The message from the reader:
“Sorry, but it was the President and Chief negotiator of the European Commission who caused the crisis. My comment: Strange, isn’t it! The Little England, “hate the frogs” lot have no idea how they come (came) across to outsiders: Throwbacks to a different age, when England ruled the waves and one could happily patronize backward French and other Continentals. For years the Brexit crowd nagged on about the horrors of the EU, really irritating the Continentals. Well, the former have their way now – and talk about an ill-thought-out dog’s dinner! The challenges facing Britain now are too many (and too boring ) to enumerate to a sophisticated international audience. Let’s just comment that from elderly Brits in France unable to renew their driving licenses to small companies who have to start a subsidiary on the Continent at great expense in order to keep their EU sales, a “dark age” looks more likely than triumphant independence, especially given a clown as Prime Minister. I weep. |
The future of the dollar (a bit long, but important)
The mighty US dollar continues to reign supreme in global markets. But the greenback’s dominance may well be more fragile than it appears, because expected future changes in China’s exchange-rate regime are likely to trigger a significant shift in the international monetary order.
For many reasons, the Chinese authorities will probably someday stop pegging the renminbi to a basket of currencies, and shift to a modern inflation-targeting regime under which they allow the exchange rate to fluctuate much more freely, especially against the dollar. When that happens, expect most of Asia to follow China. In due time, the dollar, currently the anchor currency for roughly two-thirds of world GDP, could lose nearly half its weight.
Considering how much the United States relies on the dollar’s special status to fund massive public and private borrowing, the impact of such a shift could be significant. The sustainability of growing US debt might be called into question.
The long-standing argument for a more flexible Chinese currency is that China is simply too big to let its economy dance to the US Federal Reserve’s tune, even if Chinese capital controls provide some measure of insulation. China’s GDP (measured at international prices) surpassed that of the US back in 2014 and is still growing far faster than the US and Europe, making the case for greater exchange-rate flexibility increasingly compelling.
A more recent argument is that the dollar’s centrality gives the US government too much access to global transactions information. This is also a major concern in Europe. In principle, dollar transactions could be cleared anywhere in the world, but US banks and clearing houses have a significant natural advantage, because they can be implicitly (or explicitly) backed by the Fed, which has unlimited capacity to issue currency in a crisis. In comparison, any dollar clearing house outside the US will always be more subject to crises of confidence – a problem with which even the eurozone has struggled. Democrats and Republicans broadly agree about China, and there is little question that trade deglobalization undermines the dollar.
Chinese policymakers face many obstacles in trying to break away from the current renminbi peg. But, in characteristic style, they have slowly been laying the groundwork on many fronts. China has been gradually allowing foreign institutional investors to buy renminbi bonds, and in 2016, the International Monetary Fund added the renminbi to the basket of major currencies that determines the value of Special Drawing Rights (the IMF’s global reserve asset).
In addition, the People’s Bank of China is far ahead of other major central banks in developing a central-bank digital currency. Although currently purely for domestic use, the PBOC’s digital currency ultimately will facilitate the renminbi’s international use, especially in countries that gravitate toward China’s eventual currency bloc. This will give the Chinese government a window into digital renminbi users’ transactions, just as the current system gives the US a great deal of similar information.
Will other Asian countries indeed follow China? The US will certainly push hard to keep as many economies as possible orbiting around the dollar, but it will be an uphill battle. Just as the US eclipsed Britain at the end of the nineteenth century as the world’s largest trading country, China has surpassed America by the same measure.
The Chinese renminbi will not become the global currency overnight. Transitions from one dominant currency to another can take a long time. During the two decades between World Wars I and II, for example, the new entrant, the dollar, had roughly the same weight in central-bank reserves as the British pound, which had been the dominant global currency for more than a century following the Napoleonic Wars in the early 1800s.
So, what is wrong with three world currencies – the euro, the renminbi, and the dollar – sharing the spotlight? Nothing, except that neither markets nor policymakers seem remotely prepared for such a transition. US government borrowing rates would almost certainly be affected, though the really big impact might fall on corporate borrowers, especially small and medium-size firms.
Today, it seems to be an article of faith among US policymakers and many economists that the world’s appetite for dollar debt is virtually insatiable. But a modernization of China’s exchange-rate arrangements could deal the dollar’s status a painful blow. (The Guardian 4/3/21)
• (Kenneth Logoff is professor of economics and public policy at Harvard University. He was the chief economist of the International Monetary Fund from 2001 to 2003)
Covid and exercise
A US study shows that people who are less physically active are more likely to be hospitalised and die with Covid-19. According to these new calculations, being inactive puts you at a greater risk from Covid-19 than any other risk factor except age and having had an organ transplant. If this is right, it’s a big deal.
