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Castro, Chavez defy US trade pact

Discussion in 'News' started by dojafx, Feb 3, 2005.

  1. dojafx

    dojafx 12oz Member

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    Castro, Chavez defy US trade pact

    Discussion started by dojafx - Feb 3, 2005

    Cuban President Fidel Castro and Venezuelan President Hugo Chavez have announced an alternative trade bloc to the one proposed by the US for a free-trade area of the Americas.

    The alternative was conceived as "a battle fought with the same rules and regulations as those imposed by the [US] empire to divide the people", Castro said on Tuesday.

    Naming the new pact the Bolivarian Alternative for the Americas (ALBA), the presidents said it would eliminate trade barriers and tax obstacles, provide incentives for investment, increase banking relations and tourism cooperation.

    Venezuela promised financing for Cuban industrial and infrastructure projects, while Cuba agreed to pay a minimum price of $27 per barrel of Venezuelan oil, as part of the accord "to apply the Bolivarian Alternative for the Americas".

    FTAA dead

    Before the signing of the agreement, Castro and Chavez addressed a rally in Havana where both presidents declared the US-proposed Latin American Free Trade Zone dead.

    "It is an alternative to the perverse FTAA, which they have been trying to impose on us for years," Chavez said. "FTAA is dead."

    Chavez also accused Washington of pursuing imperialist intentions in free trade talks with Andean countries.

    Venezuela is one of the biggest suppliers of crude oil to the US, but their relations have been strained by disputes between Chavez and the White House.

    Washington has expressed concern over Chavez's close ties to Castro since Chavez won the presidency in 1998.

    And US President George Bush's says the FTAA is the solution to the region's deepening poverty.

    Chavez visit

    Chavez is on a two-day visit to commemorate his first encounter in Havana with Castro 10 years ago when he was an army officer recently released from prison for leading a failed coup.

    At the time, Castro proclaimed him Venezuela's future leader.

    Venezuela currently provides Cuba with 53,000 barrels of oil a day at preferential prices, while Cuba has 13,000 doctors in Venezuela, is helping the country stamp out illiteracy and has treated thousands of Venezuelans in its hospitals.
     
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  2. JUSTONE

    JUSTONE 12oz Member

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    JUSTONE - Replied Feb 3, 2005

    too fucking right;

    there may be trouble ahead though, i can't see washington taking it too well.
     
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  3. KING BLING

    KING BLING Guest

    KING BLING - Replied Feb 3, 2005

  4. <KEY3>

    <KEY3> 12oz Veteran Member

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    <KEY3> - Replied Feb 3, 2005

    You have to give it to Cuba..... most nations cant resist the us greenback.
     
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  5. villain

    villain 12oz Veteran Member

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    villain - Replied Feb 3, 2005

    Heh.... Latin America is stretching out now that we are busy in the middle east.
    And it's far too easy to resist the greenback these days. Bush is wrecking the economy and weakening the dollar to record levels.
    Here are some ominous trends for the US economy:

    From The Wilderness wishes to thank GATA, the Gold Anti-Trust Action Committee, for posting this story.

    [It appears that Malaysia may be the first major Asian economy to dump dollars in sizeable chunks. This is not surprising. Having survived hostile currency wars in past decades (e.g. that of George Soros) Malaysia has shown a particular financial savvy. China is watching everything closely and I have no doubt it has already calculated what I call a "flopover" point which will optimize the dumping of the dollar and provide the greatest strength to a newly unpegged Yuan. I am beginning to think that both events will occur very close together.

    It is important to note that unpegging the Chinese currency from the dollar is not the great blessing that the US Treasury and NY Fed suggest. It will most certainly trigger the wholesale dismemberment of America's middle class and amount to a class war of extermination against the poor. These developments (Chinese unpegging/dollar dumping) -- when they happen -- will be the financial equivalent of a nuclear first strike that will "mysteriously" leave the US financial and political elites untouched. Is there something suspicious about this? --MCR]

    If China Shuns Dollar, Look Out U.S. Bonds

    By William Pesek Jr.
    Bloomberg
    http://www.bloomberg.com/apps/news?pid=710...id=aEBBmwvtNuxA

    In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

    Jan. 28 (Bloomberg) -- Malaysia isn't a place traders look for clues about the U.S. dollar, yet Asia's No. 10 economy may be offering some ominous ones.

    They can be found in a recent report on international reserve holdings at Bank Negara Malaysia, the nation's central bank. It states that Malaysia made a $2.1 billion "revaluation gain" in 2004, "arising mainly from the depreciation of the U.S. dollar against the major currencies."

    Central banks are always reticent to detail their holdings, but one can't help but wonder if Malaysia is buying an increasing amount of euros -- or even yen -- these days. Its central bank sure didn't make that kind of cash holding the dollar, the currency to which its own, the ringgit, is pegged.

    The plot thickens when you consider how such a shift away from the dollar would jibe not only with comments from top Malaysian officials, but trends throughout Asia.

