Business, Finance & Economics

From Britain: Offshore views of the planet's big two economies


Republican presidential candidate Newt Gingrich comes in for serious criticism for having his head too much in the 18th century and not the 21st.


Scott Olson

A pleasant coincidence sees two thought provoking columns in Britain's leading right and left wing papers today.

On the right, The Daily Telegraph's Ambrose Evans-Pritchard looks at recent data from China and notes that the housing bubble has collapsed and other indicators show the Chinese economy is headed for a hard landing as it cools down from its extraordinary growth rate of recent years.

He quotes Albert Edwards, an analyst at Societe General, saying, "Investors are massively underestimating the risk of a hard-landing in China, and indeed other BRICS (Brazil, Russia, India, China)... a 'Bloody Ridiculous Investment Concept' in my view."

Edwards predicts a devaluation of the yuan next year, risking a trade war.

Pritchard's conclusion, "China faces an epic deleveraging hangover, like the rest of us."

I found the article well worth a look.

Over at the Guardian, Cambridge University professor, Ha-Joon Chang, uses some of Newt Gingrich's more colorful recent comments about children being paid to be their school janitors as a departure point for an interesting dissection of how 18th century ideas are muddling up thinking about the current economic crisis.

Chang writes, "The German refusal to let the European Central Bank operate as a full-blown lender of last resort is based on a very 18th-century belief that such action would save "imprudent" borrower countries from paying for their mistakes. However, from the mid-19th century ... it has been recognized that in crisis situations an indiscriminate supply of liquidity may be socially beneficial, as it prevents bank runs and financial rot, even though it would save some imprudent borrowers."

So the 19th century is the century we should look to, I guess. The century that gave Charles Dickens - and the term Dickensian - to the world. (BTW, we are coming up on the 200th anniversary of the great man's birth).

Chang's full article is here.