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I have to say, though, when the IMF opines, I tend to take the contrarian position. Habit perhaps, but all that I see here is the current CW - Keynesian policy to the max, and then some more.

I certainly understand their panic. I feel it myself a bit, beneath the adrenaline rush of this latest manifestation of Shock Doctrine.

One substantive criticism - I think that the current China stimulus policy is detailed enough and is precisely the correct approach. I doubt that capital is fleeing China; the manufacturing plants and energy systems are operational, and that physical reality is the definition of capital - not the dollars. E.g., does Blanchard think that GE will dismantle their CFL lighting facility? (I would like to see them try.)

If dollars are moving 'west' - which they are - it is to buy government bonds and to build trade with other emerging nations, while the dollars still has some 'value' in such transactions.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Tue Dec 23rd, 2008 at 09:20:34 PM EST

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