I blogged about this topic a couple of times last month, and now it looks like the issue is already coming to North American shores. Not exactly sure what China is up to here, but it is very serious economic saber-rattling, and in a media world full of manufactured bogeymen, this is an issue to actually be concerned about.
From the third (and final) link:
Last month, the New York Times reported that the Chinese government clamped down on its exports of rare earth metals, which are used in the manufacture of all kinds of electronics, to Japan. Now, it appears that a similar thing is happening with Western countries like the United States, the Times reports, though Chinese officials deny it.
The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues.
But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle. “The embargo is expanding” beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity for fear of business retaliation by Chinese authorities.
They said Chinese customs officials imposed the broader restrictions on Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce United States trade actions.
As we said last time, the mechanics of any rare earth metal embargo is important to manufacturers and suppliers, but hard to pin down. What’s important, policy-wise, is that we could have a domestic rare earth metal industry in the United States, but we have refused to support it in the belief that the market would always deliver what we needed from low-cost Chinese suppliers.
Somewhat encouraging news, but the reality on the ground is still very grim and I’m guessing will get worse before it improves.
From the link:
The International Monetary Fund raised its forecast for global growth this year, reflecting a stronger-than-expected first half, while warning that financial- market turmoil has increased the risks to the recovery.
The world economy will expand 4.6 percent in 2010, the biggest gain since 2007, compared with an April projection of 4.2 percent, the Washington-based fund said in revisions yesterday to its World Economic Outlook. Growth next year is projected to be 4.3 percent, unchanged from the April forecast.
Canada and the U.S. are leading advanced economies out of the worst recession since World War II, trailed by euro-area countries that need additional measures to boost confidence in their banks, the fund said. Faster expansions in Brazil, China and India are helping to protect the global recovery as a sovereign-debt crisis weighs on Europe, the IMF said.
“The overarching policy challenge is to restore financial- market confidence without choking the recovery,” the IMF report said. “The new forecasts hinge on implementation of policies to rebuild confidence and stability, particularly in the euro area.”
[Note: this is the replacement for this lost post without the extensive additional commentary from the lost original.]
News from Bloomberg:
Americans plan to refrain from boosting their spending even after the biggest drop in consumption since 1980, signaling concern about the direction of the economy over the next six months.
Only 8 percent of U.S. adults plan to increase household spending, almost one-third will spend less, and 58 percent expect to “stay the course,” a Bloomberg News poll showed. More than 3 in 4 said they reduced spending in the past year.
Respondents were divided over whether the economy will get better or stay the same in the next six months; only 1 in 6 said things will get worse. More than 40 percent of those surveyed said they feel less financially secure than they did when President Barack Obama took office in January, outnumbering 35 percent who said they feel more secure.
[Note: this post was lost in WordPress somehow. Hit this link for new post sans my expanded commentary from the lost original.]
After a long while in the cellar, the US dollar is finally seriously rebounding against the pound and euro.
From the link:
Sterling tumbled on Wednesday, hitting a 7 1/2-year low against the dollar, as intensified risk aversion drove investors back into the U.S. currency which reached its strongest levels against the euro in six weeks.
Economic worries around the world stung global stock markets and sliding European shares kept demand high to dump risky assets. The pound extended deep losses on the view that an ailing U.K. banking sector will keep the economy weak despite drastic interest rate cuts.