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The rise of the Yuan

Yuan Inflows to Rise as Dollar Loses Luster, WisdomTree Says — Bloomberg

Sept. 15 (Bloomberg) — Investors are putting more money into the yuan
on bets China will allow appreciation in the exchange rate to make it
more accepted as an international currency, according to WisdomTree
Investments Inc.

A weak dollar, linked to concern about record amounts of debt in the
U.S., will drive more funds into China and emerging markets given
prospects growth rates will exceed those in developed countries, Bruce
Lavine, president of investment firm WisdomTree, said in an interview.

Lavine said in each of the last three months there was an inflow of
$25 million into his $142 million Chinese Yuan Exchange-Traded Fund,
which was started in May 2008 and invests mostly in yuan
non-deliverable forwards. ETFs are listed on an exchange where they
are bought and sold daily like stocks.

“Five years from now you will see a thoroughly different landscape in
terms of internationalization of the yuan,” said New York-based
Lavine, whose funds oversee $5.1 billion in assets. “When the dam
finally breaks, it happens faster than you think.”

To access the full article please visit –
http://www.bloomberg.com/apps/news?pid=20601110&sid=a7FkyJviwSqE


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Great blog, written by a wise man living in China

Jonathan (Jono) Warren is a friend of mine who is currently living in Beijing, but is moving to Kashgar, Xinjiang. You know the place where all the riots occurred a little while ago. He is beginning a tea business, where he will be importing Pakistani tea into China, packaging it in China and then selling it to super markets in the West.

Sounds crazy right? Well, regardless of your thoughts of this brief description of his business, the man is quite well read and paints a incredible story with his words… which you can find at his blog Garbage and Noodles (http://garbageandnoodles.blogspot.com/)

Here is a small excerpt from his most recent post “I sing, you sing, we all sing

Up in Changbaixian, Liu Baiguo was that grower. The owner of a local Chinese-medicine shop (???), recommended Mr. Liu as his farm was the closest to the city, but produced some of the best ginseng. Liu walked into the shop and asked for the ones who were looking for him. He seemed genuinely excited to be able to show his roots to two bright-eyed American entrepreneurs.

He led us out of the shop, out of the marketplace, and into his car – a police car that he got to keep after his work as a chinese border customs official. At his fields, he told us everything he knew about ginseng, how he inherited his fields, how there are 92 workers working for him, how he plants trees on the plots where the ginseng is picked because the roots use up all the nutrients…

Click here to read more

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Help wanted! Young US-American professionals head to Beijing and Shanghai

I thought it was very appropriate and a nice coincidence that upon returning from my business trip to China & Singapore, I turn on my blackberry and am flashed with this NYT article: American Graduates Finding Jobs in China.

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BEIJING — Shanghai and Beijing are becoming new lands of opportunity for recent American college graduates who face unemployment nearing double digits at home.

“I’ve seen a surge of young people coming to work in China over the last few years,” said Jack Perkowski, founder of Asimco Technologies, one of the largest automotive parts companies in China.

“When I came over to China in 1994, that was the first wave of Americans coming to China,” he said. “These young people are part of this big second wave.

[Source: NYT - American Graduates Finding Jobs in China]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Let’s be honest. China has not escaped the shocks of the global economic recession. There are empty office and commercial buildings around Beijing’s Central Business District. Rents are sky rocketing and apartments are remaining unsold and unoccupied. Factories are closing in Southern China. Political turmoil has touched regions where minorities are great in number. And… so on.

Nonetheless, after living and working in the country at the beginning of the crisis (Sept – Dec 08), and returning to do business this past month—the fact remains there is one thing you can find in China that is missing from my colleagues and friends here in the North-Eastern United States, down in Lima, Peru and Belo Horizonte, Brazil and across the pond in the UK and France.

“A positive outlook on the future.”

Walk the streets of Beijing and the city is full of people just as the NYT article above describes; motivated and adventurous young entrepreneurs and professionals from all walks of life that have come to China to build their respective futures.

