Relevant and even prescient commentary on news, politics and the economy.

Is China quietly moving away from US treasuries?

Aol money reports that China has reassured the US it is a firm holder of US treasuries.

China is a responsible investor in international financial markets, and our country’s foreign exchange reserves are managed with the operational goals of safety, liquidity and profit,” Xinhua quoted the central bank official as saying. The People’s Bank does not disclose the composition of the foreign exchange reserves, which have swelled in recent years as China’s exports surged and investors poured money into the country to profit from an economy now in its fourth straight year of double-digit growth. But the reserves have become a political issue both within China and between Beijing and Washington. As the dollar has fallen in value, the People’s Bank has come under pressure to diversify its holdings to maintain the value of the reserves and improve returns.

Aol money also reports:

China has scrapped rules that required local companies to convert a portion of their foreign earnings into Chinese currency, the government said Tuesday, in a move that could ease pressure on Beijing’s foreign exchange system. Companies now will be allowed to decide on their own how to use money earned abroad, the State Administration of Foreign Exchange said on its Web site. Previous rules requiring companies to convert at least 20 percent of foreign earnings into Chinese yuan boosted demand for the currency, increasing pressure for it to rise against the U.S. dollar and other foreign currencies.

The latest change could help to slow the growth of China’s $1.3 trillion foreign reserves accumulated by the central bank as it tries to curb pressure for prices to rise by draining money from the economy through bond sales. “This policy revision is an important reform in foreign exchange management,” the agency said on its Web site. “The implementation of the new policy will improve the autonomy and convenience of domestic companies, strengthen companies’ capital management and improve the international balance of payments.”

Until 2002, Chinese companies were required to bring home all the money they made abroad and obtain government permission to make new foreign investments. Beginning in 2002, companies were allowed to keep 20 percent of foreign revenues. That was raised to 50 percent in 2004 and 80 percent the following year.

Is this a quiet move to loosen reliance on US treasuries? What else does it accomplish?

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The Guardian has an article worth reading:

Lieutenant Clay Hanna looks sick and white. Like his colleagues he does not seem to sleep. Hanna says he catches up by napping on a cot between operations in the command centre, amid the noise of radio. He is up at 6am and tries to go to sleep by 2am or 3am. But there are operations to go on, planning to be done and after-action reports that need to be written. And war interposes its own deadly agenda that requires his attention and wakes him up.
When he emerges from his naps there is something old and paper-thin about his skin, something sketchy about his movements as the days go by.

The Americans he commands, like the other men at Sullivan – a combat outpost in Zafraniya, south east Baghdad – hit their cots when they get in from operations. But even when they wake up there is something tired and groggy about them. They are on duty for five days at a time and off for two days. When they get back to the forward operating base, they do their laundry and sleep and count the days until they will get home. It is an exhaustion that accumulates over the patrols and the rotations, over the multiple deployments, until it all joins up, wiping out any memory of leave or time at home. Until life is nothing but Iraq.

Hanna and his men are not alone in being tired most of the time. A whole army is exhausted and worn out. You see the young soldiers washed up like driftwood at Baghdad’s international airport, waiting to go on leave or returning to their units, sleeping on their body armour on floors and in the dust.

Where once the war in Iraq was defined in conversations with these men by untenable ideas – bringing democracy or defeating al-Qaeda – these days the war in Iraq is defined by different ways of expressing the idea of being weary. It is a theme that is endlessly reiterated as you travel around Iraq. ‘The army is worn out. We are just keeping people in theatre who are exhausted,’ says a soldier working for the US army public affairs office who is supposed to be telling me how well things have been going since the ‘surge’ in Baghdad began.

They are not supposed to talk like this. We are driving and another of the public affairs team adds bitterly: ‘We should just be allowed to tell the media what is happening here. Let them know that people are worn out. So that their families know back home. But it’s like we’ve become no more than numbers now.’

The first soldier starts in again. ‘My husband was injured here. He hit an improvised explosive device. He already had a spinal injury. The blast shook out the plates. He’s home now and has serious issues adapting. But I’m not allowed to go back home to see him. If I wanted to see him I’d have to take leave time (two weeks). And the army counts it.’

A week later, in the northern city of Mosul, an officer talks privately. ‘We’re plodding through this,’ he says after another patrol and another ambush in the city centre. ‘I don’t know how much more plodding we’ve got left in us.’

When the soldiers talk like this there is resignation. There is a corrosive anger, too, that bubbles out, like the words pouring unbidden from a chaplain’s assistant who has come to bless a patrol. ‘Why don’t you tell the truth? Why don’t you journalists write that this army is exhausted?’

