Archives August 2021

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Thursday, February 17, 2005

Alan Greenspan, Chairman of the Federal Reserve has suggested that there will be more of the same in coming months from the Fed. In his speech during testimony before the U.S. Senate Banking Committee on Wednesday, Mr. Greenspan noted that the economic fundamentals of the U.S. appeared to be stable. On Thursday, Greenspan spoke before the U.S. House Committee on Financial Services and when faced with questions regarding Social Security reform issues, he hinted that he was in favour of partial privatization of Social Security – but the general consensus on Wall Street is to expect more of the same.

However, economic advisors were somewhat disappointed that most of the testimony in both speechs was focused on the upcoming Social Security reform and did not address monetary policy as broadly as they’d hoped. Mike Moran, chief economist at Daiwa Securities America Inc, is quoted in the Investors Business Daily as saying “Chairman Greenspan provided few explicit insights into his plans for monetary policy.”

Greenspan reiterated his concerns about market reactions to the burgeoning federal deficit. “We are not sure to what extent and how much the market will respond,” he said.

Parsing Greenspan’s reports to Congress is a Wall Street obsession, but the general consensus from his recent testimony is to expect little change in the current Fed policy. Economists expect “measured” hikes to the central bank’s short-term interest rates from the next few meetings of Fed policy-makers.

“In my view the bottom line is that we are in for more of the same,” said Steve Stanley, chief economist at RBS Greenwich Capital to the Associated Press.

Friday, September 26, 2008

The World Health Organization (WHO) is warning that more food imported from China may be contaminated with melamine, a chemical used in the manufacturing of plastics. Melamine, although nontoxic in very small amounts, can cause severe kidney problems in large doses.

Guanshengyuan, a Chinese company that makes children’s candy, has stopped selling its popular brand White Rabbit, which is sold nationally in China, after tests confirmed the presence of melamine. Bright foods owns the candy company. Earlier their powdered milk was found to contain melamine which sickened over 53,000 people and was responsible for the deaths of at least four infant children. Guanshengyuan has stopped exporting their goods to the nearly 50 companies overseas that buy them.

Melamine has also been found in Hong Kong in baby cereal and vegetable formula made by Heinz. It has also been found in wasabi crackers which are manufactured by the Chinese company, Silang House.

Another Chinese food company called Marudai Food Co. has also halted the sales of several items such as meat buns, cream buns and corn crepes made with cream over fears that melamine laced powered milk has contaminated their products. So far there have been no reports of any illnesses associated with Marudai Foods.

Further items recalled or other products that feared to be contaminated with melamine are Mr. Browns Instant Coffee and tea products, along with their powdered milk.

The first report of contamination came last week when the Chinese health ministry confirmed that the companies responsible for producing the milk were trying to repair their damaged public image by increasing output using melamine. The Chinese Health Ministry has stated that most of the tainted milk was produced by Shijiazhuang Sanlu Group Co.

The WHO says that women with infants should consider breast feeding for the time being on infants aged at least six months, until the contaminated milk can be removed from the consumption chain.

“WHO recommends that all infants should be fed exclusively with breast milk for the first six months of life. No other liquid or food, not even water, is needed during this period. Thereafter, infants should receive adequate and safe complementary foods while breastfeeding continues up to two years of age and beyond,” said the WHO in a statement on their website.

In 2007, the Food and Drug Administration (FDA) confirmed the presence of melamine in pet food that was imported from China. Samples indicated that wheat gluten, used as an ingredient in the pet food, was contaminated with the chemical. As a result of the contamination, the FDA said some of the contaminated gluten entered the human food chain. At least 45 people ate contaminated pork which was traced to pigs from a farm in California. The pigs had eaten feed that had been contaminated. There were no reports of deaths or illnesses.

Friday, November 7, 2008

Anders Fogh Rasmussen, the Prime Minister of Denmark, said on Tuesday that he will seek broad parliamentary support for a national referendum on joining the euro, the common currency of the Eurozone.

“I’m convinced that we need broad support in parliament to hold a referendum, because it’s about the Danish currency and about stability and safety,” he said, speaking at his weekly press conference. “Recent events have shown the necessity to give the population the opportunity to vote on Denmark joining the euro.”

Berlingske Tidende is reporting that Rasmussen is meeting with political leaders to negotiate support for the referendum.

In 1992, Danish voters rejected the Maastrict Treaty in a referendum. It was only able to pass the following year after the Edinburgh Agreement granted Denmark an opt-out of the third stage of the Economic and Monetary Union of the European Union (EMU).

In 2000, Denmark again rejected the common currency in a euro referendum. The current currency of the Scandinavian country is the Danish krone. As part of stage two of the EMU, the exchange rate of the krone is allowed to fluctuate within a ±2.25% range to the euro.

In order to maintain this peg Danmarks Nationalbank, the central bank, adjusts interest rates and performs foreign exchange operations by buying and selling currency. To do this, Danmarks Nationalbank has had to raise rates twice, even as other central banks, including the European Central Bank (ECB), were lowering rates to deal with the current economic crisis.

As a result, interest rates in Denmark are now 175 basis points higher than the ECB’s rates. As recently as May, the difference was only 25 basis points.

Rasmussen heads the Venstre party which leads a minority coalition government. The main opposition party, the Social Democrats, also support adopting the euro as the nation’s currency.

While there has long been support among the politicians, the euro has failed when it has been put before the voters. However, recent opinion polls have shown a growing support for the euro among Danes. The most recent of these have seen those in favor just topping the 50% level needed to pass a referendum.

Rasmussen has said he wants a referendum put before voters before 2011. His government had originally planned to hold a referendum this past September to abolish the EMU opt-outs, but that was scrapped when Ireland voted down the Treaty of Lisbon.

On October 30, while in Stockholm, Sweden, Rasmussen said: “The euro ensures political and economical stability in Europe and the current financial turmoil makes it evident that Denmark has to join the Euro.”

Analysts consulted by Berlingske Tidende have said that an endorsement from the Socialist People’s Party (SF) could prove to be the tide-turner.

“If there was a vote, then I would vote Yes. But I am of the opinion that it is stupid to hold a vote unless we first have a real debate. We haven’t had a debate in eight years and all arguments need to be tested,” said Margrete Auken of SF.