Our blog's intention is to request the US government to grant us a chance to defend our mother country Japan at the American court of law regarding the resolution "Comfort Women" passed July 30, 07.


U.S. alerts Asian capitals to possible North Korean uranium enrichment program

By John Pomfret
Washington Post Staff Writer
Sunday, November 21, 2010; 12:17 AM

The Obama administration has dispatched a team of experts to Asian capitals to report that North Korea appears to have started a program to enrich uranium, possibly to manufacture more nuclear weapons, a senior U.S. administration official said Saturday.

The team was sent out after North Korea told two visiting American experts earlier this month that it possessed such a program and showed them a facility where it claimed the enrichment was taking place.

"North Korea's claim to have a uranium enrichment program is yet another provocative act of defiance and, if true, contradicts its own pledges and commitments," the senior administration official said.

"We have long suspected North Korea of having this kind of capability, and we have regularly raised it with them directly and with our partners in this effort," the official said.

The claim of the facility's existence - made to Siegfried Hecker, the former chief of the Los Alamos National Laboratory, and former U.S. government analyst Robert Carlin - complicates the Obama administration's efforts to counter nuclear proliferation around the globe. It also raises questions about North Korea's motivations in announcing the presence of the plant as it undertakes a leadership transition from leader Kim Jong Il, apparently to his third son, Kim Jong Eun.

North Korea's disclosure of this facility was first reported by the New York Times on its Web site Saturday.

The North Koreans told Hecker that the facility - located at Yongbyon, where North Korea once had a program to isolate plutonium for nuclear weapons - was for the low-enriched uranium generally used in power plants, according to David Albright, the director of the Institute for Science and International Security, which has monitored North Korea's nuclear programs for years.

But Albright said he thinks the program could be used to produce weapons-grade, highly enriched uranium. North Korea's nuclear arsenal has so far used plutonium recovered from spent nuclear reactor fuel rods, the other way to obtain weapons-grade fissile material.

In October, Albright's group reported that North Korea "has moved beyond laboratory-scale work" and is capable of building a "pilot plant" of centrifuges to enrich uranium.

The senior U.S. official said that North Korea's policy of using "missiles and nuclear tests to threaten the international community and extract concessions . . . hasn't worked because of strong unity among allies."

Still, there is debate among the nations involved in the stalled six-party talks on North Korea's nuclear program - South Korea, Japan, the United States, Russia and China. Beijing has advocated that the talks resume because, it says, if North Korea is involved in talks, it will be less likely to lash out at the West or conduct another nuclear test. a third nuclear test. (North Korea is thought to have tested a nuclear device in 2006 and again in 2009.) Some officials in Washington, Seoul, Tokyo and Moscow agree with the Chinese position.

Nonetheless, many in the Obama administration and in other capitals are wary of being drawn into the same pattern with North Korea that bedeviled previous U.S. administrations and other governments - wherein Kim Jong Il's government made threats and then was rewarded with cash and other benefits not to carry them out.

"We have consistently insisted that any talks must be real negotiations over its nuclear weapons program," the senior official said in an e-mail.



Bernanke Takes Aim at China


Federal Reserve Chairman Ben Bernanke is firing back amid criticism at home and abroad of the Fed's easy-money policies, arguing that China and others are causing global problems by preventing their currencies from strengthening as their economies boom.

Ben Bernanke will break his silence Friday to respond to his many critics over the Federal Reserve's monetary easing program. WSJ's Jon Hilsenrath reports.
.By keeping their currencies artificially weak, Mr. Bernanke argues in remarks prepared for delivery in Frankfurt Friday, China and other emerging markets are allowing their economies to overheat, preventing trade imbalances from adjusting and worsening what he called a "two-speed" global recovery.

Their "strategy of currency undervaluation" is preventing more "balanced and sustainable" global growth, he warns, echoing a view expressed by Obama Administration officials.

Mr. Bernanke has come under attack for the Fed's decision to purchase $600 billion in U.S. Treasury bonds in an effort to drive down long-term interest rates. Critics in the U.S say it could cause inflation. Critics abroad say the flood of dollars that the Fed is effectively printing to finance its bond purchases is pouring into overseas markets and could cause asset bubbles.

