The Caribbean Interbank Market News Scan as of 7:57 am EDT

Currency PairExchange Rate
GBP/USD1.2089
USD/XCD2.7000
GBP/XCD3.2640
USD/JMD148.8260
GBP/JMD179.9150
USD/DOP53.9802
CAD/XCD2.0953
CAD/JMD115.4950
EUR/USD1.0426

Source: OANDA

A side note: Why the issue of colonial status in the United States Virgin Islands is a non-issue …

For years the Virgin Islands of the United States has struggled with the issue of whether it should remain an unincorporated territory, become a state, or go the route of an independent sovereign nation.  The territory is nowhere near self-governance, not even a recipient of all the constitutional rights guaranteed to citizens living on the mainland. 

Going its own way by shedding its colonial status requires a process that goes deeper than a constitutional convention or ballot referendum.  Besides the issue of creating a national identity that not only includes ancestral Virgin Islanders (those who can directly trace their ancestry to a grandparent born and living in the old Danish West Indies on 31 March 1917) and native Virgin Islanders like myself who were born in the territory but have no lineage to March 1917, there is the political economic issue that undergirds the definition of colony. 

Getting clarity on the definition is important because clarity will guide you to the primary stakeholders whose buttons have to be pushed.  In my opinion, the button-pushing has focused heavily on 80% of the USVI population of African descent who are being treated as second- or third-class citizens by the world’s best-known democracy, and for this painful reason the status of the USVI has to be resolved.  Status has become another civil rights issue on steroids.

Let’s look at “colony.”  According to Webster’s New World Dictionary, a colony is a group of settlers in a distant land that is under the jurisdiction of their native land.  It is territory ruled over by a distant state with a community of the same nationality or pursuits.  As a territory, a colony is part of a country or empire that does not have full status.

What is missing from this definition is the economic aspect of colonization.  If you take the classic case of the original thirteen British colonies in North America in the 17th and 18th centuries, we had transplanted Brits that extracted natural resources and sent those resources to Great Britain for further processing and packaging where part of the finished product was sold back to the colonists.  This was the basic crux of the relationship.  We had landowners in North America trading with investors and manufacturers in Great Britain, trading on a platform of cheap land and free labor in the form of African slaves.

But when it was time to press for independence, the philosophy and narrative came from the landowners in the colonies.  The philosophy and narrative were created by a wealth class that stood to benefit from reallocating Great Britain’s monopoly on taxes from the monarch to American government.

Fast forward to the 21st century Caribbean.  I believe that if the USVI is going to move from its unincorporated status, that move will have to be initiated by the group that has the most to lose or gain economically from a change in status.  That group is not the 80% of the population that descended from African slaves.  The groups calling the shots on removing colonial status will be the owners of USVI tourism assets and financial institutions and the investors on the US mainland and in Europe. 

Should these groups see economic benefits and political influence stemming from a change in status being greater than the current political economy status, that is when the non-black wealth class will agitate for that change in status.

In the meantime, change in status is a non-issue for the majority of Virgin Islanders.  They have no control over the political economy and will settle for now with the current level of American citizenship.

Alton Drew

20 May 2022

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Statement by Press Secretary Jen Psaki on President Biden’s Call with President Xi Jinping of the People’s Republic of China

Source: Executive Office of the President

President Joseph R. Biden, Jr. will speak with President Xi Jinping of the People’s Republic of China (PRC) this Friday. This is part of our ongoing efforts to maintain open lines of communication between the United States and the PRC. The two Leaders will discuss managing the competition between our two countries as well as Russia’s war against Ukraine and other issues of mutual concern.

17 March 2022

Black social media documents how not to approach global political power …

Commentary

Being a part of the African Diaspora, it is sad to see how Afro people in America and its Caribbean territories have been analyzing the Russian invasion of Ukraine through emotionally tainted lenses. On Facebook, for example, Afros quickly donned digital banners on their feeds expressing support for Ukraine. Some adopted the left-wing media narrative of tying former US president Donald J. Trump to the actions of Vladimir Putin, an easy low-hanging fruit move by Mr Trump’s detractors given his past expressions of admiration for the Russian Federation president.

