The thrust of the International Herald Tribune article which they put on their front page, seems to be that traders and analysts play on concern. Presumably they pick up concern and they look around for a superficial reason for it. They do not have a theory of why Japan is in trouble, but are looking to exogenous explanations.
Economists however "who understand the peculiar characteristics of China's half-reformed economic system" have deeper less empiricist knowledge. This knowledge requires close understanding of how current Chinese politics work and can best be gathered from the Asian research analysts of major financial corporations who are based in Hong Kong, where they can dine and mingle with people in touch with the Communist Party of China.
It does presume, as I suggested, that the Chinese were doing something much more than signalling anxiety that they might be forced to devalue the yuan. They are playing a long term game for greater influence in the world financial system.
This would be in conformity with their strategic decision earlier this year publically to announce their intention of keeping a large proportion of their reserves in ECU.
>What does it mean for the theory of efficient markets?
Efficiency for whom?
And why
>would a devaluation be good for US hegemony over the long term, as some
>have said here?
This is my own gloss. I am suggesting that the Asian crisis puts neo-liberalism in big trouble. While it will no doubt continue in many forms, a sort of unfettered laissez faire is now obviously foolhardy. The best outcome for it as a theory, I am suggesting, would be a sudden devaluation of the yuan, which would knock (I am guessing) 30% off the value of the worlds stock markets and then allow the system to start up again, albeit rather slowly. (I am assuming that crises must be solved by the destruction of capital.) The massive unemployment would be a warning to all to exercise prudence and accept wage cuts. Meanwhile the US would emerge ahead of the field with the highest relative concentration of capital again, able to support organisations counselling neo-liberal prudence.
But I think the tide is turning. Capitalism actually naturally tends toward monopoly, and it is not averse to planning that holds out the prospect of some stability for its profits. I suspect China intends to exploit these tendencies to accelerate a more multi-centred more cooperative world system of states, albeit ones still trading intensively in commodities.
>
>Seth Ackerman
>Fairness & Accuracy in Reporting
Your signature line suggests that there is a problem of unfairness? Do you mean on this question? I gave a lot of detail about the sources of the report.
Chris Burford
London