Things get worse before they get better

People are worried that even though the UK is trying to  rebalance its payments by increasing exports, but currently its imports are increasing at 5 times the rate of their exports. This is because of the J-curve idea. Initially when a currency depreciate, imports become more expensive but exports do not increase, making the currency [...]

Read Full Post »

China’s Current Account Balance (via Hyun’s Nexus Exotica)

Hyun’s blog post on China’s Surplus Current Account Balance: $297.1 billion (2009 est.) $426.1 billion (2008 est.) Currently, China's currency (CNY) is substantially below the value predicted by their cross-country estimates. Chinese trade flows respond to relative prices  but the relationship is not always precisely estimated. In addition, the direction of the effects is sometimes [...]

Read Full Post »

Spanish Prision

Although Spain was on board a few years ago when the euro was introduced, now its weary. when Spain has its pesos, it could manipulate its currency and policies to suit its economic situation and correct imbalances. However, with the single currency, Spain has lost all of its control. Why should to Euro depreciate when [...]

Read Full Post »

Currency Wars

While China and the US are in a known partnership, they fight over everything. In a fight to be the number 1 economy in the world, neither wants to give up any advantage. When China’s enormous trade surplus is compared to the US’s 5% GDP deficit (extra or lack of money in the current account, [...]

Read Full Post »