Some also have accused the Fed of trying to weaken the dollar to spur U.S. exports.

Fed officials have denied that is their goal, though Mr. Bernanke effectively acknowledged the U.S. currency should weaken against currencies in emerging markets, because their economies are growing so much faster than economies in the developed world.

The Fed chairman's message, though scholarly in tone, was unusually blunt in laying blame for inflationary pressures in emerging markets and for tensions over currencies on countries like China. A chart accompanying his comments also pinpoints Taiwan, Singapore and Thailand as aggressively trying to hold their currencies down, while India, Chile and Turkey aren't.

"Why have officials in many emerging markets leaned against appreciation of their currencies toward levels more consistent with market fundamentals?" Mr. Bernanke asks. Mainly, he says, because they are sticking to a long-term strategy of pushing for export-led growth with cheap exchange rates.

Argentina Booms Again, for Now Access thousands of business sources not available on the free web. Learn More Central banks manage exchange rates by intervening in currency markets. As dollars flood into their economies from exports, the central banks use the dollars to purchase assets like U.S. Treasury bonds rather than allowing those dollars to be exchanged freely for domestic currencies. That keeps the domestic currencies from rising in value.

Mr. Bernanke notes that in preventing the yuan from appreciating, China has accumulated a massive $2.6 trillion stock of foreign-currency reserves. Most of that is in U.S.-dollar assets. An alternate risk for the U.S.: If China sells its U.S. bonds, it could push down their value and push up U.S. interest rates.

Mr. Bernanke also makes his case against domestic critics, arguing that U.S. unemployment could keep rising without action by the Fed and that inflation is too low and could fall further.

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Ben Bernanke spoke to an economics class in Jacksonville, Florida earlier this month.
.Though critics say inflation could soar because of the Fed's actions, Mr. Bernanke says it is around 1%, is likely to be "quite subdued" for a long time and that he is committed to allowing it to go no higher than 2%.

"On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for years," Mr. Bernanke warns. "As a society, we should find that outcome unacceptable."

Mr. Bernanke got a voice of support Thursday from Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis. In comments in Chicago he supported the Fed's easing program, describing it as "a move in the right direction," though he had expressed some skepticism about the program in the past. He and Mr. Bernanke said the program wasn't a cure-all.

Write to Jon Hilsenrath at

Corrections & Amplifications

China has $2.6 trillion in foreign-currency reserves, mostly in U.S.-dollar assets. An earlier version of this article incorrectly said China has $2.6 trillion in U.S.-dollar assets.



Inflating the Risks to China's Economy


The fight against inflation in China is getting ever more serious.

Beijing's top body, the State Council, is now mulling price controls for some consumer staple goods. It's also cracking down on speculators, who've been driving up vegetable prices, while giving extra welfare payouts to poorer families.

Such announcements help the government give the impression it is doing all it can to fight inflation, particularly in the cost of food. The consumer price index's spike to 4.4% on-year in October was mostly due to a 10.1% on-year rise in food prices. Politically it's an important move, showing Beijing's keen to prevent social unrest that might result from a sharp uptick in the basic cost of living.

Still, the greater war it has to fight is to bring down the excess money swilling around China's economy. That's a result of the main of the credit Chinese banks pumped into the economy over the last two years, now exacerbated by potential hot money inflows on the back of loose U.S. monetary policy.

China's consumer price index spike to 4.4% on-year in October was mostly due to a 10.1% on-year rise in food prices.
.There's certainly reason to be skeptical price controls will work. Mark Williams, Capital Economics' China economist, says that when such measures were implemented in January 2008, wholesale food prices still rose 17% over the following two months because controls weren't always comprehensively implemented.

Price caps can become counterproductive for consumers, if, for example, producers respond by limiting their output or increasing exports, leading to domestic shortages of key goods.

Even if price controls do have a temporarily beneficial effect, Chinese policy makers will continue to face problems if they don't tackle the causes of inflation rather than its symptoms. Back in 2008, high food inflation was mostly a result of supply bottlenecks.