The media has inundated Afro people in America and its Caribbean territories with plenty of images that stoke emotional responses. Crying children, concerned parents, people trying to leave on trains, bombed out buildings, and a young Ukrainian president in military garb are the content for countless press photos on Twitter and Facebook. Afros in America and its Caribbean territories dutifully share these photos thus aiding the narrative’s virality. What is puzzling is how Afro people in America and its Caribbean territories have not given any mention or included in their analyses similar actions taken by their own country with plenty of those actions based on contrivances just as grievous or more so than those conjured up by Mr Putin. Here are a few:

  1. The American invasion and occupation of Haiti from 1915 to 1934, under the guise of maintaining law and order so as to prevent European foreign influence in the island-nation.
  2. The American designed and supported Bay of Pigs invasion of Cuba in 1961, under the guise of stemming the influence of the Soviet Union and neutralizing Cuba’s new left-wing dictatorship.
  3. The Kennedy Administration’s implied approval of the assassination of South Vietnamese president Ngo Dinh Diem who had shown himself to be ineffective in garnering the people’s support against the North Vietnamese.
  4. The United States invasion in 1983 of the island-nation of Grenada, pursuant to the assertion that an airport under construction on the island-nation was intended to serve as a staging area for Soviet Union military aircraft. Troops from Jamaica and the Organization of Eastern Caribbean States also participated.

Fast forward to today and the Russian Federation is expressing its concern for possible NATO encroachment on Russia’s borders and that invasion of Ukraine is necessary for mitigating such a threat. Afro people in America and its Caribbean territories have not taken into consideration that they have seen this behavior before on the part of the United States and that such behavior, albeit egregious, is par for the course in world politics.

And it’s not like war on the European continent is that unusual, even today. Blood on the European continent was spilled during the Yugoslav Wars from 1991 to 2001, yet none of the concerns we heard back then come close to the amplification we hear today.

Given our marginal political power status, standing on the sideline and and acting like we are at a Dallas Cowboys cheerleader audition brings no dividends. The only question that should be asked about now is, “How do we benefit from this conflict?” In the short and intermediate run, nada, especially since Ukraine is not a major trading partner of the United States or the Caribbean.

The longer run is a different matter. The removal of certain banks from the Society for Worldwide International Financial Transactions, freezing assets in American and European banks, and the suspension of the Russian stock market should not provide the African Diaspora with any reason to do back flips and shake their pom poms. Quite the opposite. It should make you scared. The world is not western Europe. The populations of China, India, and the continent of Africa alone account for over three billion people. Technology is not limited to the United States. These areas can, with a lot of feasible work, create their own regional, integrated political and economic systems and trade among themselves. If that were to happen, then Afros in America, who already, as a collective. are on the bottom rung will suffer as their US dollar loses more value and poor working families are faced with the increasingly daunting task of keeping food on the table.

Rather than sending “prayers up” for (and to) a bunch of people who, when the dust settles, will be doing better than you, it is time for Afro peoples in America and her Caribbean territories to ask themselves, “How do we prepare?”

Alton Drew

04.03.2022

Would Virgin Islanders prefer to be an American outpost?

Growing up in the U.S. Virgin Islands I noticed the rift between those who considered themselves ancestral Virgin Islanders and those of us who were either born in or children of people born in the Eastern Caribbean.  This rift, in my opinion, was fueled by the native Virgin Islander belief that being citizens of the United States gave them a certain privilege or right to be condescending to anyone else from the Caribbean.  It was never surprising to hear a “local” refer to down-islanders as “garrot” or “islo” in reference to the fact that the person being persecuted came from further south and east in the Lesser Antilles.

It is no wonder so many of our families started separate civic organizations like the Nevis Benevolent Society or formed churches such as the Bethel Baptist Missionary Baptist Church whose membership was comprised mostly of individuals who hailed from the British Virgin Islands, St. Kitts, Nevis, Anguilla, and Antigua.

