Here’s a list of the 15 biggest current account surpluses, at least for countries listed in the back of the Economist magazine:
|Country||CA surplus (share of GDP)|
Now let’s discuss how “we” think about the surpluses for Norway and China. (Of course by “we” I mean us white people):
1. Norway: What’s not to like? Finally there’s a country that isn’t blowing all its oil wealth like those more “backward countries.” By backward, I mean cultures that don’t have that enviable Nordic patience, whose governments don’t have the ability to defer instant gratification. The Norwegians are smart; they are socking away hundreds of billions of dollars in a sovereign wealth fund, which they will be able to draw on when the money runs out. What an inspiring model for the world!
2. China: You just can’t trust those inscrutable Chinese. Their government doesn’t play fair, they are socking away hundreds of billions in international reserves. Look at those huge trade surpluses (no less than 4% of GDP!!) Don’t believe me? Paul Krugman sees what the real problem is:
And this in turn means that the savings glut possibly making the natural real rate negative is actually originating abroad, not at home.
Do you sort of see why I’m a hawk on China policy?
Krugman is one of the few China-bashers who sees the real problem with crystal clarity. It’s not about exchange rates; after all, fixing the nominal rate has no effect on the real exchange rate. No, the real problem is countries that save.
And don’t tell me that the Northern European countries (in aggregate) have a vastly bigger CA surplus than China. What difference does that make? After all, any jobs “we” lose will be offset by jobs that “we” gain. Remember who “we” are. We are white people.
PS. For those readers who are new to the blog, any bigotry was meant to be sarcastic. My grandmother was Norwegian and my wife is Chinese.
PPS. Michael Pettis points to the absurdity of the Europeans asking for a loan from China, when the Northern European countries already have massive CA surpluses.
PPPS. By “Northern European,” I mean the 6 countries on the list above that lie between Switzerland and Norway. They have a $455 billion surplus, as compared to China’s $303 billion.