Mark Thoma quotes a Washington Post op-ed piece by Daniel Gross that gets worried about the current and prospective level of foreign ownership of US businesses: …In countries that are resource-rich or export powerhouses, governments and government-controlled entities have amassed huge pools of capital. A report issued last month by Morgan Stanley economist Stephen Jen […]
Read more...For those who don’t know about him, Jim Grant of Grant’s Interest Rate Observer has been a long standing and highly regarded advocate of probity, common sense, and historical memory. Of course, that means he is completely out of fashion. But Grant has a loyal following and even those who differ with his skeptical outlook […]
Read more...The Journal’s front page story, “Homeowners Abroad Take Currency Gamble in Loans,” had numerous anecdotes about how Eastern Europeans are active in the carry trade, borrowing in cheaper currencies, gambling that the interest rate savings won’t be offset by currency appreciation. Some have compared the carry trade to picking up nickels in front of a […]
Read more...I’m a bit late to get to this item, a predictably good article by the Financial Times’ Martin Wolf on Nouriel Roubini’s observations about why Asian countries became so willing to finance our deficits (short answer: they decided to keep their currencies cheap after the 1997 emerging markets crisis) and whether this situation is sustainable […]
Read more...Nobel Prize winning economist Joseph Stiglitz can be blunt. In an interview with MarketWatch, he says that our dependence on Chinese capital puts us in a not-so-great bargaining position. He also pointed out in Congressional testimony that the Chinese have no reason to open their financial markets since they don’t need capital. And our focus […]
Read more...One of the funny things about slow motion train wrecks in the financial arena is that even when they are painfully obvious, they can be so long in coming that the Cassandras come to look like idiots, or worse, throw in the towel. Remember the dot com era. Anyone with an iota of common sense […]
Read more...We predicted, given China’s blistering response to America’s imposition of countervailing duties on coated paper manufacturers (a small amount of goods, but a big shot across the bow) and its aggressive posture in the negotiation of the language of the third IPCC report, that Paulson’s efforts to obtain trade concessions and a revaluation of the […]
Read more...That won’t go anywhere as a horror flick title, but the specter of China’s ever growing trade surpluses is focusing the mind of its trading partners. Some hoped that these surpluses would correct themselves naturally over time as the Chinese population started consuming more and its economy became less dependent on exports. That clearly isn’t […]
Read more...Mark Thoma pointed us to an insightful Washington Post op-ed piece, “China’s Trade Time Bomb,” by Robert Samuelson. He makes the point that trade with China isn’t yet having much impact on the US economy, but soon will be, mainly because they don’t play fair (something we’ve commented on before): It sometimes seems as if […]
Read more...Many economists have observed that the current global imbalances, meaning US trade deficits financed by overseas capital flows, cannot continue forever. Indeed, there are already signs that foreign central banks are getting uncomfortable with their level of US dollar holdings and have said they plan to diversify their currency holdings (translation: sell dollars) which would […]
Read more...A Financial Times story tells us that Japan is contemplating creating a special state investment fund that would be an active manager, along the lines of Singapore’s Temasek. If it comes to fruition, this development would be a major shift, since it would be far and away the biggest and most influential fund of that […]
Read more...A provocative article by Jeff Faux at the Economic Policy Institute argues that US trade deficits have become so large and so chronic that we need to put the brakes on further trade liberalization until we get our house in order. And getting our house in order means increasing our domestic savings rate. For those […]
Read more...If you believe in technical analysis, when a commodity or security price falls below a “support level” it will continue in the same direction until it finds a new (lower) support level. Even if you don’t subscribe to this school of thought, it is surprising and likely Not Good that the dollar is falling. One […]
Read more...Brad Setser, who is normally an upbeat counterpoint to permabear Nouriel Roubini at RGE Monitor has an unusually worried post on what the end game might look like for foreign purchases of the US dollar (the central element of the oft-discussed global imbalances). We found this post courtesy Brad DeLong. Setser focuses in on a […]
Read more...We have yet another instance of the Journal putting a happier face on the news than the Financial Times, this time on the slowly escalating US-China trade dispute. By way of background, we reported earlier on the US’s imposition of punitive duties on Chinese, Indonesian, and South Korean coated paper because these countries were determined […]
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