Ambrose Evans-Pritchard is the International Business Editor for the Telegraph. He has sources that most financial journalists would kill for.
Paul Krugman is a pundit for the New York Times. He won the 2008 Nobel Prize in Economics.
I think Ambrose is smarter although I once wrote that his writing "ran the gamut from despondent to suicidal".
From the Telegraph:
The long-simmering clash between the world's two great powers is coming to a head, with dangerous implications for the international system.
China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand.
Within a month the US Treasury must rule whether China is a "currency manipulator", triggering sanctions under US law. This has been finessed before, but we are in a new world now with America's U6 unemployment at 16.8pc.
"It's going to be really hard for them yet again to fudge on the obvious fact that China is manipulating. Without a credible threat, we're not going to get anywhere," said Paul Krugman, this year's Nobel economist.
China's premier Wen Jiabao is defiant.
"I don’t think the yuan is undervalued. We oppose countries pointing fingers at each other and even forcing a country to appreciate its currency," he said yesterday. Once again he demanded that the US takes "concrete steps to reassure investors" over the safety of US assets.
"Some say China has got more arrogant and tough. Some put forward the theory of China's so-called 'triumphalism'. My conscience is untainted despite slanders from outside," he said
Days earlier the State Council accused America of serial villainy. "In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers' rights are seriously violated," it said.
"The US, with its strong military power, has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights," it said.
"At a time when the world is suffering a serious human rights disaster caused by the US subprime crisis-induced global financial crisis, the US government revels in accusing other countries." And so forth.
Is the Politiburo smoking weed?>>>MORE
From the New York Times:
China’s Water Pistol
China is the biggest buyer of Treasury bonds at a time when the United States has record budget deficits and needs China to keep buying those bonds to finance American debt.
As I said, this was a very good article about China; the debt line was probably inserted because it’s considered obligatory to say this in any article about US-China relations. As it happens, however, while it’s part of what everyone knows, it’s also completely false.
Why don’t people get this? Part of the answer is that it’s really hard for non-economists — and many economists, too! — to wrap their minds around the Alice-through-the-looking-glass nature of economics when you’re in a liquidity trap. Even if they’ve heard of the paradox of thrift, they don’t get the extent to which we’re living in a world where more savings — including savings supplied to your economy from outside — are a bad thing.
Also, and I think harder to forgive, is the way many commentators seem oblivious to how we got here. Yes, we have large budget deficits — but those deficits have arisen mainly as the flip side of a collapse in private spending and borrowing. Here’s what net borrowing by the US private and public sectors looks like in the Fed’s flow of funds report:Federal Reserve Board of Governors
The US private sector has gone from being a huge net borrower to being a net lender; meanwhile, government borrowing has surged, but not enough to offset the private plunge. As a nation, our dependence on foreign loans is way down; the surging deficit is, in effect, being domestically financed.The bottom line in all this is that we don’t need the Chinese to keep interest rates down....MORE