Global Economic News

Geithner Rants about Yuan to No Avail

May 5 (EIRNS)—In what has become an expected ritual, U.S. Treasury Secretary Timothy Geithner, before the third round of the Strategic and Economic Dialogue (S&ED) to be held in Washington on May 9-10, is ranting about China economic policies, and especially China's refusal to up-value its yuan currency and debase the dollar.

But China again politely refused. "It would be inappropriate for China to let its currency float freely at present, given the ongoing second round of quantitative easing initiated by the U.S. and the resulting excessive liquidity," said Chen Daofu, policy research chief at the Financial Research Institute of the State Council's Development Research Center.

Chen did say that China should accelerate the full convertibility of the yuan in trade and direct investment. But policymakers, he added, should remain cautious about trading in financial markets, especially those that involve highly leveraged derivative products, to avoid drastic fluctuations and irregular cross-border capital flows.

Japan's Decision To Close Nuclear Reactors Draws Fire

May 7 (EIRNS)—The website of Japan's NHK-TV network reports that "Critics Slam Kan's Plan To Shut Hamaoka Reactors." The three Hamaoka reactors, ordered shut by Prime Minister Naoto Kan yesterday, are in an area of high earthquake potential, but are in good condition. Critics say Kan's decision was too sudden, and could have repercussions for all the other nuclear plants.

Nobuteru Ishihara, the secretary general of the Liberal Democratic Party (LDP)—which ruled Japan almost non-stop until the Democratic Party of Japan (DPJ) victory in 2009—said he wants to ask the prime minister whether he had considered Japan's overall electricity needs. Rank and file LDP members yesterday created a group to promote nuclear power.

NHK also indicated opposition to Kan's ruling from within his DPJ. The DPJ's official economic plan has as a major plank for the promotion of Japanese nuclear reactors around the world.

Japan's Ministry of Economy, Trade and Industry (METI), considered by many to contain the heart of Japan's industry-government historic alliance for growth, issued (and leaked) an in-house document on Japan's energy future yesterday. It considers nuclear energy one of the three pillars of its long-term energy policy for 2030 to 2050. It says nuclear energy can be considered one of Japan's best energy sources in the future, if the country pursues safety to the maximum.

Crucially, it points out that if all nuclear reactors were prevented from re-opening after routine maintenance, then all nuclear power stations in Japan would be shut down and the country would lose more than 30 million kilowatts of electricity, from pre-earthquake levels.

The Chube Electric company, which runs the Hamaoka plant, is also resisting Kan's dictate. Its board met May 6, to discuss Kan's request, but was "unable to reach a conclusion." The utility says the date for the next board meeting has not been fixed.

British Unions Planning Major Anti-Austerity Strikes

May 3 (EIRNS)—Building on the "March for the Alternative" mass demonstration on March 26, which brought 500,000 people out to protest in London, British trade unions are holding conferences to map out strike action against the cutting of wages, pensions, and budgets.

The Daily Telegraph quotes Dave Prentis, the general secretary of Unison, the public service trade union, "After the double bank holiday, feel-good factor wears off, the reality of austerity Britain will kick back in. Unless this government changes direction, it is heading for industrial turmoil on a massive scale. The government must understand that Unison will fight tooth-and-nail to protect and defend public services, and will ballot 1 million of its members to strike to protect their pensions. This will not be a token skirmish, but a prolonged and sustained war, because this government has declared war on a huge proportion of the population."

Unison called on the public to use the local elections to "let the government know exactly what they think of its handling of the economy."

Mark Serwotka, the general secretary of the Public and Commercial Services Union, said no government "in living memory" had caused such unrest and opposition in such a short time. "Barely a year in, this government has sparked a wave of popular anger against its ideological plan to blame and punish us for an economic crisis caused by greed and recklessness in the financial sector.... At least half a million people showed on the TUC march that they were prepared to march for the alternative. We are now saying we must also be prepared to strike for it."

On May Day, 10,000 people demonstrated in Trafalgar Square, where former MP and Cabinet minister, veteran left-winger Tony Benn said: "This week, local authorities have got their elections. We must use our vote to build on what the TUC did on March 26, and work for a better society for ourselves and our children and grandchildren. It is important to remember that the real conflict in the world is between the majority who create the world's wealth, and the handful who control the world's wealth. All the gains that have been made have been made by people like ourselves."