Post Tagged with: "protectionism"
Running through Italian default scenarios
The most important debate of our lifetimes is now ongoing. The question: Should the ECB “write the check’ for the euro area national governments? In thinking about the answer to this all-important question, I prefer to shift the focus by changing the verb “should” to “will”.
Answering this slightly different question is much more important than answering the first question for you as an investor, a business person and as a worker. If the ECB writes the check, the economic and market outcomes are vastly different than if they do not. Your personal outlook as an investor, business person or worker will change dramatically based upon this one policy choice. The right question to ask then is: Will the ECB “write the check’ for the euro area national governments
Expect a lot more trade intervention
The currency may well be undervalued, but a significant rise in the RMB, especially if it is countered domestically by an increase in credit at lower real rates, might actually make the global imbalances worse and, more worryingly, cause China’s debt burden and capital misallocation to rise. This would make China’s eventual adjustment far more difficult.
The focus should be on shifting China’s economy towards the more labor-intensive and efficient sectors, and an appreciating RMB might actually make things worse, especially if it encourages hot money inflow. It is much better, I think, for China to raise interest rates than to raise the value of the
Stephen Roach on America’s other 87 deficits
Here are a few excerpts from Stephen Roach’s latest at Project Syndicate
Pippa Malmgren on the Republican Presidential Debate
Former George W. Bush official Pippa Malmgren does a good analysis for Bloomberg of the issues important to voters and how they will play in this year’s presidential election
Who is winning the currency wars?
Judging from this chart drawn up by the Financial Times, it would seem that Turkey is winning the currency wars and China is losing them
China currency bill is about US politics, not trade
Below is a video of my appearance on RT International last night discussing the recent bill to authorise sanctions against the Chinese for currency manipulation. I see this bill as all about the politics and little about the economics
China Bill: Huff, Puff and Bluff
US national elections are 13 months away and not coincidentally, the Congress is looking at a new measures to encourage China to re-value the yuan. While there is little doubt that the yuan in under-valued, though reasonable people may differ on the magnitude, politics more than economics appears to be the driving force
China will retaliate if US imposes sanctions
Professor Professor Xiang Songzuo from the Centre for International Monetary Research at Renmin University in Beijing told the BBC yesterday there would definitely be retaliation if the US moves to sanctions against China. If this scenario occurs, wouldn’t this be similar to the trade dynamic from the 1930s
Some predictions for the rest of the decade
Markets have been crazy this month, but rather than try to wade through all the news, much of which doesn’t seem to have much informational content, I thought I would duck out altogether and instead make a list of things I expect will happen over the next several years
Debt is the Problem and Private Debt is Even More of a Problem
Comstock Partnrs writes that its fund is currently positioned to benefit from a declining stock market. This bearishness is mostly due to the enormous debt built up over the last few decades (total debt-including private debt– was $11 trillion in 1984 and grew by over $40 trillion to over $52 trillion today). Of that $40 trillion increase over 27 years, $26 trillion came in the last decade
Without changes to reserve currencies another crisis is inevitable
We saw that Joseph Stiglitz proposes a new reserve currency to alleviate pressure on trade imbalances. Michael Pettis is now also proposing a similar move away from the U.S. dollar. In an FT Op-Ed, Michael wrote that every generation we hear warnings that the dollar’s dominance will wane. In his view, these warnings have intensified of late. The reality is that the US dollar’s reserve currency status is a ‘public good that comes with a cost’. And the cost is debt accumulation in net importing countries along with trade imbalances that becoming a lightening rod for economic nationalism and protectionism. He recommends the US take the lead in moving to a multi-currency world. I support this recommendation and believe that another crisis is inevitable if we do not move in this direction