Not much else worth commenting on in the FT today (I do not wish to use my credits to render homage to Martin Wolf's noble defense of free information in his Column, and El-Erian manages only some home-spun platitudes on the EU sovereign debt) - so I will seek briefly to bolster the arguments concerning the Fed's conduct of monetary policy with an eye to the "domestic" and "geopolitical" developments. Starting with the latter first, this story in the FT neatly summarises the precise extent to which Fed policies of "malign neglect" are hurting export-dependent economies (usually recent or present dictatorships) - in the instant case, it is South Korea (http://www.ft.com/intl/cms/s/0/c362bc76-aec0-11e0-9310-00144feabdc0.html#axzz1S2Kdqyyx) but the argument is virtually identical when extended to China, Brazil, Taiwan, Japan, and even Germany.
In a nutshell, the higher won and soaring inflation have forced the South Korean central bank to raise interest rates yet again just as its working population is flagellated with higher import prices. The consequence is that the big conglomerates (like SOEs in China) that have access to their own or cheap capital are doing fine whereas the SMEs are close to collapse - and all this while the Chinese economy grew at 9% which (as the krafty James Mackintosh reminds us in the latest 'Short View'), far from being a beacon of hope, should serve as a further warning that the Chinese dictatorship (with inflation on pork running at 57%!!) has really and truly lost all control of this train-wreck approaching from the other end of the tunnel!
In other words, Bernanke's QE is working wonders for US exports and manufacturing, at least in "relative" terms (in terms that is of how greater the damage would be without it and of the fact that the Chinese trade surplus expanded only because imports fell more than exports because of high interest rates - and there are clear signs of "hot money" flowing into China as the dictatorship attempts to extend its power by "internationalising" its currency - good luck with that!).
Domestically, of course, Bernanke only "worries" about "inflation" because he needs to pay lip-service to "stable prices" - and he knows that the quickest way to shoot down speculation in commodity markets is to wreck the Chinese economy - which, as we said earlier, he is achieving with remarkable "resolve". Again, we must not underestimate this "geopolitical" target because the Chinese military-industrial complex was beginning to pose a serious challenge to the US in the South China Sea especially. The Politburo has overplayed its hand and the US Administration has decided that it is high time those export-dependent economies (Germany in particular) were taught a lesson. And so say all of us... though the pain is being felt first of all in the EU "periphery".
Domestically, I simply cannot believe how little people (pundits and analysts) understand the full extent of this "crisis" on the self-understanding of the capitalist elites in terms of what the role of the State (the collective capitalist) should be in "controlling" social relations of production that are now threatening the very survival of the society of capital. I will not go into that here - those who are interested can always join us at www.eforum21.com where I am posting a series of short studies on the topic of "the Crisis-State". Cheers to all.