Likewise, a considerable portion of China’s younger generations remain confident and positive about their futures. In a country of 1.4 billion people (probably more) you will hardly ever find a general consensus. What applies in Beijing, will not apply in western China in the city of Xinjiang. This does not change the fact, that the life styles and future aspirations of China’s youth are considerably different than those of their parents and grandparents.

The Chinese are not ignorant; they know things are probably worse than their government lets on. At the same time, critics in the west are too quick to point fingers and predict imminent economic collapse. Sometimes it is a bursting real estate bubble, an over-valued stock market due for a correction, plunging exports, or decreasing import demand. Critics will always find a way to well… criticize.

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China's currency reserves may top $2 trillion

Now where is China going to put $2 trillion USD? Well according to
this Bloomberg article (see excerpt and a link to the complete article
below), China still plans to purchase US treasuries. However, if
China’s recent foreign policy and international investments tell the
world anything, it is that the total dominance of the US dollar as the
world’s currency is slowly coming to an end. This won’t happen over
night, and the US dollar will probably remain a big player for some
time, but eventually China wants to find new places to park its money.

Here’s a small except. See link below for the complete article from Bloomberg.

China’s foreign-exchange reserves probably topped $2 trillion for the
first time, drawing attention to the difficulty the government faces
in finding places to invest the world’s largest holdings.

The reserves climbed $67.8 billion to $2.022 trillion as of June 30
from three months earlier, according to the median estimate of six
economists surveyed by Bloomberg News. That would compare with a $7.7
billion gain in the previous quarter. The central bank may release the
number today or next week, based on the timing of previous
announcements.

Central bank Governor Zhou Xiaochuan ruled out any sudden change in
the management of the reserves last month after proposing that
governments investigate setting up a supranational currency. Premier
Wen Jiabao is concerned that China’s $763.5 billion of Treasury
holdings may fall in value as the U.S. sells record amounts of debt to
fund stimulus spending.

“There’s no obvious alternative for China to U.S. Treasury bills,”
said Stephen Green, head of China research at Standard Chartered Plc
in Shanghai. “The alternatives are limited for that much money.”

China’s reserves more than doubled in two and a half years as the
trade surplus pumped cash into the economy, fueling claims that the
nation’s currency is kept artificially low to help exporters. The
International Monetary Fund may describe the yuan as “substantially
undervalued” in a pending report, according to a person who has seen
the draft.

Bloomberg article:
http://www.bloomberg.com/apps/news?pid=20601080&sid=acAzOqr9lvKA


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Benito
International Trade Consultant
Mir Global Marketing LLC
http://www.mirglobalmarketing.com
http://www.chinasouthamerica.com

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The Clinton Curse

ChinaSouthAmerica has been over-run by embedded videos as of recent. The site will return to to the normal mix of my own personal analysis and coverage of news and developments relating to China, South America, South-South Cooperation, Commodity Markets and Micro-Finance.

I have been thinking about creating a new blog which I will dedicate to sarcastic, cynical, comedic based material of US-Pop Culture.

Content such as this video from the Colbert Report on Comedy Central shows a side of the United States people from abroad miss quite often, and that is, WE (USA) LOVE TO MAKE FUN OF OURSELVES.

The Colbert Report Mon – Thurs 11:30pm / 10:30c
The Clinton Curse
www.colbertnation.com
Colbert Report Full Episodes Political Humor Jeff Goldblum

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John Adams final words to enourage the signing of the Declratation of Independence – 1776

John Adams final words, meant to encourage his fellow assemblymen to sign of the Declaration of Independence and the eventual first reading of the Declaration of Independence from the amazing HBO miniseries based off John McCullough biography on John Adams.

“Objects of the most stupendous magnitude. Mirrors which will effect the lives of millions, born and unborn are now before us. We must expect a great expense of blood and pain, but we must always remember that a free constitution of civil government can not be purchased at too dear a rate as there is nothing on this side of Jerusalem of greater importance to mankind.

