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Antigua's bid to get big sanctions against the U.S. for its online gambling ban has for all intents and purposes failed

Last year saw the U.S. ban online gambling in its many sordid and popular forms.  Casinos and private firms felt the pinch as the feds started 2007 off with a campaign of arrests that threatened to completely destroy the online gambling industry as it exists in the U.S.  Most recently, the US government scored a jackpot settlement of millions of dollars from Google, Yahoo, and Microsoft, who admitted to aiding and abetting online gambling in the past.

Now the U.S.'s gambling-critical government has another victory, as it escaped any serious international sanctions from the World Trade Organization (WTO).  The WTO, which polices trade worldwide, investigated Antigua's accusations that the U.S. was holding domestic online gambling providers to a different and unfair standard from foreign gambling providers since casinos are legally owned and operated in parts of North America. 

The small island nation of Antigua invested heavily in online gambling and was rocked by the U.S.-lead WTO decision last year to curb and eventually ban it.  Antigua sought $3.4B USD in WTO sanctions against the U.S.

In the end, the U.S. got off with nothing more than a slap on the wrist.  The WTO announced a ruling of a paltry $21 million USD in sanctions against the United States.  The U.S.'s Trade Representative stated publicly that Antigua deserved more than $500,000, but also stated, "We're pleased that the figure arrived at is over 100 times lower" than Antigua had sought.

Banning online gambling outright is illegal under the current WTO-enforced international treaty.  In the coming months  the WTO will hear committees to rework the WTO main agreement to allow such bans. 

Sources close to the case speculate Antigua may try to fight back by allowing copyright-lax server farms; a move similar to the recent Chinese ban on U.S. movie imports.


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RE: Why?
By giantpandaman2 on 12/27/2007 6:02:34 PM , Rating: 2
Take a macroeconomics course. Banks and the issuing of debt/savings are currency multipliers. The buying and selling of government bonds is a major way of manipulating currency valuation. The major reason why Japan holds so much of our debt is because they believe they need a high dollar valuation in order for their economy to thrive.

Some might reply that, that doesn't explain why China holds so much of our debt. They're doing it for political reasons more than economic. As the largest holder of American debt they have quite a bit of leverage on our government.


RE: Why?
By robertgu2k on 12/27/2007 6:28:08 PM , Rating: 2
Thanks for the suggestion for the economic classes. I have a degree in economics and I am a very successful trader in stocks, currency, options, and debt. Now that in no right makes me an expert and my logic infallible of course, global economics is not 100% understood and percepts are challengeable.

Now your suggestion that gov’t issued debt increases currency makes no sense to me, the gov’t is not a bank, it does not hold reserves like a national bank or commercial bank would do. So when you claim that the gov’t issuing more debt increases the money supply, I cannot agree with that. The transaction is a net zero on the money supply. Now debt can act like a multiplying factor for economic activity (which can increase GDP) but it does not in itself increase the money supply which is what I’m getting by reading your post.

China’s increasing holdings of US debt assets is for the same reason why Japan has such large holdings. It’s not political at least in US terms; the Chinese National bank has to buy US assets with the dollars it gains from its exports to the US in order to keep the dollar pumped up and the Yuan depressed. That way the Chinese exports enjoy additional competitive cost advantages, and that causes their export engine to keep booming, which employs increasing numbers of the rural population, which helps keep the Chinese people happy and not protesting their gov’t. An additional side effect of China “recycling” dollars back to the US by buying US debt, is that it helps keep US interest rates lower, which allows the US consumer to borrow more to potentially buy more Chinese goods.


RE: Why?
By giantpandaman2 on 12/27/2007 8:40:43 PM , Rating: 2
The Chinese Yuan is NOT a floating currency, so they don't have to buy US bonds to keep the dollar depressed.

But the mechanism that you're misapplying is the exact reason why the national debt is devaluing the greenback.


RE: Why?
By JustTom on 12/28/2007 10:30:10 AM , Rating: 1
The problem with you analysis is the US dollar is measured against other national currencies. And US public debt is not out of line with other major nations public debt. Low interest rates are probably a much bigger contributor to falling dollar prices than debt.

From CIA factbook
Russia 7.7% of GDP (2006 est.)
China 22.1% of GDP (2006 est.)
South Korea 25.2% of GDP (2006 est.)
Spain 39.9% of GDP (2006 est.)
UK 42.7% of GDP (2006 est.)
Brazil 46% of GDP (2006 est.)
France 64.2% of GDP (2006 est.)
United States 64.7% of GDP (2005 est.)
Germany 67.8% of GDP (2006 est.)
Canada 67.7% of GDP (2006 est.)
Italy 106.7% of GDP (2006 est.)
Japan 177.6% of GDP (2006 est.)


RE: Why?
By giantpandaman2 on 12/28/2007 7:41:16 PM , Rating: 2
National debt is but a piece of the currency valuation puzzle. Interest rates are definitely a big part of the pie, along with investment (corporate stocks and bonds), and trade deficit. My point is that the rising national debt does have some very negative effects, and one of them is its effect on the dollar valuation.


RE: Why?
By Ringold on 12/27/2007 9:24:29 PM , Rating: 2
quote:
is that it helps keep US interest rates lower, which allows the US consumer to borrow more to potentially buy more Chinese goods.


Not to mention as well this years buzz about sovereign wealth funds, where they're taking those dollars and dipping right in to the equity markets, buying stocks and shares in companies.

Nevermind the panda guy. I don't have the applied experience you do, except for my own investment account, currently fiddling with a transition-to-teaching program, but have the degree and in the bag and those two posts of yours above were one of the more informative posts I've seen lately. He's got the reactionary "debt is bad" chip on his shoulder; must not be aware other OECD nations have significantly more debt as a % of GDP than we do and yet nobody often talks about them. France and Italy by this guys standards would make the Euro worthless.


RE: Why?
By camped69 on 12/28/2007 2:02:20 PM , Rating: 2
You can talk about the gdp all you want. At the end of the day it doesn't mean squat. Debt in the US has been leveraged out to around 10,000:1. In a fiat system that spells an eventual collapse. Aside from the imminent depression that is looming The dollar is plummeting across the board against other currencies. Yet the World Bank sees fit to okay massive inflation to our economy. 43Billion was injected a few weeks ago and with the inflation our dollar buys less and less. No worries though, the Amero will be there to replace it in short order. This is by design so don't fret, get in line, and take your vaccinne. The collapse of the American dollar will usher in a "new" global fiat system. Barcode anyone? How about a chip? Wake UP!


RE: Why?
By mdogs444 on 12/28/2007 2:11:18 PM , Rating: 2
I think you've been reading or watching way too much Glen Beck. He talks about the "Amero" all the time. Don't get me wrong, I like him, and I am of conservative nature.

But the "Amero" isn't going to happen, nor is the combining of US & Mexican, or US & Canadian currencies. The only way that would happen is if we decide to roll over in our sleep one night, make one of them the 51st state, and take control of their oil. But then again - taking the oil would be a boost to the economy, and cause deflation.

:-)


RE: Why?
By Ringold on 12/28/2007 4:06:09 PM , Rating: 2
quote:
You can talk about the gdp all you want.


Removing the metric of debt as a % of GDP would be like removing the metric of distance from physics.

How fast does something go? Since a "mile" doesn't mean "squat", it must go "really fast" or "really slow".

It's clear you're not familiar with what you're talking about asides from what your fellow tin-foil hat buds have told you, unless you want to make a constructive argument based on accepted data and research from respected institutions -- you know, like how real economists and investors do. :P


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