New Reserve Currency: G20 considers wider role for China's yuan

The SDR (see previous posts on SDR under 'Financial Stability')  closer to becoming the reserve currency: Amidst worries of the US defaulting due to political wrangling, a stronger push for a new reserve currency grows.  The SDR would allow a number of nations to participate and keep any one nation's economy from impacting it in a crisis, unlike it is now with the reserve currency being hinged on the US economy.  One of the large participants to sway is China.  In order for China to get closer to the goal of opening the door to being a part of a reserve currency, all they have to do is to give up sovereignty over their central banking system, the way so many other countries have done.  The question is what will it take to entice China further into the world banking system?  Some analysts say it will be years to get China into the SDR basket.  China has stated that it intends to become 'the' reserve currency in ten years time.  One wonders if the IMF can make their offer of the SDR basket sweet enough to bring China's banking system fully into the fold.

Excerpts from a BBC article which discusses the latest G20 meeting in China:

The G20 is to study whether to include the Chinese yuan within the basket of currencies that make up the IMF's Special Drawing Right.  The Special Drawing Right, or SDR, is a quasi currency used within the IMF by its member countries.

Some economists believe the SDR could one day become a global reserve currency alongside the US dollar.

 "Without rules and supervision, the world runs the risk of being condemned to increasingly serious and severe crises," said President Sarkozy.

"It is clear that we must evolve toward a more flexible exchange rate system that will allow us to withstand shocks," he added.

His comments were backed by US Treasury Secretary Timothy Geithner who said he supported a change to SDR composition.

"Over time, we believe that currencies of large economies heavily used in international trade and financial transactions should become a part of the SDR basket," he said.

Currency control
However, Mr Geithner said that for this to happen, governments would have to loosen their control of currencies.
...

Read full article:  BBC News - G20 considers wider role for China's yuan

The Syrian Time Bomb - By Patrick Seale | Foreign Policy

This is an interesting article regarding all the facets of what unrest in Syria may mean to the United States:

The Syrian Time Bomb - By Patrick Seale | Foreign Policy

Seven New Laws of the G-20 Era - By Colin Bradford | Foreign Policy

Here is an article outlining the Council on Foreign Relation's take on the usefulness of the G20:

Seven New Laws of the G-20 Era - By Colin Bradford | Foreign Policy

G-20 Criticism of Fed and Release of Fed Documents on Discount Window

Interesting that the Fed releases documents it has been adamant about keeping private while the G20 (IMF) puts pressure to change the balances in currencies...essentially relegating the dollar to a lesser role as the world's reserve currency.

Here are excepts from an article which ran on the Bloomberg site:

A Chinese state economist called for an end to the dollar’s dominance in a paper posted on a website yesterday, blaming the U.S. for fueling inflation. 

Officials including French Finance Minister Christine Lagarde will discuss topics including “shortcomings in the international monetary system” and dealing with volatile capital flows, according to the schedule for the conference in Nanjing, a city on the Yangtze River about 170 miles (270 kilometers) from Shanghai.

Tomorrow’s event also reflects the French leader’s desire to organize a new “Bretton Woods” during his presidency of the G-20 to address what he has called imbalances in the global monetary system. He first raised the possibility of such a meeting in August and pressed the Chinese to act as hosts.

Bretton Woods, New Hampshire, was the site of a 1944 meeting which led to the establishment of the World Bank and International Monetary Fund.

“I think in some sense maybe the axis of discussion for this G-20 is going to be helping the Chinese assume a bit more prominence at the global table,” said Cliff Tan, head of emerging-markets research at Societe Generale SA in Hong Kong.

--Michael Forsythe. With assistance from Rebecca Christie in Washington and James Hertling, Zheng Lifei and Rainer Buergin in Beijing. Editors: Paul Panckhurst, Nerys Avery.

Check out the full article:
G-20 Criticism of Fed Easing May Be Muted at Meeting in China - Businessweek

Catching a Ripple in Time and Space: JPL Mission to Detect Gravitational Waves

JPL, in conjunction with the European Space Agency and NASA, is preparing a mission for 2020 named LISA (Laser Interferometer Space Antenna).   Its purpose is to try and detect a ripple in time/space (gravitational wave).   Consider the possibilities if they succeed... it will be the first step to really understanding the mysteries of the gravitational force; a  force which has perplexed physicists searching for a 'theory of everything' for over a century.  Perhaps what they find will once and for all allow us to make sense of the how all of the currently known forces work together on both the macro and micro levels.  And what if, just like electricity, we can harness the power of the ripple long before we understand exactly how and why it works. 

