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On China and the Yuan
China’s announcement of its intention to resume Yuan exchange rate flexibility is very good news for China, welcome news to President Obama and Treasury Secretary Geithner, and almost completely irrelevant to recovery of the U.S. economy.
To achieve equilibrium with emerging markets (over anything shorter than a generation’s growth timeline), sufficient for the developed nations to be competitive with the low cost BRIC countries – four times more populous – would require either massive appreciation in the value of the currencies of those nations (which the Chinese, at least, will not permit) or relative deflation in the wages, the prices of goods and services, and the real assets of the developed nations. The latter still appears more likely than the former, despite this past weekend’s announcement.
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Punting the Bill: Heading into Overtime in the Game of Financial Industry Regulatory Reform
Congressional proponents of necessary reregulation of our financial services industries received a break as the European credit crisis has sent the markets on another retreat from risk, and the zeitgeist is taking a break from the V-shaped recovery crowd. Accordingly, in May, the U.S. Senate was able to pass an omnibus bill that is significantly more far reaching than anything that could have emerged from the dysfunctional legislature only a few months before.
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Another View: Looking Beyond the Volcker Rule
Notwithstanding all the riveting talk about political motivations, President Obama has finally decided to wrest control of financial reform efforts from his somewhat tone-deaf minions and the “too-hard-to-tackle” crowd in Congress. Better late than never. But in belatedly joining forces with Paul Volcker, the man who will ultimately go down in history as the wisest regulator of his generation (sorry, Maestro Greenspan), Mr. Obama has waded into an immeasurably complicated debate that is enormously difficult for the general public to comprehend.
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Please, Listen to the Man
Once again, the colossus of classical economic common sense and the greatest financial regulator of the post-war United States has stepped in to a politically untenable situation and insisted that what is needed, must be so. A young and inexperienced president is finally heeding the advice of his elders, a group of those well past the point of having any agenda other than to avoid breathing their last with their beloved nation in potentially as bad an economic shape as it was when they were coming of age in the 1930′s.
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Please, Listen to the Lady!
The short essay below was first published online by The New York Times earlier today, as part of its Dealbook blog, edited by Andrew Ross Sorkin. Sheila C. Bair, the Federal Deposit Insurance Corporation’s chairwoman, has had a tough time keeping her opinions to herself during this financial crisis, often in private and, not infrequently, [...]
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Banking Lessons We Should Have Learned
From the New York Times: With the conclusion of last weekend’s Group of 7 proceedings in Istanbul, and the Group of 20 gathering last month, we offer our views on the realities we have faced — and those we have yet to confront — in relation to the banking system in the so-called developed world, [...]
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S&P/Case Shiller 20 MSA Index – Q2 2009 Looking Under the Hood at the Underlying Data
A Tale of Seven Cities The CS-20 MSA Index and its sub indices for the month of June 2009 led much of the financial marketplace to conclude the deterioration in home prices has come to an end. As we pointed out in our report of August 20, 20091, there is still a reasonable likelihood that [...]
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Haven’t We Been to this Show Before? (Note: Past Results are No Guide to Future Performance)
“There were fairly distinct indications, in last week’s stock market, that even professional Wall Street is getting back to a mood in which it will look at things as they are, and not necessarily as they would like them to be. Not much more than a month ago it was in that [latter] frame of [...]
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Reconstructing American Home Values
On a National Level, We are About 75% of the Way to Price Stability for American Homes, While Some Markets Have Overshot to the Downside Highlights One year ago, we projected that the U.S. housing market would decline from peak bubble-era levels by 28.2%. Although many observers thought we were overly pessimistic, it turns out [...]
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PIPP, PIPP, Hooray!
Today, at the behest of industry and a certain Congressional elements, the Financial Accounting Standards Board (FASB) is set to vote on the loosening of the so-called mark-to-market rules affecting banking institutions. This expected action has set off a global rally in the equity markets based on the specious notion the less transparency is a [...]
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Thomas Grennes
Thoughts From Across the Atlantic
Thomas Grennes is a professor of economics at the North Carolina State University and a former visiting faculty member at the Stockholm School of Economics in Riga. His research has dealt with various aspects of international economics, including open economy macroeconomics, international finance, and international trade in agricultural products. Recent research topics have included macroeconomic aspects of the Great Moderation, offshore outsourcing, sovereign wealth funds, and the relationship between government debt and economic growth. Earlier work dealt with emerging market issues in the Baltic countries and Russia and trade and macro policies in Sub-Saharan Africa. Economic history topics include the Columbian Exchange of plants and animals, the effects on food markets of introducing mechanical refrigeration, and the integration of Tsarist Russia into the world grain market. When he is not involved in economics, he enjoys mountain hiking.
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