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.