Friday, June 22, 2012

China's Latest Swap Agreement is with Brazil

Some call this currency swap deal, between China and Brazil, to be the biggest one yet by China with a value of about $30 billion. The swap deal is part of a broad, long term bilateral cooperation between the two countries.

Since I have been keeping track, this is the first swap agreement China has entered with another member nation of BRICS, the others being Russia, India and South Africa.

Of course, while China has no formal swap agreement with Japan, their publicly announced agreement to settle their trade in their own currency and bypass converting into dollars is potentially a much bigger deal than the swap deal with Brazil just by virtue of the magnitude of their bilateral trade, well north of $300 billion annually.

Many have speculated on the significance of China's gradual introduction of the renminbi as an international currency.

Wednesday, June 13, 2012

Internationalization of the Renminbi

Speaking of collateral damage, an interesting discussion of the gradual replacement of the dollar by the renminbi has come to my attention from, of all places, Australia. The author sees savings accounts denominated in dollars as "collateral damage" when the dollar is displaced by the renminbi.

When should you begin to stuff renminbi under your mattress? Now. When will you be glad that you did? The author thinks it could come as soon as 36 months. Maybe not says China central banker, but let the market decide.

I have been monitoring this situation since I wrote about the bilateral swap agreements and plan to continue to do so. See also my April post on related matter between the renminbi and the yen. Certainly China-Japan bilateral trade represents a significant part of global trade and the significance of settlement that by-passes the dollar has been published  by several sources recently.

See this twit for a recent comprehensive explanation of the benefits of swap agreements: The BRIC Currency Swap Proposal Is A Global Game Changer

Tuesday, June 12, 2012

America's Drone Warfare Trivializes the Meaning of Collateral Damage

Collateral damage used to connote unfortunate, accidental, regrettably unintentional death and destruction committed in the quest of accomplishing a greater good--admittedly a doubtful and shaky definition to begin with. When collateral damage becomes routine, massive, indiscriminate and random, the consequences deserve more thought than simply dismissing the incident as, oh well, another dead innocent civilian or two or three or tens and hundreds.

Use of drones can come back and bite our collective ass. See arguments presented on why drone warfare is illegal.

Drone warfare is unlikely to become a topic of presidential campaign and debate but thoughtful Americans, perhaps a contradiction in terms, need to think deeply about this practice before the joystick jockeys wearing uniforms begin to think of this exercise as just another video game.