On the other hand, arguably this behavior from native-born Virgin Islanders, albeit condescending and disrespectful of those whose lineage did not historically run through the Virgin Islands from birth, may be part of a native attempt to maintain a Virgin Islands identity unique from other Caribbean nations and territories. 

Virgin Islanders have likely struggled with identity dualism since the territory was formally transferred to the United States from Denmark in March 1917.  The identity struggle likely intensified as the U.S. Virgin Islands found itself surrounded by a Caribbean tossing off governance from European powers and going their own way.  Jamaica gained its independence from the United Kingdom in 1962.  Barbados and Guyana also broke from the United Kingdom in 1966.  St. Vincent and the Grenadines went their own way in 1979, while Antigua and Barbuda and St. Christopher (St. Kitts) and Nevis gained independence in 1981 and 1983, respectively.

The schizophrenia of being a Virgin Islander and an American tends to be received with more indifference and a smirk from Caribbean nations versus respect as a Caribbean neighbor.   

This schizophrenia apparently seeped into the constitutional politics of the Virgin Islands.  In its fifth attempt in 2010 to draft a constitution for the US Virgin Islands, the constitutional drafting committee ran afoul of the US Department of Justice by recommending tax exemptions for ancestral native Virgin Islanders and native Virgin Islanders.  A native Virgin Islander is defined as someone born in the Virgin Islands on or after 28 June 1932.  An ancestral native Virgin Islander is defined as someone born in the Virgin Islands prior to and including 28 June 1932 as well as descendants of such individuals whether residing in the territory or not.

Under the proposed constitution, ancestral native Virgin Islanders and their descendants would receive a tax exemption on ownership real property.  This exemption would not flow to native Virgin islanders or any non-Virgin Islander domiciled in the territory.  A law distinguishing who would receive and not receive a tax benefit based on place and timing of birth, in the opinion of the Justice Department, would create multiple tiers of citizens. These designations, apparently not tied to a legitimate governmental interest, would run afoul of the Equal Protection Clause of the U.S. Constitution.

The Department of Justice was also concerned with the drafting committee’s apparent attempt to usurp United States sovereignty over the coastal waters of the Virgin Islands.  In its constitutional proposal, the committee provided language that the Virgin Islands would exercise sovereignty over its inter-island waters and over waters extending twelve nautical miles from each island’s coast up to the borders with international waters.  The lack of mention of US sovereignty over this twelve-mile area, in the Justice Department’s opinion, raised the concern that such a measure, if enacted, would violate federal law.  

At the end of the day, the initiative to draft a constitution adds weight to what University of the Virgin Islands professor Paul Leary identified in a 2020 opinion piece discussing the feasibility of an independent U.S. Virgin Islands.  The Virgin Islands is experiencing “the absence of a clear national identity.”  His observation is a reminder that a national identity is the platform upon which a country must be built.  The Virgin Islands are way too small to play “nation-state” politics.  The size of the territory would only lead to more intense conflict among groups of native and non-native Virgin Islanders trying to divide up a near non-existent pie.

The cohesiveness necessary for nationhood in the U.S. Virgin Islands may be two to three generations away, but given the economic circumstances of the territory, where young people constantly move to the mainland for work and business opportunity, the development of a cohesive nation may experience unacceptable delay.  In the meantime, the Virgin Islands of the United States may have to optimize its status as an American outpost in the Caribbean; subject to scorn from its independent neighbors, relying on the United States for its identity, and pushing away its Caribbean brethren.      

Government strategy: Strong dollar versus weak dollar policy …

Earlier today, Christine Lagarde, president of the European Central Bank, gave a shout out to Janet Yellen, the U.S. Treasury-elect. President Lagarde wished Ms Yellen well on her confirmation which is expected to go favorably sometime this week. Both women have commented on the state of the foreign exchange markets this week with Dr Yellen expressing her preference for market determined foreign exchange rates and President Lagarde telling reporters during today’s European Central Bank policy rate announcement that the ECB would be monitoring foreign exchange rates “very closely.”

In its early days, the Trump administration expressed a preference for a “strong” dollar. A strong dollar scenario is one where the U.S. dollar has risen to a historically high exchange rate relative to another currency. Strength could be attributable to another nation devaluing its currency relative to the dollar in an effort to make the foreign country’s exports more competitive.

