A version of this list of recommendations also comes out earlier in the day as part of the weekly Policy Progress e-newsletter.
“Begun the Currency wars have” – Raf Manji
Yves Smith (Naked Capitalism) – Currency War Threats Escalating
Matthew Yglesias – How I Learned to Stop Worrying and Love Currency Wars
Raj Manji -The Art of Currency War
David E. Sanger and Michael Wines (New York Times) – More Countries Adopt China’s Tactics on Currency
Phil Izzo (Wall Street Journal) – Stiglitz: Central Banks Creating ‘Chaos’
Matt Nolan (The Visible Hand in Economics) - Race to the bottom actually race to the top
Bernard Hickey – Opinion: Why NZ can’t step aside and wait to be slaughtered in the currency wars to come
Bernard Hickey – Five ways to control the NZ$ and capital flows
So what has been the big news story this week? Paul Henry? Chris Carter? The Hobbit? Um, how about the threat of competitive currency devaluations amongst the leading economies? Last week Brazil’s finance minister Guido Mantega introduced the phrase “currency war” into the discussion and it seems to have stuck. The range of articles above provides a pretty good introduction to the issues and differing views about the implications (and they include links to further articles). (Note – Raf Manji is an occasional commenter here at Policy Progress.)
Amidst the potential turmoil, Bernard Hickey offers a New Zealand perspective:
There is a significant risk that as central banks in the Northern Hemisphere crank up into a series of competitive devaluations that the New Zealand dollar is pushed up vs the US dollar, the euro and the Japanese yen, but not versus the Australian dollar.
. . . Luckily for New Zealand exporters to Australia, the one currency more in demand than our own is the Australian dollar.
But in the end that won’t save us. Our trade with China, now our second largest trading partner, is in US dollars and the Chinese are reluctant to let their currency appreciate vs the US dollar.
. . . If the New Zealand dollar surges under the weight of capital inflows from carry-trading, yield-hunting investors and those hunting for safety away from the money printing, then the Reserve Bank needs to be ready to sell New Zealand dollars. It worked before in 2007 and made the taxpayer a tidy profit. It can work again.
Simon Kennedy (Bloomberg) - Wall Street Sees World Economy Decoupling From U.S.
B’vedeni Snapshot – Food, glorious food! Will food become the new crude?
Meanwhile, some other emerging signs on the world economy front look more hopeful. From Bloomberg:
A book published last week by the World Bank . . . “The Day After Tomorrow” concludes that developing nations aren’t only decoupling, they also are undergoing a “switchover” that will make them such locomotives for the world economy, they can help rescue advanced nations. Among the reasons for the revolution are greater trade between emerging markets, the rise of the middle class and higher commodity prices, the book said.
And from B’vedeni Private Wealth (hat-tip Alison):
A decade ago, it would have been hard to imagine a world where giant multinationals and cashed up venture capitalists were battling each other for a share of the world’s fertiliser, irrigation water, and soybean markets. Yet today almost everything to do with large scale agriculture and the marketing and processing of agricultural products is a much sought after investment prospect.
Patrick Diamond - Labour’s failed renewal campaign
The Policy Network’s Patrick Diamond was one of those who accused Eurpoean progressives of “the politics of evasion”. Here’s what he has had to say about the Labour leadership contest in the UK:
At a deeper level, the contest has suffered from lack of sustained reflection about why the theories of social democracy – a stakeholder economy, democratic reform and an ethical foreign policy – proved so difficult to achieve in practice, despite three huge majorities. That insufficient work was done in opposition before 1997 is all too apparent. Only in Mr Blair’s second term did he develop a compelling reform mission, but even then Labour proved notoriously reluctant to challenge powerful institutional interests in the City, the media and public services. New Labour’s mind-set was one in which making enemies risked ceding electoral advantage to the Conservatives. But why this was, and how it stopped it governing in the public interest, has barely been discussed. As a result, whoever emerges as leader will likely lack a mandate to overhaul Labour’s programme.
. . . the current contest could have done with louder calls, for instance, to escalate Britain’s faltering war on poverty. But the mind-set that the state and social justice are inescapably linked remains, when it should be discarded . . . Labour’s next leader must deliver a radical speech that breaks out of the impasse created by the campaign. Their task will not be to detoxify their brand, as Mr Cameron fought to do, but to seek a dramatic new Clause 4 moment – one that once and for all announces an end to Labour’s fixation with traditional state power, and makes it again the party of moral, not mechanical reform.
Note: (free) registration is required for access to this Financial Times article.
A few other dispatches from the UK, following on from our Ed Miliband special edition last week:
- Charlie Beckett – Did Ed’s First Speech Change The Story?
- Maurice Glasman – The Tories seize Labour’s language
- Jon Wilson – Community campaigning is Labour’s messy future
- Patrick Dunleavy - What is the Cameron-Clegg governance strategy? Zombie ‘new public management’ cannot work in the face of massive public expenditure cutbacks
And, on the ‘To Read’ pile:
- Peter Kellner – The Crisis of Social Democracy: A Sustainable Philosophy for the Left (Open Left/Demos)
- Andrew Simms and Tony Greenham - Where did our money go? Building a banking system fit for purpose (new economics foundation)
And finally, a reminder: if you haven’t voted in the local body elections yet, you can still hand-deliver your ballot paper to a polling booth by midday tomorrow; check your local council website for details. (And if you live in Wellington or in the neighbouring areas covered by Capital and Coast, then as an added bonus you can vote for me for election to the District Health Board!)