►Cultivating the Chinese Consumer
Stephen Roach/NY Times
“On Wednesday, the House of Representatives is set to pass legislation that would allow trade sanctions to be imposed on China as compensation for its supposedly undervalued currency…The currency fix won’t work. At best, it is a circuitous solution that would address only one of the many pressures shaping the imbalances between our two nations; at worst, it would lead to a trade war, or risk jeopardizing China’s understandable focus on financial and economic stability.”
►Gold hits all time high, eyes on Fed’s next move
“Gold hit a lifetime high on Wednesday, its 10th record in 12 sessions, as the dollar dropped against a basket of currencies on expectations the Federal Reserve would take new measures to shore up the economy.”
►Currency Wars: A Fight to Be Weaker
Tom Lauricella and John Lyons/Wall Street Journal
“Tensions are growing in the global currency markets as political rhetoric heats up and countries battle to protect their exporters, raising concerns about potentially damaging trade wars.”
►How to stop currency manipulation without a trade war
“With the US threatening to label China a ‘currency manipulator,’ this column presents a plan to address global imbalances without risking a trade war. It proposes a ‘reciprocity’ requirement – if the US can’t buy Chinese government bonds, then China can’t buy US bonds either.”
►China Moves Closer to Becoming Currency King
“When U.S. President Barack Obama told Chinese Premier Wen Jiabao last week that the yuan’s peg to the dollar is unsustainable, he forgot to add one thing: It also threatens the world’s floating exchange-rate system.
China’s official currency reserves are simply becoming too large.”
►The World Wakes Up to Threat of Currency Wars
Randall W. Forsyth/Barron’s
“The specter of international currency wars has been raised by Guido Mantega, Brazil’s finance minister. ‘We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,’ the Financial Times quoted him as saying. In that, the FT asserted Mantega was saying out loud what policy makers were saying in private (not to mention what was being written in this space.) No doubt this will be a major topic of discussion at next week’s annual meeting of the International Monetary Fund and World Bank in Washington.”
►No Big Risk Of Currency War, IMF Chief Says
“There is no big risk of a global currency war, International Monetary Fund Managing Director Dominique Strauss-Kahn reportedly said on Tuesday.
‘I don’t think today that there is a big risk of a currency war, but that is part of the downside risk,’ Strauss-Kahn told reporters.”
►Does a 1930s-style trade war loom as recovery falters?
Michael Babad/The Globe and Mail
“Capital Economics in London today posed the question: Are we on the cusp of a currency war? Not likely, said senior markets economist John Higgins, though he does fear the rise of global trade sanctions.
‘We continue to believe that the risk of global trade sanctions – which effectively amount to the same thing – is building,’ Mr. Higgins said in a research note. ‘If domestic demand remains depressed, policy makers will inevitably turn their attention abroad for a solution as they did in the 1930s.'”