Friday Lite

By popular demand, the Friday post will hereafter be titled Friday Lite. At one time it was thought that this title would become monotonous, but the alternative of attempting to pick out a title that represented the contents of the now typical Friday fare proved too daunting a task, week after week, as Saturday drew near.

Actually this blog shows up near the top of the list on this search for "Friday Lite" at Yahoo!, the top spot currently being occupied by this blog, or sometimes by this one. A search at MSN finds us in second place trailing only this site, and at Google a search reveals that the top spot has already been secured.

The goal is now clear - to own "Friday Lite" on all search engines through sheer force of repetition (which, with an obscure, only half-grammatically correct phrase, is actually not that hard to do).

Hu's Your Daddy

While business leaders were disappointed that no major agreements were announced during the visit of Chinese President Hu Jintao at the White House, both parties agreed that they had a productive meeting. This story from China Daily contained the following references to 19th century railway construction and World War II.

For his part, President Hu Jintao said that he wished to convey to the great American people the warm greetings and best wishes of the 1.3 billion Chinese people. He mentioned that in mid-19th century, several dozen thousand Chinese workers, working side by side with American workers and braving harsh conditions, built the great railway linking the east and the west of the American continent.

"In our common struggle against fascist aggression over 60 years ago, several thousand American soldiers lost their lives in battlefields in China. Their heroic sacrifice still remains fresh in the minds of the Chinese people," Hu said.

The Chinese president is said to have a photographic memory, able to recite speeches, word for word, without the aid of a teleprompter or written text, and, like most of the other men who run China, he was trained as an engineer.

Now, This Can't Be Good News

This story from Asia Times tells of the growing relationships between Russia, China, and Iran:

The Shanghai Cooperation Organization (SCO), which maintained it had no plans for expansion, is now changing course. Mongolia, Iran, India and Pakistan, which previously had observer status, will become full members. SCO's decision to welcome Iran into its fold constitutes a political statement. Conceivably, SCO would now proceed to adopt a common position on the Iran nuclear issue at its summit meeting June 15.

Speaking in Beijing as recently as January 16, the organization's secretary general Zhang Deguang had been quoted by Xinhua news agency as saying: "Absorbing new member states needs a legal basis, yet the SCO has no rules concerning the issue. Therefore, there is no need for some Western countries to worry whether India, Iran or other countries would become new members."
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Visiting Iranian Deputy Foreign Minister Manouchehr Mohammadi told Itar-TASS in Moscow that the membership expansion "could make the world more fair". And he spoke of building an Iran-Russia "gas-and-oil arc" by coordinating their activities as energy producing countries. Mohammadi also touched on Iran's intention to raise the issue of his country's nuclear program and its expectations of securing SCO support.

The timing of the SCO decision appears to be significant. By the end of April the director general of the International Atomic Energy Agency is expected to report to the United Nations Security Council in New York regarding Iran's compliance with the IAEA resolutions and the Security Council's presidential statement, which stresses the importance of Iran "reestablishing full, sustained suspension of uranium-enrichment activities".

The SCO membership is therefore a lifeline for Iran in political and economic terms. The SCO is not a military bloc but is nonetheless a security organization committed to countering terrorism, religious extremism and separatism. SCO membership would debunk the US propaganda about Iran being part of an "axis of evil".

Somehow, in the last few years, U.S. foreign policy is getting much harder.

Those IMF Dollar Bears

The International Monetary Fund once again warns about trade imbalances and the lack of flexibility in currency exchange rates:

Restoring balance to the world economy will require shifts in global demand and exchange rates, and governments must not stand in the way of the process, the International Monetary Fund said on Wednesday.

In the April edition of the semiannual World Economic Outlook, the IMF renewed a warning about the threat posed by trade distortions, saying a fall in the dollar and a rise in some Asian currencies is one prerequisite to resolving them.
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"The baseline forecast is for continued strong growth, although risks remain slanted to the downside, the more so since key vulnerabilities -- notably the global imbalances -- continue to increase," the IMF said.

The fund lamented the lack of action to tackle this risk, citing only "modest signs" of improvement in U.S. savings, limited adjustments in exchange rate policies in emerging Asia, and more room for reforms in the euro zone and Japan.

"An orderly resolution of global imbalances will require measures to facilitate a rebalancing of demand across countries and a realignment of exchange rates over the medium term," the IMF said, saying this means the U.S. dollar would need to fall significantly as currencies in surplus countries, such as some in Asia and oil producers.

"The longer the adjustment is delayed, the larger these exchange rate adjustments will ultimately need to be and the greater the risk of overshooting," it added.
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A more abrupt and disorderly unwinding could spark a messy dollar slide, a larger increase in interest rates and a sharp economic contraction or recession.

The Chinese authorities must be quite aware of what has recently happened to the currencies of both Iceland and New Zealand, which, combined with the near-death 1997 Asian experience and their engineering pragmatism will likely result in baby steps toward a freely floating currency (at least until after the 2008 Olympics in Beijing - then all bets are off).

Did You Miss the Correction?

Who knows where gold and silver will go from here, but the ride up has been pretty wild this week. The ride down yesterday, then back up this morning make you wonder what's going on in the precious metal markets.

Margin requirements have reportedly been raised at the COMEX where the metals trade, and short sellers have been under extreme pressure.

Here's another idea how to explain some of the price action.

Jim Rogers, Gold Bug

For many years, Jim Rogers has believed that there is nothing special about gold. That it's just another commodity. He has previously said that central banks have too much gold, and therefore would be able to sell enough of the shiny stuff into the market to keep the price suppressed indefinitely.

Apparently he has changed his mind, and in this report, the folks from GATA (Gold Anti-Trust Action Committee) took the opportunity to get in a couple digs:

Not long ago Jim Rogers, the hedge and commodities fund manager, was more impressed with lead than with gold, and more impressed with himself than anything. Then Refco taught him the meaning of the term "counterparty risk."

So with gold quickly a couple hundred dollars higher and showing no sign of stopping, Rogers has come around, giving Bloomberg an interview, appended here, forecasting a gold price of $1,000 per ounce.

Well, yesterday showed a sign of stopping, and who knows what'll happen today.

From the Bloomberg article:

Jim Rogers, the former George Soros partner who foresaw the start of a commodity rally in 1999, said the boom in energy and raw material prices will endure, driving gold to a record $1,000 an ounce.

"The shortest bull market for commodities lasted 15 years, the longest 23 years," Rogers, 63, said in an interview. So if history is any guide, "they've got a long way to go."

Jim Rogers has been right on just about everything else having to do with commodities, and he didn't really say when the $1,000 mark would be surpassed, so there doesn't seem to be too much of a change in stance.

Someone Get Me a Bucket!

This report from the China Daily recounts how the misreading of a handbook can be very embarrassing:

An elementary school principal trying to prevent student walkouts during immigration rallies introduced a lockdown so strict that children weren't allowed to go to the bathroom, and instead had to use buckets in the classroom.

Worthington Elementary School Principal Angie Marquez imposed the lockdown March 27 as nearly 40,000 students across Southern California left classes to attend immigrants' rights demonstrations.

Marquez apparently misread the district handbook and ordered a lockdown designed for nuclear attacks.

Oh well - an honest mistake.