Asia discovers it has been paying for American diesel all along, with interest
Asia Interest Rates Now Officially Controlled by American Truck Fuel
JAKARTA – A 44-year-old accounts clerk named Budi Hartanto learned this week that the monthly payment on his two-bedroom house in Bekasi depends chiefly on the price of diesel at a filling station he will never visit, in a state he cannot locate, bought by a man named Dale. The chain of events is set out in Asia Times analysis of the US diesel crisis and Asia’s interest rates, which reports that diesel in the United States has climbed above 6.50 dollars a gallon, up about 75 percent from a year ago, and that Asia is likely to pay for it through higher borrowing costs.
The mechanism is straightforward, economists say. Expensive diesel keeps American inflation high. High inflation gives the Federal Reserve a reason to keep raising rates. Higher American rates pull money out of Asia, weaken local currencies and force Asian central banks to raise their own rates in self-defence. “So when Dale fills his truck, I pay,” said Budi, reviewing a letter from his bank. “I do not own a truck. I have a scooter. The scooter runs on petrol. I would like to speak to Dale.”
Central Bankers Explain That Nothing Is Up to Them
Regional monetary authorities have moved quickly to reassure the public that they remain fully independent institutions that will do exactly what Washington does about six weeks later. “We set our own policy,” said Rahmat Suryadi, deputy governor for acknowledgements at the Jakarta Institute of Monetary Coincidence. “It is a coincidence that our policy is always the American policy plus a little extra for nerves. We study many indicators. One of them is a live camera feed of a diesel pump in Omaha.”
The Institute’s research department has found that 92 percent of Southeast Asian borrowers cannot name the chair of the Federal Reserve but can accurately describe the feeling of him doing something. In Manila, where the peso has been singled out as vulnerable, currency traders have begun their mornings by checking American freight costs before checking whether it is raining.
Household Measures Recommended by the Authorities
To help families cope, the Institute published a short guide to managing a mortgage that is governed from another hemisphere:
- Do not look at the exchange rate before breakfast
- Consider writing a polite letter to an American truck driver asking him to coast downhill
- Remember that rates always come down eventually, as they did in 2009, for a different reason, also American
- Cook at home
Budi said he had already been cooking at home. “The rice also went up,” he said. “I am told that is diesel as well.”
How the Fuel Ran Short in the First Place
The origins of the squeeze lie further back. A related Asia Times piece recounts how the oil and gas industry expected a surplus but got a shortage: forecasters predicted the world would soon produce more oil than anyone wanted, prices fell too low to justify new wells and refineries, and then the Strait of Hormuz became a problem nobody had pencilled in. The practical result is a planet with a great many forecasts and not quite enough diesel, which is the less useful way round.
Asian governments are weighing their options. Thailand is said to be considering fuel subsidies, which it can fund by borrowing at the higher interest rates caused by the fuel. Vietnam has encouraged citizens to conserve energy, a request citizens received on their phones while sitting in traffic. India has noted that it saw this coming and that nobody listened, which is India’s standing position on most matters and is frequently correct.
The View From the Other End of the Pump
Efforts to reach Dale have so far been unsuccessful, though correspondents report that there are several thousand men of that name driving diesel pickups across the American Midwest and that all of them are also upset. A long-haul driver interviewed outside Kearney said he was paying more than 900 dollars to fill his rig and had not been told that this was raising rents in Bekasi. “I didn’t know I was that influential,” he said. “Tell the fella I’m sorry. I got a mortgage too. Mine goes up when somebody in Tokyo sneezes.” Economists describe this as the fundamental symmetry of the global financial system: every household on earth believes its bills are being decided by a stranger abroad, and every household is correct. The Jakarta Institute has proposed an annual conference at which the strangers can meet and apologise to each other in person.
British Borrowers Send Their Regards
The predicament is being followed with fellow feeling in the United Kingdom, where homeowners have long understood that their mortgages are decided by events in places they have never been, such as the bond market. The London Prat has published extensive satirical news about the UK economy on exactly this theme, and its satirical British news reporting once traced a Croydon remortgage to a gas pipeline, a lettuce and a man in a hurry.
In Bekasi, Budi has taken matters into his own hands. He has drafted a letter addressed simply to “Dale, Nebraska, USA,” asking whether Dale might drive a little less in the second half of the year, and offering in exchange a recipe for nasi goreng. “I think if we talk, person to person, we can fix the global economy,” he said, sealing the envelope. The postage, he noted, had also gone up. Bohiney Magazine will publish Dale’s reply in full.
SOURCE: https://bohiney.com/
