Mark this day in your calendar
For two reasons I think this day will show up in history:
1.) German President Köhler dissolved the German Parliament to allow new, early elections.
2.) China lowered the fixed exchange rate from 8.28 down to 8.11 Yuan per Dollar, agreeing to peg it to the Dollar and promised to tie the exchange rate in the future to a currency basket.
Maybe I am overreacting, but German's recent development in terms of government reminds me too much of Weinmarer Republic conditions. The fact that the current Chancellor Schröder is running again is beyond my understanding. If you feel that you don't have the platform to get your reforms through, either means you try to get something done that is not called for or you are not doing your job persuading the public what it needs. The later is too scary resembling Bush's approach of using all means of propaganda to convince people of false facts. In either case, the German democracy seems to be hurt by this decision. It is an indicator of its weakness which again is a sign of its ineffectiveness. Don't get me wrong, I am a convinced fighter of democracy, even if I haven't voted in a German election in a while. Of course, Germans still participate in elections and compared to the USA I still think people are not yet feeling that they can't change anything with their vote.
But when tactics like that are used to get a better result seems more like the statistician that massages data to the point that it fits his/her expectation to what the outcome should be in their opinion, rather than to accept the unbiased result.
I don't get the impression that Angela Merkel is a alternative to Gerhard Schröder, but this is a great gamble for the SPD to get a pink slip with the remark we need a change, no matter what this means in political terms. I will be following this election closely. Most interesting to me will be to find out if their are many swing voters and what the participation and mood of the new/young voters will be. And then there is still the suit before German Supreme Court (Bundersverfassungsgericht) to check the actual constitutionality of this act.
China has been doing so well for a while. But I thought that I remember that China had set is currency below value to ensure tremendous inflow of foreign currency, a modern form of dumping. Revaluation of the Yuan brings its value slightly up. However, it could be and I have to research this a bit more, that the Yuan had appreciate so much over the recent years but could rise due to fixed exchange rate that the lowering of it value actually sets it a its true value. But this still doesn't seem to fit into the picture. So what does that mean for China? It is now less cheaper to invest in China! And it yet remains to be seen how this pegging against other currencies will look like, (Bretton-Woods III?). I am somehow not yet convinced that China will openly let its currency fluctuate on the world market. If this is the first step for China to become more open, great, but then watch out what you asked for. The Chinese have been working on building up to be the next world superpower financially they are certainly on the way to become a force to reckon with. True, they have been already very much an export and import nation, but reserved non the less. I am glad that this is happening, but I skeptical of its sincerity. As an economist I am thrilled, since I don't believe in fixed currency politics, protectionism, or government intervention for the wrong reasons. Long live free trade and open borders!
But like I said, despite skepsis, mark this day in the calendar, it may change the world, even if just a little bit.
1.) German President Köhler dissolved the German Parliament to allow new, early elections.
2.) China lowered the fixed exchange rate from 8.28 down to 8.11 Yuan per Dollar, agreeing to peg it to the Dollar and promised to tie the exchange rate in the future to a currency basket.
Maybe I am overreacting, but German's recent development in terms of government reminds me too much of Weinmarer Republic conditions. The fact that the current Chancellor Schröder is running again is beyond my understanding. If you feel that you don't have the platform to get your reforms through, either means you try to get something done that is not called for or you are not doing your job persuading the public what it needs. The later is too scary resembling Bush's approach of using all means of propaganda to convince people of false facts. In either case, the German democracy seems to be hurt by this decision. It is an indicator of its weakness which again is a sign of its ineffectiveness. Don't get me wrong, I am a convinced fighter of democracy, even if I haven't voted in a German election in a while. Of course, Germans still participate in elections and compared to the USA I still think people are not yet feeling that they can't change anything with their vote.
But when tactics like that are used to get a better result seems more like the statistician that massages data to the point that it fits his/her expectation to what the outcome should be in their opinion, rather than to accept the unbiased result.
I don't get the impression that Angela Merkel is a alternative to Gerhard Schröder, but this is a great gamble for the SPD to get a pink slip with the remark we need a change, no matter what this means in political terms. I will be following this election closely. Most interesting to me will be to find out if their are many swing voters and what the participation and mood of the new/young voters will be. And then there is still the suit before German Supreme Court (Bundersverfassungsgericht) to check the actual constitutionality of this act.
China has been doing so well for a while. But I thought that I remember that China had set is currency below value to ensure tremendous inflow of foreign currency, a modern form of dumping. Revaluation of the Yuan brings its value slightly up. However, it could be and I have to research this a bit more, that the Yuan had appreciate so much over the recent years but could rise due to fixed exchange rate that the lowering of it value actually sets it a its true value. But this still doesn't seem to fit into the picture. So what does that mean for China? It is now less cheaper to invest in China! And it yet remains to be seen how this pegging against other currencies will look like, (Bretton-Woods III?). I am somehow not yet convinced that China will openly let its currency fluctuate on the world market. If this is the first step for China to become more open, great, but then watch out what you asked for. The Chinese have been working on building up to be the next world superpower financially they are certainly on the way to become a force to reckon with. True, they have been already very much an export and import nation, but reserved non the less. I am glad that this is happening, but I skeptical of its sincerity. As an economist I am thrilled, since I don't believe in fixed currency politics, protectionism, or government intervention for the wrong reasons. Long live free trade and open borders!
But like I said, despite skepsis, mark this day in the calendar, it may change the world, even if just a little bit.
posted by daenjel at 10:25 PM
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