Inquiring minds are looking at the reaction from the world to Ben Bernanke’s “QE II”. Please see our earlier piece “Run, Turkey Run“.
So much for Ambassadorspeak. The backlash is unbelievably to the point:
China, Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.
Guido Mantega, the Brazilian finance minister who was the first to warn of a “currency war”, said: “Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”
Mr Mantega added: “You have to combine that with fiscal policy. You have to stimulate consumption.” Germany also expressed concern.
“As long as the world exercises no restraint in issuing global currencies such as the dollar – and this is not easy – then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” Xia Bin wrote in a newspaper under the Chinese central bank.
Korn Chatikavanij, Thailand’s finance minister, said the Thai central bank had told him it was “in close talks” with regional central banks over measures “to prevent excessive speculation.”
Market reaction was almost immediate:
Oil hit a six-month peak above $86 a barrel and gold rallied to $1,883.7, just shy of its all-time peak. The euro hit $1.428, its highest since January. Measured against its major trading partners, the dollar has fallen more than 3 per cent this week.
Anybody ever read Edgar Allan Poe’s “The Purloined Letter”?
If not, it is highly suggested you do.
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