This time, as analysts at GaveKal Dragonomics argue, inflation is arising from China's previously expansionary monetary policy and rising wages. "Rising food prices are an expression of inflationary pressure rather than its cause," they said.

Steps are under way to tighten policy, with the People's Bank of China raising interest rates and forcing banks to hold more reserves. Tighter control of new bank lending, and faster yuan appreciation—to help keep import prices down—would also help in the inflation battle. But they'd also hit at key drivers of China's economic growth - loan-fueled investment and exports.

It's increasingly clear that something has to give in China's economy.



Japan tries to repair ties with China, Russia
TOKYO - Beginning twin diplomatic repair jobs, Japanese Prime Minister Naoto Kan on Saturday met leaders from China and Russia to discuss territorial disputes that have strained relations between Japan and its massive neighbors.
- By Chico Harlan

Commentspostmark54 wrote:


When your military learns to stay home and quits terrorizing on a global scale, then and only then feel free to throw stones at China.

In the meantime, if a few of our students get p!ssed of at Japan, so be it, they've justified their feelings and actions even if you haven't.

They are kids after all and by the time they start their own families they will settle down and take things into perspective.

Your military leaders and government leaders on the other hand are not kids anymore, have their own families yet stir up trouble all over the world, I hope you can see the difference.

By the way from looking at the video of the so called ramming of a Chinese trawler on a Japanese Coast Guard ship, the video shows a blue boat, with no identification displayed so this can be any video of any blue trawler, not necessarily a Chinese trawler and in all honesty it looked like the Coast Guard vessel deliberately cut off the trawler making it all but impossible for the trawler to avoid contact.

I realize that you see what you want to see, think what you want to think so I may well be wasting my time on you but it's a Sunday afternoon here in Shanghai and I haven't got anything better to do right now so I figure, what the heck, I'll try to steer you in the right direction.

And remember Charlie that if China had been in the wrong the Japanese would have held their ground, but seeing their bluff wasn't going anywhere they wisely chose to release our fishing boat captain and rightly so, he hadn't done anything wrong.

So once again Charlie, now's not the time for sour grapes but rather it's time for you to be congratulating us on a job well done.

It's high time you learned some valuable lessons from us and the number one lesson is to keep your troops home protecting you instead of stomping all over the globe causing misery to millions of innocent people.

11/14/2010 2:40:33 AM
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shirogikumaru wrote:
Since when has Chico Harlan become an expert on Asia?
He used to write on sports,didn't he?
It may be more convenient to use someone obscure like him and let go, like NY Times's Onishi, after some intentionally biased and inaccurate pieces.

It's more interesting to read what he's trying to do than what he writes.

11/14/2010 12:23:30 AM
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thmak wrote:
Japan cannot repair tie with China because the Japan-USA miltary treaty is directed against China under the false pretense of defense.
11/13/2010 9:38:03 PM
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CharlesMcKay1 wrote:
No sour grapes here, just detached observation. I see young Chinese people on my TV trashing Japanese department stores. There is no logic in their becoming that upset over a couple uninhabited rocks hundreds of kilometers out in the Pacific, or what Japanese soldiers did 50 years before they were born. This is raw, emotional, nationalist bigotry, manipulated by China's rulers, and ignored in this instance by Chico and his ilk because it is aimed at a non-PC-protected target.
11/13/2010 8:02:48 PM
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postmark54 wrote:

Please keep in mind that we're a 5000 year old adolescent and that we've been around the block a couple or more times so you best not be spouting off, you'll be needing us a whole lot more than we'll be needing you seeing that you've p!ssed off the whole world.

Remember that whilst your lot has been terrorizing the world with your military we've been staying home as far as our military goes and the only way we've branched out is through savvy business deals and it's beginning to pay off for us.

Now's not the time for sour grapes Charlie, you should be congratulating us for a job well done.
11/13/2010 7:34:50 PM
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iseheijiro wrote:
>>China will reclaim what was stolen by the Japanese, including the Diaoyu Islands, Taiwan and anything else that wasn't nailed down.