 This artist’s concept shows the proposed LISA mission, which would consist of three distinct spacecraft, each connected by laser beams. It would be the first space-based mission to attempt the detection of gravitational waves -- ripples in space-time that are emitted by exotic objects such as black holes. Image credit: ESA

 The article notes that the mystery surrounding two pulsars first led us to indirectly observe what is believed to be gravitational waves.

"...1974, researchers discovered a pair of orbiting dead stars -- a type called pulsars -- that were spiraling closer and closer together due to an unexplainable loss of energy. That energy was later shown to be in the form of gravitational waves."

The article goes on to note that this mission if successful would give us a whole new way of looking at our universe:

"LISA is expected to not only "hear" the waves, but also learn more about their sources -- massive objects such as black holes and dead stars, which sing the waves like melodies out to the universe as the objects accelerate through space and time. The mission would be able to detect gravitational waves from massive objects in our Milky Way galaxy as well as distant galaxies, allowing scientists to tune into an entirely new language of our universe. "
 

Read the full article: Tuning an 'Ear' to the Music of Gravitational Waves - NASA Jet Propulsion Laboratory
 

Religion may become extinct in nine nations, study says

Ever watch the show Numb3rs? It was intriguing to think that almost anything falls into a predictive equation. Well the following article from the BBC News Online covers a recent study that predicts the extinction of religion in nine countries...

BBC News - Religion may become extinct in nine nations, study says

Best-yet Universe Expansion Measurement: Universe Not Growing in a Void

Theories and best guesses are all we can do to understand that which is too far away to really "know". For a while now cosmologists have been talking about the need to add variables they call dark energy and dark matter to their equations in order to make their calculations for why the universe is expanding work. But even expansion and the speed of it are guesses for you cannot calculate the distance of a star with out the brightness or the brightness without the distance; calculations from which you then determine a little thing called the red shift, ya da ya da... I say this not out of disrespect for the incredible minds that spend their hours thinking on these matters but rather because I am so in awe of how little we "really know" about what we see 'out there'. Even with the naked eye each evening, I am blessed to be able to be able to see around 3,000 'stars' on a moonless night and I wonder, the same questions humans have wondered for millennia. In those moments it is hard not to feel a kinship with every human who has, is, or will gaze upon the heavens with more questions than answers.

The only thing the following article can tell us for sure is that our best observations lead us to believe with some certainty that our universe does not exist in a void....
SkyandTelescope.com - News from Sky & Telescope - Best-yet Universe Expansion Measurement

Activity on the Sun: "Here Comes Trouble?"

Spaceweather.com ran the following update today:

HERE COMES TROUBLE? A big sunspot is emerging over the sun's southeastern limb, and it is crackling with activity. NASA's Solar Dynamics Observatory recorded a surge of extreme ultraviolet radiation from the sunspot's magnetic canopy on March 21st:

This appears to be the return of old sunspot 1165, last seen in early March when it formed on the sun's southwestern limb. Since then it has been transiting the far side of the sun, apparently growing in size and restlessness. The potential for trouble will become more clear in the hours ahead as the active region emerges in full. Stay tuned.

The Belgium SCIC (Link provided on left) also noted today:

PRESTO FROM SIDC - RWC BELGIUM Mon Mar 21 2011, 1255 UT

The proton flux is elevated, but not exceeding the threshold. This increase is probably linked with a back sided CME of Mar 21, 02:54UT. The Earth is magnetically connected with the source site behind the Sun. The Parker spiral (the Parker spiral is the shape of the suns magnetic field) has bended magnetic field lines that guide the electrically charged protons. The Earth is near such field lines along which these protons travel. This is a rare event. 