Deleveraging is another method of dollar strengthening where debts are paid off which reduces the amount of dollars in the system thus increasing the value of the dollar.

Although a strong dollar protects foreign investor holdings of U.S. assets , the higher prices for imports faced by Americans could create a political scene where consumers start asking their government to reverse the course. The prior administration’s use of tariffs in its trade spat with China raised such concerns.

While Ms Yellen has again expressed her preference for market-determined rates, her future Treasury Department could buy and sell foreign currency for the purpose of narrowing exchange rate movements should a market-determination scheme not meet the Biden administration’s policy objectives. If the dollar is viewed as depreciating too quickly, Treasury could boost demand and value by using foreign currency to buy the greenback. If the dollar is viewed as appreciating too quickly, the Treasury could resort to using the dollar to buy foreign currency. If Dr. Yellen stays the course on a market policy, then the tactic will be to allow the foreign exchange rate to move to equilibrium.

Across the Atlantic, President Lagarde will likely not just look at exchange rates but try to determine the impact rates is having on yields. The European Union has been signaling its desire to boost the status of its currency, hoping to attract more investment to the Eurozone. President Lagarde would likely want to see appreciation in the euro and an accompanying increase in yields.

Traders and brokers should pay close attention to policy moves designed to make the euro and the dollar more attractive to investors and also how the European Union positions itself between the United States and China. Depending on how competitive the United States and the European Union become, shout outs between Dr yellen and President Lagarde will become more interesting.

Government strategy: Strong dollar versus weak dollar policy …

Earlier today, Christine Lagarde, president of the European Central Bank, gave a shout out to Janet Yellen, the U.S. Treasury-elect. President Lagarde wished Ms Yellen well on her confirmation which is expected to go favorably sometime this week. Both women have commented on the state of the foreign exchange markets this week with Dr Yellen expressing her preference for market determined foreign exchange rates and President Lagarde telling reporters during today’s European Central Bank policy rate announcement that the ECB would be monitoring foreign exchange rates “very closely.”

In its early days, the Trump administration expressed a preference for a “strong” dollar. A strong dollar scenario is one where the U.S. dollar has risen to a historically high exchange rate relative to another currency. Strength could be attributable to another nation devaluing its currency relative to the dollar in an effort to make the foreign country’s exports more competitive.

Deleveraging is another method of dollar strengthening where debts are paid off which reduces the amount of dollars in the system thus increasing the value of the dollar.

Although a strong dollar protects foreign investor holdings of U.S. assets , the higher prices for imports faced by Americans could create a political scene where consumers start asking their government to reverse the course. The prior administration’s use of tariffs in its trade spat with China raised such concerns.

While Ms Yellen has again expressed her preference for market-determined rates, her future Treasury Department could buy and sell foreign currency for the purpose of narrowing exchange rate movements should a market-determination scheme not meet the Biden administration’s policy objectives. If the dollar is viewed as depreciating too quickly, Treasury could boost demand and value by using foreign currency to buy the greenback. If the dollar is viewed as appreciating too quickly, the Treasury could resort to using the dollar to buy foreign currency. If Dr. Yellen stays the course on a market policy, then the tactic will be to allow the foreign exchange rate to move to equilibrium.

Across the Atlantic, President Lagarde will likely not just look at exchange rates but try to determine the impact rates is having on yields. The European Union has been signaling its desire to boost the status of its currency, hoping to attract more investment to the Eurozone. President Lagarde would likely want to see appreciation in the euro and an accompanying increase in yields.

Traders and brokers should pay close attention to policy moves designed to make the euro and the dollar more attractive to investors and also how the European Union positions itself between the United States and China. Depending on how competitive the United States and the European Union become, shout outs between Dr yellen and President Lagarde will become more interesting.

