Apakah ini bukan suatu acuan yang kurang masuk akal? Setelah ada suatu tendensi
US dollar mendapat saingan dari Euro, sekarang setelah Euro juga terkena
musibah jatuhnya nilai tukar Euro, apakah Chinese Yuan akan bisa tampil sebagai
nilai tukar global yang handal?
Ekonomi global terlalu jlimet untuk bisa dengan gampangnya di "tukar-tambah"
dengan acuan dalam hal ini pergantian valuta baru yang juga pondasinya kurang
di maklumi banyak pihak(negara)
Harry Adinegara
----------------------------
Meet the World's New Currency: the Chinese Yuan
By MIKE WHITNEY
Things are getting worse. Since September, $16 trillion has been erased from
global stock market value. Losses in the US--where the financial turmoil
originated--have been much smaller than other, more vulnerable markets. The Dow
is down less than 40 percent from its peak of 14,000, whereas Hong Kong, Poland
and China have all tumbled more than 60 percent. Its a bloodbath.
The Chicago Board Options Exchange Volatility Index, "the Fear Index", surged
to 79.13 on Friday, the highest in its 18-year history, The massive blow-off in
stocks is mainly the result of ongoing deleveraging among the hedge funds which
are dumping shares in at a record pace to cover the dwindling value of their
asset base.
According to the New York Times: "Hedge funds lost an estimated $180 billion
during the last three months and some are near collapse. Investors are
demanding their money back, and Wall Street is bracing for a shake-out in the
$1.7 trillion industry."
If a large fund, like Citadel, goes down, it will create a black hole in the
financial system, similar to the loss of Lehman Bros. and, once again, the US
Treasury will have to come to the rescue by providing a multi-billion dollar
taxpayer bailout.
The dislocations caused by the unwinding of the hedge funds creates the
possibility that US markets will have to be closed while assets are dumped on
the market. New York University Professor Nouriel Roubini summed it up like
this:
"Policy makers may soon be forced to close financial markets as the panic
selling accelerates.
Indeed, we have now reached a point where fundamentals and long term valuation
considerations do not matter any more for financial markets. There is a free
fall as most investors are rapidly deleveraging and we are on the verge of a
capitulation collapse. What matters now is only flows - rather than stocks and
fundamentals - and flows are unidirectional as everyone is selling and no one
is buying as trying to buy equities is like catching a falling knife. There are
no buyers in these dysfunctional markets, only sellers and panic is the ugly
state of this destabilizing game.
“We have reached the scary point where the dysfunctional behavior of financial
markets has destructive effects on the financial system and - much worse - on
the real economies. So it is time to think about more radical policy actions
and government interventions."
(Nouriel Roubini's Global EconoMonitor)
The stock market rout has triggered gigantic swings in the currency markets,
too. The dollar has surged 16 percent against the euro in a matter of weeks
while every other currency in the world has steadily lost ground, excluding the
yen. The sudden fall in commodities and the unwinding of dollar-based bets in
foreign capitals has bolstered the dollar and made US Treasurys the preferred
"flight to safety" investment.
The volatility is causing problems everywhere, particularly where foreign
companies must pay back loans in dollars which have risen steeply in relation
to their own currencies. Emerging "commodities based" markets are getting
clobbered.
The stronger dollar also threatens to make it harder on US exports which have
been the one economic bright spot in recent months. If present trends continue,
then foreign governments will have to allocate more of their reserves to prop
up their own currencies which will make it even more difficult for the US to
fund its current account deficit as well as the Treasury's expanding balance
sheet.
In other words, these violent and unprecedented currency swings foreshadow a
funding crisis looming just ahead as credit is drained from the financial
system and capital becomes even scarcer. For now the dollar is flying high, but
the future is looking grimmer by the day.
The financial crisis is wringing credit from the system and pushing prices
downward across the board. No asset class has been spared, including gold which
posted its biggest one week loss in 28 years and has plummeted from $1,040 in
March to $734 at Friday's market close.
Oil has also been hammered by speculative bets made by the hedge funds which
are now forced to sell their positions to cover downgrades on their
mortgage-backed assets. The erratic movement in oil prices makes it possible to
see the real destructive power of the unregulated market, particularly the
opaque buying and selling by the hedge funds. In just 14 months oil went from
$70 to $145 and back to $67 again on Friday.
