One of the reasons that it is been so hard for a lot of analysts, even trained economists, to understand the imbalances that were at the root of the current crisis is that we too easily confuse national savings with household savings. By coincidence there was recently a very interesting debate on the subject involving several economists, …
Read More…Category: Euro
Feedback loops
Early this month Martin Wolf had another of his very interesting articles, this time on China, which I think suggests some of the concerns we must have about the upcoming adjustment. Wolf argues that it may be useful to think about Japan as a model for understanding the adjustment process in China since the Japanese model …
Read More…When do we call it a solvency crisis?
This post is extracted from my newsletter sent out four weeks ago, at a time when the mood in Europe was much better than now and when there was even a sense that the crisis was in the process of being resolved. I mention this to remind readers of how quickly sentiment can chnage. —— …
Read More…Europe’s depressing prospects
Normally I don’t like to write about European prospects in the midst of a very rough patch in the market because in that case there isn’t much I can say that isn’t already being said. I find it more useful to wait for those recurring periods in which the markets recover and optimism rises. Still, …
Read More…Current account dilemma
Creditors nations are worried. Their obligors seem determined to take steps, they claim, to undermine or erode the value of their obligations – at the expense, of course, of the creditors. Over the past two years we have become pretty used to the spectacle of Chinese government officials warning the US about its responsibility to …
Read More…Chinese stock markets and European politics
Because of the lunar New Year festivities when I wrote my newsletter little had happened in China besides the 25 bp interest rate hike on Tuesday, not counting of course the never-ending stream of fireworks and the several really great jaio zi dinners I have managed to snag from my students and their families. I …
Read More…The rough politics of European adjustment
If Europe is going to “resolve” the current crisis in an orderly way, it is going to have to move very quickly – not just for the obvious financial reasons, but for much narrower political reasons. I am pretty sure that the evolution of European politics over the next few years will make an orderly …
Read More…Chinese inflation and European defaults
Part 1. Will Europe face defaults? Its official – Spain and Portugal will need to be bailed out soon. How do I know? In one of my favorite TV shows, Yes Minister, the all-knowing civil servant Sir Humphrey explains to cabinet minister Jim Hacker that you can never be certain that something will happen until …
Read More…Are you ready for the United States of Germany?
“How can I, that girl standing there, my attention fix,” asked William Butler Yeats plaintively in the midst of the political upheavals of the early 1930s, “on Roman or on Russian or on Spanish politics?” Well, love and beauty in the Beijing spring weather notwithstanding, it is hard once again not to fix attention on …
Read More…