For the last several years the euro has been appreciating steadily against the U.S. dollar. Given the Chinese renminbi and other East Asian currencies are pegged to the dollar that means the euro has been appreciating steadily against all. This spells trouble for Euroland, and it suggests European policymakers should join with the U.S. to address the global problem of under-valued currencies. (more…)
Archive for the ‘U.S. Policy’ Category
Triangular Trouble: the Euro, the Dollar and the Renminbi
Monday, October 15th, 2007The Flaws in Rubinomics
Tuesday, October 9th, 2007With Senator Hillary Clinton firmly cemented as the front-runner for the Democratic Party’s nomination, Rubinomics—named after former Treasury Secretary Robert Rubin, who shaped economic policy under President Clinton—has re-emerged as a critical issue. This is because Senator Clinton has firmly embraced it. Rubinomics rests on faulty economics and embodies bad politics. Progressive Democrats and the nation need to understand this. Here’s an explanation. (more…)
The Fed and America’s Distorted Expansion
Tuesday, September 11th, 2007The U.S. economy has been in expansion mode since November 2001. Though of reasonable duration, the expansion has been persistently fragile and unbalanced. That is now coming home to roost in the form of the sub-prime mortgage crisis and the bursting house price bubble. (more…)
China’s Empty Threat
Tuesday, September 4th, 2007The United States Congress is currently contemplating critical legislation aimed at remedying the huge U.S.-China trade deficit. China and businesses that benefit from Chinese imports oppose this legislation, and to discourage action China has hinted at retaliation – including possibly selling its U.S. Treasury bond holdings. That threat has prompted some to argue against legislative action on grounds that risks of a trade war are too large and costly. Such thinking is mistaken. The reality is China’s threats are empty, whereas its currency manipulation is wreaking significant real damage on the U.S. economy. (more…)
Market Bondage
Thursday, August 16th, 2007With Wall Street beset by a crisis of confidence and the mortgage-backed securities market seizing up, there is urgent need for an immediate emergency Federal Reserve interest rate cut. This sudden need has also revealed how today’s financial system places monetary policy in bondage to markets. That system has evolved over the past twenty-five years with the Fed’s approval, and the current crisis starkly reveals need for reform. (more…)
R.I.P. Trade Promotion Authority
Tuesday, May 29th, 2007Trade promotion authority (TPA) – formerly known as fast-track negotiating authority – is set to expire on June 30, 2007. As a result, the Bush Administration and business interests are now lobbying Congress for its renewal. However, there are strong reasons to not just let TPA temporarily lapse, but also to permanently bury it. (more…)
US – China Trade: Pay Now or Pay More Later
Sunday, May 6th, 2007After several years of patient negotiation, the US appears embarked on a harder stance in dealing with its China trade deficit. In Congress there is talk of veto-proof legislation addressing China’s under-valuation of its currency, while the Bush Administration has imposed tariffs on coated paper products to offset Chinese subsidies. Behind this shift is a dawning recognition that China is unwilling to reduce its surplus, and that reduces the policy choice to one of “pay now or pay more laterâ€. (more…)
Memo to Fed: Cut Rates, then Reform Policy
Tuesday, March 20th, 2007The US economy is showing signs of a potentially rapid deceleration. In particular, there is accumulating evidence that the housing sector slowdown may be becoming a meltdown. In many areas house prices are falling, house sales are down nationally, and mortgage delinquencies and foreclosures are rising – especially in the sub-prime market. This has caused tremors in broader financial markets. The only good news is employment and wages continue growing, but labor markets conditions are also widely viewed as a lagging indicator. (more…)
Abandoning America: Corporate Foreign Direct Investment
Tuesday, March 13th, 2007In recent years outward foreign direct investment (FDI) by US corporations to other countries has been increasing rapidly, while inward FDI by foreign corporations into the US has been trending down. Since investment in the US is critical for future economic prosperity, these patterns are troubling and provide evidence of how globalization and flawed policy are encouraging corporations to abandon America. (more…)
Third Way, Wrong Direction
Wednesday, February 21st, 2007In anticipation of 2008, a potentially historic debate is shaping up within the Democratic Party. On one side are progressive Democrats whose lineage reaches back to FDR and the New Deal. On the other side are new Democrats, who emerged in the 1980s and embraced Ronald Reagan’s critique of big government. (more…)