Admission Control

Said a girl at the school where she prepped:
"As of late, it is hard to have slept,
When my counselors relate
The diminishing rate
At which colleges lately accept."

"I must temper my high expectation
For my 20th school application,
As it may be perhaps
My profusion of apps
Will worsen a bad situation."

Davos

There's a conf'rence of world VIPs
Taking meetings in spas and on skis;
By Switzerland's hills
They solve the world's ills,
Or at least decide who's the big cheese.

Every year at this time, the gloom of January is brightened (or deepened, depending on your viewpoint) when central bankers and business leaders from around the world gather in Davos, Switzerland to discuss the world economic outlook.  The World Economic Forum is "committed to improving the state of the world" and, according to the organizers of the annual meeting, it "remains the foremost creative force for engaging leaders in collaborative activities focused on shaping the global, regional and industry agendas." Others take a more cynical view, including Bloomberg radio commentator and former SEC chairman Arthur Levitt, who has given up going to Davos, remembering it as a social competition in which the object was to collect the greatest number of prestigious names on one's "dance card."

Those prestigious names are now concerned over the possibility of systemic financial failure, according to a report by Reuters.  Over 1,000 central bankers and business leaders were surveyed ahead of the annual meeting, and it turns out that they are worried about all the excess liquidity that the former have pumped into the system for the benefit of the latter.  Recurring asset bubbles and "currency wars" of internationally competitive devaluations are some of the other concerns that keep the power elite uneasily awake through those snowy Alpine nights.

Franc-ly, My Dear...

Said the head of the Swiss central bank,
Whose wife played the dollar and franc:
"I may be remiss,
In our conjugal bliss,
If it's me she's beholden to thank."

Money and politics make for a volatile mixture; add marriage, and the results can be explosive. So were the halls of the Swiss National Bank rocked on Monday by the resignation of its chairman, following a scandal involving his wife's well-timed currency trades. Philipp Hildebrand, at 46 the youngest-ever Swiss central banking head, maintained that he had no prior knowledge of wife Kashya's purchase of US$504,000 against Swiss francs; Mrs. Hildebrand made this trade shortly before Mr. Hildebrand's bold currency intervention that drove down the value of the franc vs. the dollar and earned her a 17% profit. The case occurs against a tense political backdrop, in which Mr. Hildebrand's push for more openness in the Swiss banking system has met with strong resistance from the conservative Swiss People's Party. Against such opposition, the SNB chairman soon found himself in a farewell press conference: "Central bankers need to be absolutely credible," he said. "The resignation fills me with sadness." Mrs. Hildebrand, who had worked for the Moore Capital hedge fund in the '90s, expressed her remorse in a $79,000 donation to charity, effectively disgorging the tainted profits.

Hu Wants a Strong Dollar?

Declared China's President Hu:
"With the Fed buying bonds as they do,
It touches raw nerves,
As our dollar reserves
May devalue a trillion or two."  

President Hu Jintao of China, in preparation for his state visit to Washington this week, expressed his unease with the course of the US dollar.  Responding to questions from the Wall Street Journal and Washington Post, President Hu said that the dollar as the international reserve currency is "a product of the past."  He also worried about the impact on China's $2.85 trillion of US currency reserves of the Fed's "quantitative easing" policy of buying treasury bonds to lower interest rates.  China fears that such stimulation will export inflation and cheapen its US dollar investments.  

Of course the Fed, as steward of the world's largest free-floating currency, does not have the luxury of the more direct forms of manipulation practiced in Beijing.  These are a source of irritation to many in the US, as they tend to cheapen Chinese exports and exacerbate the trade imbalance.  Should make for some interesting state dinner conversation with President Obama.

Shipping out on the QE2

Said Bernanke: "I wish I were abler
To stimulate use of our labor,
So I'll cheapen our bucks
And we'll export more trucks,
Which is sometimes called 'Beggar Thy Neighbor.'"   

The Fed's much-anticipated, $600B second round of quantitative easing (QE2) was announced this week, with the stated intention of increasing credit and stimulating  economic activity.  Many argue, as in this commentary in the Globe and Mail, that QE2 is really a means of cheapening the US dollar and enabling America to export its way out of the crisis, or rather to export the crisis itself.  However, others can play that game, too.

Yuanna Make Somethin' Of It?

Said Senator Dodd, "It's quite funny
How Beijing manipulates money;
The pace that it grew,
Though quickened by two,
Is too slow by a factor of twunny."

Yuan or Not?

In London, New York and Shanghai,
The Yuan was to reach a new high,
But when the Renminbi
Arose only minim'ly,
Many asked: "Why the Hu and the Kwai?"