Thomas Friedman is not allowed to manage my money
"A simple rule of investing that has always served me well," says Thomas Friedman. "Never short a country with $2 trillion in foreign currency reserves."
Sigh. As Felix Salmon points out, "if you decided to short only countries whose foreign exchange reserves reached some large proportion of gross world product, you’d be batting 2 for 2 right now as you started shorting China. First you would have shorted the USA in the 1920s, and then you would have shorted Japan in the 1980s." He continues:
One of the scariest aspects of the most recent financial crisis is that far from addressing the biggest and most potentially destabilizing global imbalances, it actually exacerbated them. If and when those imbalances unwind chaotically, the global effects will be highly unpredictable. But it’s far from clear that China will be any kind of safe haven.
Michael Pettis has more.
February 3, 2010; 1:30 PM ET
Categories: Financial Crisis
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