IMF Survey: Global Monetary Reforms Needed to Tackle Imbalances

For those still gainfully employed in the US, it may seem that things are stabilizing.  For those still out of work, they may have a more realistic view of the "recovery" which really only means that traders are once again making money in the stock market, big business is pocketing revenue, and financial institutions having shed their losses to the US tax payer, are once again enjoying large profits from the "managing" of your money.  However gas and food prices continue to rise making it harder and harder for the middle class. The middle class being the engine which produced years of economic prosperity is being chocked further and further and with the middle class goes the future of our country.  Even those who understand all the intricacies of the global markets see that we have not fixed what brought us to the verge of collapse in 2008.  The stimulus spending has not been invested in projects that will spur long term growth and according to a number of economists that stimulus is about to reach the end of its effectiveness. 

The following article from the IMF discusses the need for reforming the global monetary system before the penalties of over spending catches up with the western world again.  I have to wonder if the US has a double dip would this be a catalyst to speed up the removal of the dollar as the primary reserve currency undermining yet another pillar of our economy.  

IMF Survey: Global Monetary Reforms Needed to Tackle Imbalances

Financial Crisis and Sovereign Risk: Implications for Financial Stability IMF High–Level Roundtable Opening Remarks By Dominique Strauss-Kahn, Managing Director, International Monetary Fund

One of the truths to come out of the 2008 financial crash is that trusting private or "semi-public" institutions to do the right thing in a deregulated system is risky for everyone given the current inter-dependence of the world's banking system and markets.  'So now what?', is the question at hand.  In the end, those in debt will have to abide by the rules of those who hold their debt.  Exactly what those rules will be is still being developed and worth our time to keep up with as each one us in the US have had a portion of the financial debt of private institutions put on to our back by the use of our future tax dollars to bail them out and further use of a tax burden to try to monetize that debt in order to stabilize those same financial markets.

Financial Crisis and Sovereign Risk: Implications for Financial Stability IMF High–Level Roundtable Opening Remarks By Dominique Strauss-Kahn, Managing Director, International Monetary Fund

IMF Survey: Rising Food Prices May Be Here to Stay

High food prices are here to stay... the weather, natural disasters, man-made disasters like market speculators and soil errosion, changes in the sun, water shortages... you name it and it is making feeding seven billion people harder and harder each year. 

I recently listened to an interview with Jim Rogers, a commodities trader and investment guru, where he was accused of being one of the heartless speculators causing food prices all over the globe to increase. The commodities guru was willing to accept that speculation is a large contributor to the ever rising cost of food, but noted that this was only part of the story. 

Speculators do not speculate on whims but rather on statistical analysis and trending.  The IMF's article noted in the link below, goes into detail on what Jim Rogers went on to say which was that in all his years of looking at the stats there are real concerns regarding the level of world surpluses which are being hammered by the extreme changes in weather as well as a host of other stressors, not the least of which is that we have more mouths to feed than ever before in history.   




IMF Survey: Rising Food Prices May Be Here to Stay

Atlantis found? Film highlights professor’s efforts to locate fabled lost city

 2,600 years ago Plato wrote of the grandeur of the City of Atlantis.  Now, archeologists have found the remains of a city in the marshlands off the coast of Spain that just may turn out to be the fabled city. Check out the article at Science Daily to learn more.

Atlantis found? Film highlights professor’s efforts to locate fabled lost city

A Black Hole “Too Big” For Its Galaxy

When cosmologists write their books they seem to have all the answers but as we are able to see further and further into the universe, we find that some of our previous best guesses are not even in the ball park. This article covers our latest findings regarding black holes. What is clear by the articles conclusion is that while what we do know fills libraries, there seems to be infinitely more to learn.

SkyandTelescope.com - News from Sky & Telescope - A Black Hole “Too Big” For Its Galaxy

Solar Activity: Second X-Flare After 4 Years

Another X-flare at 1.5 blasted out of a CME (coronal mass ejection). The activity of the sun continues to increase. Check out the link below: Read the second update and play the film of the latest CME.

SpaceWeather.com -- News and information about meteor showers, solar flares, auroras, and near-Earth asteroids

The IMF - One Governing Body

Many have discussed the idea of being 'one world' under one set of governing laws. In man's known history many have tried to accomplish this, to our knowledge no one has ever governed or had control over the all the worlds countries. Certainly, no one ruling body has ever had what is approaching seven billion people dependent upon its structure. So I wonder how many of those polled would believe that such a structure actually exists today. Without an election or revolution, slowly over the span of decades, we find ourselves with a "global economy" that would be impossible without a world banking system.