My worthy colleague from Pennsylvania, has spoken with great ingenuity and eloquence. He has given you a grim prognostication of our national future, but where he foresees apocalypse, I see hope. I see a new nation ready to take its place in the world, not an empire, but a republic and a republic of laws, not men. Gentlemen, we are in the very midst of revolution, the most complete, unexpected and remarkable in the history of the world.

How few of the human race have every had an opportunity for choosing a system of government for themselves and for their children?

I am not without apprehensions gentlemen, but the end we have in sight is more than worth all the means. My believe says that the hour has come, my judgment approves this measure and my whole heart is in it. All that I have, all that I am and all I that I hope in this life I am not ready to stake upon it.

While I live, let me have a country. A free country!”


John Adams — 1776

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Happy 4th of July — The Vote For Independence — John Adams HBO miniseries

Notice the faces of the founding father’s… John Adams, Ben Franklin, Tom Jefferson, etc

“Heyyyyy now, worth it yes… but wtf did we just get ourselves into.”

[youtube=http://www.youtube.com/watch?v=nrvpZxMfKaU&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6]

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And everyone says the US don't care about futbol (soccer)

In all good fun to the international readers. I am a football fan. By football I do mean the sport you play using your feet.

The Colbert Report Mon – Thurs 11:30pm / 10:30c
Is it Time to Care About Soccer?
www.colbertnation.com
Colbert Report Full Episodes Political Humor Jeff Goldblum

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Current Situation in Honduras

Today, I present to all readers, Pamela Fernandez, a university colleague of mine from Honduras who was nice enough to email me a incredibly well articulated analysis of the situation going on down in Honduras. The original message arrived in my mail box last night at 1:18 am, June 29, 2009 – Eastern Standard Time.

Pamela writes:

I feel the media has done a terrible job in reporting the events that took place yesterday in Honduras. A friend of a friend mainly wrote the following 8 points. I have edited them out a bit and added the translation of the constitution article. Below you’ll find my views.

1. The event this morning should be taken as an arrest against a Honduran citizen, Manuel Zelaya, who broke the constitutional Honduran law in multiple occasions over the last few days. This SHOULD NOT be taken as a Coup d’état.
TRANSLATION – Article 239.- The citizen that has been the head of the Executive Branch cannot be President or Vice-President again.

Whoever violates this law or proposes its reform, as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.

2. The vast majority of Hondurans firmly oppose Manuel Zelaya and are in favor of his arrest.

3. The current news being portrayed in international networks appear to be heavily tilted toward a contrarian view of most Hondurans.

4. The majority of Hondurans are not in favor of Manuel Zelaya and are extremely proud of our congress and military for their stance in favor of democracy and peace.

5. The events happening today were caused by an attempt by Manuel Zelaya to manipulate our country and its constitution to fulfill his ultimate goal of remaining in power indefinitely.

6. The world should be proud of Honduras as we are the first Latin-American country to stand against a tyrannical leader who has tried to topple democracy and peace in our country.

7. Declarations made by Hugo Chavez should be discredited immediately. He should, as President Obama said, allow Hondurans to solve this issue through open communication following LEGAL processes.

8. It is ONLY in the interest of Honduras and its citizens that democracy prevails.

Now mine:

Facts:
• The economic growth the country experienced in 2006 was a result of the previous government not of Mel’s. The country is now in as much debt as it was before. After a GDP growth of 6% in the 2005, according to the World Bank it is expected to fall to about 2% in 2009.

• In December 2008, Mel decided to raise the minimum wage by 60% against the economists and private sector advice. The government itself will not be able to pay the public employees including teachers and doctors next year. It has resulted in a higher than unemployment rate and it is expected to rise even more in 2010.

• The public higher education system cannot afford to pay the university professors under the new minimum. The professors went on strike for two months and the issue still undresolved.

• After the recent earthquake Mel denied the severity of the damages in port city of Puerto Cortes and never declared a state of emergency in the country. In previous years, he had also undermined the impact of floods and hunger stricken south.

