Excellent post, but I will have to read a couple more times.
I also wonder about the global "capital glut."
One response: There are no bubbles, no shortages and no gluts. Only supply and demand.
But...in fact, many nations globally suppress consumption, and funnel non-market savings money into investments, China being the prime example but also Germany, Singapore, any number of Asian nations. I have to say, this strategy seems to work.
Having "too much" capital might not be a bad thing, but I suspect then returns on investments are artificially suppressed.
I have reservations whether the US employee classes have benefitted from the last 50 years of globalism.
Foreign capital buying the best real estate to live in...that is what happens in Third World nations...and now the US and Greece too. Of course, this problem is exacerbated by the outlawing of new housing construction in much of the US.
Michael Pettis has an interesting take on international trade, and I think a worthy one.
I frequently find Pettis to be questionable. I think some of the points I make in this post are at odds with his point of view.
Tyler Cowen is usually not one to cast aspersion, but recently he posted an unusually direct statement in opposition to Pettis' international trade POV.
"As China-watcher and Carnegie China senior fellow Michael Pettis noted on X, plenty of debt has piled up under "prudent" conditions without re-invigorating domestic demand.
"The problem with Chinese monetary policy until now has not been that its tightness has led to slow growth and low inflation, but rather that its looseness, directed almost exclusively at the supply side of the economy, has accommodated deeper imbalances and deflation," he said.---Reuters
Pettis may be right about this.
This subsidy of industry leads to export manias, to soak up production...
I like a lot of this. Of course the financial crisis was not cause by bad mortgages. It was 100% created by the Fed that refused to keep inflation up to target. Yes many financial sector firms would have, should have lost all their equity, but not more than a few house owners, no unemployment, etc.
Excellent post, but I will have to read a couple more times.
I also wonder about the global "capital glut."
One response: There are no bubbles, no shortages and no gluts. Only supply and demand.
But...in fact, many nations globally suppress consumption, and funnel non-market savings money into investments, China being the prime example but also Germany, Singapore, any number of Asian nations. I have to say, this strategy seems to work.
Having "too much" capital might not be a bad thing, but I suspect then returns on investments are artificially suppressed.
I have reservations whether the US employee classes have benefitted from the last 50 years of globalism.
Foreign capital buying the best real estate to live in...that is what happens in Third World nations...and now the US and Greece too. Of course, this problem is exacerbated by the outlawing of new housing construction in much of the US.
Michael Pettis has an interesting take on international trade, and I think a worthy one.
I frequently find Pettis to be questionable. I think some of the points I make in this post are at odds with his point of view.
Tyler Cowen is usually not one to cast aspersion, but recently he posted an unusually direct statement in opposition to Pettis' international trade POV.
https://marginalrevolution.com/marginalrevolution/2024/12/monday-assorted-links-485.html
Yeah, I saw that Cowen comment, and Cowen links to one of Pettis' weaker moments. I think Pettis must have been off his beam a little bit.
I do recommend Perris book, "Trade Wars are Class Wars."
I am hardly a Trump fan, but for the first time in ages I feel optimism on trade and foreign policy, snd reasonable control of borders.
The Trump effect may even put the kibosh on terrorism.
Well, we will see.
"As China-watcher and Carnegie China senior fellow Michael Pettis noted on X, plenty of debt has piled up under "prudent" conditions without re-invigorating domestic demand.
"The problem with Chinese monetary policy until now has not been that its tightness has led to slow growth and low inflation, but rather that its looseness, directed almost exclusively at the supply side of the economy, has accommodated deeper imbalances and deflation," he said.---Reuters
Pettis may be right about this.
This subsidy of industry leads to export manias, to soak up production...
I like a lot of this. Of course the financial crisis was not cause by bad mortgages. It was 100% created by the Fed that refused to keep inflation up to target. Yes many financial sector firms would have, should have lost all their equity, but not more than a few house owners, no unemployment, etc.