Comments on: The Blame Asia Meme

By: Glen

Glen — Thu, 12 Mar 2009 00:37:46 +0000

I find myself in agreement with Dr. Richmond WRT appropriating the blame.

http://tradeandtaxes.blogspot.com/2009/03/greenspan-protesteth-too-much.html

By: Edward Harrison

Edward Harrison — Wed, 11 Mar 2009 21:19:18 +0000

the question is where did this liquidity come from. I would argue it came from the U.S., Asia and Japan. Greenspan seems to be saying it came from Asia. He tries to absolve himself of all blame here and is not convincing. While Asia played a role, the U.S. also played a role by leaving interest rates too low and having an asymmetric policy response.

Moreover, his complicity began much earlier — in the 1990s as he allowed a deregulated environment to create macro imbalances. I would also argue that Greenspan’s easy money created the pre-conditions for low savings and high consumption which engendered the whole problem to begin with.

By: Glen

Glen — Wed, 11 Mar 2009 20:09:04 +0000

So Edward where is your rebuttal?

Krugman, Vlocker, Morici, etc. all seem to be saying the same thing. Excess liquidity underpriced risk.

By: miek

miek — Wed, 11 Mar 2009 16:34:14 +0000

I’ll buy stocks again when policy-makers begin to take responsibility for their part in this debacle.

By: Sobers

Sobers — Wed, 28 Jan 2009 23:55:45 +0000

Of course its a crock of an idea. Its just a way of hiding the fact that the West decided that it was above the dirty, hard work of digging stuff out of the ground, refining, smelting, manufacturing et al. It preferred to push pieces of paper around and sit in air conditioned offices, thinking that such activity created wealth. It doesn’t. The wealth created by the Eastern nations is built on the physical hard labour of its populations that Westerners think they shouldn’t have to do anymore. At the end of the day stuff only gets done when someone physically does it. You don’t make steel sitting in an office. Or build a supertanker either. There are too many people in the West who don’t DO anything, despite ‘working’ fulltime. We are entering a era when living standards are going to fall consistently in the West for the first time in living memory. No wonder politicians want someone to blame.

By: mL

mL — Wed, 28 Jan 2009 00:28:28 +0000

China is a scapegoat in this case.

China is buying T-bonds, a way to lend money to the U.S. government.

What happens if Chinese lends money to the U.S. government in Yuan, and insist the US pays back in Chinese Yuan not U.S. dollars? Will the U.S. government insist Yuan to be appreciated? Probably not.