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I recorded the video segment below on on RT America on Wednesday night (Notice my green tie for St. Patrick’s Day!). The overall gist of the clip was that the currency battle now brewing between China and the U.S. is mostly a political confrontation. There are reasonable ways out of this that don’t include a [...]

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Highlights
The US dollar is firmer against most major currencies.  The euro is trading near the week’s lows while the safe haven Swiss franc is up on the day amidst ongoing concerns about Greece.  That’s despite comments from EU Commissioner Barroso that countries including Germany stood ready to give Greece aid if asked and amidst talk [...]

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Notable quotes in this 5 minute segment:
"They don’t want to look in the mirror. America doesn’t have a China problem. It really has a savings problem. America has the biggest shortfall of national savings of any leading country in modern history. And when you don’t have saving you have to run current account deficits to [...]

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Here’s how I see things playing out:

Congress looks at this report and concurs that the key to ending slower global growth is to correct global imbalances via a Chinese currency revaluation. Fair enough.
However, individual Congressmen, looking to reassure jobless constituents ahead of the midterm elections, will escalate by presenting bills to ‘punish’ China if [...]

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In reading Scott Sumner’s take on the China currency peg dilemma, I see that both he and Paul Krugman hit on the fundamental problem in the debate: reserves. Everyone is talking about the peg as if relaxing the peg will be the magic bullet to America’s current account problem. But this is clearly not the [...]

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Highlights
The US dollar is firmer against most major currencies. The euro, together with the Swiss franc and Swedish krona are the worst performers.  The euro failed to make a clear break above $1.38 yesterday and news reports suggesting Germany may have shifted its stance on Greece seeking IMF aid saw the euro slip back to [...]

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FT.com – Asia’s inflation genie leaps out of the bottle
House prices to fall further as loan arrears rise – Independent.ie
TheMoneyIllusion » It’s China’s world, we just live in it (Krugman, round two)
More Americans live with multiple generations of family – USATODAY.com
FT.com – The weak renminbi is not just America’s problem
How [...]

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Highlights
The US dollar is softer against most major currencies.  The still expansionary FOMC statement, the BoJ’s extension of Q/E overnight and the conclusion of the EU finance ministers’ meeting yesterday may have helped ease tensions.  However, the dollar was already beginning to soften ahead of these events after failing to extend gains in early March.  [...]

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With US midterm elections up ahead, we are already seeing political posturing by US politicians regarding China’s currency.  Democratic lawmakers are reportedly drawing up legislation that sets criteria on whether a country has a misaligned currency.  It would modify the current US Treasury semi-annual report to misalignment instead of manipulation.  The House Ways and Means [...]

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It’s curious how one and the same message is emanating from both Beijing and Berlin at the moment: “don’t blame us, it’s not our fault”. And it isn’t.
According to the Financial Times, the Chinese Authorities spent their morning pushing back against the mounting US criticism of their currency policy, arguing that their huge trade surplus [...]