The trade war between America and their good friends, the Chinese, is coming along nicely.
Latest addition is China imposing up to 105% duties on American Chicken products. which it claims America has been dumping on the Chinese market. How is anyone supposed to incubate the latest version of bird flu if foreigners are flooding the market with Yankee chickens? that should help no end in this weeks congressional debating and voting on what steps America should take to respond to China’s ‘currency manipulation’.
Meanwhile Japan’s government seems to me to be showing that it is finally aware of how dangerous a position they are in regarding their debt and bond sales. As I have mentioned before Japan is within a whisker of having to try to sell its debt abroad on the open market for the first time in a generation. And at a time when Japanese public debt is twice as large as its economy. $10 Trillion debt being serviced by a $5 Trillion economy.
The government is now locked into another suicidal round of attempting to devalue the Yen. It has tried twice, thrown away billions in the effort and achieved nothing but a small stain in their hanky. The government needs more cash. Both the Prime Minister, Mr Kan and the Finance Minister, Mr Noda have said they must raise this money without issuing any more debt. To do this they want to use the whole of last year’s budget surplus. The problem is there is a law which says half of any surplus must be used to buy back debt, not increase it. I think it a clear measure of how they now recognize their danger, that they propose to change the law so as to use all the surplus, rather than issue more debt.
In Dubai, the county’s largest property developer and critical list debtor, Tamweel, is to now be majority owned by Dubai Islamic Bank. The bank will increase it holdings, by buying shares. Which amounts to a State bail-out fudged up in Islamic as opposed to Wall Street, mumbo jumbo. So we know that Tamweel is still in very deep camel dung and no one else wants to ‘invest’. And the State is having to dig back into its copious pockets.
Lastly, talking of banks, Germany’s are still rolling in excrement. It’s so unfair really, the way Ireland, Greece and Spain hog the lime light. When is reality, Germany’s banks have truly massive undeclared debts of their own. WestLB, BeyernLb and HSH Nordbank are three in particular trouble. They have been bailed, saved, lost and re-bailed more times than AIG.
The latest is that the European Commission has been ‘monitoring’ the recovery plans of these banks, much to the great annoyance of the Germans. The Germans have made it clear that they want the Commission to bog off. In return the Commission has just written to the Finance Ministry saying it is worried these three banks might be in bad enough shape to be a systemic threat. The letter points out that despite the recent benign conditions these three banks are still at death;s door. What will happen as conditions worsen?
Wouldn’t we all like to know.
And from the UK the absolute worst and most worrying news ever. A Chinese food company Bright Foods is reported to want to buy United biscuits, makers of McVitties – the best biscuit in the world. Bright foods was one of the companies who supplied Melamine tainted milk products.