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macroblog: The Adam Smith Institute Blog honors the anniversary of the publication of The Theory of Moral Sentiments. Edward Hugh notices that the "French Shop As Germans Save."Mark Thoma reviews Martin Feldstein's review of the Economic Report of the President. (via Cosmos)

New Economist: the US trade deficit to a more sustainable level of 3% of GDP, writes Harvard's Martin Feldstein in today's Financial Times, Uncle Sam's bonanza might not be all that it seems (subscribers only). Mark Thoma provides us with the story and his comments:Martin Feldstein: Capital Inflows Primarily from Foreign Governments, not Private Investors Martin Feldstein says the optimistic view that capital inflows to the U.S. are the result of the attractiveness of investment is wrong and arises from a misinterpretation of the data. A proper interpretation of the data reveals that the source of (via Cosmos)

  - Alpha.Sources blog: It results from a misinterpretation of the data provided by the US Treasury in the press release for its monthly Treasury International Capital report." As reported by Mark Thoma (who actually has a FT subscription)the dollar much would have to depreciate substantially to curb the CA. "He (Feldstein) believes a 30% decline in the dollar is necessary to get the current account down from 6% of GDP to a more sustainable level of 3% and that much larger changes are possible." Brad Setser (via Cosmos)

  Angry Bear: Mark Thoma (via Cosmos)

Dismally, as it relates to the markets.: Currency crisis' are usually born from large fundamental and structural imbalances, and although there may be reasons to raise an eyebrow, I don't see either showing signs that we should panic.  As Paul Krugman points out, we are not sitting on an economy that is gearing up for an "Argentina-style economic implosion".  We are as likely to see a default in our ability to pay our debts as we will ever find WMD's in Iraq, and therefore a dumping of the greenback in favor of more quality investments.  After all, our debts are denominated in dollars.  Any currency exposure derived from our debts are on the side of the holders, not us.  (via Cosmos)

  AsiaPundit: AsiaPundit has been an on-and-off admirer of Paul Krugman for many years. AP particularly enjoyed some of his essays prior to and after the Asian FInancial Crisis, although he did find much of Krugman’s non-economic New York Times work excessively polemic. (via Cosmos)

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