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Brad Setser
@Brad_Setser
, 3 tweets, 1 min read Read on Twitter
This seemed inevitable after the last Argentine election. IMF's formal policy after all is that in when the debt isn't sustainable with a high probability there should be a reprofiling.

bloomberg.com/news/articles/…
think it makes it easier for the IMF to disburse the next tranche -- funds won't obviously be going to allow investors to exit
Useful numbers from the WSJ. Argentina had sold a lot of debt that matured this fall earlier this year (investors wanted an exit option before the election), so maturities got bunched up.

wsj.com/articles/argen…
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Brad Setser
@Brad_Setser
If China ever followed the IMF's fiscal advice (the IMF wants, a gulp, 7.5 pp of GDP fiscal consolidation over time), China's current account would not remain close to balance ...

cfr.org/blog/imfs-new-…
(apologies for redoing this tweet -- the initial tweet left out the critical "not")
China poses a particular problem for the Fund:

the Fund basically thinks the policies (notably a large augmented fiscal deficit and loose credit) that brought its current account surplus down to "fair value" are themselves unsustainable ...
Read 4 tweets
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Brad Setser
@Brad_Setser
I am among those trying to figure out Trump’s China trade strategy.

Like most I am confused. Trump’s latest escalation was formally a response to China’s latest round of tariffs. But China’s tariffs, in my view, basically confirmed that China has run out of good targets.

1/x
The incremental costs to the U.S. of the trade war right now are essentially coming from Trump’s own tariffs. And I suspect that undermines the United States' leverage.

2/x
UBS thinks that China added about $10b in new products to its tariff lists, so its tariffs now cover $100b rather than say $90b of its $150b in imports from the U.S. (based the Chinese number for imports from the U.S.)

3/x
Read 14 tweets
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Brad Setser
@Brad_Setser
There will be a lot written about financial deglobalization when folks pour over the 2018 data. But it is a mistake to fit last year's financial deglobalization into a Trump trade driven narrative.

It is basically a function of the shift in U.S. tax policy.

(thread)

1/x
The fall in U.S. outward FDI is entirely a function of a fall in U.S. direct investment in the world's tax havens; there was not real change in the pattern of investment in other economies.

(under the old law profits reinvested abroad could defer paying US tax)

2/x
The fall in U.S. FDI "reinvested" abroad in low havens had a host of other effects - firms building up assets in low tax jurisdictions were buying U.S. debt, inflating gross flows in both ways.

(there is actually a good fit in the BoP data here,using flows over last 4qs)

3/x
Read 9 tweets

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