I just learned a new word after reading a long article about how the US is waging economic war against China.
And I can't wait to share it with my friends here. It's called cacophemism.
A cacophemism is a harsh word pinned on something good to make it look bad. To economists Radhika Desai and Michael Hudson, when US Treasury Secretary Janet Yellen recently accused China of over-production of clean energy goods like solar panels and electric vehicles, she was using a cacophemism.
Instead of applauding China for making solar panels and other useful stuff that poor countries can afford, she said China was flooding the world market with products which Western manufacturers couldn't match in terms of pricing. So stop exporting, she lectured the Chinese, because you are driving us out of business. Cacophemism indeed!
Humanities › English
What Is the Meaning of the Grammar Term Cacophemism?
You Don't Want to Use This in Polite Company
cacophemism
The slang expression grease monkey is a cacophemistic term for a garage mechanic. The term can be used in either a pejorative or an affectionate sense.
Cacophemism is a word or expression that's generally perceived as harsh, impolite, or offensive, although it may be used in a humorous context. It is similar to dysphemism, and a contrast with euphemism. Etymology is from the Greek, "bad" plus "speech".
Cacophemism, says Brian Mott, "is a deliberate reaction against euphemism and involves intentional use of strong words, very often with the aim of shocking the audience or the person to whom they are addressed" ("Semantics and Translation for Spanish Learners of English", 2011).
Examples and Observations
"A cruel or offensive dysphemism is a cacophemism (from Greek kakos bad), such as using 'it' for a person: Is it coming again tonight?"
(Tom McArthur, "The Oxford Companion to the English Language". Oxford University Press, 1992)
How Neutral Terms Become Cacophemisms
"When we use cacophemisms,....we do not necessarily speak ill of anything. Cacophemistic language is a rough and raw, blunt and vulgar way of saying anything — good, evil, or neutral — of a thing. Not all of it is obscene by any means; witness 'grub' and 'duds' for example. Some are extremely vulgar, but not quite obscene (that is, not quite categorically tabooed in polite society), likely to offend but not to shock, like 'puke,' 'guts,' 'fart,' 'stink,' 'belly,' 'croak,' and 'burp.' A genuinely obscene word, in virtue of the taboo its utterance violates, is as cacophemistic as a word can be. . .
"People naturally find some perfectly accurate descriptive terms unflattering and displeasing. It is therefore considered good manners for others to avoid these terms as much as possible, and when one cannot avoid speaking the unpleasant truth, to find descriptive synonyms that strike the ear as less blunt, though they say the same thing as the unflattering term. In this way, we generate a stream of euphemisms, in comparison to which the original descriptive term seems ever more coarse, until that term, originally neutral, becomes a cacophemism. The words 'fat' and 'old' are good examples of this process. It is now considered to be blunt almost to the point of uncouthness to refer to a fat person as 'fat.' And while there are a few dysphemistic ways of saying the same thing ('potbellied,' 'fat-assed,' 'lard-assed,' 'gross'), there are few other terms that are as cacophemistic now as the straightforward unadorned 'fat.'"
(Joel Feinberg, "Offense to Others". Oxford University Press, 1988)
Rationalizing With Euphemisms and Cacophemism
"Euphemism and cacophemism play a central role in rationalization. When we call someone a 'terrorist,' we may be using a cacophemism — making an activity seem worse than it actually is. When we call the same person a 'freedom fighter,' we may be using a euphemism — making the activity sound better than it really is. Either way, by using these words, we set ourselves up for rationalizing the harming of others."
(Ronald A. Howard and Clinton D. Korver, "Ethics for the Real World". Harvard Business Press, 2008)
Cacophemisms and Humor
"A euphemism is generally no more than the triumph of squeamishness over reality: little person for dwarf, senior citizen for old man, disturbed for crazy, etc. Cacophemisms, on the other hand, tend to reflect an attitude of rough-and-ready good humor toward the person or object in question: egghead, grease monkey, quack, etc. A further difference between the two 'isms' is that cacophemisms are more readily recognized for what they are; euphemisms tend to have acquired a wider currency in normal parlance and hence to be accepted more unthinkingly by the listener."
Janet Yellen warns China against clean energy dumping ; US Treasury secretary tells Beijing its trade practices will distort markets and harm workers.
