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Thursday, January 29, 2009

Zimbabwe has decided to abandon its currency, the Zimbabwean dollar, in favour of other currencies.

Acting Finance Minister Patrick Chinamasa announced today that Zimbabweans will be allowed to make transactions in other currencies along with the local currency. “In line with the prevailing practices by the general public, [the] government is therefore allowing the use of multiple foreign currencies for business transactions alongside the Zimbabwean dollar,” he said, adding that the Zimbabwean dollar will not be removed from circulation and would be used alongside other currencies.

This decision comes during the current period of hyperinflation, which has massively devalued the Zimbabwean dollar. Banknotes up to $100 trillion have been printed, despite the removal of ten zeroes from the currency last summer to try to make transactions easier. The official inflation rate, last updated in July 2008, was 231,000,000% a year, although independent estimates place the number as high as 6.5×10¹⁰⁸, or 6.5 quindecillion novemdecillion, percent.

Up to now, only vendors with licenses were legally able to accept foreign currencies, although the practice was widespread — private businesses altogether refuse to accept the unstable Zimbabwean dollar.

Large sections of the workforce, including teachers and doctors, have gone on strike because hyperinflation rapidly renders their wages worthless. Representative groups said salaries, now measured in trillions of dollars, are insufficient to pay for even the bus fare to work.

Zimbabwe also faces other crises, including a cholera epidemic that has claimed the lives of over 3,000 people, according to statistics from the World Health Organisation.

Saturday, May 21, 2005

In an effort to ease complaints by the U.S. and Europe about a heavy influx of low priced Chinese goods, China will raise export tariffs on 74 categories of textile products in June. This follows plans from the U.S. to impose quotas on Chinese textiles and clothing.

Products likely to see an increase from the Chinese move include synthetic fiber shirts, trousers, knit shirts and blouses, cotton shirts, and combined cotton yarn. Last week, similar restrictions were imposed by the U.S. on cotton trousers, knit shirts, and underwear. Currently, a 2.5 cent charge per item is imposed; the new tariff will raise this to the equivalent of 12 cents per piece now. While this is a fourfold increase, it is not expected to affect consumer prices. Because of this, some doubt the tariff will have any effect on correcting the trade imbalance.

This move is in response to U.S. trade quotas imposed due to concerns that increased Chinese goods would put U.S. textile manufacturers out of business. According to Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, a textile industry group in the U.S., the move will preserve 10,000 U.S. jobs. The new U.S. trade quota will limit the growth of Chinese textile imports to 7.5 percent compared with shipments over the past year.

Prior to January 1, a global quota system helped regulate the trade. With the quota system gone, fears have arisen that a flood of Chinese goods could undercut U.S. competitiveness in the market. China is able to market its goods cheaply due to an artificially weak yuan. The U.S. Treasury criticized the China yuan policy as “highly distortionary”, posing a major risk to China’s economy itself and to global economic growth. They challenged China to revalue its currency to bring it to a level they believe will allow fairer competition between global manufacturers.

China has disputed the charges of the U.S. Treasury. Chinese Commerce Minister Bo Xilai said, “I believe they are not reasonable”.

Laura Jones, a representative of large retailers, also criticized the move, saying “These restrictions on imports from China will do absolutely nothing to help the U.S. textile industry — and the government knows it.”

China has seen a boom in economic growth in recent years due to growing trade surpluses with the West, but economists worry that the trade gap will cause longer term global economic problems. China’s textile and apparel exports are the most noteworthy example, with exports up over 1,000 percent in some categories this year and the rapid loss of marketshare and jobs by U.S. textile manufacturers.

Beginning in 1978, the Chinese economy has been transforming from a Soviet-style centrally planned economy to more of a free market style system, under the rigid political control of Communist Party of China.

To this end, the government has leveraged foreign trade to stimulate economic growth. The result has been a fourfold increase in GDP, making China the sixth largest economy in the world. By 2012 the People’s Republic of China may have the highest GDP in the world.

According to U.S. statistics, from 1999 to 2004 China’s trade surplus with the U.S. doubled to $170 billion. Wal-Mart is China’s seventh largest export partner, just ahead of the United Kingdom.

However, the gains from their “socialist market economy” have not been without problems. The Chinese leadership has often experienced the worst results of socialism and capitalism: bureaucracy, lassitude, corruption, and inflation. Inflation rates have been an on-going challenge, reaching as high as 17% in 1995.

Environmental deterioration is a longer-term threat to economic growth. In 1998, the World Health Organization reported that China had seven of the 10 most-polluted cities on Earth. Another concern among some economists is that China’s economy is over-heating, and due to its global economic expansion this could have major repercussions among other nations.

Typically, wages have been low and working conditions poor, with workers living in restrictive dormitories and working at boring factory jobs. However, recent labor shortages have started improving conditions, and raising the minimum wage towards the equivalent of 100-150 US dollars per month. The labor shortages are in part a result of a demographic trend caused by strict family planning.

