Brad Setser is right to applaud the Financial Times:
Brad Setser's Web Log: Chinese yuan hits new low against euro, swiss franc, pound ...: Let me take a moment to give Thanksgiving kudos to the Financial Times for their recent coverage of the dollar story. The oped page has run solid pieces by Wolf and Cecchetti. Phil Coggan's column on Monday said what a lot of what I was trying to say in my post about "large players in large markets" in a lot fewer words. The Wall Street Journal ran a Monday story emphasizing that Asia was accepting dollar depreciation (to a degree). The FT had a set of stories on Monday highlighting the difficulties created by the asymmetries in the way Asia is adjusting: the won and the yen have strengthened v. the dollar and the yuan has stayed fixed (i.e. the won and yen have strengthened v. the Chinese yuan). Hence friction between Korea's finance ministry and central bank, and Japanese talk of intervention. The WSJ story was OK, but it failed to pick up on the tensions among the Asian countries in the way that the FT's combined coverage did.
Today's FT had a nice story on Russia's desire to build up its euro reserves -- evidence that at least some of smaller parts of the Bretton Woods system are tiring of the dollar reserve accumulation game.
All these articles tell part of the dollar's story -- the growing desire on one hand to diversify reserve holdings to protect against a dollar fall (or in the case of the People's Bank of China, a desire not to have to add to its already massive dollar holdings to soak up massive capital inflows) and on the other hand worries that failure to intervene will siphon away growth by undermining exports.
The FT has long paid more attention to international economic issues than the WSJ, in part because of London's currency markets. And in a world where at least half the financing for the US current account deficit is likely coming from official sources (i.e. central bank intervention), its greater emphasis on the "policy world" also is likely to pay real market dividends.
Unfortunately for the general public, both the FT and the WSJ are locked behind their paywalls.
Posted by DeLong at November 27, 2004 02:18 PM | TrackBackThis is depressing
Posted by: jr at November 27, 2004 03:22 PMHappy Thanksgiving, Professor DeLong.
It looks like we are leaving Kansas for a financial/economic galaxy far, far away.
Posted by: Charles at November 27, 2004 03:23 PMSorry to be off topic, but I would also like to offer a Happy Thanksgiving to the Professor and all (well, most) of the regular and occasional posters here. This is a fascinating blog, politically and economically and I look forward to perusing it more than anything I receive in print or regularly visit on the Web. Bravo.
http://www.wingsparrotlets.com/Lucy%20on%20apple.-1.jpg
A Thanksgiving gift to all for this lovely Blog.
Posted by: anne at November 27, 2004 04:18 PMA paywall is the subscription bar for Financial Times and Wall Street Journal. However the New York Times has links to Financial Times and International Herald Tribune in the international and business sections.
Posted by: anne at November 27, 2004 04:58 PMThank you anne
Posted by: Tom Slee at November 27, 2004 05:54 PManne: please explain where this link is to FT in NYT, I can't seem to find it, just looked in both sections you mention.
Posted by: mauisurfer at November 27, 2004 09:25 PMThe NYTimes link to Financial Times is along the right hand side of the page in the business, world business, and international sections, Monday through Saturday.
Posted by: anne at November 27, 2004 11:03 PMDoes this mean that gas will be getting cheaper for those of us who don't get paid in USD? I seem to remember at least one OPEC leader openly pondering the thought of accepting EUR for oil, but, that was a few years ago, and, er . . . ah, nevermind.
Posted by: Steve Wart at November 27, 2004 11:51 PMActually, here is the FT article that caught my eye on Monday (actually saw it in the print edition; fortunately Google seems to offer some respite from this "paywall" nonsense).
http://www.google.ch/search?q=cache:szG8sSS3_VUJ:news.ft.com/cms/s/f16a4694-3cb1-11d9-bb7b-00000e2511c8.html+&hl=en
Mr Li, who spoke before a meeting of the Asia-Pacific Economic Co-operation (Apec) forum last weekend, said China did not want to run trade surpluses or accumulate foreign currency reserves. Its reserves stand at $515bn.
“If there is a small deficit, we are not concerned. But certainly we don't want to run into the US situation of having a trade deficit of 6 per cent of GDP,” he said.
“That is not sustainable,” he added. “The appreciation of the RMB will not solve the problems of unemployment in the US because the cost of labour in China is only three per cent that of US labour. They should give up textiles, shoe-making and even agriculture probably.
“They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.”
A different article, on the front page of Monday's FT print edition:
http://www.google.ch/search?q=cache:szG8sSS3_VUJ:news.ft.com/cms/s/f16a4694-3cb1-11d9-bb7b-00000e2511c8.html+&hl=en
Mr Li, who spoke before a meeting of the Asia-Pacific Economic Co-operation (Apec) forum last weekend, said China did not want to run trade surpluses or accumulate foreign currency reserves. Its reserves stand at $515bn.
“If there is a small deficit, we are not concerned. But certainly we don't want to run into the US situation of having a trade deficit of 6 per cent of GDP,” he said.
“That is not sustainable,” he added. “The appreciation of the RMB will not solve the problems of unemployment in the US because the cost of labour in China is only three per cent that of US labour. They should give up textiles, shoe-making and even agriculture probably.
“They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.”
A different article, on the front page of Monday's FT print edition:
http://www.google.ch/search?q=cache:szG8sSS3_VUJ:news.ft.com/cms/s/f16a4694-3cb1-11d9-bb7b-00000e2511c8.html+&hl=en
Mr Li, who spoke before a meeting of the Asia-Pacific Economic Co-operation (Apec) forum last weekend, said China did not want to run trade surpluses or accumulate foreign currency reserves. Its reserves stand at $515bn.
“If there is a small deficit, we are not concerned. But certainly we don't want to run into the US situation of having a trade deficit of 6 per cent of GDP,” he said.
“That is not sustainable,” he added. “The appreciation of the RMB will not solve the problems of unemployment in the US because the cost of labour in China is only three per cent that of US labour. They should give up textiles, shoe-making and even agriculture probably.
“They should concentrate on sectors like aerospace and then sell those things to us and we would spend billions on this. We could easily balance the trade.”
Only financial girly-men read pink newspapers!
Posted by: Julian Elson at November 28, 2004 09:05 PM