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March 26, 2006

Monetary Policy
Summers on reserves, exchange rates, the international financial architecture and other big topics close to my heart

Larry Summers has always believed that capital should flow from the already rich and aging societies that constitute the current core of the world economy to the poor and young countries on the perip…

April 19, 2006

United States
You can not put dark matter in a container …

So says Michael Mandel.   Some of us might say you can't put dark matter in a container because it doesn't really exist.That is not Mandel's argument.  He believes in dark matter, though …

April 10, 2006

China
A shortage of labor in coastal China is a good thing

Unless, I suspect, if you are a Hong Kond textile magnate.  I don't entirely agree with Stephen Roach's argument that the US should thank China for its cheap financing so long as the US doesn…

August 1, 2006

United States
How long can the US retain a comparative advantage as a “storehouse for wealth”

If foreigners investing in the US keep doing so badly? That would be my question for John Makin.    I don’t doubt the superior liquidity of US markets. I realize that there are only so…

June 30, 2006

United States
DeLong is right. If the US wants to end up like Australia, US trade deficit needs to fall - unless foreigners continue to do terribly on their investments in the US.

As Brad Delong notes, the big difference between the United States and Australia is that the United States has a  trade and transfers deficit of close to 7% of GDP.    That implies – assuming the sto…

us_net_international_invest

July 3, 2006

United States
Paging Michael Mandel. I give up … there isn’t that much to worry about. At least not judging from the 2005 NIIP data.

OK, I am not really ready to give up.  But the 2005 net international investment position (NIIP) data sure didn't provide me much to work with.For a couple of years now I have been warning agains…

November 30, 2006

Financial Markets
2006, The year of the euro (and pound)

Like many others, I expected that Asian currencies – notably emerging Asian currencies – would appreciate against both the euro and the dollar this year.    That hasn’t happened.  Sure, the RMB ha…

January 13, 2007

United States
The more the dollar falls, the more dollars you need to buy …

That, more or less, is the conclusion of “portfolio balance” models of global capital flows.    The dollar tanks.   Its share of your portfolio falls.   So sell euros (or RMB) and buy dollars to keep…

January 26, 2007

China
The latest sign the apocalypse is upon us … CNY funded carry trades

If what rational world does it make sense for the currency of a high-investment, fast growing, still quite poor country to be the funding currency for a carry trade? The Japanese yen and Swiss …

August 18, 2008

Monetary Policy
Ut-oh

Agency spreads have widened. See John Jansen for all the gory details. The New York Fed’s custodial holdings of Agencies haven’t grown at anything like their typical pace over the past few weeks. …