Sunday, 22 May 2005

Weekend reading: Real estate, trade and currencies

Here are some interesting reads from blogs yesterday.

Barry Ritholtz has lots on real estate at The Big Picture. Start here. Just don't blame me if you ruin the rest of your weekend because you end up spending it in front of the computer.

But if you're more concerned with trade and currencies, hop over to Brad Setser's Web Log as he discusses some recent trade and currency trends. And for those who don't think exchange rates matter, he had this to say:

Europe's exports to the US have grown 28.5% between 2000 and 2004 -- even with the euro's rise since 02. Nothing compared to China, whose exports to the US increased by 97% between 2000 and 2004. But European exports to the US still grew faster than overall Asian Pacific exports to the US -- which were up only 18% over the same period.

Part of that is the lagged impact of the weak euro, which lasted til mid 2002. US imports from the Asian-Pacific region are currently growing twice as fast as imports from the eurozone. (15.6% v 8.4% --yes, exchange rates do matter ... )

And in the comments section, PC of Investor's Diary left this comment:

People talk about a Dollar crisis but the real economic crisis will come when the Dollar becomes relentlessly strong.

And on his own blog, he wrote:

How about this scenario - a long and deep secular economic contraction finally starts to reverse the US trade deficit. Dollar demand is high due to all the outstanding Dollar denominated debt obligations that needs to be repaid. So the Dollar continues to strengthen relentlessly due to a collapsing current account deficit plus strong demand for the greenback.

In other words, a deflationary scenario. Perhaps then, we would be nostalgic for inflation.

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