The Real Reason For China’s Slowdown

Share this
Share

Central Banks manipulate the price of money using several different tactics for controlling interest rates. One of those mechanisms is buying assets like bonds. The last easing program that the Federal Reserve conducted ended in Oct. of 2014. Even though interest rates are still at a record low in the United States, the effects of ending Quantitative Easing have been felt across the globe. Namely with our largest trading partners. Europe, Canada and China have all faced slowing economies since the end of the program. In Europe, the ECB is combating the problem with a record asset buying program. And so far it has kept Europe afloat.

The largest effect of this asset buying program, has been the devaluation of the Euro, to close to parity with the US dollar. The idea behind this is easing is to strengthen exports and create inflation with the intention of spurring growth.  When central bankers devalue their currencies, each major bank gets to ease its currency when its economy is most in need. After QE3, the Japanese and European economies were slowing at a rapid pace. The burden of US easing could no longer be put on their shoulders, and the ECB soon began to cheapen its currency. As an effect of this, the US dollar index started to rise precipitously in July of 2014. The index’s rise was further strengthened with the possibility of a US Interest Rate hike being brought into focus by Chair Yellen. As a result the US economy began to face more economic pressure, and it started to show in the data.

One may ask how any of the above is critical to understanding why China’s economy is slowing, or why the People’s Bank of China devalued the Yuan by 2%, but it is the key foundation for accurate analysis.

The Yuan is directly pegged to the Dollar. If the dollar becomes more valuable then the yuan does likewise. This may seem trivial but it is absolutely essential to realize. US Central Bank policy that effects the value of the dollar, will also heavily effect the Yuan. Since the dollar has been rising in value against the Euro and the Yen, so has the Yuan.

One of the largest effects of a strong currency is stong cheap imports and weak expensive exports. This explains part of the large inventory buildup seen in the US. China is heavily dependent on its exports. The lower demand for higher priced Chinese exports dragged on the sector and has contributed to their slowing economy.

Rather than breaking their peg with the US Dollar the PBOC decided to directly devalue their currency against the dollar to provide stimulus for their economy and relief to their export industries.  Despite this small devaluation China will continue to face pressure as long as the dollar remains strong, and Central Banks continue their manipulation of interest rates.

The amount of malinvestment in China and economies around the world will continue to make global markets unstable in the years to come. But instead of blaming the Chinese for their slowdown, one must really look at the underlying reasons why systemically that slowdown is inevitable. In the meantime we will continue to hear the word “China” blasted three hundred times per day from every news network, financial channel, and every Donald Trump interview.

By Andrew Gehrig

‘Joujou’ is another name for hope in the Brazilian wetlands

Share this
Share

A male jaguar named Joujou has returned to his home sweet home in the wild.

In Brazil he has become a symbol of the efforts of environmentalists, volunteers and firefighters to protect and restore a much affected strip of the Pantanal, the world’s largest tropical wetland area, which was ravaged by the fires last year.

Little by little, vegetation returning to the Serra do Amolar, a chain of mountains considered an environmental treasure because of the large number of species it houses.

Before the fires, 62 jaguars had been monitored in the region. Today, researchers are unable to say how many have survived and how many have returned to their habitat, which was scorched in the worst sequence of fires in 14 years. Between January and September of 2020, 2.3 million acres have been on fire, an area which is two times as big as the city of Rio de Janeiro.

Joujou the catJoujou has become a symbol of hope because he was shown on national TV with his paws burned. Some Brazilians said they cried in front of the screen when they saw the big cat suffering so much. In November, two jaguars were rescued. They could barely move. One of them didn’t make it. Joujou was taken to a center for housing and treatment of wild animals in the city of Campo Grande, capital of the state of Mato Grosso do Sul.

After months of intensive care, this example of the Americas’ biggest feline has recovered entirely and was flown back to Pantanal. Joujou now has a tracking collar and will be monitored for a year. He reached the hospital weighing just a hundred pounds. He now weighs almost 180 pounds.