But the exhaustion of the US army emerges most powerfully in the details of these soldiers’ frayed and worn-out lives. Everywhere you go you hear the same complaints: soldiers talk about divorces, or problems with the girlfriends that they don’t see, or about the children who have been born and who are growing up largely without them.

‘I counted it the other day,’ says a major whose partner is also a soldier. ‘We have been married for five years. We added up the days. Because of Iraq and Afghanistan we have been together for just seven months. Seven months … We are in a bad place. I don’t know whether this marriage can survive it.’

The anecdotal evidence on the ground confirms what others – prominent among them General Colin Powell, the former US Secretary of State – have been insisting for months now: that the US army is ‘about broken’. Only a third of the regular army’s brigades now qualify as combat-ready. Officers educated at the elite West Point academy are leaving at a rate not seen in 30 years, with the consequence that the US army has a shortfall of 3,000 commissioned officers – and the problem is expected to worsen.

And it is not only the soldiers that are worn out. The wars in Iraq and Afghanistan have led to the destruction, or wearing out, of 40 per cent of the US army’s equipment, totalling at a recent count $212bn (£105bn).

But it is in the soldiers themselves – and in the ordinary stories they tell – that the exhaustion of the US military is most obvious, coming amid warnings that soldiers serving multiple Iraq deployments, now amounting to several years, are 50 per cent more likely than those with one tour to suffer from acute combat stress.

I have said this is a different sort of war and was taking a much heavier toll on our troops than admitted by the powers that be. Fourth generation warfare demands re-thinking some of our priorities, especially by proponents of global conflict and defense who demand sacrifice. Especially before next April when desparation becomes the rule of the day.

Karl Rove gets to go home now to salvage his family from the long haul. And Mitt’s boys are hard at work in Iowa, keeping us safe from the Dems. My worry is for the citizens.

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Reader Dan and a Simple Shopping Survey

This is a first post for me as a member of Angry Bear contributors. I have several posts full of pretty charts, ground breaking medical news that I believe will impact health care and environmental issues together, and more of course on WTO GATS, but decided to keep this simple and everyday. Up to this point cactus has corrected my html errors with grace and patience, but now I am responsible for the look. Score one for ownership. This one has no html quirks.

Mrs. Dan and I had to shop for a new stove. We did have one with a glass top but it cracked a few years ago, and tops carry limited warranty anyway. We looked for one of the old-fashioned kind with electric coils, and discovered that no matter where we went, big or small stores carried only ONE stove that had electric coils out of extensive inventories of glass topped stoves. Our lonely choice was half to a third the price of comparable stoves, but did not have the automatic setting to 350 degree F. with the on switch, and had a couple manual knobs instead of digital mechanisms.

The price of the model we bought was the same at two stores who carried our choice, one a national chain and the other local. We bought at the national chain because installation was ‘free’ (true for us as immediate consumers), taking away the old stove was $10, as part of the sales tax free day in MA it was offered that day with a 15% sale price reduction plus 10% off as part of an advertised regular special, and then the common 5% savings from the uncollected state sales tax for that day. If this sounds like the Fed budget discussions, do not go there.
With the $190 savings Mrs. Dan bought a couch day bed for the office (which somehow cost more than $190, but I am a child of the 21st century, so it is to be expected). I was struck by the preponderance of gadgets at twice to three times the cost in the Gilded Age of kitchens. Granite counter tops are the rage.

Over the last two years, for $40,000, we had a new shingled roof (hired), renovated the laundry room, re-painted the downstairs walls in a striking bold color scheme, new kitchen floor (hired), re-finished old oak flooring, new forced water boiler, more insulation, and re-painted the outside of the house with new fascia boards and new screens for the porch. I have two sons and a daughter who spent time from far parts of the US to provide paid labor and expertise, but I am still able to paint 35′ up a peak.

It did not dawned on me that this accomplishment could be unique to a degree and old-fashioned. Hands on is quite valuable if you can try and creates value other than buying the work, and the money lost from ‘work’ as vacation (self-employed) for me is outweighed by the value of doing and connection. Adventure vacations are fun, but I think this marks many things for family values that no adventure vacation can touch.

Score one for ownership of work, family, and values. This old progressive is glad to join the fray.

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Credit Card debt bubbles through the financial world.

“Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa,” said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. “We’re starting to see leaks now.”
The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.
At the same time, defaults _ when lenders essentially give up hope of ever being repaid and write off the debt _ rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.
Serious delinquencies also are up sharply: Some of the nation’s biggest lenders _ including Advanta, GE Money Bank and HSBC _ reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.
The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors _ similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

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