Blah,blah,blah,, You want to shoot out? Bring it on! You Changs are known coward. If not, send Ching Chang gunboats with full of punks like you to Senkaku. There will be a big barbecue party on the sea.
11/13/2010 7:29:49 PM
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CharlesMcKay1 wrote:
postmark54's post demonstrates the attitude perfectly. China is an adolescent boy who has just had a growth spurt and is eagar to show off his new found strength. He is motivated not by wisdom or reason, but by hormonal surges and the giant the chip on his shoulder.
11/13/2010 7:24:36 PM
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postmark54 wrote:
Japan is seriously kissing butt now knowing full well that the American Empire is in rapid decline.

Japan has been kept down all these years by the Americans and is now pushing panic buttons as American money and support is running out and very quickly at that.

China will reclaim what was stolen by the Japanese, including the Diaoyu Islands, Taiwan and anything else that wasn't nailed down.

Obama looked like the lost littly puppy that he is at the G-20 and Japan quickly picked up on that.

Japan is now realizing that it is sink or swim and if it wants to swim it better not p!ss off the big boys, the big boys being China and Russia, the other big boy, America, is fading fast and self destructing as you're reading this.

Forbes just declared Hu Jintao as the world's most powerful man for good reasons and Obama is feeling the heat and squirming knowing that on his watch the US has become second rate.

Hint to America, best be teaching Putonghua as a second language at all your schools, starting at the kindergarten level, the younger they are the sooner and better they learn, it will come in handy when trying to negotiate with us here in China.

I learned your language as a third language, I'm sure you can learn mine as a second language.
11/13/2010 7:11:30 PM
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justwondering wrote:
Elisa2 wrote:
"The world will not bow down to China and Iran.They will not become the "children" of the Chinese Dragon.They will not become the slaves of an Iranian Caliphate run by a false prophet.IT WILL NOT HAPPEN!"

How does Iran fit into the narrative of this story? As to China, some would say that China has become economically powerful and important enough that .. ahem... world is beginning to show respect.

Elisa, when GYSI said get active, I think they expected you to display some commonsense, some understanding of what it is you should comment on.

11/13/2010 7:10:14 PM
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CharlesMcKay1 wrote:
"Since the collision among a Chinese trawler and two Japanese patrol boats near disputed islands in the East China Sea..."
A collision among them, eh? Chico, there is a video of the trawler ramming the patrol boat on youtube which, apperently, everyone in the world but you has seen.
11/13/2010 6:59:58 PM
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CharlesMcKay1 wrote:
"Kan's meeting with Hu was a last-second arrangement, coming hours after several thousand demonstrators - holding Japanese flags and shouting anti-China slogans - marched through downtown Yokohama."
... which of course follow weeks of multiple, large, violent anti-Japan demonstrations in China, but there's no need to mention that, eh Chico? Journolist ethics demand that you only tell people what they need to know in order to form the politically correct opinion.
11/13/2010 6:52:02 PM
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alance wrote:
Japan just figured out it can't depend on America to fight her battles. First they tried to move our base in Okinawa. Then Japan tried to claim islands in the China Sea that belong to China. South Korea already figured that out.

China is the new big boy on the block. Japan better learn to fend for herself.
11/13/2010 6:34:52 PM
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JimW2 wrote:
Please don't end up giving the islands to china.
Remember Japan, that china is not liked by ANY nation in the world.
11/13/2010 4:16:39 PM
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JimW2 wrote:
I hope Japan doesn't end up giving in to china.
Every country in the world needs to stand up to china and not be bullied by them.
Look what they did to Tibet.
11/13/2010 4:09:37 PM
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iseheijiro wrote:
All Japan needs is dozens of 50 mega ton nuclear ICBM and target Beijing and Moskow. We don't need massive military machines any longer. China and Russia are outlaws. They will never become civilized nation as US, Japan and all democratic nations in the world.
11/13/2010 4:03:55 PM
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Elisa2 wrote:

Americans watch a lot of youtube.

They saw the video of the Chinese ship attacking the Japanese ships, ramming them.
They saw the truth for themselves.

They also know about China's attacks against Vietnam.

