Category Archives: Globalization

"Why Did Financial Globalization not Deliver the Goods?"

Dani Rodrik provides us the introduction to a new paper (co-authored with Arvind Subramanian), “Why Did Financial Globalization Disappoint?” which argus that financial liberalization. meaning making their economies more open to international capital flows, has not been a boon for developing economies. It has not produced not better growth and has increased volatility (think of […]

Setser: Foreign Buys of US Assets Increasing Dislocation

Brad Setser, a source for thorough, thoughtful coverage on currencies and related topics, provides his monthly parsing of the Treasury International Capital report (this one from January, plus its survey of foreign holdings of US securities as of the end of June 2007) and does not like what he sees. Since the August TIC report, […]

Krugman: Trade Data Not Good Enough to Analyze Impact on Wages

Quite often, policy debates get mired in superficial, outdated, manipulated, or simply incomplete understandings of the facts. Getting relevant data is vital to coming up with intelligent approaches. Unfortunately, Paul Krugman, who has tried getting to the bottom of whether trade has increased income inequality in the US, concludes that we don’t have the right […]

Buffett on the Dollar and Trade Deficits

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 […]

Thomas Palley: "The Debt Delusion"

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 […]

Are High International Capital Flows a Bad Thing?

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, […]

US Rate Cuts Leading to Economic Controls and Subsidies in Asia

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 […]

Sovereign Wealth Funds Say No on Transparency

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 […]

Is Japan Starting to Suffer a Subprime-Induced Credit Crunch?

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, […]

Chinese Think Globalization Happening Too Quickly

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.

Willem Buiter: "Why the US may well need a recession, 2"

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 […]

Should We Be Worried About China’s Growth?

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 […]

Peculiar Washington Post Article on Japan

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 […]

Will Foreign Exchange Losses of China’s Central Bank Matter?

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 […]

"Buyers, not savers, caused America’s deficit"

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 […]