    Here in Malaysia, for example, Prime Minister Abdullah Ahmad Badawi recently said he is seeking ways to reduce the economy's reliance on the dollar for trade. Indonesia has mentioned it is considering trimming its holdings of U.S. Treasuries. The same goes for Thailand, according to the Financial Times.

    China also has been in the news as traders speculate that Asia's No. 2 economy may pull the plug on dollar-denominated debt. Such a move by the second-biggest holder of U.S. Treasuries after Japan could send shockwaves through global markets.

    Fan Gang's Comments
    Hence all the fuss over comments by Chinese economist Fan Gang. Fan isn't a government official; he's director of the state-owned National Economic Research Institute in Beijing. The connection seemed close enough for traders who found great relevance in Fan's comment that China has lost faith in the dollar, to which its currency is pegged.

    "The U.S. dollar is no longer, in our opinion is no longer, (seen) as a stable currency and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English, at the World Economic Forum in Davos, Switzerland. "So the real issue is how to change the regime from a U.S. dollar pegging to a more manageable reference, say euros, yen, dollars -- those kind of more diversified systems."

    Paul Donovan, London-based senior global economist at UBS AG, seemed to speak for many traders and investors when he said: "This in fact is a scenario we consider to be highly likely." Certainly more likely than, say, China letting the yuan trade freely.

    Turning to the Euro
    Again, Fan isn't a Chinese policy maker, and it's unclear how close he is to the economic decision-making process. Still, his views have a certain logic to them. Irony, too. The U.S. has been using its might to bully China into revaluing the yuan. Yet it seems it is U.S. weakness -- a fragile dollar -- that may be the catalyst.

    It means now is as good a time as any for this region to avoid losses ahead of any surge in U.S. debt yields. After all, in real estate, it is all about location, location, location. With markets, it's timing, timing, timing, and waiting means Asian central banks may lose even more.

    Confidence in the dollar wasn't enhanced this week by President George W. Bush's record budget deficit forecast of $427 billion for this fiscal year. It belied assurances that the White House will bring one of the world's most worrisome economic imbalances under control.

    All this has investors turning to the euro. Once Asian central banks do, the dollar's woes will worsen. By buying vast amounts of Treasuries, Asian central banks are delaying the rise in U.S. yields that would typically accompany a falling currency. If Asians pull the plug, U.S. rates could skyrocket.

    Reckoning Approaching?
    Central banks here don't buy U.S. debt out of altruism. Hoarding dollars is necessary to hold down currencies to boost Asian growth. Yet dumping dollars would result in stronger Asian currencies and, by extension, Asian gross domestic product.

    Smaller economies like Indonesia, Malaysia or Thailand may be able to trim dollar holdings without undermining their own economies. The same can't be said of Japan and China; combined, they own $906 billion of the roughly $1.1 trillion of U.S. Treasuries held overseas.

    Still, the day of financial reckoning that investors fear may be getting closer.

    It has long been said that Japan's bond market is a bubble waiting to burst. Even with a national debt approaching 150 percent of GDP, 10-year Japanese debt yields just 1.32 percent. Asians have to wonder if U.S. rates are irrationally low, too. Do yields at 4.19 percent for U.S. 10-year debt really compensate investors for the risks they face?

    The U.S. finds itself in a be-careful-what-you-wish-for situation here. If China tomorrow announced it was letting the yuan float, as the U.S. wants, its central bank wouldn't need anything near the $191 billion of U.S. debt it holds. Massive dollar selling could follow.

    Asian central banks like China's have become America's bankers, financing its excesses through good times and bad. It's now up to Asia to decide whether to extend the U.S.'s line of credit. The U.S. should be warned that the odds are moving less and less in its favor.

    To contact the writer of this column:
    William Pesek Jr. in Kuala Lumpur, or through the Tokyo newsroom
    at wpesek@bloomberg.net.

    To contact the editor responsible for this column:
    Bill Ahearn at bahearn@bloomberg.net.
     
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  6. villain

    villain 12oz Veteran Member

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    villain - Replied Feb 3, 2005

    Sinking Dollar Dominates Davos Debate

    By Mark Landler
    January 27, 2005
    New York Times

    In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

    DAVOS, Switzerland, Jan. 26 - Two things were as clear as the Alpine air on the opening day of the World Economic Forum on Wednesday: The relentlessly sinking dollar is Topic A, and anyone hoping for an answer to when it will stop dropping is likely to come away disappointed.

    Economists, politicians and business executives voiced deep unease about the imbalances in the global financial system, which are reflected in the dollar's steep fall against the euro and other currencies.

    But most expressed skepticism that the Bush administration would reduce the trade and budget deficits, which have fed those imbalances. The White House has said that it does not view these issues as a major problem because foreigners still view the American economy as an attractive investment.

    Some at the forum said they doubted that China, which is financing much of the American debt, would bow to pressure to allow its currency to rise against the dollar this year.

    "The U.S. current-account deficit is a problem for the whole world," said Jacob A. Frenkel, a former governor of the Bank of Israel. But, he said, "I don't see the budget deficit being taken seriously."

