Archive for April, 2008

Peas and Bonds

April 30, 2008

That pea being Black Eyed Pea member “Will.i.am.”. He repeated an oddity that keeps cropping up:

“If America really wants to make a difference, it should stop importing China’s products and pay back its debt

Now the former is a personal choice, the latter is… well, it makes no sense.

America issues debt in the form of treasury bonds and China along with any other individual or institution on the planet can buy them. Perhaps too much paper is issued but given the low yields on current treasuries its obvious there’s plenty of demand to be a creditor.

The US dollar has depreciated against the Renminbi in recent years, moreso than the bonds yield. Effectively the Chinese government is subsidising the US but at no cost to the US government or taxpayer.

Restricting access to US debt would currently benefit China, not hinder it.

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The Flat World Is Coming Unstuck

April 30, 2008

Excellent blog post by Brad Setser here:

Borders still matter; “the world isn’t as flat as it used to be”

Plenty of cut and pasting from other blogs but it paints the overall picture. The so-called globalised barrier-free economy is still somewhat illusionary.