China, Europe and the US dollar

December 20, 2007

Following a recent post here on the use of the dollar weapon against the euro, it was pointed out to me that if the US was in the process of using the dollar weapon, the real target was not Europe but China. That the US is trying to force a revaluation of the yuan is almost certainly true; but I believe that both currencies are, in fact, in America’s sights.

In defence of my earlier post, it is easy to exaggerate the importance of the US trade deficit with China. In 2006, the total US deficit stood at $759 billion. Of that, $177 billion was with China. Whilst clearly a huge sum, it is not large enough to support claims that changing the terms of trade with China would solve America’s deficit problems. Moreover, it is not clear that a revaluation of the yuan would make a huge difference to America’s overall deficit. A stronger yuan would not make the US import less, merely source its imports from somewhere else.

Nor would it make America export more. US exports are largely capital-intensive (and so expensive) and consumed primarily by rich countries. Given China is not yet part of this group, a revalued yuan would make little difference to demand for US-made products in that country. A stronger euro, on the other hand, would increase demand for US exports amongst wealthy Europeans. For this reason, reversing the $116 billion deficit with the EU is the priority for the US in its attempts to improve its balance of payments position. 

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Mind the gap: modern society meets the stone age brain

December 17, 2007

The most critical division in our politics this year won’t be between left and right, or between Labour and the Tories. It won’t even be between rich and poor. In 2008, we will find the most important split in public life within individual citizens. Inside ourselves, we see a gap – profound and entrenched – between private optimism and public gloom.

For a long time now, politicians and policy-makers have been aware of a startling schizophrenia in British life. Known in Westminster as the “perception gap”, and in Washington as the “happiness gap”, the split between private optimism and public pessimism is one of the most serious problems of current political life. Resolving this cognitive rupture must be the task of 2008, or we will end the year once more paralysed politically, unable to deal with the challenges that face us.

Time and time again, opinion polls reveal a dramatic gap between what people say about their personal experiences, and what they say about the state of things in general. On the whole, people are confident, even buoyant, about their individual prospects – witness journalist and 20-year absentee Jon Henley marvelling at “the energy, the entrepreneurism, the ambition, the can-do”, on his return to the country. Yet they insist on believing that the nation as a whole is going to hell in a handcart.

Take attitudes towards public services. In a recent poll, 81% of respondents said that they were happy with their last visit to hospital. Yet when the same group was asked whether they thought the NHS was providing a good service nationally, only 47% felt able to declare that it this was so. Total violent crime has fallen since 1997, and most people report themselves confident with the way crime is dealt with in their locality. Yet the bulk of people think that violent crime has risen, and a strong majority think that crime is handled badly in Britain as a whole.

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Why changing reading habits could spell the end of empathy

December 5, 2007

The way we read is changing. Could this affect our ability to empathise?

Reading used to be something done with care and dedication, and over long periods. Now, if it happens at all, it is more likely to happen briefly, and with a ruthless eye for relevance.

We used to get married to the things we read; now, we have one night stands.

So what?, I hear you saying. Yes, some people lament the decline of old-style reading: hence the chorus of disapproval greeting the report of the International Literacy Study, released last week. Saner voices see that “youth literacy isn’t actually decreasing; it’s just moving into arenas that the fogeys don’t know about or understand”.

But what if the changing reading habits also changed the way we thought about liberty, equality and fraternity: our most fundamental mental concepts?

Reading historian Lynn Hunt’s Inventing Human Rights, such a possibility doesn’t seem that remote.

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Panic On The Trail/Romney Speech Update

December 4, 2007

Overreactions, as Howard Kurtz cool-headedly point out in today’s Washington Post, are common on the campaign trail.

To read most accounts, it’s been a frantic few days. Hillary Clinton has been hitting back at Barack Obama now that he has (finally, some might say) stepped up his rhetoric against her. Mitt Romney is to give the long-awaited ‘Kennedy speech’ in an attempt to allay doubts (and fears) about his suitability for the highest office on the grounds of his Mormon religion. Both Clinton and Romney have been front runners (Clinton nationally and Romney is several early-primary states), but now the race is beginning to tighten as we approach the Iowa caucuses (less than one month to go). Is Clinton’s campaign machine floundering now that it’s being seriously tested for the first time? Is Romney lying awake at night haunted by visions of Mike Huckabee – the ghost of Christmas yet to come?


Kurtz paraphrases the media’s considered reaction:

“OMG they must be panicking!!!!”

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Mark Wallinger wins the Turner Prize

December 3, 2007

Congratulations to Mark Wallinger for winning the Turner Prize. He probably deserves the gong, given his often potent contribution to British art over the last twenty years. I loved his Fourth Plinth statue; certainly a lot better than bloody Alison Lapper.

Wallinger won for a piece called State Britain. At the time, his reassemblage of poor old Brian Haw’s Parliament Square protest was declared a supremely political act. “How rich this work is, and how saddening our state,” burbled the Guardian.


Interviewed after winning, Wallinger maintained this political line. “By happenstance I was able to make a work that had some relevance to what’s going on in Britain and in the world”, he said, He also paid tribute to Haw: “A remarkable man, who has waged a tireless campaign against the folly and hubris of our government’s foreign policy.”

Haw may well be a special man, although not necessarily in the most complementary sense of that word. His protest, however, is not political, or even campaigning. Much like the anti-war movement itself, it was (and remains) a rag-bag of often competing slogans, all sound and fury, signifying nothing. Spiked had it bang to rights: “you cannot call it a protest, because it is a wail, not an argument”.

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The falling dollar and the dollar weapon

December 3, 2007

With the news stands currently screaming the imminent decline of the dollar and with it America’s power and seignorage in the international economy, interesting to see Anatole Kaletsky presenting an opposing view in today’s Times.

According to Kaletsky, the weak dollar combined with a housing slump is serving America rather well, posting 4.9% third quarter growth and turning back the balance of trade against Europe.

I can’t help wondering whether those Americans are a bit craftier than we take them for.

The fall of the dollar has been seen as symptomatic of economic mismanagement by the Bush administration and structural weaknesses in the American economic model. But is this all in fact a deliberate strategy on the part of US administrators to shift the terms of trade with Europe back in America’s favour?

Are we seeing the dollar weapon in action once more?

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The Top Five…Coup D’Etat-ers

December 3, 2007

By far and away the funniest story of last week was the failed coup d’etat in the Phillippines.

So, you’re in court, standing trial for plotting to overthrow the government. Things aren’t going well. What do you do?

The only sane response is to storm out of the courtroom, barricade yourself in the plush hotel down the road, and demand that the government stand down.

(First time round, the group, led by Senator Antonio Trillanes, occupied a luxury apartment complex. Like those other great slapstick artists, the US government, they clearly like to conduct their farces in style).


I was going to compile a list of the top five worst ever coup attempts to honour these jokers – any opportunity to relive (Sir!) Mark Thatcher’s moment of madness in Equatorial Guinea.

But I felt that wasn’t really appropriate. They needed something better than that.

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