Bonus graph
A quick chart showing how my estimates (from work I have done with Arpana Pandey of the CFR) for official...
China, new financial superpower …
One of the biggest economic and political stories of this decade has been China’s emergence as the world’s biggest creditor...
Still growing …
The Fed’s custodial holdings of Treasuries just topped $2 trillion. Custodial holdings of Treasuries rose by $25 billion in July....
The (almost) dollar crisis of 2007 …
It is now rather common to argue that those economists who anticipated the crisis anticipated the wrong crisis – a...
Doesn’t a smaller (external) deficit mean less dependence on (external) creditors, including China?
There is a common argument that the US depends more on China now than before because the US needs to issue so many Treasury bonds to finance its fiscal deficit.
I disagree, for two reasons:
First, the trade deficit is down significantly, so the amount that the US needs to borrow from the rest of the world...
The problem with relying on the dollar to produce a real appreciation in China …
Is now rather obvious. The dollar goes down as well as up.
Last fall, demand for dollars rose — in part because Americans pulled funds out of the rest of the world faster than foreigners pulled funds out of the US. The dollar soared. ...
And now, the rest of the story: long-term portfolio flows have fallen by more than the trade deficit
The goods news: the US trade deficit has shrunk. On a rolling 12m basis the trade deficit is down to around $500 billion, and the data from the last few months suggests that it should fall even further.
The bad news: the US trade deficit hasn’t shrunk by as much as foreign demand...
Don’t ignore the adjustment that has taken place; the US trade deficit is half its size this time last year …
Most reporting on the May trade data tried to fit it into the “green shoots” meta-narrative, thanks to the small uptick in exports. Never mind that total exports were about equal to their level in March even after the May uptick– and that about half the uptick between May and April came from...
Chinese Handcuffs? No, Chinese trade deficit
This is Mark Dow. Brad is away.
China has become the obsession that Japan was back in the 80s. And rightly so. It is a huge place, with a robust secular growth force underlying it (remember the conditional convergence growth hypothesis?). Rumors of China doing this or that have become a daily staple of the market.
Lately,...