Many other animals – including anteaters, armadillos, snakes, alligators and other jaguars – did not survive the blaze. However, Joujou, beautiful and strong, has been returned home safe and sound.

By Jorge Valente

Leave a comment

The priest who left no sharp stones

Share this
Share

SAO PAOLO, Brazil – One of the most iconic figures in the fight for the homeless in the city of São Paulo has been in the spotlight since the beginning of February.

Father Julio Lancelotti learned that the City Hall’s authorities had decided to cover the ground under a bridge with pointed stones, a move to prevent the homeless from sleeping underneath.

A reputed advocate of human rights, father Lancelotti had no second thoughts about the line of action he was about to take.

With a sledgehammer in hand, he took to the streets and positioned himself right below the bridge. And then attacked and destroyed furiously what he considered another serious breach of human rights in a city already plagued by many other violations.

On social media he later posted a picture showing the result of his action and wrote, “Outrage against oppression”.

São Paulo is believed to have more than 24,000 homeless living below the poverty line, according to a 2019 survey. But Human Rights Watch groups say this number skyrocketed during the pandemic.

City Hall authorities said that the decision to put the stones under the bridge was an “isolated action” and had already fired the employee who was in charge of the task.

Father Lancelotti, however, was skeptical about this take on things, and said another similar action had already been done, commenting, “It’s inhuman, looks like a concentration camp.”

By Jorge Valente

Leave a comment

Tourists damage 1500-year-old Gate of the Sun and rock monoliths in Bolivia’s ancient city of Tiwanaku

Share this
Share

Four women and one man from the eastern city of Santa Cruz were charged with damaging the carved stone relics of the civilization that flourished for five centuries on the site, forerunner of the Inca empire. The pre-Columbian ruins are part of the country’s most important archaeological treasures.

After seeing what they described as “suspicious activity,” caretakers said the group splashed the structures with an oily substance that stained surfaces and that experts say would attract gases into the stone, causing internal changes and deterioration.

By Milan Sime Martinic

Leave a comment

Myanmar university students rally near Chinese embassy, protest SEAFOOD

Share this
Share

YANGON, Myanmar – University students in Yangon rallied near the Chinese embassy Feb. 27 and called for the Chinese government not to cooperate with the Myanmar military.

Protesters in Myanmar suspect that China is transporting hardware devices to build a firewall for controlling the internet in Myanmar. When the protesters asked the question, the embassy told them that China was sending SEAFOOD to Myanmar. “SEAFOOD” is defines as Software Engineering Approaches for Offshore and Outsourced Development.

There are three main telecommunication companies in Myanmar: MPT, Ooredo and Telenor have provided faster internet connections since 2014.

At present, there is an internet blackout between 1am to 9am daily throughout Myanmar, and when it is available, internet connections are slower than before the military grabbed power from the democratically-elected government.

By Htay Win
Featured image credit: Sit Htet Aung

Leave a comment

Japan’s ruling party to allow women to watch its board meetings, but no talking

Share this
Share

Japan’s Liberal Democratic Party will invite up to five of its female members of parliament to board meetings, but they should not speak. This was announced by the party as it took what it said was a step toward equality.

“It’s important to fully understand what kind of discussions are going on,” said Toshihiro Nikai, the LDP general secretary. “Look. That’s what it’s about.” Nakai added that women should not have a say in the proceedings but can submit suggestions in writing after the meetings have concluded.

The party’s action has sparked criticism from the opposition, which charges male chauvinism and discrimination against women is ingrained in the LDP, which depends on the voices of Japan’s strong nationalist circles with their traditional role models. They are tentative in grappling with women-friendly ideas, according to women’s groups, and progress is slow. The party’s make-up is 40% female, but women only hold 10% of its parliamentary seats, a figure far below the 25% global average.

According to the World Economic Forum 2020 report, Japan ranks 121 out of 153 countries in its gender parity global ranking.

By Milan Sime Martinic

Leave a comment

More news in Opinion

Most recent: