Category Archives: Currencies

Satyajit Das: New & Old Greek Lessons

By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives Contained Again… The language is reminiscent of the start of the sub-prime mortgage problems. The problem is “small” and “contained”. Despite the “solution” announced by the European Union (“EU”), the problems of Greece […]

Auerback: The PIIGS Problem: Maginot Line Economics

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. The Maginot Line, named after French Minister of Defense André Maginot, was a line of defenses which France constructed along its borders with Germany and Italy after suffering appalling damage and casualties during World War I. The French thought they […]

Gonzalo Lira: “Systemic Contradictions”: The Eurozone De Facto Currency Peg, and the Death Spiral We Are Currently Witnessing

By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile Critics of free-market capitalism, especially of the Marxist persuasion, love talking about its “systemic contradictions”. Especially European critics—they adore using that steam-roller phrase: “systemic contradictions”. It sounds so thrillingly lapidary, so discussion-ending, so terminal. Nothing can escape its grasp, or the base […]

Three ways to keep NPLs down, recapitalize banks, and socialize losses all at the same time

A post by Edward Harrison Michael Pettis is out with another great piece on the likelihood that non-performing loans (NPLs) will rise in China when the present spate of malinvestment comes a-cropper. What caught my eye were his statements about the hidden ways in which government pays for bank recapitalization in order to deal with […]

Geither Defers “Currency Manipulator or Not” Determination on China

As expected, Treasury has put off a decision on whether to label China a currency manipulator for a few months, pending negotiations with China. The problem is, however, is that China has been signaling that it is pretty non-negotiable (yes, there has been the occasional conciliatory remark, but they have been notably few and far […]

More Evidence of Lack of Competitiveness of Many Chinese Exporters

One argument we have made, which some readers find difficult to accept, is that China’s keeping its currency, the renminbi, at artificially cheap levels is tantamount to an across-the-board export subsidy (the proof that the RMB is artificially cheap comes via the fact that China has had to engage in massive dollar purchases to keep […]

Auerback: Greece and the EuroZone: Angie, Ain’t it Time to Say Goodbye?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Arthur Conan Doyle’s literary creation, Sherlock Holmes, once solved a murder by noting the dog that didn’t bark. It doesn’t take Holmes’s ingenuity to see that the plan on offer for Greece is clearly a rescue package which doesn’t rescue. […]

Greece Rescue = Smoke and Mirrors

It is astonishing that the words “rescue” and “bailout” are being applied to the headfake announced by the EU for Greece last week. Rebecca Wilder at Angry Bear blandly noted, “All I’m saying is that this plan, in its current form, is really not much of a plan at all.” Ed Harrison stressed that voters […]

China Expects to Announce Trade Deficit for March

A story in China Daily indicates that the Chinese offiicaldom foresees a record trade deficit for March: The country will probably see a “record trade deficit” in March thanks to surging imports, Minister of Commerce Chen Deming said on Sunday, while warning that Beijing will “fight back” if Washington labels China a currency manipulator. Speaking […]

The Beginning of the End of the Eurozone As We Know It?

The widely-extolled idea, that the EU would find a way to muddle through the Greece crisis, looks very much in doubt. The pressure has not simply put the rescue of Greece into disarray, but appears to have led to some positions being taken that, if they hold, could lead to the partial dissolution of the […]

China’s Exporters Hanging by a Thread?

Has the Chinese export sector become hostage to WalMartization, the ability of powerful retailers to squeeze vendor profit margins? Reader Michael Q called our attention to a key remark in a Wall Street Journal story: Vice Commerce Minister Zhong Shan, in an exclusive interview Thursday ahead of a visit to the U.S., said that the […]

Martin Wolf: China, Germany Commiting World to Deflation

The Financial Times’ Martin Wolf gives a cogent and sober assessment of what he deems to be a destructive refusal to adjust policies on behalf of the world’s two biggest exporters, China and Germany. The problem is that both simultaneously want to have their cake and eat it too. As we stressed in a recent […]

Are Rising US-China Tensions Pointing to a Rupture?

Relations between the US and China have been deteriorating. Although both sides have poked each other in various ways (Obama meeting with the Dalai Lama, China dissing Obama in Copenhagen by standing him up for a meeting, some tit for tat on tariffs), the major, unresolved bone of contention is China’s pegging of its currency, […]

Why is Geithner Lobbying EU on Behalf of Hedge and Private Equity Funds?

A war of words has broken out between the Treasury Department and the EU over proposed EU financial services regulations. The first salvo in this dispute occurred earlier this week, when, as reported in the Guardian, American banks were excluded from the sovereign bond market, which means new issues (they obviously cannot be prohibited from […]