Since the late 60's the world's financial institutions have been brought under the umbrella of one organization slowly but surely. Each countries banking system is a part of a central banking hub overseen by a board of non-elected representatives who head the International Monetary Fund and World Bank (the World Bank being so closely related it can be looked at as a part of the IMF).

The financial crisis of the past few years, gave impetus for some of the most significant reforms in the IMF and its governing body. One of the most interesting was the removal of a few European positions from the board and the inclusion of countries like China, Brazil and India.

"The 10 largest members of the Fund will now consist of the United States, Japan, the four largest European economies (France, Germany, Italy, and the United Kingdom) and Brazil, China, India, and the Russian Federation (the BRICs; see box)."(www.imf.org/external/pubs/ft/survey/so/2010/NEW110510B.htm)

In the 70's the IMF developed an asset unit they dubbed 'Special Drawing Rights' for the top investors in the IMF. Now the IMF is discussing making the SDR's a reserve currency. The current reserve currency is of course the US dollar. Unfortunately, with mounting debt and the lack of political will to impose the needed changes, the US posses a significant risk to the global economy and therefore the world banking system. One of the proposals is for the SDR over time to become a reserve 'currency' of sorts. Rationally speaking, this makes sense as its stability would not be linked to the fortunes or mis-fortunes of any one country. Factsheet -- Special Drawing Rights (SDRs)

The following was written by John Lipsky, First Deputy Managing Director, International Monetary Fund on March 7, 2011:

Role of the SDR
Another G-20 agenda item is the future role of the SDR in the international monetary system. At its heart, this is a discussion about whether a meaningful degree of multilateral responsibility should exist for the creation of international reserve assets, or whether this instead should result from a combination of market outcomes and bilateral policy choices. As is well known, the proportion of dollars in global foreign currency reserves—at least the part that is reported to the IMF—has declined by about 10 percentage points over the past decade to a little over 60 percent of the total.

If the IMF’s members decide to allocate SDRs in larger quantities, this could satisfy some of the precautionary demand for reserves of emerging markets and others. And SDRs could play a more substantial role in ensuring there is a well-functioning safety net as countries cope with the changing concepts of international liquidity. Another possibility would be for the SDR to expand beyond its current role as an official asset, for example if the IMF or another multilateral agency issued SDR-denominated instruments that could be privately held and traded.

It will be very interesting to watch the IMF over the next months and years, for regardless of any election, those who control the money  hold the future of the masses in their hands.

Mysterious Disk Shaped Shadow on Distant Star

Ofen we think of science as knowing and understanding almost everything.  They speak as if they "know" when on almost every front of science there are more unanswered questions than there is true understanding of this incredible world around us.

The link below tells of one of those mysteries.  Perhaps some day we will have a telescopes powerful enough to make out just what is causing this mysterious disk shaped shadow on a remote star. 

 University of Michigan (2010, April 8). Astronomers take close-up pictures of mysterious dark object. ScienceDaily. Retrieved 

Solar Plasma Cloud - Strongest in four years

Our sun is entering a season of heightened activity.  If early indications hold, for the first time in modern history we, our world with a culture so dependent upon satellites, may turn our eyes skyward as we experience GPS, television, cell phone and internet connectivity interruptions. 

February 15, 2011 the following alert was posted by the Space Weather Forecast Centre of Belgium when they witnessed extreme space weather. (The Centre puts out alerts to anyone who signs up for them at http://sidc.be/index.php).  This particular alert noted that an X2.3-solar X-ray flare occurred.  This is the strongest flare in four years since an X1.5 occurred in 2006.   

Solar flares are rated from weakest to strongest by A, B, C, M, or X; an X class flare being the strongest.  The magnitude of the flare is then further defined by the addition of a number (e.g. an X2 flare is twice as strong as an X1 flare).  Since we began recording and ranking solar flares in 1976, the strongest flare appeared in April of 2003, which was rated as X28+.


The key to whether a flare affects us here on earth is whether the flare occurs on the earth facing side of the sun.  Predicting solar weather is a relatively new area and therefore years behind our ability to predict weather within our atmosphere.  For the purpose of better tracking and predicting when solar activity may occur and whether it will affect us, two Stereo satellites were put into orbit by NASA that allow us to monitor the entire surface of the sun.