Playing chicken with currencies

    Why bother with mere trade tensions when you can have an "international currency war"?

    That's what Guido Mantega, Brazil's finance minister, calls the efforts of market-intervening central bankers. Japan, Switzerland and others have been selling their currencies in a bid to make their goods cheaper in foreign markets and prop up their faltering economies.

    As it happens, Brazil has been among those playing the currency intervention game, in a bid to counter the torrents of funds attracted by its high interest rates and strong growth prospects. Though as is often the case, its efforts haven't exactly been what you'd call a success.

    The real has strengthened considerably since early 2009, when a global depression looked like a good bet and the flight-to-safety trade was pushing up the value of the dollar.

    Since then, the Fed has staged its own intervention of sorts, buying huge quantities of U.S. bonds, pushing down the value of the dollar and sending the prices of gold and other commodities higher. Fed comments to the effect that inflation isn't high enough are fueling expectations that the central bank isn't done, which will make it harder for all the other currency sellers to keep up.

    On top of all this, the U.S. and its biggest foreign creditor, China, are now squabbling over trade in things from chickens to credit cards. Legislators, eager to look strong on China ahead of November's midterm elections, are turning up the volume on China's currency manipulation -- not that the Chinese are necessarily quaking in their boots.

    One way or another, it appears, the feathers are going to fly.