Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog

Morici: Events in Tunisia and Egypt were caused by Chinese mercantilism
Howard Richman, 1/31/2011

In a commentary in The Street (Egypt and Stagflation), U. of Maryland economist Peter Morici argues that the events in Egypt were caused by Chinese mercantilism. It sounds a bit far-fetched. Here's how he ties it together:

China is subsidizing imports of oil and other commodities -- using the dollars it gets from currency market intervention- -- to moderate the effects of commodity price increases on its domestic gasoline and food prices. This pushes the price adjustments on the rest of the world, including the United States, and rising prices for food are hitting the poorer countries in the Middle East (those without oil) and Africa much harder than in the developed world and Asia, and contributing to social unrest and political risk....

His predictions for the United States: Gasoline could hit $4 a gallon, which would bust the economic recovery, and our economy could experience stagflation.