As of 11:43 am AST, foreign exchange rates between U.S., the Eurozone, certain African, Caribbean, Asian nations …

CAD/USD=0.7852USD/CAD=1.27263
MXN/USD=0.0505USD/MXN=19.7830
JMD/USD=0.00689USD/JMD=142.187
GYD/USD=0.0047USD/GYD=204.984
BBD/USD=0.5000USD/BBD=2.0000
TTD/USD=0.1448USD/TTD=6.6571
XCD/USD=0.37037USD/XCD=2.70
GBP/USD=1.3581USD/GBP=0.73549
EUR/USD=1.2075USD/EUR=0.8275
NGN/USD=0.0026USD/NGN=380.7000
GHS/USD=0.1701USD/GHS=5.8468
ZAR/USD=0.0656USD/ZAR=15.2200
KES/USD=0.0090USD/KES=109.135
BTC/USD=36,208.0000USD/BTC=0.0000
ETH/USD=955.0000USD/ETH=0.0009
JPY/USD=0.0100USD/JPY=103.8600
CNH/USD=0.1541USD/CNH=6.4831
AUD/USD=0.7701USD/AUD=1.2980
Source: OANDA

What does the narrative of fair trade with China mean?

This morning I watched the Fox Business Network‘s Mornings with Maria.  They have been featuring news clips of an interview that U.S. Secretary of State Mike Pompeo had with host Maria Bartiromo where he criticizes China’s trade policy toward the United States and warns Americans of the Chinese intent to steal American intellectual property and Americans’ personal information.  The United States has been making it clear for years that it is unhappy with what it describes as an imbalance in trade between the two nations.

China has a potentially large consumer market, its emergence stymied in part to its current status as a creditor nation where it finances other nations, including the United States versus living off of the dead aid provided by western nations as part of their policy of noblesse oblige toward emerging, lesser developed countries.  In addition, given its growing economic power, it is easily in a position to influence economic affairs in southeast Asia.  As a provider of inexpensive telecommunications equipment it has been able to enter Europe’s telecommunications market providing competition for American made telecommunications products.

But at the heart of the American narrative may be the fear that the Anglo-American world view or philosophy is being challenged by an alternative Chinese view that, if not held under control, will replace the Anglo view thus making the current American narrative on political economy i.e. the greatness of the republican form of government combined with a free market, less attractive for leadership in other nations to use the American model for governing their domestic and foreign trade affairs.

Pompeo and other American leaders have been using the media to signal to Americans that China’s actions are a threat to the American economy thus a threat to the American way of life.  I can see the broad strokes.  For example, if China continues to lock the US out of additional trading opportunities in China and can price the US out of European and other Asian technology and manufacturing markets, America’s wealth and trade influence would shrink and the US would be forced to become more self-reliant.  America, facing a challenged supply chain, would see shortages and increasing prices for goods and services thus the threat to the American way of life.

Pompeo also describes China’s activity as a threat to American democracy.  That threat I don’t buy into and I see it more as a jingoistic ploy than anything else.  Democracy refers to a citizen’s ability to participate in the process whereby political leaders are selected.  Pompeo has yet to state his case in a cogent manner.  He has insinuated that China has deployed an influence campaign targeting voters and elected officials alike but has provided no specifics.

In addition, the terms fairness and balance are continuously uttered, likely part of the jingoism campaign, as Americans tend to conflate fairness and balance with democracy.  A fair and balanced trade relationship between two countries has nothing to do with how the leaders in each respective country are chosen.  Americans should be asking themselves and their leaders why connecting these points creates such a sound political narrative that US electorate would have no other choice but to support any legal initiatives or actions that promote escalated tensions.

And the legal actions and initiatives are being turned up.  The Justice Department recently told PBS News that 60% of its trade cases are against China and that its actions against China are more in line with stopping illegal activity versus expressing an intellectual bias.

I see law as the codification of an originating philosophy transmitted via a narrative and  refined by politics and policy.  What is missing here is the jurisprudence.  For the citizen to properly understand the government’s legal actions against China trade policy, the focus has to come off of messages that conflate democracy, fairness, and balance, and look for the philosophy that is being promoted.  Conflation promoted by government officials should open up the citizens’ minds to questions about the mismatch between the politics, the policy, and the messaging.

Getting to the why is critical.