Wall Street speculators drove up prices with money they borrowed from the
investment banks and delivered a knockout blow to the US consumer. The Fed
played a critical role in this "gaming the system" by providing the low
interest credit that created burgeoning profits for the investment class and
falling living standards for everyone else.
Now that the currency bubble has popped, its effects are being felt worldwide.
Countries that benefited from the high commodities prices are now getting
slammed everywhere from Russia to the Persian Gulf. Ethanol producers are
facing bankruptcy if things do not turnaround in the next 12 months. As the
Wall Street Journal notes:
"The tragedy of the second bubble is that it has left the economy in a weaker
position to ride out the housing slump and credit panic. The American consumer
has been whipsawed with $4 dollar gas and food inflation, while entire
industries have been put on the edge of bankruptcy. Detroit's auto makers have
spent the last year taking down their truck and SUV assembly lines while
gearing up to make hybrids and electric cars, even as their cash flow has been
ravaged. Their new investments are based on the expectation that oil will stay
high permanently, but will the market for hybrids exist if oil is $50 a barrel?
“As Congress plumbs the causes of our current mess, the main one is hiding in
plain sight: Reckless monetary policy that did so much to create the credit
mania and then compounded the felony with a commodity bubble and run on the
dollar whose damage is now becoming apparent."
The effects of low interest rates and credit contagion are not limited to
"bottom line" considerations. As Marketwatch's Thomas Kostigen points out,
monetary policy can be a death sentence for poor people across the planet who
are invariably its biggest victims:
"The harsh reality of the economic fallout isn't that Joe the plumber can't buy
his business or that people's retirement funds are being lost or that
unemployment is rising; the harsh reality is that people will die.
“Already, since food prices began to rise 100 million more people have been
pushed into poverty, according to the World Bank, with as many as two billion
on the verge of disaster. Almost half the world's population, let's remember,
live on less than $2.50 per day. Millions die annually of hunger and
starvation, and more than a billion do not have access to fresh water.
“These numbers are poised to rise dramatically with population growth,
dwindling natural resources and higher consumer prices across all goods and
services. So as the stock market tumbles and the world economy falters, it's
important to remember that it's more than financial losses we are talking
about, it's the loss of life.
And increasingly it isn't just people in far-off places around the world who
are succumbing to such extreme hardships. Note this: Job losses in the state of
Indiana have caused the child poverty rate there to spike 29 per cent since
2000. The wealth gap in the United States and around the world is at record
levels -- and it has serious consequences.
The Organization for Economic Cooperation and Development reported this week
that the gap between the rich and the poor is getting bigger around the world,
and that the U.S. is experiencing the biggest dichotomy.
We are experiencing the largest wealth gap in history. Further erosion of the
economic floor will only send more people plunging into destitution.
This is why it's so important to fix the economic crisis -- now.
We're all linked." (MarketWatch)
The Bush administration has called for an economic summit to be held by the 20
largest economies sometime after the presidential elections. US and EU
officials are hoping to stitch together another Bretton Woods wherein control
of the global economic system was delivered to those same nations. It's likely,
however, that the outcome will turn out considerably different than
anticipated.
Already, under China's leadership, 12 Asian nations have agreed to set up an
80-billion-dollar fund to protect their economies from currency-runs, capital
flight or other financial disruptions. China has the world's largest reserves
at $1.9 trillion followed by Japan at more than $1 trillion. Clearly the two
richest nations will set the agenda and play a central role in deciding how
best to deal with the global recession.
The November summit in Washington could produce some unwelcome surprises which
were hinted at by Thailand's Deputy Prime Minister, Olarn Chaipravat, who told
Bloomberg News:
"The message of this initiative is for China to consider whether or not China
would open up its banking system and allow the strongest currency in the world,
which is the Chinese yuan, to be the rightful and anointed convertible currency
of the world."
Surely, the present financial malaise which has its roots in Wall Street and at
the Federal Reserve, has demonstrated that the dollar must be replaced as the
world's "reserve currency" and that America must be deposed as the de facto
steward of the global economic system. Leadership implies responsibility and
the US must be held to account for its failings. It's time for a change.
Mike Whitney lives in Washington state. He can be reached at [EMAIL PROTECTED]
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