The Great Debate UK
The retaliatory China currency bill passed in the U.S. House helps brand this Congress as one of the more protectionist in years. The next one might switch gears and embrace trade by passing several stalled pacts. But Beijing shouldn't expect that to translate into a friendlier Washington.
A companion bill in the Senate also meant to pressure China to allow a faster rise in the yuan is unlikely to succeed. And it would probably be vetoed by President Barack Obama if it did.
Yet the overwhelming vote in the lower chamber does reflect a further fraying of the free trade consensus. It's not just frustration over the weak yuan policy, blamed for costing U.S. jobs. Congress also has failed to ratify trade agreements signed with South Korea, Colombia and Panama. Those deals would increase American exports by an estimated $12 billion a year. That may be just a small drop in U.S. trade, but would still be a big help for the likes of Boeing , Caterpillar and Oracle in a weak economy.
Enough pro-trade Republicans might enter Congress come November to pass the three deals. The political turnabout could be particularly head-snapping if the GOP was to actually retake the House. Chairmanship of the key trade-related Ways and Means Committee, for one, would shift from a Big Labor-backed Democrat to a Republican who has already pledged to make the outstanding trade agreements a top priority.
from Chrystia Freeland:
Get ready for the next wave of globalization. The emergence of the emerging markets is old news, of course: after all, Tom Friedman discovered that the world was flat back in 2005. But even as much of the developed world is struggling with weak consumer demand and stubbornly high levels of unemployment, the emerging market countries are writing a new chapter in the story of the global economy.
We are accustomed to thinking of our economic relationship with the countries Fareed Zakaria describes as “the rest” as a two-way exchange between west and east or north and south: western companies setting up call centers in India or manufacturing their goods in China, for instance; and, more recently, savings-rich emerging market economies, especially China, investing in US treasuries, or Russian oligarchs buying London mansions.
from The Great Debate:
What does $4 trillion a day in business, never sleeps and sees Japan's Ministry of Finance as just one more patsy?
The foreign exchange market, of course, which is licking its collective lips as Japan embarks on another round of unilateral intervention to sell the yen in an effort to drive down its value and protect its export-oriented economy.
By John Foley and Wei Gu
China's plans to make its currency global could change the world -- if they get off the ground. More international use of the yuan might increase China's trade clout, unseat the mighty U.S. dollar and make a lot of financiers very rich in the process. But it can be hard to separate the facts from the fable. Here are some questions answered.
Why are people talking about an international yuan?
China is the world's second-biggest economy. But its currency doesn't nearly match its size. For most international dealings, China relies on the dollar, which leaves it beholden to the United States. Beijing wants more influence on the global stage, so it has been taking baby-steps to turn the yuan into an internationally used currency.
Mike Dicks, chief economist and blogger at Barclays Wealth, has identified what he sees as the three biggest problems facing the global economy, and conveniently found that they are linked with three separate regions.
First, there is the risk that U.S., t consumers won't increase spending. Dicks notes that the increase in U.S. consumption has been "extremely moderate" and far less than after previous recessions. His firm has lowered is U.S. GDP forecast for 2011 to 2.7 percent from a bit over 3 percent.
from Global Investing:
Bank of America-Merrill Lynch's monthly poll of around 200 fund managers had a few nuggets in the June version, aside from the usual mood-taking.
Gold is too expensive. A net 27 percent of respondent thought it overvalued, up from 13 percent in May. Then again, the respondents to this poll have reckoned gold is too pricey since September 2009.
In its May economic outlook, the Organisation of Economic Cooperation and Development projected upward growth outlooks for BRIC countries Brazil, Russia, India and China — the world’s four largest emerging economies.
Strong growth in those economies is helping to pull other countries out of recession, the OECD said. The Paris-based organisation projects that China’s GDP growth will exceed 11 percent for 2010, and anticipates that India’s real GDP growth will be 8.3 percent. Russia‘s GDP growth is expected to be 5.5 percent, and Brazil‘s is projected at 6.5 percent. By comparison, the OECD projects that the Euro area will see 1.5 percent real GDP growth, while the UK will see a 2.2 percent growth.
- Ben Hughes is deputy CEO and global commercial director at the Financial Times. The opinions expressed are his own. -
Last month Italian luxury fashion house Fendi unveiled a handbag made of python leather and dipped in 24-carat gold. Price? A cool $36,000.
from The Great Debate:
For the growing number of Americans who see China heading for inevitable global dominance, nudging aside the United States, a brief walk down memory lane helps put long-term predictions into perspective.
Not so long ago, Japan was seen as the next (economic) number 1. American executives studied the 14 management principles of The Toyota Way, developed by the automobile manufacturer that grew into the world's biggest car maker and is now recalling millions of defective vehicles.
from The Great Debate:
A tightening in financial conditions is under way but its principal architect won't be the Federal Reserve.
Far from it, the Fed will be pinned down by powerful disinflationary, perhaps even deflationary, forces, making it very unlikely to be willing to raise interest rates any time soon.