• “Economy of the People’s Republic of China” — Wikipedia, May 22, 2005
• “China raises tariffs on textile exports. Beijing hoping to counter criticism from U.S., Europe.” — CNN, May 21, 2005
• “China to increase export tariffs” — CNN, May 19, 2005

Thursday, April 21, 2011

France and Italy have announced along with the United Kingdom that they will be sending military advisers to help Libyan rebels in their fight against the forces of Libyan leader Muammar Gaddafi.

Italian Minister for Defence Ignazio La Russa said Wednesday that his country will send ten instructors. French officials said they would send fewer than ten. The British Foreign Secretary, William Hague, said they would send a team that could possibly contain up to twenty advisers.

La Russa said in a news conference that the advisers’ roles had yet to be determined, “They won’t be on the battlefield. They’ll be mentors, they won’t accompany them. Training is one thing, participation another.”

He further said of the rebels, “They’re rich in enthusiasm, they want to fight for liberty, but naturally they are poor in experience and arms.” However, La Russa believes that not all the arms the rebels have were taken from the Libyan Army stockpiles, stating, “I don’t think they only have arms from the Gaddafi army. Some help arrived.” He did not elaborate on the final statement.

Meanwhile, U.S. officials say President Barack Obama’s administration plans to give the Libyan opposition $25 million in non-lethal assistance. The officials say the assistance could include items such as vehicles, fuel trucks, protective vests and non-secure radios.

Libya’s foreign minister, Abdul Ati al-Obeidi, criticized the dispatch of foreign military advisers, saying it will harm chances for peace in the country. In an interview with the BBC, Obeidi called for a ceasefire followed by a six month period to prepare for an election. “We think any military presence is a step backwards, and we are sure that if this bombing stopped and there is a real ceasefire we could have a dialogue among all Libyans about what they want — democracy, political reform, constitution, election. This could not be done with what is going on now,” said Obeidi.

The move comes as UN officials condemn the use of cluster bombs that are in use by pro-Gaddaffi forces, a tactic banned under the Convention on Cluster Munitions, of which Libya is not a signatory.

UN High Commissioner for Human Rights Navi Pillay stated, amidst reports of snipers attacking civilians in many towns, that use of such munitions would “inevitably lead to civilian casualties”, whilst also calling for NATO forces to “exercise the utmost caution and vigilance so as not to kill civilians by mistake”. Pillay praised the Libyan government for allowing on Monday a U.N. humanitarian base in the capital city of Tripoli.

Meanwhile, fighting has continued between rebel and pro-government forces this Wednesday in the besieged western port city of Misrata, where residents are pleading for international intervention.

British photojournalist Tim Hetherington, who co-directed the documentary film Restrepo, which was nominated for an Academy Award for Best Documentary Feature this year, died from wounds he suffered in an RPG attack in the city.

His colleagues, photographers Chris Hondros and Guy Martin were also severely wounded. Hondros suffered a severe brain injury leaving him in a critical condition and eventually succumbed to his injury at a triage center and Martin, a British citizen, was injured by shrapnel, and is now receiving vascular surgery. Another with the group, Michael Christopher Brown also received shrapnel wounds which were not life-threatening.

Hetherington last updated his Twitter account on Tuesday, which read, “In besieged Libyan city of Misrata. Indiscriminate shelling by Qaddafi forces. No sign of NATO.”

Leaders in the rebel-held city called for the urgent intervention of foreign ground troops to protect the 500,000 civilians there, the first such request by anyone among Libya’s opposition forces. The rebels’ civilian leadership, the Transitional National Council, has however rejected the presence of foreign troops on Libyan soil to help their cause.

Meanwhile, across the country, NATO airstrikes again struck government installations in several cities.

Sunday, April 24, 2005

New York Stock Exchange (NYSE) announced last Wednesday that it has agreed definitively to merge with Chicago-based Archipelago Exchange (ArcaEx) and form a new publicly traded, for-profit company known as NYSE Group. This announcement was followed two days later by NASDAQ®, which independently announced a definitive agreement to purchase Instinet Group.

Archipelago and Instinet are innovative e-trading (electronic trading) companies, and formerly were the two largest American rivals to NYSE and NASDAQ, in recent years taking increasingly large portions of their market share. The Securities and Exchange Commission (SEC) and other regulatory agencies still have to review and approve the transactions, particularly with respect to US securities law and antitrust law, in order to ensure that the marketplace remains lawful and competitive.

Other pending issues for NASDAQ include obtaining the approval of Instinet shareholders, as well as customary closing conditions. NYSE must obtain the approval of its members and Archipelago shareholders.

These changes, a reaction to increased e-trading competition and a changed regulatory environment, will result in NASDAQ and NYSE trading each other’s shares and attempting to grab market share, which many hope will drive down transaction costs and ultimately benefit consumers. However, at least one commentator, Dan Ackman writing in Forbes, has noted that the trading commission at the NYSE currently averages less than a nickel (US$0.05) per share, and was less enthusiastic about potential efficiency gains from electronic trading at the exchange.

The transactions are also intended to make the two leading American stock exchanges more globally competitive with such exchanges as the London Stock Exchange, the Frankfurt Stock Exchange, the Toronto Stock Exchange, and the Australian Stock Exchange located in Sydney.