America is getting more support in its efforts to pressure China to let the yuan appreciate. Bloomberg reports than the Bank of England’s governor Mervyn King is lining up with Jean-Claude Trichet and Hank Paulson: Bank of England Governor Mervyn King is joining Jean-Claude Trichet and Henry Paulson to demand that China allow the yuan […]
Read more...An ongoing discussion in the financial media and among economists is how to characterize the causes of the so-called global imbalances, namely, that the US is importing capital from high savings nations, primarily China, Japan, Taiwan, and the Gulf states, to fund its high consumption. Some like to focus on the “savings glut” hypothesis, which […]
Read more...Today’s dose of dealism comes from Willem Buiter, professor of European Political Economy at the London School of Economics, in his post, “Immigration as a Human Right.” As an aspiring and ultimately unsuccessful immigrant, having gotten prized and rare four-year Australian visa, but unable to pass the hurdles needed to obtain permanent residence, I am […]
Read more...At Vox EU, Shang-Jin Wei argues in “Don’t over-sell the benefits of a change in the Chinese exchange rate policy,” that the upside of an end to the dirty float of the yuan (or as he prefers, the renminbi), has been overstated. His analysis is elegant and persuasive, and the piece is colorfully written as […]
Read more...Whoever wrote the headline to former Treasury Secretary, now Harvard professor Larry Summers’ latest comment in the Financial Times did him a disservice. The lead-in, “How American must handle the falling dollar,” implies that Summers has a specific, hard-headed program. Instead, the piece offers a succinct and subtle analysis of what is wrong with our […]
Read more...John Plender in the Financial Times wrote a very solid piece, “Credit squeeze could be harbinger of a Chinese crash,” which looks at the major financial train wrecks of the past century and finds a common element: immature but rapidly growing economies acting as major global creditors. The efforts to manage the resultant imbalances lead […]
Read more...Well, I thought no one would do a deal with Bear, at least not a strategic investor sort (taking a trading position is another matter entirely). But the government controlled Chinese entity Citic appears to have done just that. Hopefully I will have more thoughtful commentary later (I am pressed for time now), but I […]
Read more...The Financial Times reports that the G-7 meetings this weekend did not even address one of the two main issues on the agenda, the dollar, and along with the concurrent IMF meetings, featured a good deal of acrimony and disarray. Exactly what you don’t need with a crisis looming. From the Financial Times: After Friday’s […]
Read more...The International Herald Tribune gives a particularly interesting report on a semi-annual meeting hosted in Washington by the IMF and World Bank. It illustrates that the influence of the US and of US sponsored institutions is waning. One item mentioned in other reports on these meetings is the concern with the impact of food inflation […]
Read more...Remember basic macroeconomics? The current account, which consists primarily of trade in goods and services, is supposed to be offset by the capital account, which is largely capital transfers but also includes the purchase or sale of “non-produced goods” like mineral rights and intellectual property. And the story of the US has been that our […]
Read more...I must confess I don’t read the Economist as much as I used to. I suppose one factor was my belated recognition of how much to the right it had moved (it was evident to UK readers in the 1990s, but not being a close follower of British politics, I didn’t recognize it until the […]
Read more...George Magnus, the UBS economist who popularized the term “Minsky moment,” has a thoughtful comment, “The credit crisis: why it is still too early to relax,” in today’s Financial Times. The article expresses doubts about the beliefs that undergird the current optimism in the financial markets, namely that the credit crisis is pretty much over, […]
Read more...In a further blow to the dollar’s standing, Vietnam and Qatar both announced that they are cutting their holdings of dollar assets. Note that this isn’t merely “diversifying away from the dollar” which could be accomplished by effectively reducing ongoing dollar purchases (both run trade surpluses which oblige them to buy dollars) via exchanging them, […]
Read more...A page one story in tomorrow’s Wall Street Journal tells us that a Wall Street Journal/NBC poll found that Republicans have joined Democrats in having a negative view of “free” trade. As we have discussed in earlier posts, more open trade can be a good thing, but not if entered into naively. Our system is […]
Read more...Ah, time for a reality check on the Wall Street Journal/Administration party line. Here we’ve been told how horrible Sarbanes-Oxley is, and how those tough corporate governance measures are bad for the competitiveness of US markets. Like many of the things the officialdom in Washington has been telling the public, this line of reasoning doesn’t […]
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