*** A few weeks ago, the Indians were giving America a piece of their mind. This week, it’s the Chinese. The subprime crisis was caused by Washington’s “warped conception” of market regulation, said a Chinese banking regulator… and the Chinese media has gone so far as to compare China’s decisive action in Sichuan Province after the earthquake to the Bush administration’s diddling after Hurricane Katrina.
“U.S. credibility and the credibility of U.S. financial markets is zero everywhere in the world,” says Joseph E. Stiglitz, a professor of economics at Columbia University.
“Anybody looking at this from the outside says, ‘There’s been a lot of hot air coming out of the U.S., so why should we listen to these guys when they didn’t know how to manage risk?’”
The Chinese yuan has gone up 11% against the dollar so far this year.
*** When it rains, it pours. The Midwest has seen the worst flooding in 15 years…pushing up grain prices even higher.
But it could be worse. You could be in Argentina, from which our colleague Paola Pecora reports on the latest conditions (farmers are blocking roads to protest tax increases):
No market for grains
Running out of food and fuel
Inflationary expectations rising
Consumers expect to consume 24% less than the year before
220 roads blocked
An actual 20% drop in consumption spending
74% of people expect higher prices
Fall in foreign exchange reserves at the Central Bank
Public debt higher than before the default of 2001
Flight of bank deposits
Real incomes falling
“Things get worse every week,” writes Paola.
Markets and Money