That the dollar is “too-big-to-fail,” notwithstanding flip-flops on part of China and Japan, and the massive show of strength by China on its 60th anniversary, is finally being realized globally. For a while, in recent weeks, it looked like the dollar was finally falling into an abyss but last week Russia said it would maintain holdings of treasuries, Japan said it would keep the yen down and a host of govts across the world said a strong dollar is essential for keeping the world economy afloat. And the dollar moved up.

Obama advisor Larry Summers called the situation “financial balance of terror” at the G20 meet. He should have called it “balance of financial terror,” for powerful forces are rendering savings for the future futile, forcing the consumer to spend earnings before they accrue.

Apparently things are calm and stable but sweeping long term changes can still be sensed, a typical example being the Euro’s share in global currency reserves rising nearly two percentage points in Q2 alone, mostly at the cost of the dollar.

Despite the spectacular come back of market valuations the world over, IMF believes major banks will have to write-off a further $1.5 tn by end 2010, though EU insists its biggest banks can survive through an even bigger crisis. Meanwhile, G20 has come out with one of the most amusing ideas ever - a global tax on financial institutions.

China has apparently started looking at growing economic disparities (luxury goods market now at $5 bn) and the need for enforcing judicious allocation of capital to different segments of its economy; five recent IPOs at Hong Kong are quoting well below their offer prices. The US, on the other hand, continues to be oblivious to the rising number of bank failures (now 98), growing unemployment, declining median household income, and rising rate of poverty (13.2%), sanguine in its belief that the dollar and the Wall St can solve any and all problems.

While the corporate world in Japan is trying hard to gauge the new govt’s economic thinking, Brazil (along with US) is trying to spur competition in the credit card industry. Somebody should ask Seven-Eleven, which has collected 1.66 mn signatures demanding lower charges by credit card issuers, how can one process an average transaction of $100 and provide a few weeks credit at the same time, for less than $2.

The Germans voted the incumbent govt back into power last week; the political plus point of the Euro is that the policy-makers are not in a position to be too adventurous and voters do not expect miracles from their govts. Voter turnout of about 70% was the lowest in post-war Germany.

While Toyota, worried about the strong yen and falling auto sales (US sales down 23% in Sep, after clunkers ended), has had to ask 3.8 mn customers to take floor mats out of their cars because the accelerator gets stuck when pressed hard, GM has more or less decided to kill the Saturn brand.

BNP Paribas is raising $6.3 bn from fresh stock to repay govt loans while Societe Generale has announced plans for 50 new outlets in China. American Express is reversing some pay cuts and BofA is hunting for a new CEO after incumbent Kenneth Lewis resigned abruptly last week.

Solvay is selling its drugs business to Abbott for nearly $7 bn in cash, Xerox is buying Affiliated Computers for $6.4 bn, Sina Corp (China’s largest Web portal) has decided to cooperate with Focus Media, instead of taking it over, and China Petroleum says its million ton ethylene JV with Kuwait in Guangdong will cost $7.8 bn. MTR of Hong Kong, which already operates the London Overground, hopes to begin operations in Melbourne and Stockholm shortly.

Starbucks is out to create a new brand of instant coffee, Via, in a move that analysts say will hurt its premium image. US department store chain Kohl is adding 37 new stores. Wal-Mart says its energy conservation drive is yielding financial gains and it intends to push suppliers to save energy and costs. Danone (France) has decided to quit its Chinese JV because it believes partner Wahaha is selling identical products, and rumours have it that Playboy may be up for sale.

India’s Bharti has called off its ill-conceived plans of merging with MTN of South Africa. Cisco is buying Tandberg of Norway to expand its video-conferencing business. Accenture profit is down 40% and Stanford is planning to sell $1 bn of ill-liquid assets because of liquidity constraints.

Last week an Algebra 1 student in U.S. managed to explain America’s problems in one sentence: “People seem to think it’s cool to be stupid.” That was when Bill and Melinda Gates visited the West Charlotte school to understand why their country has fallen behind in education. They probably didn’t know that one in five Americans texts while driving, and the govt has responded by banning its employees from texting while driving! Until the right hand is free while driving, Americans can never drive safely.

In far away Egypt, the govt is ruing the day it over-reacted to the swine-flu and ordered slaughter of 300,000 hogs as now there is nobody to hog the organic waste dumped on the streets. In Germany, a politician refused to recognize the reality that switching to English is inevitable now and reprimanded a reporter for asking a question in English. Whatever the language, or the level of education, the real problem looming large on the horizon, according to a Danish research report, is that if the current trends in life expectancy continue, one half of all newly borns in rich nations would live to be 100. What impact will it have on equities, currencies and commodities?

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