Last week, the simmering threat of trade disputes erupted into a full boil when Brazil’s finance minister Guido Mantega said that national governments around the world were weakening their currencies in an “international currency war” to gain competitive advantage. Mantega stressed that Brazil was prepared to back his words with action to lower the value […]
Read more...A story up on Bloomberg may be far more significant than its bland headline, “China to Spur Domestic Demand to Stabilize Economy, Wen Says,” suggests. In recent posts, we’ve inveighed about the dangers of the path China is now on. Its economy is unbalanced to an unprecedented degree. Exports plus investment account for a full […]
Read more...By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2010, FT-Prentice Hall). Detox Cures In the first half of 2010, angst about European sovereign debt receded and market volatility eased. In the second half of 2010, concerns about Greece, […]
Read more...A measure passed by the House tonight, which would permit the US to impose tariffs on countries that keep their currencies artificially low, is at this juncture a mere statement of intent. It is nevertheless playing into a dynamic of the hardening of stances between the US and China. Note that the bill has yet […]
Read more...An ongoing China v. Japan/US row is getting interesting, and probably not in a good way. Readers may recall that we took note of a ban on shipments of rare earths raw materials to Japan, which in many ways was also a shot across the US bow. Even though so-called rare earths are not that […]
Read more...We have the specter of Greece’s finance minister insisting really, no really, it will never never default, or default via restructuring. Now given the unfortunate accident of timing, these protests sound awfully Dick Fuld like, although the better parallel is probably Mexico, which kept insisting in 1994, no way, no how would it need to […]
Read more...Let’s see….early in the days of this Administration, Treasury Secretary Geithner said some pretty critical things about China. The Chinese threw a big temper tantrum and Geithner backed down. He had tended to try to play down tensions with China over its mercantilist policies (the most important being pegging its currency at an artificially low […]
Read more...Yves here. I’m a fan of Tim’s work on the Fed beat, and consider this post on the implications of the announcement tonight of Japan’s intervention to lower the value of the yen to be particularly important. By Tim Duy, the Director of Undergraduate Studies of the Department of Economics at the University of Oregon […]
Read more...Wolfgang Munchau in the Financial Times gives a good recap as to why the recent spell of good cheer regarding the Eurozone is overdone. His central observation is that the Eurozone, like the US, patched things up with duct tape and bailing wire, and the hope was that the resumption of peppy growth would reduce […]
Read more...Martin Wolf, in today’s Financial Times, argues that the eurozone has done wonders for Germany by allowing it to keep the value of its currency down. With Germany’s persistent, large trade surpluses, the value of the deutschemark would eventually have risen, dampening Germany’s trade surpluses and forcing it either to accept a higher level of […]
Read more...The end of the US summer holiday period is upon us, and with it, a return to reality. The markets are again concerned re Eurobanks, as the fears registered in EU periphery country bond spreads are now registering with investors in other markets. Per Bloomberg: The gaps between 10- year German bond yields and those […]
Read more...Wolfgang Munchau has an intriguing piece at the Financial Times debunking the idea the Germany’s recent peppy growth numbers are as salutary as Mr. Market seems to believe. Part of his message isn’t necessarily all that surprising, and comes towards the end of the article: ….it is important to keep some perspective and not draw […]
Read more...The yen reached a 15 year high overnight as the Japanese Finance minister’s efforts to talk the currency down appear to have backfired. From MarketWatch: Strong words against a strong yen from Japanese Finance Minister Yoshihiko Noda failed to prevent the Japanese unit from rising to fresh multiyear highs…. Noda said that recent currency moves […]
Read more...John Plender in his comment at the Financial Times, “Great dangers attend the rise and fall of great powers,” does a fine job given the space constraints of discussing the fraught process of changes in global economic and political leadership. I thought it would be useful to quote Plender at length, with some additional observations, […]
Read more...By Marshall Auerback, a portfolio strategist and fund manager who writes at New Deal 2.0 In a post titled “China Cuts US Treasury Holdings By Record Amount,” Mike Norman makes the excellent observation that while China is moving its money out of Treasuries, interest rates are hitting record lows. In other words, the sky still […]
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