Janet Yellen, US Treasury secretary: ‘We have raised overcapacity in previous discussions with China and I plan to make it a key issue in discussions during my next trip there’
US Treasury secretary Janet Yellen has warned China not to flood the world with cheap clean energy exports, saying they would distort global markets and harm workers. Yellen delivered her message to Beijing from a solar energy manufacturer in Georgia on Wednesday, just days before her second trip to China as Treasury secretary. The comments reflect continued concern in the Biden administration about China’s trade practices, which are likely to be a source of friction during Yellen’s visit despite recent efforts by both countries to stabilise relations. “It is important to the president and me that American firms and workers can compete on a level playing field. We have raised overcapacity in previous discussions with China and I plan to make it a key issue in discussions during my next trip there,” Yellen said. Yellen said China’s previous excess production of metals such as steel and aluminium had damaged the global economy — and warned that similar oversupply of clean energy products, including solar, electric vehicles and lithium-ion batteries, could also distort markets. “China’s overcapacity distorts global prices and production patterns and hurts American firms and workers,” she said, adding that she had heard similar warnings “from government counterparts in industrialised countries and emerging markets, as well as from the business community globally”. Yellen pressed Chinese officials to take the “necessary steps to address this issue”. Senior US Treasury officials had already raised concerns with Chinese officials about overcapacity in clean energy products, including in talks with He Lifeng, the vice-premier responsible for China’s economy. The warnings from Yellen come as the Biden administration tries to drive investment into its own domestic cleantech sector, offering huge tax breaks and subsidies to developers to build green energy manufacturing facilities in the US and break dependence on Chinese supply chains. The subsidies included in President Joe Biden’s landmark Inflation Reduction Act have been criticised as protectionist by US allies. Clean energy groups have also warned that moves to restrict Chinese clean energy imports into the US will slow efforts to reduce emissions and make renewable technology more expensive. Trade with China is poised to become a prominent issue in the 2024 presidential campaign pitting Biden against Donald Trump, his Republican predecessor.
Biden has kept many of the tariffs on Chinese imports that Trump imposed, but the former president has vowed to impose steeper levies on Chinese products if he wins a second term. This is expected to put pressure on Biden to take a tougher stance against Beijing on trade heading into the November vote. Yellen said in her speech that Biden’s policies were already producing results, including in Georgia — a crucial swing state in the election. She highlighted companies’ announcements of more than $675bn in clean energy and manufacturing investments since the start of the administration, saying that solar accounted for more than half of new power generation capacity added to the US grid last year.
April 4, 2024
Yellen faces tough road on China's vast overproduction problem.
GUANGZHOU, China, April 4 ,2024 - U.S. Treasury Secretary Janet Yellen arrived in China's southern factory hub of Guangzhou on Thursday with a tough message to Chinese officials: you're producing too much of everything, especially clean energy goods, and the world can't absorb it.
China is unleashing a flood of electric vehicles (EVs), batteries, solar panels, semiconductors and other manufactured goods into global markets, the result of years of massive government subsidies and weak demand at home. Global prices for many goods are tanking, pressuring producers in other countries.
"We see a growing threat of money-losing firms that are going to have to sell off their production somewhere," a senior U.S. Treasury official said of overproduction in key Chinese sectors.
In a series of meetings with top Chinese economic officials from Friday through Monday, Yellen will seek to convey her view that the excess production is unhealthy for China and that there is a growing drumbeat of concern about it in the U.S., Europe, Japan, Mexico and other major economies.
The official, who spoke on condition of anonymity, also said Yellen would explain: "If there are trade actions around the world, it's not an anti-China thing, it's a response to their policies."
But Beijing appears to be doubling down on investing in more manufacturing capacity in favored high-technology sectors, a stance that is also increasingly at odds with Europe.
"I do think the stage is set for renewed tensions with China," said Brad Setser, a former U.S. trade and Treasury official.
Setser added that Yellen's warnings about Chinese overproduction may be an initial step by the Biden administration towards new tariffs or other trade barriers on Chinese EVs, batteries and other goods.
En route to Guangzhou, Yellen declined to say whether she would raise the threat of new tariffs in her meetings in Guangzhou and Beijing with Chinese Vice Premier He Lifeng and Guangdong Province Governor Wang Weizhong, who has also presided over hundreds of billions of dollars worth of recent new projects.
But she said the Biden administration was determined to develop American supply chains in EVs, solar power and other clean energy goods with investment tax credits and would not "rule out other possible ways in which we would protect them".
In March, China's leadership pledged to follow through on President Xi Jinping's new mantra of unleashing "new productive forces" in China by investing in developing technology industries including EVs, new materials, commercial spaceflight and life sciences - areas where many U.S. firms hold advantages.
