The Obama Administration has taken recycling way too far. There is a rumor that former economic adviser Larry Summers is a potential nominee for President of the World Bank. Is there no one else besides these retreads who have represented and worked for the FINANCIAL-POLITICAL COMPLEX? Summers is a horrible choice as he has been tainted by his work and exorbitant compensation for several Wall Street firms. The idea that the World Bank president has to be an American is a throwback to the times when it was ok to fight anti-colonial wars around the globe and at the same time using the World Bank’s funds to buy friends and influence people no matter how tyrannical the regime.
The world is changing and the old colonial model of funding any anti-communist regime is gone. It is time to reward the emerging economies with positions that reflect their economic maturity. It would be refreshing to see global institutions be meritocratic rather than resume enhancers for a better job in the financial capitals of the world. If there is to be no change at least President Obama can find somebody besides the tired old retread Larry Summers. Yes, if good policy was dependent on genetics, Mr. Summers would be an ideal choice but it is time to reward the critics of past policies with a post where maybe they just might make a difference: Simon Johnson of MIT would be a fine beginning.
***In tomorrow’s Financial Times there is an article discussing the need for Japan to begin using the overly strong YEN to purchase global assets. Economy Minister Yukio Edano maintains that rather than complaining how tough it is for corporate Japan to profit with the YEN‘s present value, the large firms should put the strong currency to work for improving their world positioning. The Japanese know that they are competing with the Chinese for natural resources, so Mr. Edano says: “Japan is short on resources so we need to use this opportunity to firmly secure rights to energy and commodities.”
As I have discussed during the past year, CRUDE OIL IN TERMS OF YEN IS AT THE SAME PRICE AS 1983. This is an advantage that Japan enjoys as it imports so much OIL, especially after the TSUNAMI last year and the fact that nuclear power has been greatly reduced because of FUKUSHIMA. The strong YEN does have it benefits but does the hollowing out of Japanese manufacturing have to be the end result?
***In Martin Wolf’s FT column January 18, “Why the Super-Marios Need Help,” Wolf cites a study by Jean Pisani-Ferry for a Brussels think tank. The study claims “most European banks are likely to resist purchasing the debt of riskier sovereigns given the pressure from the European Banking authority to raise the capital they hold. But the domestic banks might make different decisions, probably under pressure. That would help fund vulnerable governments but also increase the concentration of risk in domestic banks. This is high: In mid-2011, 28 per cent of Spanish debt and 27 per cent of Italian debt was held by domestic banks….” This statement should be reread for it shows how the sovereign debt crisis is truly a banking crisis, which is a sovereign debt crisis … May the circle be unbroken.
***A Big Hat TIP to Pimco’s Mohamed El-Erian, who, in a published piece reveals why he will not be attending the World Economic Forum in Davos. It is a rare person who avoids the lights of the world’s largest insider trading convention. Either that or he is afraid of being PEPPER-SPRAYED. Again, Mohamed is to be praised for his avoidance of being in a suspect crowd and wanting to really support the global capitalist system.