have to get used to what.

Anonymous said...

Since the 'old order' is always falling apart since the first recorded history, perhaps a bit more explanation is in order.

I assume you are pointing to a replacement of the dollar as a reserve currency by something more to the taste of the Chinese who are sitting on a sea of the things.

I note the Iranians have a way of avoiding dollars and therefore negating the restrictions(?)they are put under.

Next step, a visit from your local friendly superpower - who are there to help....

Passerby said...

James Rickards wrote a book recently called Currency Wars.

James Rickards participated in financial war games at the pentagon, the point of which was to ascertain the vulnerability of the USA to a financial attack on dollar hegemony.

Jim Rickards says there is a currency war going on, and it certainly not the first one.

The Brazilians are getting badly hammered in this war because, for reasons I cannot remember, they are unable to keep the price of their currency low - google brazil currency war.

Its serious stuff. Although Jim Rickards does not mention it, you may remember Iraq was invaded a few years back. The official reason was weapons of mass destruction that were never found. You may also remember Dr David Kelly (a man who knew about these things) said there weren't any there - before the invasion.

Iraq had no connection to 9/11 either.

So why did 'we' invade?

Because Saddam switched trading Iraqi Oil from US dollar to the Euro and was thereby undermining US Dollar hegemony?

Why did we intervene in Libya?

Libyan Gold dinar perhaps?

I have no idea, but I find these possibilities kinda interesting.

Stevie b. said...

@ Electro-Kevin - No doubt if/as/when the £ falls all sorts of stuff will get bought by foreign nationals/Cos./Govts. - that is, if they're all allowed to...as I seem to remember when the shtf in the 70s there were all sorts of exchange/currency controls to prevent anything Govt considered undesirable & to try and stop things imploding big-time. I nearly joined the TA (thought my Psychology degree might actually come in handy) as from memory the FT index fell below 120 (?) and I hoped it might be one way to try and ensure I could feed my family!

Electro-Kevin said...

Stevie B - I think they will be allowed to. It looks as though the Chinese are to put in a bid for a major UK transport operator.

(I have to be careful not to divulge too much info)

Passerby said...

Further to my musings yesterday...

http://www.tandfonline.com/doi/full/10.1080/21598282.2011.566044

World crisis, currency war, and the end of US/dollar hegemony: A conversation with Michael Hudson

Stevie b. said...

Correction - fwiw finally remembered and found a chart to confirm that the FT Index fell to around 150

http://www.sharehunter.com/news/wp-content/uploads/2010/03/FT-30-71-76.png

Passerby - interesting read - I see Hudson talks about new Capital Controls....plus ca change etc...