Your lies against Japan are not going to work.
11/13/2010 4:00:57 PM
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gwshening wrote:
Japanese militarism shall not be allowed to return to Japan in any shape or form.

The provovation by the Japanese against its neighbors is a sign that the "Japanese militarism sentiment" is still live and well in Japan TODAY!

The Japanese are still living in the last century and century before thinking they are the victors in wars against both China and Russia. They think their defeat in WW-2 is only to the Americans.

If we don't "manage" the Japanese well, they will dig themselves into another war with China, and perhaps with Russia, they can never win.

Allies or no allies, we cannot let this Japanese militarism get out of hand.
11/13/2010 3:37:36 PM
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Elisa2 wrote:
The world will not bow down to China and Iran.

They will not become the "children" of the Chinese Dragon.

They will not become the slaves of an Iranian Caliphate run by a false prophet.


11/13/2010 3:25:50 PM
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zakaria_belal wrote:
G20 with APEC for Island dispute seem tooremote.Indirect diplomacy likely.Japan is OPEC customer and Russia OPEC.Said Germany in G20:“ Don’t punish Germany for being successful“. Looking into top Economy in Trillions ,USA seem to have debt of $7 Trillion
With zero surplus UK has Debt of $1.5 Trillion with Zero Surplus Canada with $O.6 Trillion Debt.
With Zero Surplus. Two area Of difficulty in G-20 was Trade and Currency Rate. In the Past GATT was general agreement on Tariff and Trade which was sabotaged by bringing down World Trade centre by Bush and Blair before moving in Iraq knowingly due to their oil ( second highest oil reserve in the world)on 9/11 pretext .Why Currency dispute in G20? OPEC oil determined Currency Rate. None of the G20 belong to OPEC but disputed UK USA Japan France South Korea Italy India Manufacture Cars airplanes Jumbo Jets Malls High Rise office Hiways Parking lot fuel tax petroleum tax parking tax toll hiways all depending on OPEC .They even print own debt notes and value currency Rate 9like lately India)unilaterally. Said Prez Obama in Mumbai these Taj Mahal Hotel Terrorist from Pakistan must be defeated .I visited both India and Pakistan. Few months later again. Overnight Pakistan Currency devalued India Currency Revalued upgraded built Commonwealth village on Debt signed to mfr more cars more jets and planes on loan and became big economy claimant in G20 like USA UK Canada India. Even South Korea not too long ago was poor struggling to do contract for Qadaffi In Libya Claim Big OPEC style currency and Trade people like US UK Canada India.How one is going to pay Debt on Interest - Print own Currency put in own trillion owing (Debt) without having to pay ever and Pretend their money as equal to OPEC by currency Value Manipulation. World leader G20 are Calling Muslim OPEC as Alqaeda Taliban Terrorist.Broken Russia has now become Biggest OPEC .Is Russia going to reconcile with OPEC impersonator G2O mixing with APEC ?
11/13/2010 12:45:35 PM
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44fx2901 wrote:
The China Ascendancy, Japan bows deeply to the new hegemon.
11/13/2010 12:27:00 PM




さあ、あなたはどう思いますか? 伊勢平次郎 ルイジアナ

Nov. 6 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.

“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said yesterday in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”

Bernanke came under fire yesterday from officials in Germany, China, and Brazil, who said his plan to pump cash into the banking system may jar other economies and fail to fuel U.S. growth. Critics including Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, have said Fed policy is encouraging investors to take on too much risk and threatens to undermine the dollar.

“It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said.

Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.”

Best Week

Stocks capped their best week in two months, with the MSCI World Index and Standard & Poor’s 500 Index up more than 3.4 percent each, after the Fed pledged on Nov. 3 to buy as much as $600 billion of Treasuries through June to boost the economy.

“We are showing insufficient stimulus,” Bernanke said yesterday in his remarks, mostly in response to questions. Asset purchases have “the goal of reducing interest rates, providing more stimulus to the economy and, we hope, creating a faster recovery and an inflation rate consistent with long-run stability,” Bernanke said to students.

An acceleration of U.S. economic growth would support the value of the U.S. dollar, Bernanke said.