Yellen will also argue that China would be better off focusing spending on supporting households and boosting chronically weak consumer spending.
FACTORY FIRST
The results of China's prior investment binges are staggering.
Including EVs and combustion-engine cars, China by the end of 2022 had the capacity to produce 43 million vehicles annually, but its plant utilisation rate - a measure closely linked to profitability - was just under 55%, according to data from the China Passenger Car Association.
Bill Russo, the Shanghai-based founder and CEO of advisory firm Automobility, estimated that this translates to excess auto production capacity of about 10 million vehicles a year, or roughly two-thirds of North American auto output in 2022.
And new entrants are still coming into an increasingly cut-throat Chinese EV market. Mobile phone maker Xiaomi on Tuesday launched sales of its sporty Speed Ultra 7 EV, drawing an estimate from Citi analysts that each unit sold would lose $10,000.
SOLAR DOMINANCE
The situation in China's solar panel sector may be worse, where overproduction pushed prices down 42% last year (2023) to levels 60% below the cost of comparable U.S.-made products. Major Chinese producers are continuing to build factories, backed by provincial and local subsidies.
At the end of 2023, China had the capacity to build 861 gigawatts of solar modules per year, more than double the global total installed capacity of 390 million gigawatts. Another 500-600 gigawatts of annual capacity is forecast to come online this year -- enough to supply all global demand through 2032, according to energy research firm Wood Mackenzie.
Chinese officials are expected to push back and argue that the excess capacity results from an unexpected downturn in demand following a property crisis and a rocky exit from COVID-19, said Scott Kennedy, a China economics expert at the Center for Strategic and International Studies in Washington.
"I can foresee a conversation that goes around in circles," he added.
How Would a New BRICS Currency Affect the US Dollar? (Updated 2024)
The BRICS nations, originally composed of Brazil, Russia, India, China and South Africa, are looking to establish a new reserve currency backed by a basket of their respective currencies.
The potential BRICS currency would allow these nations to assert their economic independence while competing with the existing international financial system. The current system is dominated by the US dollar, which accounts for about 90 percent of all currency trading. Until recently, nearly 100 percent of oil trading was conducted in US dollars; however, in 2023 one-fifth of oil trades were reportedly made using non-US dollar currencies.
Central to this ongoing situation is the US trade war with China, as well as US sanctions on China and Russia. Should the BRICS nations establish a new reserve currency, it would likely significantly impact the US dollar, potentially leading to a decline in demand, or what's known as de-dollarization. In turn, this would have implications for the United States and global economies.
During the first US Presidential Debate between former President Donald Trump and current Vice President Kamala Harris on September 10, Trump doubled down on his recent pledge to impose strict tariffs on nations seeking to move away from the US dollar as the global currency. He is taking a particularly strong stance against China, threatening to slap 60 percent to 100 percent tariffs on Chinese imports if elected.
It's still too early to predict when a BRICS currency will be released, but it's a good time to look at the potential for a BRICS currency and its possible implications for investors.
Table of contents
● Why do the BRICS nations want to create a new currency?
● Will BRICS have a digital currency?
● What would the advantages of a BRICS currency be?
● How would a new BRICS currency affect the US dollar?
● How would a BRICS currency impact the economy?
● How can investors prepare for a new BRICS currency?
● Investor takeaway
Why do the BRICS nations want to create a new currency?
The BRICS nations have a slew of reasons for wanting to set up a new currency. Recent global financial challenges and aggressive US foreign policies have prompted the BRICS countries to explore the possibility. They want to better serve their own economic interests while reducing global dependence on the US dollar and the euro.
When will a BRICS currency be released? There's no definitive launch date as of yet, but the countries' leaders have discussed the possibility at length. During the 14th BRICS Summit, held in mid-2022, Russian President Vladimir Putin said the BRICS countries plan to issue a "new global reserve currency," and are ready to work openly with all fair trade partners.
In April 2023, Brazilian President Luiz Inacio Lula da Silva showed support for a BRICS currency, commenting, “Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries? Who decided that the dollar was the (trade) currency after the end of gold parity?”
In the lead up to the 2023 BRICS Summit last August, there was speculation that an announcement of such a currency could be on the table. This proved to be wishful thinking, however.
"The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to creates a BRICS currency," Leslie Maasdorp, CFO of the New Development Bank, told Bloomberg at the time. The bank represents the BRICS bloc.
