Dollar Basher Roundup: Lord Turner & Bin Laden

♠ Posted by Emmanuel in at 1/30/2010 10:05:00 AM
In normal circumstances, you probably wouldn't lump the world's most famous financial regulator--Lord Turner of Britain's Financial Services Authority (FSA)--with the world's most famous terrorist. These, however, are not normal times. First up is Lord Turner inveighing against the dollar carry trade borne of abnormally low interest rates:
Lord Turner of Ecchinswell, chairman of the Financial Services Authority, said that a big part of the foreign exchange trading business of the City of London was “economically valueless” and hinted at a crackdown on a popular speculative activity called the carry trade.

In an echo of his controversial assertion last summer that parts of the City were “socially useless”, Lord Turner said that banks and hedge funds that borrowed cheaply in US dollars to bet on higher-yielding investments in emerging markets were adding no value to the real economy. “If I could wave a magic wand here, and greatly reduce the carry trade, I’m pretty certain the world would be a better place,” he said...Carry trades are a form of bank proprietary trading likely to be curbed by tougher capital rules when the international Financial Stability Board, of which Lord Turner is a member, rules on the new capital regime next year...

After a private session on casino banking and regulation, Lord Turner said of the carry trade: “It’s a form of speculative activity where you can’t work out what the value is to the real economy.” He said that speculators were relying on being able to extricate themselves from the trade before a sudden collapse of the currency they had bought. “You’re betting you’re going to get out before the train wreck — the adjustment — happens.”
I agree. Foreign exchange for trade facilitation is necessary, but that for engaging in the carry trade is of dubious purpose. Obviously, record low US interest rates have been an enabler of this carry trade.

Our next celebrity dollar basher is none other than the world's most famous terrorist. Or, at least someone who claims to be him as there is debate whether he's still alive. Bin Laden seems to have gotten off the jihad train for now to cover other issues in an attempt to incorporate third-world populism. As widely reported, he's going after industrialized countries' excess carbon emissions as well as the US dollar:
“We must also stop dealings in the dollar and get rid of it as soon as possible,” he said. “I know that this has great consequences and grave ramifications, but it is the only means to liberate humanity from slavery and dependence on America.”
America: Who loves ya, baby?