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...In a succinct and well argued Financial Times comment, Richard Duncan weighs in on the savings glut versus overspending (aka money glut) theories of global imbalances, and concludes it’s the spending, stupid. By way of background, let’s review the two competing notions of the causes of global imbalances, which is shorthand for “nice central banks […]
Read more...Another day, another sovereign investment fund check to an investment bank. How the mighty are fallen. The story in the Telegraph makes clear the proposed Qatar Investment Authority acquisition of 5% of Credit Suisse, worth roughly $3 billiion, is not a done deal but seems likely to go through. And the article goes to some […]
Read more...Since the market meltdown ’round the world is pre-empting a lot of other programming, I thought we’d turn to other important topics. A study looking over 40 years led by UC Berkeley researchers concluded that first world environmental degradation of third-world countries cost them more, in aggregate, than their foreign debt. Indeed, the researchers argue […]
Read more...Brad Setser and Tony Jackson both comment today on the seemingly inexorable rise of foreigner investors in the US, particularly to shore up foundering financial institutions. Setser’s piece is much broader and also synthesizes and comments on recent hand-wringing in the media, so it gets pride of place. However, Jackson’s observation about the maybe-not-so-hot prospects […]
Read more...Peter Dorman at Econospeak provides an awesome little post, “Nonsense on Imported Stilts,” that eviscerates some conventional and widely used assumptions in trade economics: Econ bloggers have really missed the point about Landsburg’s free trade screed. The estimable Dani notwithstanding, the issue isn’t ultimately ethics or even procedural fairness. The problem is that doctrinaire economists […]
Read more...Never ones to miss an opportunity to lose money, the top Japanese banks, finally having recovered from lending against wildly overvalued collateral, and then suffering nearly two decades of working out zombie loans (or more accurately, being insolvent but being allowed to operate anyhow, since reviving the crappy banking sector one has is easier than […]
Read more...The Wall Street Journal reports that Prince Al-Waleed, who salvaged Citi in the early 1990s (its stock was at $9 on its way to zero) is expected to pump equity into the bank again. Note there are some disparities between the Journal’s story and the one in the Financial Times. For example, the Journal says […]
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...William Cohan, the author of the popular and award-winning book The Last Tycoons: The Secret History of Lazard Frères & Co gives a badly flawed account the past in his comment, “Mixed portents for Wall Street’s rescuers,” in today’s Financial Times, and therefore makes a misleading comparison. Cohen goes through the recent foreign investments in […]
Read more...John Plender of the Financial Times warns us that the movement of assets from shaky players to the solvent has only just begun. Those who complain of crown jewels begin sold to foreigners had better get used to more of the same. Plender points out that investors are taking real risks, not merely that their […]
Read more...As the US government has sponsored various plans to forestall the recognition of real estate related losses, ranging from the failed SIV bailout program to New Hope Alliance subprime rate freeze program to proposals to raise Freddie Mac and Fannie Mae’s mortgage ceilings, it has begged comparison to Japan in the post-bubble years. Even though […]
Read more...The Financial Tines and the Wall Street Journal feature two treatments of the same theme, investors looking to pick up bargains in companies damaged by the subprime implosion. The Financial Times discusses the interest of the Kuwait Investment Authority in acquiring stakes in financial services firms; the Journal article is aimed at retail investors that […]
Read more...Many commentators see the euro as the logical successor to the dollar as the reserve currency. Yet the Financial Times’ Lex column points out that most currency unions fail. However, the dollar is the product of of that very type of arrangement. Nevertheless, the piece serves as an important reminder against blindly assuming current trends […]
Read more...Harvard economics professor Edward Glaeser reviewed a new book, “Bad Samaritans” by Ha-Joon Chang in the New York Sun (hat tip Mark Thoma). Glaesar focuses on his objections to the book, but nevertheless concedes, Readers who believe in free trade will not find much in Mr. Chang that challenges that belief, but the book is […]
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