South Africa's BRICS ambassador, Anil Sooklal, has said as many as 40 countries have expressed interest in joining BRICS. At the 2023 BRICS Summit , six countries were invited to become BRICS members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. All but Argentina officially joined the alliance in January 2024.
In recent years, the US has placed numerous sanctions on Russia and Iran. The two countries are working together to bring about a BRICS currency that would negate the economic impacts of such restrictions, according to Iranian Ambassador to Russia Kazem Jalal, speaking at a press conference during the Russia–Islamic World: KazanForum in May 2024.
Some experts believe that a BRICS currency is a flawed idea, as it would unite countries with very different economies. There are also concerns that non-Chinese members might increase their dependence on China's yuan instead. That said, when Russia demanded in October 2023 that India pay for oil in yuan, India refused to use anything other than the US dollar or rupees. Russia is struggling to use its excess supply of rupees.
Will BRICS have a digital currency?
BRICS nations do not as of yet have their own specific digital currency, but a BRICS blockchain-based payment system is in the works, according to Kremlin aide Yury Ushakov in March 2024. Known as the BRICS Bridge multisided payment platform, it would connect member states' financial systems using payment gateways for settlements in central bank digital currencies.
The planned system would serve as an alternative to the current international cross-border payment platform, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which is dominated by US dollars.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics,” Ushakov said in an interview with Russian news agency TASS.
What would the advantages of a BRICS currency be?
A new currency could have several benefits for the BRICS countries, including more efficient cross-border transactions and increased financial inclusion. By leveraging blockchain technology, digital currencies and smart contracts, the currency could revolutionize the global financial system. Thanks to seamless cross-border payments, it could also promote trade and economic integration among the BRICS nations and beyond.
A new BRICS currency would also:
● Strengthen economic integration within the BRICS countries
● Reduce the influence of the US on the global stage
● Weaken the standing of the US dollar as a global reserve currency
● Encourage other countries to form alliances to develop regional currencies
● Mitigate risks associated with global volatility due to unilateral measures and the diminution of dollar dependence
How would a new BRICS currency affect the US dollar?
For decades, the US dollar has enjoyed unparalleled dominance as the world's leading reserve currency. According to the US Federal Reserve, between 1999 and 2019, the dollar was used in 96 percent of international trade invoicing in the Americas, 74 percent in the Asia-Pacific region and 79 percent in the rest of the world.
According to the Atlantic Council, the US dollar is used in approximately 88 percent of currency exchanges, and 59 percent of all foreign currency reserves held by central banks. Due to its status as the most widely used currency for conversion and its use as a benchmark in the forex market, almost all central banks worldwide hold dollars. Additionally, the dollar is used for the vast majority of oil trades.
Although the dollar's reserve currency share has decreased as the euro and yen have gained popularity, the dollar is still the most widely used reserve currency, followed by the euro €, the yen "¥"; It is also sometimes represented as "JP¥" to differentiate it from the Chinese yuan, which shares the same symbol , the pound £ and the yuan ¥.
The potential impact of a new BRICS currency on the US dollar remains uncertain, with experts debating its potential to challenge the dollar's dominance. However, if a new BRICS currency was to stabilize against the dollar, it could weaken the power of US sanctions, leading to a further decline in the dollar's value. It could also cause an economic crisis affecting American households. Aside from that, this new currency could accelerate the trend toward de-dollarization.
Nations worldwide are seeking alternatives to the US dollar, with examples being China and Russia trading in their own currencies, and countries like India, Kenya and Malaysia advocating for de-dollarization or signing agreements with other nations to trade in local currencies or alternative benchmarks.
While it is unclear whether a new BRICS currency would inspire the creation of other US dollar alternatives, the possibility of challenging the dollar's dominance as a reserve currency remains. And as countries continue to diversify their reserve holdings, the US dollar could face increasing competition from emerging currencies, potentially altering the balance of power in global markets.
However, a recent study by the Atlantic Council's GeoEconomics Center released in June 2024 shows that the US dollar is far from being dethroned as the world's primary reserve currency. "The group's 'Dollar Dominance Monitor' said the dollar continued to dominate foreign reserve holdings, trade invoicing, and currency transactions globally and its role as the primary global reserve currency was secure in the near and medium term,".
Ultimately, the impact of a new BRICS currency on the US dollar will depend on its adoption, its perceived stability and the extent to which it can offer a viable alternative to the dollar's longstanding hegemony.
