Category Archives: Globalization

“A currency war the US cannot win”

Yves here. This post cites a number of recent Western commentaries on China’s currency policies; I suggest, for one stop shopping, you read Martin Wolf comment, “Why America is going to win the global currency battle.” There are several points in the argument below that are curious, to say the least. One is the notion […]

Satyajit Das: Weapons of Choice in Trade Wars

By Satyajit Das a risk consultant and the author of the Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives During the European debt crisis, in a matter of days, the dollar strengthened by around 10%. The weakness of the Euro and resultant appreciation of the Renminbi by over 14% reduced […]

Puzzling Out China’s Saber Rattling

One of Winston Churchill’s oft repeated saying was, “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma.” Of late, China has become a Russian-level conundrum to the wider world. Developed economies are troubled by Middle Kingdom’s increasingly aggressive economic stance; neighboring countries are rattled […]

Extreme Measures: Currency/Trade Tensions Rising, Will Action Follow?

After the in retrospect not that terrible first acute phase of the financial crisis, August-September 2007, this blog began taking note of Extreme Measures. These were proposals by respectable people for dealing with the burgeoning mess that were usually very creative and had zero chance of happening. The fact that so many normally sound people […]

Currency Tensions Rising

The fact that an IMF meeting ended with the participants unable to feign a narrowing of differences on the currency front is further evidence that positions are hardening. And let us put none too fine a point on this: the currency row is simply an acceptable way to fight over imbalanced trade patterns. As we […]

Auerback: What’s Wrong With Japan (and the Shortcomings of QE)

By Marshall Auerback, a portfolio strategist who writes for New Deal 2.0 Something is very wrong with Japan. The Japanese economy has been much weaker than any other major economy for a while now: over the last business expansion, through the Great Recession, and in the recovery since the Great Recession trough. Japan’s business cycle […]

Currency War Threats Escalating

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 […]

Is China Getting Religion on Restructuring Its Economy?

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 […]

Satyajit Das: A CDO Cure for Europe?

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, […]

House Fires Shot Across China’s Bow

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 […]

Japan Calls Out China on Rare Earths Ban

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 […]

Das on Eurozone Outlook

I’m running this clip of Satyajit Das for several reasons. First, it gives a very good big picture view of the problems with the Eurozone rescue fund, and is germane given that those concerns are coming to the fore (witness our post earlier today). Second, more generally, it gives readers a chance to see him […]

Satyajit Das: Chinese Contradictions

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). Peter Hessler (2010) “Country Driving: Three Journeys Across A Changing China”; Text Publishing Richard McGregor (2010) “The Party: The Secret World of China’s Communist Rulers”; Allen Lane […]

Tom Friedman Embraces the Electric Car 15 Years Late

When you start advocating Federally backed “moon shots” as a way to compensate for the shortcomings of American management, you know you are in deep doo doo. Tom Friedman has a characteristically breathless article at at the New York Times arguing America better get off its duff because China is very serious about electric cars: […]

China Blocks Rare Earth Shipments to Japan

In our escalating currency (really trade) dispute with China, many people argue that China holds the whip hand because it would quit buying US bonds. As we’ve explained repeatedly, that’s the last thing China would do, since stopping buying US debt (or more accurately, US dollars which it then moves into higher yielding assets than […]