National / International News

China's inflation rate hits a 10-month high in February, as Lunar New Year festivities drive up food prices.

A currency war sounds weirdly abstract, like a game played by rival politicians -- but it can have devastating effects in the real world. And it’s not all that different from a rivalry of different kind -- a hypothetical sibling rivalry.

Imagine a pair of brothers. They together own a honey-making business in Minnesota, just a few miles from the Canadian border. One day, the brothers have a fight, and decide they can’t work together anymore -- so they divide the company in two. The younger brother decides to take his half of the bees and move across the river to Canada.

Both businesses make the same honey, sold in an 8 oz. jar; priced the same, $1 per jar. When the fight happened and the brothers moved apart, the Canadian and U.S. dollars were at parity, so a jar of honey -- regardless of where it was made -- was worth both one U.S. dollar and one Canadian dollar. The younger brother sold his honey to his fellow Canadians, the older brother had the American market.

All goes well, until... CURRENCY WAR! The brothers wake up, and find that one Canadian dollar is now worth just 50 U.S. cents! Or, to put it another way, one U.S. dollar is worth two Canadian dollars.

Joe is an American who loves honey. He has one dollar. Usually he would just buy a jar of honey from the American honey company -- it’s closer, the honey tastes the same, why not buy American? But his single U.S. dollar will now buy him two Canadian dollars, with which he can buy two jars of Canadian honey.

The currency wars allow him to get two jars of honey for the price of one. This is great news for Joe, and all those Americans like him -- they all start buying up Canadian honey. It’s great news for foreigners, who also like a good deal. And it’s great news for the Canadian honey company, of course -- the cheap Canadian currency has allowed it to boost its share of the market.

But this is really bad news for the elder brother and his American honey company. He can’t afford to compete, not without watering his honey down or using imported bees or something else. Unless the government does something to weaken the U.S. dollar, he’s going to go out of business, which means he’ll have to lay off honey workers and sell off those bees.

And this will be happening all over the country, eroding America’s manufacturing base, accelerating unemployment and leaving all of us badly needing a drink.

The US and South Korea begin annual military exercises amid high tensions with North Korea in the wake of a UN sanctions vote.

Are we about to enter a world without antibiotics?

The lost photos of Garry Winogrand

Two years after the meltdown at the Fukushima nuclear plant in Japan, the BBC's Rupert Wingfield-Hayes visits the contamination zone to see the clean-up operation under way.

A project set up to monitor anti-Muslim hate in the UK says it has recorded 632 incidents in its first year of operation.

Venezuelan opposition leader Henrique Capriles confirms he will stand in April's presidential elections, called after the death of Hugo Chavez.

Wolfing down Singapore's most colourful and glutinous cake

Cloud computing pioneer Piers Linney is announced as the latest member of the Dragons' Den, replacing Theo Paphitis on the BBC Two business show.

India's 55-day-long festival closes

Despite disappointment at the polls, attendance isn't expected to dip much at the annual Conservative Political Action Conference near the nation's capital. But there has been an uproar over who's invited to CPAC this year — and who's not.

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Despite disappointment at the polls, attendance isn't expected to dip much at the annual Conservative Political Action Conference near the nation's capital. But there has been an uproar over who's invited to CPAC this year — and who's not.

» E-Mail This     » Add to Del.icio.us

A survey of nearly 700 popular meals served in celebrity chef and High Street restaurants has found that half were high in salt.

UK researchers develop a test to detect Alzheimer's disease in its earliest stages - by looking for certain patterns in blood samples.

'Reclusive' Abba star relaunches herself on the music scene

Pope Benedict XVI's successor should have the skills of a chief executive officer, argues Reverend Robert Gahl.

Stephen Evans takes tea with a German MP who says Britain's stance on Europe is to be admired.

Jonathan Kathrein was almost killed by a great white shark who bit his leg. Now, the California surfer is campaigning to save the at-risk fish.

Child neglect should be taken as seriously as physical abuse because it leads to long-term damage or even to death, a charity is warning.