Ah, those harmless Chinese……..
http://news.yahoo.com/s/csm/20070226/cm_csm/ynavarro;_ylt=AokIuKZaFUdImELOsJQYFuwDW7oF
Im no expert on economics but if the article is correct, this is a excerpt:
From time to time, US politicians have railed against these practices – and the collateral hollowing out of America that China’s”weapons of mass production” have brought about. However, any time that the Bush administration or Congress threatens any kind of significant and tangible action – as opposed to simply beating its chest – China can now credibly threaten to stop financing US deficits and start dumping greenbacks.
This is a very credible threat. If executed, inflation, the costs ofimports, and interest and mortgage rates would skyrocket. With higherhousing costs leading the way, consumers would soon be overburdened.The result: a nasty stagflation shock.
Some say that the Chinese would never take such an action because it would hurt them as much as Americans. But it’s Beijing’s view that the Chinese people are far tougher and better able to withstand any economic shock than Americans who’ve grown soft living the good life -and they are probably right. Chinese officials also take a far longer view of strategic action. So if a “dump the greenbacks” strategy need sto be implemented to break the back of a rising American protectionism,to secure Taiwan, or to achieve any other strategic goals, so be it.
So..China is in a position to cause havoc in the American economy with a flick of a switch, theyre expanding their military, and they arent shy about throwing their weight around if it suits their needs. Very interesting stuff.
Actually, it’s the Chinese that are screwed. They’ve been buying dollars to keep their own currency depressed against the dollar and make their goods more competitive. If they stopped and allowed it to float, the dollar would drop, the Yuan would rise, the wages of Chinese workers would go up, and it’d kill their trade advantage. The moment they even start selling their reserves, the dollar crashes and all the dollars they haven’t sold yet become worthless.
They’re screwed. They’ve invested in something they can’t sell.
And who wins? Americans who got goods from China at well below free market prices because the Chinese government has been basically enslaving their own people through anti-market economic policy. And China has also been one of the biggest buyers of sub-prime loans. Which means that they’ll also bear the brunt of the current housing crash.
It’s just like Japan. Remember the ’80s when everyone was predicting that they’d own our asses? What happened? They took all the money they made from restricted trade, invested it back here in real estate, pumped up the prices. We took their money, the real estate market crashed, and they sold it back to us at a loss. We kept the land, we kept their money, we kept the Walkmans and the Tercels, and and they enjoyed, what is it? 20 years worth of recession now?
I’m the first to criticize U.S. monetary policy, but the one saving grace is that we’re still better than everyone else. Not perfect by any stretch of the imagination, but sometimes you don’t have to outrun the bear, you just have to outrun the other guy.
The chinese could be screwed, but they are in essence a self sufficient nation. We are not. China could survive pulling the plug on dollars (in particular before a military event), I’m not sure the US could. The US is the major buyer of Chinese goods…and as long as we remain so, I doubt they’d try anything. Kind of an economic mutually assured destruction…we can’t mess with China, and they can’t really mess with us.
they are in essence a self sufficient nation – not hardly (to quote John Wayne 😉
Just to take one example, they’re in competition with India, Japan and the US for oil, as they don’t have nearly enough as their middle class continues to expand rapidly. It’s going to be interesting to see how they work out the economic freedom vs political control issues as they continue to grow.
I’m not saying they don’t depend on imports, but they could feed their populace. more than we can say.
We can not only feed out population, food is a major export for us. I’m not sure about China, but I suspect they’re probably pretty neutral about food imports/exports.
One interesting thing about China is the sheer number of Chinese. They have more very bright kids than we have kids. India, too. So when either of those countries advances economically, the global impact can be staggering. We can see it in oil demand, and in energy use. They’re not yet, but at some point, they’re both going to be 900 pound global gorillas.
We can feed our population with modern agriculture, heavily dependent on infrastructure and oil. And we rely on our highway system to get it to the population centers. I’m sure China has a similar model, but I don’t think they are as dependent on it.
All I’m saying is that if you knock each country back 100 years, china would survive. we might not. I think a complete economic collapse (we can no longer import oil, for example) could have that effect.
so
why worry about anything. America could have done things diffrent, but hey did nothing about it, so this is the world you have today. your choice of leaders, visionaries, and whatnot has lead America to slowly rot on the vine. those whom won’t prepare for the worst yet to come, screw you. and those whom think your government bail you out live in a fatal fantasy world. welcome to your living nightmare now. Wildflower 07