In the study, healthcare providers asked people about how much they exercised over a two-year period prior to the pandemic. Using this information, people were categorised into three groups. The first group – described as “consistently inactive” – exercised for no more than ten minutes per week. The second group engaged in “some activity” – exercising for between 11 minutes and 149 minutes a week. The third group consistently met physical activity guidelines, exercising for 150 minutes a week or more. Exercise was defined as moderate to strenuous activity, an example being a “brisk walk”.
Compared to people who were exercising for at least 150 minutes a week, people who were consistently inactive were over twice as likely to be hospitalised and to die due to Covid-19. They also had a greater risk of hospitalisation and death than people doing some physical activity.
There are a lot of reasons to trust this study. It uses data from almost 50,000 people who had Covid-19 between January and October 2020. The information on how much they exercised was collected before Covid-19 came on the scene – which means answers were not affected by people’s Covid-19 outcomes. The researchers also tried to take into account things that might skew the picture – for example, how old someone was and what other health conditions they had. (The Guardian)
My comment: Personally, I go to the gym and use a walking machine, 3 miles, 4 mph at 5 degrees angle. This I do three times a week, plus exercises given me by my physical therapist. I’m not saying this to brag ( my wife does much, much more) but it keeps you more active , alert and has some bearing on your weight. I feel Epicurus would approve. Healthy body, healthy mind ( I hope!).
Money under false pretences
Fossil fuel companies in the US received billions of dollars in tax benefits through government coronavirus relief measures, but laid off tens of thousands of workers, figures show.
A group of 77 firms received $8.2bn in tax-code changes under the massive stimulus bill passed by Congress last last year, and some benefited from the paycheck protection program. Despite this, almost every firm laid off workers, with over 58,000 people losing their jobs. (The Guardian 4/2/21)
My comment: I believe that Epicurus, were he alive today, would protest this cruel and selfish policy on the part of CEOs towards 58,000 people, many living on a knife edge, I have no doubt. Restoration of faith in government is sorely needed, and one thing is essential: the CEOs have to pay a higher proportion of their income in tax – and actually pay it. They are pampered by politicians who want their campaign money. In my neck of the woods this is de facto corruption. It goes to much of what is rotten in the system; party affiliation is irrelevant. We all ( mostly) lose from the present system.
Advice for young American ladies
Said Apollo the God
To the belle, Aphrodite,
“Come hither, my lovely
And take off your nightie.”
“Oh no, Sir”, said she,
(the advice of her mother)
You’re a hunk, that I know,
But I’m seeking another.
He’ll be tall, he’ll be fair
And more handsome than you,
(Who sits this mountain with
Nothing to do).
He’ll draw portraits all day
And compose on the lyre,
With a figure to die for
And kisses like fire.
But it’s eons B.C and I
Have to discover
A single male person
Resembling this lover.”
Sweet Aphrodite
Set out on her quest
But no human or god
Passed her rigorous test.
She travelled through Tartary,
Turkey and Spain,
Togo, Jamaica –
The men were all vain.
She went to Peru,
But the the men were untrue,
And a diet of buffalo
Ruled out the Sioux..
Women were servants to
Indians and Medes,
And the muscular Swedes
Couldn’t cope with her needs.
There was nothing much going in
Vietnam or Gaul.
In Nepal, so it’s said,
She found no one at all.
In Italy she had no
Great expectations,
Though, be fair, Italians are the
Best dressed of nations.
But lo! In the Marches of Italy,
Well, quel surprise!
On a soggy, wet day with
Mud up to her knees.
And after a search for
Milleniums of years
She’d found what she looked for
In joy and in tears.
A visit to England had been
Soundly rejected.
“Good gracious,” she thought
“This is quite unexpected.
I thought they were boring,
Standoff-ish and plain,
And the country was shrouded in
Fog and in rain.”
Well………………..
He drew hippos all day and
Composed on the lyre,
With a figure to die for and
Kisses like fire.
He told endless stories and
Laughed far too much
But she curiously responded to
Laughter and touch.
And now for all goddesses
It has been written:
“If you’re wise you’ll discover your
Lovers in Britain.”