Brad Setser has been concerned of late about the implications of China’s (and other central banks) exchange losses on their large and ever-growing holdings of US Treasuries which they buy to fund our current account deficit. Setser, a keen watcher of official data, has also noted that private foreign demand for US securities has virtually […]
Read more...I am having a Dean Baker moment, although I suspect Baker will have even more fun with the front page New York Times article bearing the headline above. This is how the story starts: China’s latest export is inflation. After falling for years, prices of Chinese goods sold in the United States have risen for […]
Read more...Brad Setser has an excellent post, “The PBoC’s dilemmas,” which he later admits is really China’s dilemmas. He focuses on two issues. First is that due to the loosening of the yuan peg against the dollar, the central bank is losing $4 billion a month, mainly on its Treasury holdings (note this is due to […]
Read more...I must confess to a prejudice. Ever since China became more open to commerce with the rest of the world, I have not understood the enthusiasm for investing in China, that is, the foreign direct investing, assets-on-the-ground type. Having worked with the Japanese, and knowing how hostile they are to any meaningful foreign role in […]
Read more...Forgive us, we are going to be a bit terse tonight. Turns out we got a wee case of food poisoning (likely culprit: shellfish). On the mend, but also behind schedule on various fronts. Bloomberg reports that China’s trade deficit has hit an all time high of $262.7 billion. So much for the idea that […]
Read more...There are three good and overlapping state of global finance pieces tonight; they all have worthy ideas and I’ll integrate them as best I can. The first is a post by Thomas Palley, “The Subprime – Trade Deficit Connection,” which is a companion piece to th Financial Times article by Stephen Roach yesterday. Roach depicted […]
Read more...I wish I had written this piece by Stephen Roach, formerly one of Morgan Stanley’s economists (and noted bear), now head of Morgan Stanley Asia. Roach does an elegant job of drawing connections between some issues that other commentators have treated separately. Roach sees the oft-decried global imbalances (shorthand for countries like China, Japan and […]
Read more...Yet another cash infusion for an investment bank suffering losses by the Chinese (the first was Bear Stearns). China state-controlled China Investment Corp, is buying securities that offer a current yield of 9% and convert into as much as 9.9% of the firm. However, the investment fund will receive no board seat or management role. […]
Read more...The Economist put “The Panic About the Dollar” on its cover, which led to a speedy and lengthy analysis by Brad Setser who along with Menzie Chin are probably the most active and best informed bloggers on the currency beat. Although the Economist isn’t what it used to be, the two pieces (the leader and […]
Read more...China is suffering from rising inflation, as well as a runaway stock market bubble, both side effects of its rapidly growing foreign exchange reserves. But rather than raise interest rates, which would rein in price growth but also increase the price of the yuan, the Chinese are instead engaging in extreme measures to combat domestic […]
Read more...America is getting more support in its efforts to pressure China to let the yuan appreciate. Bloomberg reports than the Bank of England’s governor Mervyn King is lining up with Jean-Claude Trichet and Hank Paulson: Bank of England Governor Mervyn King is joining Jean-Claude Trichet and Henry Paulson to demand that China allow the yuan […]
Read more...The Chinese have demonstrated, convincingly, that their military technology is superior to America’s, via having a cloaked sub slip, undetected, within striking distance of a US aircraft carrier during war games. This has to rate as one of the most important news stories of the year, yet it has been reported (in English, anyhow) only […]
Read more...A good article from the Associated Press, “World’s Coal Dependency Hits Environment,” doesn’t appear, at least according to Google News, to have been picked up elsewhere, which is a shame. While the title refers to “world’s,” the story is largely about China. We’ve discussed the environmental damage done by coal-fired electrical plants, yet China and […]
Read more...At Vox EU, Shang-Jin Wei argues in “Don’t over-sell the benefits of a change in the Chinese exchange rate policy,” that the upside of an end to the dirty float of the yuan (or as he prefers, the renminbi), has been overstated. His analysis is elegant and persuasive, and the piece is colorfully written as […]
Read more...Whoever wrote the headline to former Treasury Secretary, now Harvard professor Larry Summers’ latest comment in the Financial Times did him a disservice. The lead-in, “How American must handle the falling dollar,” implies that Summers has a specific, hard-headed program. Instead, the piece offers a succinct and subtle analysis of what is wrong with our […]
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