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 […]
Read more...Thomas Pally has an elegant little post, “Jack Welch’s Barge: The New Economics of Trade,” which explains why the Ricardian model of trade based on comparative advantage has been made irrelevant by the modern corporation’s ability to move capital and technology across borders. In fact, it puts corporate interests at odds with national interests. As […]
Read more...It seems peculiar indeed that a sea change in the world economy, namely, the decline of the international funds flow generally called “global imbalances,” has gotten so little attention. “Global imbalances” refers to capital flows from high savings countries such as China, Taiwan and Japan, funding current account deficits (meaning consumption) in the US. They […]
Read more...This week, CIO Magazine. in continuing series of surveys on outsourcing, reported that it fares poorly as a cost saving measure: ….our cost management survey shows that IT outsourcing is usually not an effective way to reduce IT costs. Only 15% have found it results in large savings, while 45% found it only produces minimal […]
Read more...Today’s New York Times, in “Indian Outsourcing Comes Full Circle,” reports that major Indian outsourcing companies such as WiPro are increasingly farming work out to staff hired in other developing countries. We had commented on this trend earlier, observing that cost pressures in India (new MBAs earn more than their US peers) plus the advantage […]
Read more...Consider the ironies in the discussion of free trade. It’s widely depicted by economists to be a good thing, and anyone who opposed it is considered to be economically illiterate. Yet the system we have deviates considerably from the free trade ideal and is more accurately called managed trade. And in this system of managed […]
Read more...We’ve never understood why regulation has such a bad name in America. Yes, there are all kinds of terrible specific implementations of the concept “regulation.” But the difficulty of getting it right doesn’t mean the concept should be rejected out of hand, since it turns out the alternative of “no regulation” isn’t so hot. And […]
Read more...Martin Wolf, the Financial Times’ highly regarded chief economics editor, has a particularly sobering article today, “Challenge of rescuing world economy,” and Wolf is a serious sort to begin with. Wolf uses a couple of less widely discussed presentations from the Fed’s conference at Jackson Hole as his point of departure. He contrasts one by […]
Read more...Economist Thomas Palley has a very interesting post today on our current economic conundrum, and he traces the problems to blind faith in globalization rather than permissive monetary policy or out of control financial innovation. Palley starts from an earlier point than most do, noting that our recent expansion has been unbalanced. He sees the […]
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