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Posts Tagged ‘Chinese yuan’

Should We Have Trusted the Chinese to Let the Yuan Appreciate?

Posted by Larry Doyle on October 8th, 2010 8:58 AM |

To what degree can international trading partners trust each other in the face of an ongoing decline in overall aggregate global demand for goods and services? 

More specifically, to what degree can the two major economic superpowers, those being the United States and China, trust each other in the midst of major economic challenges. While everybody can smile for the camera at trade conferences and international economic summits, what happens when those officials go home and implement policy? As with most things in life, we are wise to watch what is done to a far greater extent than what is said. Why do I raise this topic now?

Let’s look in the rear view mirror to mid-June at which point in time our wizards in Washington celebrated as the Chinese announced that they would agree to let their currency, the yuan, appreciate in value. (more…)

Beggar Thy Neighbor

Posted by Larry Doyle on October 5th, 2010 12:17 PM |

So much has happened along our economic landscape over the last two to three years that it is hard to weigh the magnitude and depth of many of the developments. That said, the simple fact is the tectonic plates underlying our global economy have shifted massively as a result of the enormous financial earthquake of 2008. While global governments and central banks have performed varying degrees of  triage to save states, nations, and regions, the movements of the plates are continuing along under the surface. To that end, what is the economic reality now bubbling above the surface given the shift in our tectonic plates below? Let’s navigate and review the reality known as Beggar Thy Neighbor, defined by our friendly Investing primer as, 

An international trading policy that utilizes currency devaluations and protective barriers to alleviate a nation’s economic difficulties at the expense of other countries. While the policy may help repair an economic hardship in the nation, it will harm the country’s trading partners, worsening its economic status.  (more…)

The Euro Is Retreating like Napoleon from Moscow

Posted by Larry Doyle on May 11th, 2010 12:28 PM |

If those involved in the European bailout thought the trillion dollar package would quickly support the Euro and, in turn, the economies of the EU, well guess what? After a quick, short covering rally for the Euro yesterday, the common currency for the EU has turned tail and is retreating faster than Napoleon from Moscow.

The Wall Street Journal addresses the Euro’s retreat in writing, Euro Falls as Aid-Plan Euphoria Fades:

Unnerved by the euro zone’s giant bailout mechanism and the prospect of patchwork politics in the U.K., investors herded back into the safety of the dollar and yen Tuesday, sending the euro and the pound lower. (more…)

Chinese Inflation Does Not Mean Global Inflation

Posted by Larry Doyle on March 11th, 2010 8:10 AM |

News this morning that China’s inflation rate has hit a 16-month high is garnering significant attention.

China’s economy is only one-fifth the size of the U.S. economy while China’s population is more than four times that of the United States. In fact, China’s population is approximately one-fifth of the entire world’s population. Clearly, the People’s Republic of China represents a huge growth opportunity in this century.

Bloomberg highlights this inflation news this morning in writing, China Inflation Quickens as Industrial Output Climbs:

China’s inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures. (more…)






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