How would a BRICS currency impact the economy?
A potential shift toward a new BRICS currency could have significant implications for the North American economy and investors operating within it. Some of the most affected sectors and industries include:
●Oil and gas
●Banking and finance
●Commodities
●International trade
●Technology
●Tourism and travel
●The foreign exchange market
A new BRICS currency would also introduce new trading pairs, alter currency correlations and affect market volatility, requiring investors to adapt their strategies accordingly.
How can investors prepare for a new BRICS currency?
Adjusting a portfolio in response to emerging BRICS currency trends may be a challenge for investors. However, several strategies can be adopted to capitalize on these trends.
●Diversify currency exposure by investing in assets denominated in currencies other than the US dollar, such as bonds, mutual funds or exchange-traded funds (ETFs).
●Invest in commodities like gold and silver as a hedge against currency risk.
●Gain exposure to BRICS equity markets through stocks and ETFs that track BRICS market indexes.
●Consider alternative investments such as real estate or private equity in the BRICS countries.
Prudent investors will also weigh these strategies against their exposure to market, political and currency fluctuations.
In terms of investment vehicles, investors could consider ETFs such as the iShares MSCI BIC ETF (ARCA:BKF) or the Pacer Emerging Markets Cash COW 100 ETF (NASDAQ:ECOW). They could also invest in mutual funds such as the T. Rowe Price Emerging Markets Equity Fund, or in individual companies within the BRICS countries.
Simply put, preparing for a new BRICS currency or potential de-dollarization requires careful research and due diligence by investors. Diversifying currency exposure, and investing in commodities, equity markets or alternative investments are possible options to consider while being mindful of the associated risks.
Investor takeaway
While it is not certain whether the creation of a BRICS reserve currency will come to pass, its emergence would pose significant implications for the global economy and potentially challenge the US dollar's dominance as the primary reserve currency. This development would present unique investment opportunities, while introducing risks to existing investments as the shifting landscape alters monetary policy and exacerbates geopolitical tensions.
For those reasons, investors should closely monitor the progress of a possible BRICS currency. And, if the bloc does eventually create one, it will be important watch the currency's impact on BRICS member economies and the broader global market. Staying vigilant will help investors to capitalize on growth prospects and hedge against potential risks.
FAQs for a new BRICS currency
Is a BRICS currency possible?
Some financial analysts point to the creation of the euro in 1999 as proof that a BRICS currency may be possible. However, this would require years of preparation, the establishment of a new central bank and an agreement between the five nations to phase out their own sovereign currencies; it would most likely also need the support of the International Monetary Fund to be successful internationally.
The impact of its war on Ukraine will continue to weaken Russia's economy and the value of the ruble, and China is intent on raising the power of the yuan internationally. There is also a wide chasm of economic disparity between China and other BRICS nations. These are no small obstacles to overcome.
Would a new BRICS currency be backed by gold?
While Russian President Vladimir Putin has suggested hard assets such as gold or oil, a new BRICS currency would likely be backed by a basket of the bloc's currencies.
That said, speaking at this year's New Orleans Investment Conference, well-known author Jim Rickards gave a detailed talk on how a gold-backed BRICS currency could work. He suggested that if a BRICS currency unit is worth 1 ounce of gold and the gold price goes to US$3,000 per ounce, the BRICS currency unit would be worth US$3,000, while the dollar would lose value compared to the BRICS currency as measured by the weight of gold.
Importantly though, he doesn't see this as a new gold standard, or the end of the US dollar or the euro.
“(With) a real gold standard, you can take the currency and go to any one of the central banks and get some gold,” Rickards said at the event. “With BRICS they don’t have to own any gold, they don’t have to buy any gold, they don’t have to prop up the price. They can just rise on the dollar gold market.
How much gold do the BRICS nations have?
As of Q2 2024, the combined central bank gold holdings of the original BRICS nations plus Egypt (the only nation of the five new additions to have central bank gold reserves) accounted for more than 20 percent of all the gold held in the world's central banks. Russia, India and China rank in the top 10 for central bank gold holdings.
Russia controls 2,335.85 metric tons (MT) of the yellow metal, making it the fifth largest for central bank gold reserves. China follows in the sixth spot with 2,264.32 MT of gold and India places eighth with 840.76 MT. Brazil and South Africa's central bank gold holdings are much smaller, coming in at 129.65 MT and 125.44 MT, respectively. New BRICS member Egypt's gold holdings are equally pauce, at 126.57 MT.
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