â€œBefore a man speaks it is always safe to assume that he is a fool. After he speaks, it is
seldom necessary to assume it.â€
FX Trading â€“ Economic thought is becoming an oxymoron
If you have been following this morning missive for awhile you know weâ€™ve been expecting
export models to be crushed on the major secular theme of global imbalances starting to
balance i.e. overconsumption in the West being balanced against overproduction in the East.
Thus, higher savings in the West means lower demand for imports and the specter of positive
current account surpluses. The lower exports from the East raises the specter of current
account deficits ruling the day (Japan posted its first currentâ€ account deficit in 13 years in
January after exports collapsed) and shrinking that hoard of foreign exchange reserves that
were indicative of the East winning all the chips to many. The game is changing.
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