On Aug 15, 2007, at 4:22 AM, Rakesh Bhandari wrote:
> From James Galbraith.See below. A few wealthy Americans are
> speculating on Chinese real estate, an appreciation of the RMB is
> good for them. Their RMB gains will be worth a lot more in dollars.
> It's a cousin of the guess that I offered. Yet would Schumer and
> Clinton and Paulson sacrifice so much for just a few speculators?
> Globalization is turning upside down the old logic: competitive
> devaluation was supposedly impressed upon the state by popular
> demands! Now it may be pursued for the sake of speculators with
> interests abroad despite the risk it poses to most ordinary
> Americans. Yet it is presented as a populist or neo-mercantilist
> measure, strengthened by appeals to American Sinophobia (see the
> important book http://press.princeton.edu/titles/7895.html).
> And the Democrats are leading the charge?
Paulson operating on behalf of a relative handful of real estate speculators? Seems like a reach.
I've been busy the last few days and have only gotten around to thinking about other reasons for the pressure, namely the U.S. would love the Chinese currency to be fully convertible on the capital account. No doubt Paulson's friends at Goldman would love to buy some Chinese brokers, and Rubin's colleagues at Citi would like to buy a commercial bank too. Since Schumer is practically the Senator from Wall Street, it wouldn't surprise me if that's the angle he's working ultimately.
And if Paulson is a serious person he has to worry about the U.S. current account deficit and growing foreign indebteness, a large portion of which is about China.
Doug