This is one of those days when there is quite a lot of good material, so forgive me for being brief. The Financial Times, on its editorial page, issued a warning to the US about getting chippy with the Chinese about the value of its currency. It did not stress some of the reasons argued […]
Read more...A Bloomberg story tells us that Japanese retail investors are undermining the forecasts (and worse, trades) of large investment banks. The banks think the yen is seriously undervalued. Unfortunately, when it appreciates, retail investors buy more assets in countries that offer more yield, which leads them to sell yen, keeping the currency in its place. […]
Read more...A post on the Guardian’s blog by Jeremy Seabrook blames a lot of the social ills afflicting British youth on the intrusion of the marketplace: binge-drinking, the “normalisation” of drugs, the cult of celebrity, the supremacy of what money can buy, incivility, absence of respect, obesity, the epidemic of sexually transmitted diseases – are by-products […]
Read more...Below is an excellent post by Barry Eichengreen, Professor of Economics and Political Science at UC Berkeley, at the new blog VoxEU. The post posits that the biggest risk to Asia is an asset crash, and looks at America’s experience during its industrializing phase to see what lessons might be learned. He determines that whether […]
Read more...The US has spent considerable time and energy hectoring the Chinese about the artificially low value of its currency (although there is considerable disagreement among experts as to how undervalued it really is). The notion that the currency is the chief culprit has become so fixed in the public imagination that Congress is determined to […]
Read more...Martin Wolf, in a Financial Times comment, “Villains and victims of global capital flows,” looks at the two competing theories of the causes of global imbalances. One is the savings glut story, in which parsimonious Chinese and Japanese force the US to consume to keep the world from falling into recession. This view is favored […]
Read more...Faithful readers, I hope you’ll forgive the comparatively skimpy posts this early morning. I had to spend some time with a buddy who had just learned that one of his closest friends is dying. Generally, I give trade economics a wide berth, because once you get past simple two-country, two factor models the discussion gets […]
Read more...Bloomberg tells us, “India’s Tata Consultancy Plans to Hire 5,000 Workers in Mexico.” The rise of the rupee is making India less attractive for outsourcing. This development begs a couple of questions. First, will US companies have to go through disruption and risk as they chase cheaper labor to various countries as currency relationships change? […]
Read more...Mark Thoma quotes a Washington Post op-ed piece by Daniel Gross that gets worried about the current and prospective level of foreign ownership of US businesses: …In countries that are resource-rich or export powerhouses, governments and government-controlled entities have amassed huge pools of capital. A report issued last month by Morgan Stanley economist Stephen Jen […]
Read more...If by some bizarre happenstance you do not know who Eric Hobsbawm is, it is never too late to find out. The Guardian’s website reported on a recent lecture he made on the declining role of empires. It’s a testament to the stature of the 89 year old Marxist historian that he was invited to […]
Read more...I’m a bit late to get to this item, a predictably good article by the Financial Times’ Martin Wolf on Nouriel Roubini’s observations about why Asian countries became so willing to finance our deficits (short answer: they decided to keep their currencies cheap after the 1997 emerging markets crisis) and whether this situation is sustainable […]
Read more...Nobel Prize winning economist Joseph Stiglitz can be blunt. In an interview with MarketWatch, he says that our dependence on Chinese capital puts us in a not-so-great bargaining position. He also pointed out in Congressional testimony that the Chinese have no reason to open their financial markets since they don’t need capital. And our focus […]
Read more...We predicted, given China’s blistering response to America’s imposition of countervailing duties on coated paper manufacturers (a small amount of goods, but a big shot across the bow) and its aggressive posture in the negotiation of the language of the third IPCC report, that Paulson’s efforts to obtain trade concessions and a revaluation of the […]
Read more...That won’t go anywhere as a horror flick title, but the specter of China’s ever growing trade surpluses is focusing the mind of its trading partners. Some hoped that these surpluses would correct themselves naturally over time as the Chinese population started consuming more and its economy became less dependent on exports. That clearly isn’t […]
Read more...Mark Thoma pointed us to an insightful Washington Post op-ed piece, “China’s Trade Time Bomb,” by Robert Samuelson. He makes the point that trade with China isn’t yet having much impact on the US economy, but soon will be, mainly because they don’t play fair (something we’ve commented on before): It sometimes seems as if […]
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