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Showing posts from November 30, 2010

Why US can't churn out a rerun of Plaza Accord

Business Times - 01 Dec 2010



Business Times - 01 Dec 2010


Why US can't churn out a rerun of Plaza Accord

Unlike in 1985, the perception now is that the US is driven by its own economic self-interest

By LEON HADAR
WASHINGTON CORRESPONDENT

AT A time when the need to fix the global financial imbalances between the United States and China dominates the policy agenda, veteran diplomats and economic officials are recalling with nostalgia a similar effort to settle the economic tensions between the US and Japan in the 1980s.

Then, as now, Washington was preoccupied with mounting budget and trade deficits, and many US officials and lawmakers were worried over competition from a rising East Asian economic power - Japan - which they accused of pursuing mercantilist trade policies.

The conventional wisdom then, as now, was that reducing the US deficits and bringing savings and investment more into balance globally would require the devaluation of the US dollar against the Japanese yen.

That in …