“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said yesterday. “That is where the fundamentals come from. We are aware the dollar plays a special role in the global economy.”

The dollar advanced 1.1 percent to $1.4049 per euro at 3:08 p.m. in New York from $1.4207 yesterday, when it touched $1.4282, the weakest level since January.

More Easing

Bernanke said additional easing will help the Fed achieve its two mandates set by Congress for ensuring full employment and stable prices.

“The unemployment rate, if at all, is coming down very, very slowly,” Bernanke told students at Jacksonville University. “Inflation is very, very low, probably below the level that is healthy for the economy in the longer term.”

Bernanke will have the opportunity to elaborate on his comments today when he is scheduled to speak to an Atlanta Fed conference at Jekyll Island, Georgia.

The Fed is purchasing more Treasuries to reduce 9.6 percent unemployment and keep inflation from slowing. Bernanke is trying to boost growth after near-zero interest rates and $1.7 trillion in securities purchases helped pull the economy out of recession without bringing joblessness down from close to a 26-year high.

Referring to the policy of so-called quantitative easing, Bernanke said, “we will be reviewing that regularly to see if it is working, to see how the outlook is changing.”

‘Dangerous Signs’

The Fed’s support for asset values isn’t helping the “real” economy, and is creating “dangerous signs of a potential free fall” in the dollar and will be unsustainable, Burry said in an interview.

Hedge-fund manager Barton Biggs is among those who defended Bernanke.

“We still are in a very precarious situation,” Biggs, the managing partner of New York-based Traxis Partners LLC and former chairman of Morgan Stanley Asset Management, said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “The economy could easily tip back into a double dip, and Bernanke did what he had to do.”

The U.S. added 151,000 jobs last month, Labor Department figures showed yesterday, exceeding all forecasts in a Bloomberg News survey of economists. Private payrolls that exclude government agencies also gained more than forecast, while the jobless rate held at 9.6 percent.

Rising Prices

Asked by a student if “skyrocketing” commodities prices may threaten his inflation outlook, Bernanke said rising commodities prices are “the one exception” to a broad reduction in inflationary pressures. Overall, excess slack in the economy will make it difficult for producers to push through higher prices to consumers, he said.

“Emerging markets are growing quite quickly,” Bernanke said. “Demand for those commodities is pretty strong. That is going to be a contributor to inflation in the U.S. because it will affect gas prices, for example, and so on.”

Asked by a student about rising gold prices and concerns over inflation, Bernanke said the Fed wouldn’t sacrifice price stability in an attempt to boost growth.

“Let me be very clear: We are absolutely committed to keeping inflation low and stable,” he said. “We have the tools to unwind and tighten policy at the appropriate time. We will honor both sides of our dual mandate.”

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.netTimothy R. Homan in Washington at



Why Do We Need QE 2? If QE 1 Worked So Darn Well?

“なぜ、QE2が必要なんだ? QE1すらうまく行かなかった~2008年9月(ブッシュの終わり)から、2010(今年)の6月までに、2兆ドルの量的緩和が強行された~すべて、消費者の財布の紐を緩めるためだ~特別融資を受けた銀行のバランスは黒字になるはずだった~いや、逆さまに、$2960億ドルの赤字(借金)となった~それだけではない、過去63年間、銀行の帳簿は赤字(借金)なのだ。2年間に渡るQE1は、バズーカ砲だった。だが、昨日、バーナンキが発表したQE2は、3分の1のキャッシュを3分の1の期間(8ヶ月)に打ち出すという水鉄砲なのだ~QE1,QE2が問題あのではない~連銀が、消費者のムードに勝てないことが大の問題なのだ~米国民は使うよりも預金にまわっている~ムードが変り、カネを使い出すまでは、米経済は良くならない”

(助言)日本経済も同じだ。良く理解して、あなたの経済につなげてください。伊勢平次郎 ルイジアナ

By Nico Isaac

Thu, 04 Nov 2010 18:45:00 ET

If you happened to be walking down Wall Street on Thursday, November 4, chances are you didn't get very far before hearing some cheery pedestrian shout out, "Happy QE2 Day!" The unofficial (yet widely observed) holiday was coined in honor of the Federal Reserve's second round of "quantitative easing," the time-released plan to buy $600 billion of US Treasury securities over the next seven months.
A triple-digit rally in the Dow seemed to pacify any doubts about the merits of the Fed's move, as these news headlines suggest:

