Apparently, at least one of the columnists at the Washington Post reads this blog. Sebastian Mallaby, a veteran from the Economist and contributor to Foreign Affairs, Foreign Policy, Prospect, the National Interest, the New York Times, Policy Review, Slate and the New Republic, and specializing in globalization, trade, investment trends, international development and economic policy, has apparently taken my advice for Tim Butcher to heart. Mr. Mallaby decided to follow up with Tim Geithner’s recent and much discussed comment about China’s “manipulation of currency” and penned a piece that’s not safe for your computer if you are drinking coffee while reading it.
Geithner is correct that China manipulates its currency. What’s more, this manipulation is arguably the most important cause of the financial crisis [because] … faced with a deluge of cheap money, no regulatory regime can be expected to prevent bubbles [and] … Chinese money flooded into the United States because of the push factor from China, not the pull factor from Americans [therefore] … there is no getting around China’s culpability.
The comments section accompanying this essay is also a good read. The first comment started with the following line:
I am sorry but this is bordering on the ridiculous. Blaming China for the current economic crisis is as absurd as blaming the road for making an accident while driving drunk.
[UPDATE] Just for the fun of it, I checked out a bit about Mr. Mallaby prior writings. Well, what do you think of his logic in an article titled “deregulation didn’t cause financial mess” from last October?
The key financiers in this game were not the mortgage lenders, the ratings agencies or the investment banks that created those now infamous mortgage securities. … Rather, the key financiers were the ones who bought the toxic mortgage products. If they hadn’t been willing to buy snake oil, nobody would have been peddling it.