Bernanke rejects devaluation worries

US Federal Reserve chairman Ben Bernanke has rejected worries the world's troubled large economies are competitively cutting their currency values and hurting smaller, healthier ones in the process.

Bernanke told an audience at the London School of Economics that, although the exchange rates of some major economies have fallen, the policies are aimed at boosting growth and "confer net benefits on the world economy as a whole".

Moreover, he said, because the main economies are all pumping up their money supplies - effectively pushing down the value of their currencies - the net change between their currencies is not very significant.

Do the strongly stimulative economic policies of countries like the United States, Britain, Japan and elsewhere "constitute competitive devaluations?", Bernanke asked rhetorically.

"To the contrary, because monetary policy is accommodative in the great majority of advanced industrial economies, one would not expect large and persistent changes in the configuration of exchange rates among these countries."

Bernanke's Fed has been the target of charges that ultra-low US interest rates and large "quantitative easing" programs which pump cheap money into the financial system are aimed at driving the dollar down in order to boost exports.

Japan, also with rates at the zero level and a huge stimulus program, has been blamed too.

The criticisms come mainly from countries with stronger economies which say they are both being swamped by inflows of money seeking higher returns and are finding it more difficult to export because their currencies are more expensive.

"I agree these challenges are significant" in emerging economies, Bernanke said, according to his prepared remarks.

However, he said, the trade-weighted real exchange rates of such countries are largely not different now than they were before the financial crisis erupted in 2008.

Moreover, even if they did lose advantage, the emerging economies would also reap benefits by the return to health of the large economies on the back of low interest rates.

The Fed's economic models, he said "suggest that the effects are roughly offsetting".

"A return to solid growth among the advanced economies is ultimately in the interest of advanced and emerging market economies alike."

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Brickworks rejects restructure calls

BRICKWORKS has shut the door on those keen to end the company's decades old cross-shareholding with Washington H Soul Pattinson, vowing not to waste any more time on proposals with little substance.

Brickworks directors said in a letter to shareholders that the board would not waste resources on unsolicited short-term restructuring proposals.

The building products company had rejected calls from major shareholder Perpetual Investments and venture capitalist Mark Carnegie to break up the cross-shareholding.

Brickworks chairman Robert Millner said a restructure was not in the best interests of shareholders and the cost of the reviews during the past two years had placed a heavy burden on the company.

"In a lot of these proposals, people haven't done their homework and they don't stack up," he said.

"We have got limited resources so we had a lot of people spending time on this when they should have been running the businesses."

In a cross-shareholding arrangement in place since 1969, Brickworks holds 42.7 per cent of WHSP, while WHSP owned 45.5 per cent of Brickworks.

Both companies are chaired by Mr Millner.

Mr Millner said investors who buy shares in either Brickworks or WHSP know there is a cross-shareholding in place.

"Nothing has changed since 1969," Mr Millner said.

Brickworks said its annual shareholder return had outperformed the broader market over the past five, 10 and 15 years.

The letter said Brickworks would continue to consider alternatives for its business during the company's annual strategic planning sessions.

Perpetual did not respond to requests for comment.

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