China is not playing nicely in the sandbox. The nitty gritty of trade seldom gets the attention it warrants, but enough mercantilist measures can trigger retaliation, which most observers agree would merely precipitate a race to the bottom. And China, which in many ways has the most to lose from protectionism, has been tempting fate. […]
Read more...The bits of evidence that provided the strongest support to green shoots backers have been the rise in stock prices and possible signs of slowing in job losses. However, the rally warrants considerable critical scrutiny. First. violent rallies are more characteristic of bear market head fakes than new bull markets. And this rally has featured […]
Read more...The Japanese have a wonderful expression that I will take some liberty in translating. They use it to signify when someone is trying to claim great distinctions among low levels of activity or achievement. The phrase is roughly “A height competition among peanuts.” Reader DoctoRx flagged this Bloomberg report as a Pangloss item. What is […]
Read more...So much for the green shoots theory, at least as far as an early Chinese recovery is concerned. From AFP (hat tip reader Michael): Chinese exports fell 22.6 percent in April from a year earlier in the sixth straight monthly decline, state media said Tuesday,… Exports from the world’s third-largest economy totalled 91.94 billion dollars […]
Read more...We’ve mentioned earlier that it was inevitable that China would reduce its purchases of Treasuries, independent of its desire to diversify away from them. With trade falling (although China still has a high surplus) and hot money inflows reversing direction, China has less reason to buy foreign assets. From the New York Times: Reversing its […]
Read more...Willem Buiter takes no prisoners, In his latest post, “The green shoots are weeds growing through the rubble in the ruins of the global economy”, he dispatches the idea that recovery is around the corner (citing Carmen Reinhart and Kenneth’s latest paper on the resolution of financial crises) and points out that the fiscal state […]
Read more...Barry Eichengreen, an expert on the Great Depression, and Kevin O’Rourke, take issue with the notion that the current downturn is less severe than the Great Depression. While the slump in the US is not as bad, that mis-states the global picture. Note that many economists expect the US to suffer less than the big […]
Read more...In a world of floating rates, driving the value of one’s currency down takes a bit of doing, but as China (since 1994) and Japan (circa 2003) have demonstrated, central banks can lower currency prices. And trashing one’s currency is part of the standard program recommended for countries facing deflation. The preferred method these days […]
Read more...Note the dramatic fall in Japanese exports in February was relative to the year-ago level, but that does not make the outcome any less ugly. From Bloomberg: Overseas shipments fell 49.4 percent from a year earlier, the sharpest decline since at least 1980, when the government started to keep comparable data, the Finance Ministry said […]
Read more...No details up yet on my cheapie version of Bloomberg, will update when more is in. Recall, however, that many analysts foresaw a fall in China’s surplus. It had stayed at near record levels despite falling volumes of trade overall because imports fell faster than exports. Well, many imports are used to produce exports. As […]
Read more...Readers may have noticed that Team Obama has put on a pre-G-20 session push to have participants spend more to pull the global economy out of its nosedive. The New York Times gave a short summary: In recent days, the White House has begun signaling that when leaders of the Group of 20 nations meet […]
Read more...While Wolfgang Munchau’s latest comment for the Financial Times, “An L of a recession – reform is the way out,” fell short of being apocalyptic, it was the gloomiest piece I can recall coming from him. Munchau argues that the world is going into what is politely referred to as an L shaped recession, but […]
Read more...Paul Keating, former Austrailian Prime Minister, gave an assessment of Timothy Geithners’ performance in the Asian crisis that is sharply at odds with US reports. According to Keating, Geither completely misread the nature of the crisis, that it was the result of hot money flight, but reverted to the standard IMF “country facing currency crisis” […]
Read more...Reader Nivethan pointed to a Bloomberg story, “China Says 8% Growth Within Reach Using $585 Billion Stimulus.” This may be a tad more significant than it appears (I also looked at Xinhua, but got the singular, and probably completely unfair impression that Wen’s speech to the party Congress was of the “give everyone at least […]
Read more...When trade started falling off in the later half of last year, this blog commented from time to time that the scarcity of trade finance, particularly letters of credit, was playing a meaningful role. That line of thinking was sometimes met with skepticism. Trade related funding has gotten even more scarce and costly, to the […]
Read more...