Money Talks, Google Walks, Other Potpourri
by ilene - January 14th, 2010 8:28 am
Money Talks, Google Walks, Other Potpourri
Every day there are a number of significant stories that come my way that I do not have time to make in depth comments on. Here is a collection on my stack worth a quick peek.
Google Walks
Google China Threat May Reflect U.S. Companies’ Growing Unease
Google Inc.’s threat to pull out of China is the most visible reflection of U.S. companies’ growing disillusionment with the country nine years after it joined the World Trade Organization, business groups said.
Washington trade organizations representing companies such as Microsoft Corp., Boeing Co., Intel Corp. and Cigna Corp., which all backed China’s entry into the WTO and fought off legislation to punish Chinese imports, say China is increasingly discriminating against them on government contracts and through unfair subsidies.
Google, owner of the most-used search engine, said Jan. 12 that it would end self-censorship of its product in China after attacks on e-mail accounts of human-rights activists. The Mountain View, California-based company said the move may cause it to close offices in the country.
Such comments from longtime backers of U.S.-China relations represent growing dissatisfaction among U.S. companies, said Susan Aaronson, a professor at George Washington University in Washington who writes about U.S.-China trade relations.
“I see much greater disillusionment as China is promoting its national champion companies,” Aaronson said in an interview. “More and more firms are going to say: I can do without this market.”
This story is far more significant than the play it will get. It signals growing protectionism as well as dissatisfaction with dealing in China. To top things off, Chinese money supply is growing completely out of control and it is only a matter of time before China implodes or explodes. More on that in another post later.
Money Talks With Protest Slogans
In Iran, money talks with protest slogans
Facing hard-line forces on the streets, Iran’s anti-government demonstrators have taken their protests to a new venue: writing "Death to the Dictator" and other opposition slogans on bank notes, while officials scramble to yank the bills from circulation.
"What did they die for?" asked one message on a bill, referring to the estimated dozens of demonstrators killed in the wake of vote-rigging allegations in last summer’s re-election of President Mahmoud Ahmadinejad.
Others were stamped with the
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Venezuela Approaching Humanitarian Disaster As Chavez Expropriates Food Retailers
by ilene - January 13th, 2010 12:39 pm
Venezuela Approaching Humanitarian Disaster As Chavez Expropriates Food Retailers
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Courtesy of Vincent Fernando at Clusterstock
Just after Hugo Chavez devalued the Venezuelan currency by 20%, he declared that companies weren’t allowed to raise their prices. Yet this would be an economic impossibility for any business. No business is sustainable if its profit margins are negative.
As a result of this reality, it appears food retailers were caught in the mix trying to raise prices, and taken over.
Albuquerque Express: Government inspectors in Venezuela have closed many shops this week after the owners were accused of trying to manipulate last week’s currency devaluation.
A group of supermarkets and other businesses across Venezuela have quickly been taken over by the tax inspectors for allegedly speculating and changing the price of products.
Superstores belonging to the Exito supermarket chain were the first to be acquired by the government.
Given the Venezuelan government’s track record for running companies, expect food shortages ahead. Really. Just look at the energy industry for cues. Oil-rich Venezuela has been forced to impose rolling black outs on itself.
By devaluing its currency while simultaneously preventing commensurate price increases for food, Venezuela has created huge disincentives for production. While Venezuela’s energy shortages are pretty sad already, food shortages would be plain scary. Venezuela continues to read like an Ayn Rand novel.
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Chavez Threatens to Seize Businesses, Devalues Currency by 50%; Chavez vs. Obama, Parallels Greater Than You Think!
by ilene - January 11th, 2010 3:51 pm
Chavez Threatens to Seize Businesses, Devalues Currency by 50%; Chavez vs. Obama, Parallels Greater Than You Think!
Courtesy of Mish
Turn out the lights. The collapse of Venezuela is well underway. It will not be long before the country completely stops functioning, assuming you think Venezuela is functioning now.
Please consider Chavez Devalued Bolivar 50 Percent.
Venezuela devalued its currency by half yesterday, the first such action since March 2005, as President Hugo Chavez seeks to pull the economy from recession amid falling oil revenue.
Chavez said the bolivar will be devalued to 4.3 per dollar from 2.15 per dollar for most imports. A second, subsidized peg of 2.60 bolivars per dollar will be used for importing food, medicine and machinery intended to boost the economy’s competitiveness.
The government, which restricted foreign currency trading in January 2003 following a two-month general strike intended to oust Chavez from power, last devalued the currency by about 11 percent in March 2005. The bolivar was also devalued in 2004.
Chavez Threatens to Seize Businesses
Inquiring minds are reading Chavez Says He’ll Seize Businesses That Raise Prices.
Venezuelan President Hugo Chavez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any entity that boosts its prices.
Chavez said he’ll create an anti-speculation committee to monitor prices after private businesses said that prices would double and consumers rushed to buy household appliances and televisions. The government is the only authority able to dictate price increases, he said.
The government also will “attack” the so-called parallel exchange rate, which Chavez called “illegal.”
The bolivar traded at 6.25 per dollar on Jan. 8, traders said.
“They put the value of the dollar at more than 6 in an arbitrary and illegal manner,” Chavez said. “We have to organize to reduce and attack that speculative, illegal dollar that hurts the Venezuelan economy so much.”
Official Rate vs. Black Market Rate
Official Rate: 4.3 bolivar per dollar
Previous Official Rate: 2.15 bolivar per dollar
Black Market Rate: 6.25 bolivar per dollar
Virtually no one in private business will exchange at the rate of 4.3 bolivar per dollar. Banks will not do it either, otherwise there would be no need for a black market.
Massive Shortages Coming
Chavez just effectively…
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Venezuelan Tyrant to Debase Currency Ahead of Make Believe Elections
by ilene - January 11th, 2010 1:19 am
Venezuelan Tyrant to Debase Currency Ahead of Make Believe Elections
Courtesy of Joshua M Brown, The Reformed Broker
a recent photo of Venzuelan tyrant Hugo Chavez
The fat, foolish and dangerously ignorant dictator Hugo Chavez* has sent consumers in his Papaya Republic racing to the shops this weekend as the government has decided to "adjust" the local currency lower in a bid to kickstart economic growth.
From Reuters:
CARACAS, Jan 9 (Reuters) – Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.
In a bid to jump-start the recession-hit economy of South America’s top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.
It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.
The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.
Ah so. It appears that the signature Bernanke Boogie, which has already spread to Japan, will now be featured prominently by some of the most primitve Oil-ocracies in Latin America. Which country will the Debasement Fairy be visiting next?
Why don’t we all blow up our currencies and go back to getting by on our ability to hunt mammoths and drag ovulating women into secluded fissures in the rocks? Abolish central bankers and fiat currency, go back to farming and clubbing and spearing. I feel like I would do pretty well in an economic sitch like that.
* I bet you loved my Chavez descriptors in my opening paragraph…one of the benefits of not being an actual journalist is that I get to call ‘em like we all see ‘em without being called into the editor’s office.
Source:
Devaluation Ups Stakes in Venezuela Election Year (Reuters)
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.