A number of commentators (see here and here) have taken note Warren Buffett’s favorable remarks in his much-anticipated annual letter to Berkshire Hathaway shareholders on sovereign wealth fund investment in the US. What I found far more significant was his somewhat-longer-form observations about how we had gotten ourselves in the situation where SWF-type capital inflows […]
Read more...Economist Thomas Palley has of late been discussing what he believes to be an insufficiently-acknowledged cause of our current financial woes, namely, a shift in government policy away from emphasizing wage growth as a key objective. Another shift was a lack of concern about trade deficits. Now one can argue that combatting trade deficits means […]
Read more...In “We must curb international flows of capital,” Dani Rodrik and Arvind Subramanian make what many might consider to be a radical argument: too much money sloshing around internationally leads to trouble. It’s not quite a hot money argument (unstable and rapidly moving investments were the proximate cause of the 1997 emerging markets crisis). Instead, […]
Read more...The repeated rounds of Fed rate cuts have led the dollar to fall against most currencies save those maintaining currency pegs. While the yuan has appreciated somewhat, it hasn’t been sufficient to have much impact on Chinese trade surplus with the US (2007 was a record year). And because China and its peers are having […]
Read more...It’s sad to watch America operate in the illusion that it can exercise much influence over the trajectory of its decline. Mind you, that slippage isn’t inevitable if we were willing to course correct and endure an unpleasant period of low to negative growth as we lowered consumption and increased savings. But since that program […]
Read more...Today’s Telegraph has a good piece, “Japan is the next sub-prime flashpoint,” by Ambrose Evans-Pritchard. And before I get to the piece, I want to say a few things about the author. A number of readers detest Evans-Pritchard, and I am at a loss to understand why. He wears his biggest fault on his sleeve, […]
Read more...The Chinese aren’t alone in their dim view of globalization. In fact, a BBC poll (hat tip Dani Rodrik) found that a higher proportion of Chinese are unhappy about the pace of globalization than Americans. One of the nations least pleased with the speed of integration is Australia, another big beneficiary via a commodities boom.
Read more...Willem Buiter continues his quixotic campaign to extirpate lousy economic logic in the US. In a colorfully written post, he ridicules the refusal of any US economist (as far as he can tell) to consider that an American recession is necessary. He points to the obvious fact (commented on repeatedly in this blog) that the […]
Read more...A comment by Kenneth Rogoff in the Financial Times argues that rapidly growing emerging markets exhibit periods of crisis, and China has a long list of possible causes. Yet policymakers, focused on slowing US growth and financial institution stress in the US and Europe, have overlooked the problem that a sudden slowdown in China could […]
Read more...Sunday’s Washington Post has a long article on Japan, “For Japan, a Long, Slow Slide,” that is truly odd. Mind you, on the surface, there is nothing wrong with it. It makes the usual observations: Japan’s population is aging, productivity is falling, the country is losing its economic standing. It give the impression that Japan […]
Read more...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 […]
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