Including: horse meat scandal, the depreciation of the Bolivar, someone in Italy talks about currency alternatives, and China’s rise gets a statistical nod.

Good morning

The headlines:

  1. The rise and RISE of China.

    Link: the world’s biggest trading nation.

    The summary: China is now officially* the world’s biggest trading nation by sum of imports and exports of goods ($3.87 trillion in 2012), taking over from the United States ($3.82 trillion). And that’s just in monetary terms – when you think about the types of imported and exported goods, I think it’s fairly intuitive that China buys and sells lower cost products… Of course, once you take imported and exported services into account, the US is still topping the league. But still.

    It’s interesting because: in all likelihood, we will one day look back at 2012 and call it “the Year the United States was lost”.

    *Which could be a misnomer – official statistics, especially when we’re discussing Chinese official statistics, should be treated with raised eyebrows. Which is certainly the attitude of some bank analysts – who pointed out that Chinese exports mysteriously jumped by 14.1% in December 2012 – although the Chinese officials maintain that this was due to hurried declarations as exporters sought to take advantage of an inspection fee waiver. 

  2. Horse for beef.

    Link: but is it criminal though?

    The summary: someone found horse-meat in their beef lasagne. The packaged food was prepared in France by French supplier Comigel for British frozen-food company Findus Group Limited; and the beef seems to have been replaced with Romanian horse meat. Findus has recalled the lasagne, and UK Environment Secretary Owen Paterson is calling it “criminal substitution”.

    It’s interesting because: I think “criminal” is a strong word for the opportunism of Comigel and/or the Romanian butcher they sourced their beef from. I’ve eaten horse, and I can’t really tell the difference between it and beef; especially when it’s microwaved and slathered in cheese. But the most interesting part is the fact that the UK used to test French beef product for evidence of horse – until the last Labour government stopped the testing. How bad is the problem that the British have traditionally tested for it? Clearly, they needed to though.

  3. An alternative currency for Milan.

    Link: yes really.

    The summary: someone vaguely associated with Silvio Berlusconi** has said that he may support a plan to introduce an alternative currency in the region of Lombardy to be used alongside the euro. And he cites 13 examples of such “internal currencies” in Europe.

    It’s interesting because: I’m not sure if there’s anything legally wrong with it. From my watching of the The Good Wife, I can safely say that it is illegal in the United States for anyone to introduce a currency (or anything that functions like a currency)***. But in the EU, it might even be a sensible decision. A government issues IOU notes instead of paying out money; the creditors start to trade the IOU notes; the market start to assign a relative value to the IOU notes; an informal exchange rate between IOUs and Euros becomes common-place; and presto: currency.

    **Has anyone noticed how news gets made “more interesting” with the name drop of someone scandalous? It’s very Huffington Post of Bloomberg. Tsk.

    ***If it’s on The Good Wife, it must be true. I trust those script-writers to do their research. 

  4. Venezuelan depreciation.

    Link: Chavez must really be ill.

    The summary: Venezuela will depreciate the Bolivar by 32% against the dollar, starting on Wednesday. The depreciation will increase the government’s oil revenues in bolivar terms, which means that they should be able to pay off their budget deficit in 75% of the time.

    It’s interesting because: annual inflation was 22% in January. A depreciation is not going to make that any lower. In fact, when you look at it properly, what the depreciation will do is inflate away the government debt (read this post for an explanation). There’s a good reason that Venezuela is on the hyperinflation watch list.

That’s all for now.

Have a good day.