A Perfect Storm Brewing for American Manufacturing -- Greek Crisis and Fed Interest Rate Liftoff

Greece has just announced the closure of its banks and stock market for a week. With falling unemployment, rising wages and improved economic prospects, the Federal Reserve is likely to start raising interest rates this year. Together, these developments are a perfect storm brewing  that could derail the hesitant recovery of America's manufacturing sector, push external trade deficits even higher, and throw large numbers of Americans out of work.  Why?

Currency-Based CVD Penalties: Wrong Tool for Solving America's Trade Deficits

The currently proposed legislation that would use currency-based countervailing duty surcharges to help reduce America's trade and unemployment problems will have almost no impact because CVDs are designed to fix firm-level, product-specific problems, not macro-economic imbalances. The note concludes that a macro-level policy designed to correct the dollar's global overvaluation is needed instead.