US/EUeconomy: US Fed’s ‘Flood of Liquidity’ Causes Instability, Stiglitz Says - by Fabiola Moura and Cordell Eddings

Joseph Stiglitz, Nobel Prize-winning economist, comments on the effectiveness of U.S. monetary policy, and its impact on global growth. He made the comments in a roundtable discussion at Columbia University in New York.

“There is lots of instability caused in part by the flood of liquidity from the Fed and the ECB. The irony is that the Fed is creating all this liquidity with the hope that it will revive the U.S. economy. It is doing nothing for the U.S. economy and causing chaos for the rest of the world.”

Note EU-Digest: George Sorros  also spoke about the above issue at Colombia University. For the Sorro speech go to:  http://www.onenewspage.com/news/Business/20101005/15707319/Read-George-Soros-Speech-Where-He-Warned-Of.htm

US economy : For more: Fed’s ‘Flood of Liquidity’ Causes Instability, Stiglitz Says - BusinessWeek

Telegraph: Europe's industry slams China over currency - by Ambrose Evans-Pritchard

For the complete report from the Telegraph click on this link

"I am deeply concerned about recent exchange rate developments," said Jurgen Thumann, president of Business Europe, the pan-EU lobby. "An overvalued euro is not good news for growth and is inconsistent with the commitments of the G20 countries for an orderly resolution of global imbalances. We must insist that our partners honor their commitments."

China has held the yuan fixed to the dollar despite its huge trade surplus through vast purchases of foreign bonds. This has allowed it to flood Europe with cheap exports, gaining market share on the coat-tails of dollar devaluation. Mr Thumann called on EU leaders to "push the message" in Beijing that China must let the yuan rise. China's central bank governor, Zhou Xiaochuan, let slip at the G20 summit that global pressure for yuan appreciation "is not that big".

The Canadian Press: Russian premier Putin says US dollar issuance 'uncontrolled', calls for diversified reserves - Sergei Venyavsky

For the complete report from The Canadian Press click on this link

Russian premier Putin says US dollar issuance 'uncontrolled', calls for diversified reserves - Sergei Venyavsky

Russia's Prime Minister Vladimir Putin on Friday said other currencies besides the dollar should be used as global reserves to reduce the risks posed by swelling U.S. debt. Putin, who spoke at an international investment forum in the Black Sea resort of Sochi, chided the United States for "an uncontrolled issue of dollars" and said the American currency's dominance had been "one of the triggers" of the global crisis. Putin renewed Russia's call on the U.S. administration and global community to give the green light to alternative reserve currencies: "If there are several reserve currencies, this will not harm the U.S. economy in any way."Russia's Prime Minister Vladimir Putin on Friday said other currencies besides the dollar should be used as global reserves to reduce the risks posed by swelling U.S. debt.

Putin, who spoke at an international investment forum in the Black Sea resort of Sochi, chided the United States for "an uncontrolled issue of dollars" and said the American currency's dominance had been "one of the triggers" of the global crisis. Putin renewed Russia's call on the U.S. administration and global community to give the green light to alternative reserve currencies: "If there are several reserve currencies, this will not harm the U.S. economy in any way."

EUobserver: Long live the Euro and the EU - Where would we be now without the euro?- by Hans Martens and Fabian Zuleeg

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Where would we be now without the euro? - by Hans Martens and Fabian Zuleeg

As John Thornhill noted in the Financial Times earlier this month: "The creation of the 15-country euro zone has introduced greater stability into the heart of the European economy, ending the frenzy of competitive devaluations that marked previous financial panics." It is easy to forget that not very long ago, a financial crisis in Europe went hand-in-hand with currency turmoil. In volatile financial markets, speculation often focuses on exchange rates, especially in cases where countries aim to maintain a level of parity with other currencies.

As former European Central Bank Executive Board member Otmar Issing recently put it in The Japan Times: "It is not difficult to imagine what would have happened during the recent financial-market crisis if the euro-area countries still had all their national currencies: immense speculation against some currencies, heavy interventions by central banks and finally a collapse of the parity system."

In times of rising scepticism towards the EU, highlighting the benefits of established 'core' common policies is all the more necessary. More needs to be done to improve Europe-wide supervision and coordination. But maybe the time has come for countries that are not in the euro zone (or indeed those which have not yet joined the EU), to reconsider whether it is better to be outside when coordination and integration inside can offer a degree of additional stability in an uncertain and volatile world.