•"QE2, A Thrill Ride For Stocks So Far"
•"QE2 Sets Sail, Stocks Cheer"
•"QE2 To The Rescue"

I just have one nettling question: If quantitative easing is such a "Q"uick "E"lixir for economic weakness, if it's able to leap tall bond markets in a single bound, then why did the first round of buybacks fail to jumpstart limping growth?

As for the extent of QE1's impotence, the October 2010 Elliott Wave Financial Forecast has this stop-what-your-doing-right-now-worthy detail:

"The depth of QE1's failure is visible in the difference between the original amount of quantitative easing and the credit growth it was supposed to generate. From September 2008, when the quantitative easing actually started, to June 2010 a $2.46 trillion ($1.43 trillion in assets and $1.03 trillion in excess reserves) increase in the Fed's balance sheet coincided with a decline of $296 billion in total US credit market debt outstanding. Consider also that up until 2008, the total credit market debt rose for 63 consecutive years."

The bond buying "bazooka" of $2 trillion in two years failed to loosen the public's purse strings. By comparison, QE2 is a BB gun, shooting one-third the amount in one-third the time.

Then there's the other glaring problem: namely, the more debt that the Fed takes over from institutions that can no longer carry their post-2007 toxic debt, the less valuable the central bank's portfolio becomes. In his August 2008 Elliott Wave Theorist, EWI President Bob Prechter shed light on this very "Catch 22": (The latest Theorist is part of a risk-free Financial Forecast Service subscription)
"The Fed has $912 billion worth of assets. A year ago, most of its assets were Treasury bonds. In the past year, it has swapped more than half of its formerly pristine portfolio for mortgages and other bank debt. Before August ends, the Fed's ratio of Treasury holdings will fall below 50% for the first time ever. This will mean that the Federal Reserve is no longer the 'federal' reserve."
Bottom line: the QE crusade will give the Fed little more than borrowed time, in the hope that consumers regain their love for credit. Yet the more time that goes by, the more the plan backfires on the central bank's own purchasing power.

QE1. QE2. It doesn't matter. The Fed is up against a force beyond its control: Social mood. The trend in mass psychology has shifted from consumption to conservation. Only when that reverses course will sustainable growth follow.

Fed’s Bernanke ‘Doesn’t Understand’ Economics, Jim Rogers Says

Nov. 5 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke’s decision to pump a further $600 billion into the economy shows his grasp of economics is weak, said investor Jim Rogers, chairman of Rogers Holdings.

“Dr. Bernanke unfortunately does not understand economics, he does not understand currencies, he does not understand finance,” Rogers, 68, said in a lecture at Oxford University’s Balliol College yesterday. “All he understands is printing money.”

“His whole intellectual career has been based on the study of printing money,” he said. “Give the guy a printing press, he’s going to run it as fast as he can.”

The Fed said Nov. 3 it will buy an additional $600 billion of Treasuries through June, in a bid to reduce unemployment and avert deflation. While Bernanke’s near-zero rates and $1.7 trillion in asset purchases helped end the recession, the Fed said progress has been “disappointingly slow” in bringing down joblessness that is close to a 26-year high.

“Debasing your currency has never worked,” Rogers said.

David W. Skidmore, a spokesman for the central bank in Washington, didn’t respond to a message seeking comment.

Rogers, who predicted the start of the global commodities rally in 1999, said investors should put money into “real” assets such as metals and agricultural products. He told students to scrap career plans for Wall Street or the City, London’s financial district, and to study agriculture and mining instead.

Rogers, who described the U.S. as the most indebted country in history, declined to comment on the performance of his own investments in commodities.

“I’m here to sell books,” said Rogers, who lives in Singapore. “My little girls need royalties,” he added, referring to his two daughters, who are both younger than eight and were in the audience.

Rogers traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include “Adventure Capitalist” (Random House/Wiley) and “Investment Biker.”