    The Bush administration, which dispatched Vice President Dick Cheney and Secretary of State Colin L. Powell to past Davos meetings to defend the Iraq war and other foreign policy actions, has not sent a similarly prominent economic policy maker to this gathering. That absence has lent the proceedings an imbalanced tone.

    "In fairness, it's a transition period in Washington," said Representative Barney Frank, Democrat of Massachusetts, who supplied the American voice on a panel about American leadership. He added, however, "The administration doesn't really have anyone they trust enough to send here."

    Mr. Frank, the ranking Democrat on the House Financial Services Committee, said that he worried that the United States was not paying enough attention to the risks of its growing indebtedness. The repercussions of a weak dollar, he said, had barely registered with the White House.

    Other critics were blunter.

    "There's nobody home on economic policy in America right now," said Stephen S. Roach, the chief economist at Morgan Stanley. The twin burdens of household and public debt in the United States, he said, are unsustainable. Describing American consumers as "an accident waiting to happen," he asked, "When does the music stop?"

    With the dollar already trading at $1.30 to the euro - near the level of economic unacceptability for Europe - Mr. Roach said the United States could not rely on currency markets to right the imbalance between it and the Asian countries that finance American deficits by buying Treasury bills.

    The answer, he said, lies with the Federal Reserve, which he said would have to raise rates aggressively to curb the spending binge. Whether it could do that without triggering a recession is an open question.

    Few here held out hope for international coordination of the kind that stabilized the dollar in the 1980's.

    "The Bush administration doesn't listen to people," said Laura D. Tyson, who served as an economic adviser to President Bill Clinton. "There's no hope of changing U.S. fiscal policy."

    Professor Tyson, who is dean of the London Business School, said European leaders needed to stop worrying about the actions of other countries and set about streamlining their own economies. She pointed to recent wage negotiations in Germany, in which the unions agreed to longer hours and more flexible work rules, as a hopeful sign of change.

    Certainly, Europe cannot rely on Asia to take the pressure off the euro. While people here said they were guardedly optimistic that China would eventually allow its currency, the yuan, to rise against the dollar, few were willing to hazard a guess as to when - or to what extent.

    "That will need a political commitment and a political will, and I don't see that happening this year," said Takatoshi Ito, a specialist in international economics at the University of Tokyo.

    Some economists warned that the expanding trade deficit and weak dollar could cast a shadow over negotiations to liberalize world trade, which have been dragging for various reasons in the last year.

    China's record trade surplus with the United States could fuel protectionist forces in the United States, said C. Fred Bergsten, the director of the Institute for International Economics in Washington. He said he could foresee moves to impose import barriers on Chinese wood and shrimp. "This is a poisonous environment for trade policy and for domestic politics in the United States."

    In the last couple of years, with the White House's march to war in Iraq, Davos itself has been a rather poisonous environment for Americans. Those tensions have ebbed this year.
     
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  7. villain

    villain 12oz Veteran Member

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    villain - Replied Feb 3, 2005

    Chinese economist says his country wants to diversify out of the dollar

    By Edith M. Lederer
    Associated Press
    Wednesday, January 26, 2005

    In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

    DAVOS, Switzerland -- China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said at the World Economic Forum.

    At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said Wednesday that the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."

    But he stressed that the Chinese government is under no pressure to revalue its currency.

    China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to US$1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency.

    "The U.S. dollar is no longer -- in our opinion is no longer - [seen] as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English.

    "So the real issue is how to change the regime from a U.S. dollar pegging... to a more manageable... reference... say Euros, yen, dollars -- those kind of more diversified systems," he said.

    "If you do this, in the beginning you have some kind of initial shock," Fan said. "You have to deal with some devaluation pressures."

    The dollar hit a new low in December against the euro and has been falling against other major currencies on concerns about the ever-growing U.S. trade and budget deficits.

    Fan said last year China lost a good opportunity to do revalue its currency, in July and October.

    "High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating."

    Asked how speculation about revaluation could be curbed, he noted that China imposed a 3 percent tariff on Chinese exports.

    Some Chinese experts say that perhaps inflation can be reduced this year, "but I'm not that optimistic," Fan said, noting that fuel prices keep rising.

    "So maybe China (will) have 4-5 percent inflation in 2005," he said.

    Fan, whose nonprofit institute specializes in analyzing the Chinese economy, stressed that the country's development is a long-term process that will take decades, maybe a century.

    Since China's economic modernization began over a decade ago, 120 million rural laborers have moved into cities, but another 200 or 300 million people need to move into the cities from the countryside to spur development, he said.

    "The income disparity is huge, and income disparity will stay with us for a long time, as long as those 200 to 300 million rural laborers stay in the countryside," Fan said.

    Nonetheless, William Parrett, chief executive of Deloitte Touche Tohmatsu, told the panel that Chinese companies are making significant progress in becoming global giants, led by state-owned companies.

    "It's probably at least 10 years before the objective of the government of 50 of the largest 500 companies in the world being Chinese" is achieved, he said.
     
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  8. villain

    villain 12oz Veteran Member

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    villain - Replied Feb 3, 2005

    goodbye america.... hello bushwhacked hills....
     
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