Thought for the day
"If Winter
comes, can Spring be far behind?"
-
Percy Bysshe
Shelley (English, 1792-1822))
Word for the day
Accouterment(n)
Personal clothing, accessories, etc.
(Source: Dictionary.com)
Malice towards none
How long could we afford to put the matter of terror attacks to rest just by blaming Pakistan,
without assigning any local accountability?
Forget lift, some are already talking about QE4
Post Lehman collapse, for once it appeared that the US is becoming
a marginal force in the emerging global order. Emerging economies like BRIC,
South Africa. Mexico, Indonesia etc. asserted themselves as leaders in a new
multipolar world. G-20 was formed to undermine the supremacy of G-3, G-8 etc.
The global multilateral financial and development institutions also saw rise in
influence of these countries in their affairs.
However, the events of past six years indubitably establish that Uncle
Sam may have lost a few battles, but it is certainly on course to win the war.
Consider this:
(a) Plagued by sub-prime
crisis which crippled its financial institution, the US did not bow down. It
successfully transmitted the disease to these resurgent emerging economies and
rescued its financial institutions.
Most emerging economies, especially India and China are now
struggling with huge sub-prime assets with no clue as to how to get rid of
these. After all their machines do not print US$ and Uncle Sam has stopped his
printers.
The troubled US banks and financial institutions are strongly back
in business and to their old ways too.
(b) Many influential voices
from the US have already suggested that the era of global economic cooperation
and coordinated policy action seen during 2008-09 crisis is over. Fed
chairperson Yellen has been quite categorical on many occasions that we will do
only what is in the best interest of the US. If monetary tightening in the US
disrupts common man’s life in 100 countries so be it.
(c) US exported deflation
to the world through persistent zero interest rates and strong USD. This
deflationary spiral has brought the commodity driven economies to their knees. The
threat of petro dollars is mostly off the table now.
(d) After attaining a
degree of energy independence, the US also does not bother about situation in
Middle East or South Asia.
Iraq was raided merely on the basis of unfounded doubts about
weapons of mass destruction. Syria has actually used these weapons and no
action has been taken. ISIS is brutally beheading people at virtually at will.
We are yet to see a comprehensive plan to check the menace. Sanctions on Iran
have been lifted. Cuba is a friend. Ukraine is left for EU to sort out with
Putin.
(e) Large ownership of US
treasuries by Chinese and Japanese have been a point of pressure for US for
long. However, some recent reports are suggesting that even this pressure point
is gradually releasing as China has been forced to sell huge chunks of US
treasuries to stem the rot in their financial markets.
As per a JPM report, YTD China has sold around half a trillion
dollars worth of USD assets, rather unwillingly. More such sale is expected in
coming months........(more on this tomorrow)
There are speculations over how it would impact the Fed's monetary
policy decision. But one thing is certain - Uncle Sam will be the only one left
laughing when cows come home.
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