Japan hits out over Medvedev visit
By Mure Dickie in Tokyo

Published: November 1 2010 09:04 | Last updated: November 1 2010 17:36

Dmitry Medvedev, Russian president, near cold war-era defence turrets, during his visit to Kunashiri Island, one of a group of islands claimed by both Russia and Japan

Japan on Monday summoned Russia’s ambassador to protest against a visit by Dmitry Medvedev, Russian president, to a disputed group of islands seized by Moscow during the second world war.

Medvedev trip puts focus on islands dispute - Nov-01.Sino-Japan dispute overshadows summit - Oct-31.US warning to China on maritime rows - Oct-11.Vietnam demands release of fishermen - Oct-06.Nato hopes to rebuild ties with Moscow - Oct-26.Japan and India meet as China fears grow - Oct-24..Mr Medvedev’s three-and-a-half hour visit to the islands, known in Japan as the Northern Territories and to Russia as the Southern Kurils, was the first by a Russian or Soviet head of state and threatens to reignite a bitter diplomatic feud over their ownership.

Tokyo’s move was condemned as “unacceptable” by Sergei Lavrov, Russia’s foreign minister who insisted that the “Russian president [had] visited Russian land” in comments that could further intensify the row.

The dispute came as Tokyo is struggling to ease territorial frictions over a group of Japanese-controlled but Chinese-claimed islands in the East China Sea, a dispute that has rocked relations with Beijing and overshadowed a gathering of regional leaders in Hanoi last week.

Seiji Maehara, Japan’s foreign minister, summoned Russian ambassador Mikhail Bely to protest at Mr Medvedev’s visit to the islands, which he said would “hurt the feelings” of Japanese citizens.

“We’ve taken the consistent position that this is our nation’s territory, so the president’s visit to the area is very regrettable,” Naoto Kan, prime minister, told a session of Japan’s Diet.

Japanese state broadcaster NHK quoted Mr Bely that Mr Medvedev’s trip was an “purely domestic matter” and calling for Tokyo to respond “calmly”.

The visit, made despite warnings from Tokyo that it could “severely harm” relations, adds a new element of territorial sensitivity to Japan’s preparations for hosting a summit of the Asian Pacific Economic Cooperation nations in the eastern port city of Yokohama this month.

Sino-Japanese relations have been chilled by a dispute sparked by the detention of a Chinese fishing boat captain following a clash with Japanese coast guard vessels near the Senkaku islands in the East China Sea last month.

Despite the release of the captain, continuing frictions over the islands, known in China as the Diaoyu group, prompted Beijing to scrap at the last moment a planned summit meeting between Mr Kan and Chinese Premier Wen Jiabao in Hanoi on Friday.

Some Japanese officials are concerned diplomatic tensions could also overshadow the Apec summit in Yokohama on November 13-14.

Mr Medvedev’s visit also highlights the failure of Moscow and Tokyo to find a way to resolve their dispute over the ownership of the territories just north of Japan’s main island of Hokkaido.

Last year, Mr Medvedev and then Japanese prime minister Taro Aso agreed to adopt an “outside the box” approach to resolve the issue, which has prevented them from signing a peace treaty formally to end second world war hostilities.

However, the accord has sparked no obvious new thinking, with neither side offering potential solutions.

Moscow has in the past suggested that it might agree a deal to divide the islands, with two being kept by each side, a stance Tokyo has rejected. Some Japanese politicians and officials have in the past also proposed some form of division of the disputed area, but any such compromise remains deeply controversial.
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Author: Nobuyoshi Ozaki

A long forty six years have passed since I stepped on to American soil. I have had various odd jobs in the past until I recently retired. Examples include working with Steven Spielberg as assistant director in a film called "1941." I was supervisor and later became Public Relation representative for Toyota Group - USA. My last occupation was a Senior Research analyst working in Silicone Valley for a major news paper from Tokyo, Japan. My spouse, Christine is a flight attendant, traveling often to the Middle East and Africa. We have spent three quarters of our life together as world adventurers. This photo was taken in Argentina. We now live in swampy Louisiana.