Well it certainly has been a while. We have managed to follow up one of the most fruitful months in Blawgconomics' relatively short history with what threatens to be the least, having not posted in about three weeks. It has been interesting to see that readership has not dropped too significantly during that time, mostly on strength of daily traffic to the Solar REIT series of articles. Based on what would otherwise be a reality-inducing lack of comments from the loyal readers of the site regarding a lack of posts, one can only imagine that the remainder of the recent traffic has come from old friends satisfied by re-examining old posts. However, one can only speculate...
Despite a lack of new content, the past few weeks have been relatively kind to our absence as many of the lead stories we covered in early June remain the stories of late June. The disaster in the Gulf of Mexico has still not been remedied. Europe continues to struggle with financial troubles and the best remedies and prophylactics for dealing with similar issues, past and future. Elena Kagan is still in the Supreme Court nomination-cum-mud-dodging phase of her career. Political pundits and opinion polls in the US continue to point to a fascinating fall. On a lighter note, the World Cup is in full swing and merits both front and back page positions in many of the world's newspapers.
One thing that has changed is the currency situation in China where the yuan, previously pegged to the dollar, has been switched to a basket peg (a situation explained at length here). However, it is unclear what the exact outcome of this will be. Though Washington has put varying amounts of pressure on the Chinese to change away from a straight dollar peg over the past few years, the world has not remained static during this time. For example, both the pound and the euro have declined in value compared to the dollar in the past year. Therefore, with its new revaluation at least in part based on these currencies, the yuan could paradoxically fall with respect to the dollar, an opposite outcome to that desired by US policymakers.
Though this could be considered a classic case of 'be careful what you wish for,' it is probably also still good in the long-run for revaluation to take place as it will help to even out the peaks and valleys of the trade roller coaster. Despite this long-term gain for the US, however, the greater value in the situation may lie in analysis of the Chinese process itself. The Chinese may have capitulated to global demands, but clearly did so at their own pace and on a timeline which proved highly beneficial to them. They also waited for the loudest cries to die down before making their move. As the nation grows more powerful politically, economically and militarily, it would be worthwhile for the diplomats and politicians of the world to take note of this worthy case study and go forward knowing that the future of Chinese relations will be nothing if not interesting.
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