Category Archives: Globalization

Is Inflation About to Burst the Chinese Bubble?

We’ve commented before on the near-impossibilty of teasing decent inflation estimates out of China. Despite that, we were early to comment that inflation was getting out of control. From a joint post with Marshall Auerback in February:

The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years’ growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus.

This combination is the making of a very messy situation.

Satyajit Das: European Death Spiral – Mission Unaccomplished

In early 2010, drawing on the military leadership of President George W. Bush, European leaders declared the economic equivalent of “mission accomplished”. A bailout – whoops support! – package of Euro 750 billion had shocked and awed speculators into submission. Like the Bush pronouncement, the European prognosis provided premature. The return of European sovereign debt problems in late 2010, culminating in the bailout of Ireland highlighted the deep seated and perhaps intractable problems of some over indebted European nations.

Guest Post: Eurocrisis: We knew all we needed to know…

Yves here. The alternative title for this post could be “No ‘whocouldanode’ excuses for the Eurozone crisis.”

By Geoffrey R D Underhill, Professor of International Governance, University of Amsterdam. Cross posted from VoxEU

Many policymakers have reacted to both the financial crisis and the recent Eurozone sovereign debt problems as though they were unexpected. This column argues that we knew more than enough to anticipate both problems, that the evidence was easily accessible, and that the institutional and political weaknesses of the Eurozone were hardly a mystery either.

Is the Ireland Bailout About to Become Bear Redux?

Not being an expert in either the Lisbon Treaty or the rules governing the ECB, I’m restricted in my ability to interpret an article in the Financial Times and the underlying position paper at the ECB on the legality of the Irish bailout. The Irish finance minister asked for a reading on the “draft law”, which is the Credit Institutions (Stabilisation) Bill 2010. There is a certain amount of grumpy harrumphing in the ECB response, namely, that it should have been consulted earlier and its preliminary reading has been made in more haste than it would like.

Regardless, it does not take a lot of expertise to get the drift of this gist:

Dylan Ratigan on Get America Working

Dylan Ratigan is leading town hall events in various cities to help spur the establishment of a job creation movement. The goal is to push for policies that foster higher employment than the ones we’ve seen over the last thirty years, which instead promoted financialization, the use of consumer debt to paper over lack of wage growth, asset inflation and speculation, and increasing income and wealth disparity.

Ratigan wants to create a dialogue among key political groups, including ordinary citizens, investors, small business operators, and corporate leaders. His sessions will focus on four issues, as he outlined in in the Huffington Post:

EU Permanent Bailout Mechanism Leaked to BBC – Bad Outcome for PIIGS Gov’t Bondholders?

The BBC has obtained a leaked copy of the EU draft communique on the so-called permanent bailout mechanism. Attentive readers may recall that current programs extend only to 2013, leaving a big question mark as to what would happen next, given the high odds that the countries perceived to be at risk would not be […]

Wikileaks Disses Chinese GDP Stats

We’ve harrumphed more than occasionally on the dubious quality of Chinese official releases (see discussions on GDP, inflation, and other drive-by-data-shootings for a selection of past grumblings).

So we are delighted to see that Wikileaks is on this beat too. From a March 2007 cable on a discussion between Clark T. Randt and “Fifth Generation Star Li Kequiang”:

Marshall Auerback: What Happens if Germany Exits the Euro?

By Marshall Auerback, a portfolio strategist, hedge fund manager, and Roosevelt Institute Senior Fellow. Like marriage, membership in the euro zone is supposed to be a lifetime commitment, “for better or for worse”. But as we know, divorces do occur, even if the marriage was entered into with the best of intentions. And the recent […]

Guest Post: All together now? Arguments for a big-bang solution to Eurozone problems

By Daniel Gros, Director of the Centre for European Policy Studies, Brussels. Cross posted from VoxEU. Muddling through isn’t working. This column argues that troubled Eurozone nations should simultaneously open restructuring talks while continuing to service their debts normally. Germany, France, and other core Eurozone nations would have to stand ready to recapitalise the banks […]

Barry Eichengreen: Ireland’s rescue package – Disaster for Ireland, bad omen for the Eurozone

By Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley; and formerly Senior Policy Advisor at the International Monetary Fund. Cross posted from VoxEU Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German […]

Pettis on Eurozone Pathways and Endgames

Michael Pettis, like Simon Johnson a few days ago, has tried mapping out what he thinks future scenarios for the eurozone might be, and what that means in terms of possible winners and losers. One of Pettis’ strengths is that he takes the time to be explicit about his reasoning, which gives readers the opportunity […]

Marshall Auerback: Bankers Gone Wild in Ireland AND Germany

By Marshall Auerback, a hedge fund manager and portfolio strategist who writes for New Deal 2.0. Despite a blame-a-thon on Ireleand, Germans banks are really at the core of the eurozone catastrophe. Much ink has been spilled in the press over the Irish problem and the laxity of the country’s southern Mediterranean counterparts in contrast […]

Guest Post: Will the Irish Crisis Spread to Italy?

By Paolo Manasse, Professor of Macroeconomics and International Economic Policy at the University of Bologna and Giulio Trigilia, Master’s student at Collegio Carlo Alberto. Cross posted from VoxEU. Is Italy the next European country to go? This column argues that the jury is still out, although the grace period will not extend beyond three years. […]

Systemic coupling round-up

Time to count up the systemic implications of the Irish crisis, following up on some of today’s links and other news. First, the usual contagion to Portugal and Spain is now in full swing, propelled by another barrage of bumbling Euroannouncements: Weber announced that if necessary, the EU would increase the ceiling of the EFSF […]

China Wants Concessions for Mercantilism in Return for Rare Earths

A story in Reuters signals that China is willing to soften its stance on rare earths. But of course, it has no reason to offer such a concession for free. The article indicates that China wants its trade partners to back off on their pressure on China to curb its abuses of international trade rules. […]