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Opinions and views from expert CFOZone members.
Tag >> China
The Congressional Budget Office provided a bit of sanity yesterday in the increasingly nonsensical debate about the virtue, or lack thereof, of government attempts to stimulate the economy.
Essentially, the CBO found that, surprise, surprise, the recession would have been a few GDP points deeper without the stimulus, that the most effective parts of the package involved spending on infrastructure and the like, and that the least effective consisted of tax cuts.
This pretty much puts the kibosh on the argument that emerging markets are the place to be right now.
It wasn't so long ago that sovereign wealth funds from countries like Dubai were supposed to ride to the rescue of Citigroup and other U.S. banks. The situation now is essentially the reverse, with Dubai World's creditors being asked for forbearance on $59 billion in debt.
There's been lots of talk around President Obama's Asian trip about China's economy being much more resilient than that of the U.S.
No question, China has bounced back from the global recession more quickly than the U.S. has. And its government clearly believes more firmly in investing in infrastructure and other means of underpinning its ability to produce rather than consume, as the liberal economist Robert Reich amply illustrates.
No one likes protectionism, including me, but some of the alarms being raised over the Obama administration's move to impose tariffis on China for dumping cheap tires into the U.S. seem rather hysterical.
The most recent example I've seen is David Rockefeller's Chicken Little op-ed in yesterday's New York Times.
To echo Anne's point yesterday, I see there's more standard-issue, carnival-barking happy talk out of the Wall Street noise machine today. As in, wow, this really beats really beaten down expectations! Party!
So, reality fans, take a good look at the photo in our slide show of an amazing maritime gathering in the South China Sea, and see this.
Pundits who predicted the 21st century will belong to China may want to consider subbing another country into the statement.
The fact is, the People's Republic still does not operate under the rule of law. Indeed, foreigners doing business in China continually find themselves being whipped about by whatever political whims happen to be blowing through Beijing at the moment.
Maybe I'm alone here, but has anyone else missed the fact that the Chinese stock market has had four straight down weeks? It was August, after all, and all eyes were on the riveting policy discussions going on at our health-care town halls.
Okay, so now there's China. A decoupling, at long last? Doubtful, I'd say. While I don't have data at hand to show recent correlations here, I'm pretty sure our markets and economies have moved pretty closely in tandem for a while now. After all, even if globalization is over-rated, the off-shoring to emerging markets has had to have some effect besides reducing U.S. corporate overhead. And many others besides our biggest company, Wal-Mart, depend heavily on China for cheap goods.
Scores of articles have been written of late about the PRC's desire to end the U.S. greenback's role as the de facto global reserve currency. Mostly, these stories have zeroed in on Beijing's fears of a weakening dollar.
True enough, a deteriorating dollar will make China's goods more expensive for Joe the Plumber (or Josephine the Plumber, for all you Jane Withers fans out there). To keep that from happening, the central bank of China has become the true Bank of America, buying up around $1 trillion in U.S. debt, particularly short-term Treasury notes.
The most critical reason to get rid of banks that are too big to fail isn't the threat they pose to the financial system but the one they represent to the economy, says Simon Johnson today.
That's because much ballyhooed financial innovation isn't anywhere as positive a development as the industry would have us believe. Simply put, the risk this has added to the financial system has far outstripped the rewards.
The latest allegations coming out of China should worry CFOs at any company that does business with the middle kingdom.
Over the weekend, a magazine website ran an article claiming that workers at miner Rio Tinto had spied on steel mills in the People's Republic for six years. The alleged snooping somehow resulted in local Chinese mills overpaying $102 billion for iron ore from Rio Tinto, according the article, which ran in an online edition of a magazine published by China's state secrets agency.