Twofish's Blog

October 10, 2006

I love this business

Filed under: china, finance, tcfa2006 — twofish @ 4:12 am

A comment on Brad Setsers blog….

I’m starting to dislike the word “liberalization” since it is becoming one of those vague feel good words whose meaning is fuzzy. When someone talks about financial system liberalization, what do they mean? End of capital controls? Floating currency? Remove restrictions on foreign ownership? Market based interest rates? What?

Also, I just finish a conference at MIT by the Chinese Financial Association and I’m about to head to NYC for another conference on Chinese banking by the Asia Society. I think that there is a consensus among most people (including people in China) that China needs to appreciate the RMB. The question right now is timing, pace, and sequence. Does floating the currency go before or after relaxing capital controls, for example?

Paulson (unless he is radically different from everyone else in finance I’ve talked to) is *not* happy about global imbalances. It worries anyone who has thought of it.

About Democrats, Wall Street is more partial to Democrats than one might otherwise expect. There are a lot of “Rubin Democrats” on Wall Street, and my general impression is that the campaign contributions people make are because they really believe in the policies rather than for tactical reasons.

The other thing is that is refreshing about Wall Street is that people are much more “big picture” than most people I’ve met elsewhere (including frighteningly, Washington DC). Part of it may have to do with the fact that a lot of them are pension fund managers that have to think 25 to 50 years ahead.

Goldman-Sachs *does not care* whether the Chinese government increases the limit on bank investment in the next year or two. It’s looking 25 to 50 years ahead.

Long term greed. It’s quite refreshing.

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