http://kotaku.com/…

In addition to its ongoing crackdown on Internet porn, the Chinese government has declared that virtual currency cannot be traded for real goods or services.

Virtual currency, as defined by Chinese authorities, includes “prepaid cards of cyber-games,” according to a joint release issued by China’s Ministry of Culture and Ministry of Commerce on Friday.

“The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services,” the Ministries said.

The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146 million.

The ruling is likely to affect many of the more than 300 million Internet users in China, as well as those in other countries involved in virtual currency trading. In the context of online role playing games like World of Warcraft, virtual currency trading is often called gold farming.

The most popular form of virtual currency in China is called “QQ coins,” a form of virtual credit issued by Tencent.com.

Tencent.com, which has about 220 million registered users — about as many as Facebook — is quoted in the Chinese government news release as “resolutely” supporting the new rule. The government justifies its ban on virtual currency trading as a way to curtail gambling and other illegal online activities.

The Chinese government, however, appears to be uninterested in regulating sales of in-game items for real cash. A report in the English-language China Daily says that in-game gear is not considered virtual currency, so selling virtual items can be expected to continue.

The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester.

He estimates that between 80% and 85% of gold farmers are based in China.

“[M]any online games have a virtual economy and an in-game currency,” he states in his survey. “Gold farmers can play in-game to make some currency. They then sell that for real money — typically via a Web site and using the PayPal payment system — to other players of the game.”

Game companies typically forbid gold farming but committed virtual currency traders find ways around such rules. Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure.

Lots of people are against gold farming and the trading of virtual for real goods yet these nearly half a million Chinese gold farmers and virtual traders are doing it because it pays better then any local, real job. If you want to improve the conditions of those individuals… allow open and free trade, enforce private property rights and contracts.

As real, legal tender, fiat currencies fall governments attack voluntarily used virtual ones.

http://www.reuters.com/…

U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.

A major goal of Geithner’s maiden visit to China as Treasury chief is to allay concerns that Washington’s bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.

China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China’s total U.S. dollar-denominated investments could be twice as high.

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

Next time may I recommend a rotten tomato or two? Just for theatrics. Don’t hit the man. He’s sad enough.

http://www.cnn.com/

Scuffles were reported outside the Bank of England Wednesday, as thousands of protesters, including anti-capitalists, anarchists, and environmental campaigners, gathered in the heart of London’s financial district a day before the G-20 summit. Eleven people were arrested for being in possession of police uniforms, a police spokesman said. They had earlier been stopped while riding in an armored personnel carrier near Bishopsgate, near the Bank of England, and the vehicle will now be examined by police, the spokesman said. Protesters occasionally lunged forward against the police line, and one masked protester hit out at polices with a long black pole. One police officer was whisked to the side after apparently being hit. Police held their line and occasionally pushed protesters back with their hands. Organizers of the protest insisted their intentions are “theatrical,” promising “mirth, merriment and the love in our hearts” and urging participants to “bring food to share, water, tea making facilities, something to sit on, a pop up tent if you plan to stay late.” But activists also published a map Tuesday with the details of scores of banks, financial companies, law firms and trading exchanges with offices in the City, prompting fears that symbols of capitalism could be targeted. “It is believed that the majority of the protesters intend to conduct a peaceful demonstration,” the police said in a statement. “Businesses should however, remain vigilant at all times and ensure that buildings are secure. Banks and financial premises are the targets of the protest although this could extend to all premises in the city.”

I’m not seeing any stories yet but I see on the office TV on CNN that there are individuals throwing items through windows of banks or local businesses. Looks like we have vandarchists, not anarchists. At least not American, libertarian anarchists but European, leftist, anti-establishment ‘anarchists.’ Which I prefer to describe, as above, vandarchists. They give us real free market anarchists a bad name. I’d also like to correct the article. The banks, financial companies, law firms and trading exchanges which are in London are not symbols of capitalism. They are symbols of fascism, corporatism, neo-merchantillism, or at minimum state-capitalism which really dissolves into those former names. It is just as wrong to call the UK or the USA capitalist as it is wrong to call the old Soviet Russia, Cuba, or China ‘communist.’

Update:

Looks like there were a few free marketeers out and about.

http://www.startribune.com/…

China’s premier didn’t say it in so many words, but the implied warning to Washington was blunt: Don’t devalue the dollar through reckless spending. Premier Wen Jiabao’s message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington’s biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

“Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference Friday after the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”

The appeal suggested the outlines of Chinese President Hu Jintao’s stance when he meets with President Barack Obama at an April 2 summit in London of the Group of 20 major economies on possible remedies for the global crisis.

Wen gave no indication whether Beijing wants changes in U.S. policy. But economists said his comments reflect fears that higher U.S. budget deficits from Washington’s $787 billion stimulus package could drive down the dollar and the value of China’s Treasury notes.

Makes you wonder if that whole “FEDS GRANT EMINENT DOMAIN AS COLLATERAL TO CHINA FOR U.S. DEBTS” stories are true to some degree.

http://globaleconomicanalysis.blogspot.com/…

Dear Mr. President, I read your New Era $3.6 Trillion Budget Proposal. I also listened to your speech Tuesday night. You made a great campaign speech. However, the campaign is over. You won. And the reason you won is you offered hope as well as a promise of change.

With all due respect Mr. President, Tim Geithner and Ben Bernanke are offering the same policies as President Bush and Secretary Paulson. Those policies are to bail out banks regardless of cost to taxpayers. Mr. President, it’s hard enough to overlook Geithner’s tax indiscretions. Mr. President, it is harder still. if not impossible, to ignore the fact that neither Geithner nor Bernanke saw this coming. Yet amazingly they are both cock sure of the solution. Even more amazing is the fact that solution changes every day.

Read More…

Just on CNN, Virgil Bernero, mayor of Lansing, Michigan, said that “China sold 10 million cars last your and you can guarantee the government was involved. In Korea the government is intimately involved in their auto industry. If we are going to be competitive and bring manufacturing back to this country we need the government to get involved.”

It’s days like this that the survivalist, rugged individualist lifestyle looks really appealing. Or at least turning out all sources of news.