• There were no reported cases of swine flu in Honduras before the OAS summit in San Pedro Sula. Once the summit was over the cases jumped from 0 to 118 as confirmed by the BBC. But the Health Ministry says there are 1,000 cases.

• According to the Observatorio Centro Americano de la Violencia, the there are 42 homicides per 1,000 inhabitants; the international rate is 8.8. In average, there are at least 12 violent deaths per day, the highest in Central America.

• According to the 2004 World Bank report, 50% of the population lived under the poverty line and 36.2% below the extreme poverty line 36.2%. The World Food Program estimated it at 73% in 2008; currently the BBC reports a 70% in the country profile.

• The country’s budget for the 2009 fiscal year was never made, some argue there’s no money and that’s why Mel would not make it.

• No body really knows how many millions of Lempiras and possibly dollars were spent on publicity for the referendum.

• Mel was paying people to vote “Yes” in the referendum.

• Hugo Chaves, Correa, Elbo and Ortega are currently in Nicaragua holding an emergency meeting of the ALBA and Central American nations. Chavez said that he would respect Honduras’ sovereignty and would not make a military intervention.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Rumors:

• The referendum materials were sent from Venezuela.

• Mel would have done an “auto” Coup against the congress and the military today if the Public Ministry (not the military) had tried to stop the voting.

• Based on a reported increase flow of Nicaraguans into Honduras: hundreds of Nicaraguan soldiers crossed the border on Friday and Saturday disguised as civilians.

• Chavez is planning to do a military intervention in Honduras. Still, his discourse last night was borderline offensive.

All that said, the president of congress Roberto Micheletti was sworn as interim president promising and making it a decree to hold the general elections on November 29th as scheduled and give the power to the elected president on January 27th. The military is not in power, they just did their job and defended the constitution.

Of course, there are plenty of sketchy things in the whole process. For example, Mel’s resignation letter, which he denies writing, the fact that Micheletti was running for president but lost the primaries are just a few; and the fact that TV, radio, and internet were cut in the main cities for couple of hours during the coup. Also a fact, not every Honduran likes Micheletti but not every Honduran likes Mel. We are trying to pick the lesser of 2 evils.

I’m not against the citizens’ right to give their opinion in the referendum but the Electoral Institute was not supervising it. I, as are many Hondurans, am aware of the social injustice and the extreme poverty in my country. We feared and questioned the transparency of the process. We also believe, and know, that Mel was acting on his interest and not that of the country.

I’m not happy that we have come to this but now we can only wonder what would have happened if Mel had gone ahead with the referendum. From my point of view, the assurance of elections in November makes this a move in favor of democracy and not one against it. Sadly, the international community does not see it this way. The UN, OAS, EU and US want Mel back because he was democratically elected, Honduras doesn’t want him back because he was trying to interrupt the democratic process by staying longer as a president.

Honduras is in peace right now, nobody died, very few were hurt, after some riots by Mel’s supporters yesterday there’s no civil unrest. The curfew is not against civil liberties it is meant to prevent riots and such from happening. In case that rumors are true and Hugo Chavez tries to use military force in Honduras, we hope and pray… I hope he doesn’t and hope we can get back solving the real problems of the country.

The good thing in all of this? I want to believe that Hondurans will wake up and take a more active role in politics. That hopefully the corrupt politicians will take a hint and realize that the “people” as Mel said can stand up against them when need it.

If you read this much, THANK YOU very much,

Pamela Fernandez is graduate of American University who specializes in visual media and film studies. You can learn more about Pamela and see some of her work at her personal site — http://www.pamelafer.com/

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Peru — Police clash with the indigenous community

[youtube=http://www.youtube.com/watch?v=XGS-GspCmfw&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6&border=1]

AlJazeera English

Dozens of people have been killed in clashes between indigenous people and police in Peru.

The Indians have been protesting against laws which will open up communal jungle lands and water resources to oil drilling, logging and mining.

Al Jazeera’s Teresa Bo reports from Bagua Grande in Peru.

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