that idea very much. It dropped 15% yesterday. Under intense pressure from Thai financiers, the Bank of Thailand then partially reversed course yesterday, allowing the stock market to recover partially on Wednesday. Bloomberg reports:

Dec. 20 (Bloomberg) -- Thai stocks rallied from the biggest slump in 16 years after the military-led government scrapped restrictions for international investors that roiled shares in emerging markets.

The SET Index jumped 11 percent to 691.55 at the close, its biggest gain since Feb. 2, 1998. It was the largest fluctuation among equity markets included in global benchmarks. Yesterday's 15 percent drop erased $23 billion in market value, prompting the government to rescind penalties on equity investors who don't keep their funds in the country for a year.

The policy reversal, a day after the new(see also Menzie Chinn, among others) noted last week, the text of Bernanke's speech in Beijing called the yuan peg (which is more accurately a crawling peg) against the dollar an "effective subsidy". However, Bernanke spontaneously reworded that description to "distortion". Originally, his speech read like this:

Greater scope for market forces to determine the value of the RMB would also reduce an important distortion in the Chinese economy, namely, the effective subsidy that an undervalued currency provides for Chinese firms that focus on exporting rather than producing for the domestic market.

The problem with that language, as Nouriel points out, is that the word "subsidy" has a specific legal meaning which allows for specific legal retaliations, such as import tariffs. In fact, all members of the WTO have agreed