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China Ministry Of Commerce "We Told You So... And No, We Aren't Depegging"
Moments after China's $7.2 billion March trade deficit was announced, the Chinese Ministry of Commerce was blasting away at critics of the CNY peg. According to Market News, the MofComm stated that "the recent steady decline in China's trade surplus
and the trade deficit post in March again show that the yuan exchange
rate is not the key determinant in the country's foreign trade balance." He has a good point - what is, is the endless printing of paper money by China used to keep its residential sector screaming ever higher, while at the same time taking advantage of the same generosity from Ben Bernanke across the Pacific, which in turn benefits China just as much as it does the US. The reason is simple - continued destruction of the dollar, which will commence shortly, will benefit China as well, further facilitating its export economy, while its own printing goes straight to boosting imports. In this way, the confrontation of Chinese and US monetary policy can be seen nowhere better than in the Chinese balance of trade: and judging by the increasing trade deficit, the Fed's influence is starting to wane. Soon enough, when the Fed's marginal impact on the CNY is negligible (via dollar printing and via the CNY peg which is not going away any time soon), China will truly have no other option but to rely on its own consumer class, even as it still seeks to reap the benefits of increasing exports. Our belief is that the deficit will drift slowly higher, however what will become evident will be the ever greater absolute amount of both imports and exports in China.
More from Market News:
Spokesman Yao Jian's comments were issued after the General
Administration of Customs reported that the March trade balance slipped
to a deficit of $7.24 billion, the first shortfall since April 2004, as
a result of higher global commodities prices and surging commodity
import volumes."Our country's trade surplus has been falling and we saw a trade
deficit in March while our yuan exchange rate maintained basic
stability," Yao said."This again proves that the determining factor the in foreign trade
balance is not the exchange rate but market demand and supply as well as
other factors."Yao also said that China's trade surplus is likely to fall sharply
this year from 2009's $196 billion."Our country's trade balance has been continuously improving. This
provides conditions for maintaining a stable yuan exchange rate," Yao
added.He also repeatedly long-standing government calls for other
countries to lift controls on exports to China.The Commerce Ministry has been identified as a key source of
opposition to a stronger yuan on the State Council, the executive
decision-making body which approves major policy shifts.
And all those who think Geithner achieved anything in China (aside from additional laughter at his ramblings from Chinese students), may want to reconsider:
Commerce Minister Chen Deming appeared on state television Saturday
soon after the data's release to talk down speculation about a move on
the exchange rate, citing the monthly trade gap."The March deficit tells us that the trade balance isn't
necessarily directly linked to the value of the exchange rate. It's
decided by market demand and supply," he said.
At the end of the day, a few hundred million angry Chinese is a greater mobilizing force than a few hundred thousand US union workers. Hopefully American politicians will figure this out soon.
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I hope Timmy made him self useful in china and bought me home some Egg Fu Yung and Creme of Sum Yung Guy with a side order of Fuc yu man and Tung sum chick with Duck sauce on the side
They may be actively trying to debase the dollar, but problems abound in Europe like a whack a mole game.
As a sidenote I guess this means Giethner and Obama take another hit on the chin as political capital has been wasted as quickly as pixelated capital is wasted by Ben.
No. They have learned from BS (Ben Shalom) Bernanke. You print, we print.
Well they got a peg to maintain.
So what did Geithner achieve? A chance to practice his conversational Chinese? Reassure we'll be the last to default after bailing out the world? A nice Chinese suntan?
Turbo Timmy is either window dressing or errand boy; we will soon find out which. One need not be a weather vane to know which way the wind blows. Read on for a hint.
The greatest fad of the second decade of this century will deemed to have been "strategic defaults" -- walking away from the mess we created without a backward glance, just like my dog after taking her daily dump.
We will not default alone. We will let some small fry (Greece, Portugal, Ireland) go first and then line up saying "if they can do it, why can't we?" Golden Slacks will ride to the rescue with a clever reciprocal collateralized debt swap, fully insured by AIG. Under such RCDS, all works fair and square: our debtors forgive us our debts and we forgive theirs. If someone comes up a bit short, they can file a claim with AIG -- but why bicker over a measly trillion or two?
<<<<At the end of the day, a few hundred million angry Chinese is a greater mobilizing force than a few hundred thousand US union workers. Hopefully American politicians will figure this out soon.>>>>
A race to the bottom? Disagree. If it's good for China we don't need it. Unions may be over paid but compared to what.. near slave labor....Free markets? Is this really needed in a progressive western nation? My advice to Timmy .. Don't listen and stop playing the role of patsy!! China will fold like tin foil or be forced to show there hands through war.
If the US ever considers waging war on China, it has forgotten Vietnam. A war that cannot be won.
I don't think they would ever go to war, they have no navy and a very limited air force. Would they swim here? We certainly wouldn't go there to go to war. I think it would be a trade war if there were a war...
A war fought with guns and bombs against China would be a loss all around, even to the economic elites who make $$$ selling Unca Scam the 'tools of the trade.' However, an economic war will just impoverish the folks who aren't rich already - on both sides - while the elites take the spoils of war. So, economic war it is. I don't know about you, but I certainly feel my economic power fading away.
It's Not America that will wage such a war, but the revolutionist. Vietnam could have been won , crushed, but America was never suppose to " Win".. aka.. Stop Communism. Global politics will eventually come to war , because usury (western banking)which the communist ( anti-Christians) have used to hold power , has run it's mathematical coarse. I hope there is never war between China and America, no good reason to spill American blood over a nation who the west can live without anyway. Just my two cents...
We specialize in wars that cannot be won.
" WE" ?? It's Not America that wages wars that cannot be won.. but rather our glorious high minded liberals and secret banking cabalist on either side of politics isle. America if ever truly mobilized to wage war would have kicked every foes ass into ashes, including the present ill adviced wars. Don't confuse weakness for political treason.
Sorry, my <sarcasm> font was turned off. You are right, of course. Keep in mind that the cabal does not need to win wars, it just needs to keep them going. Huge profits roll in from munitions and it is such a bother to have to retool for rebuilding the infrastructure we just bombed into smithereens. But just in case, we have a subsidiary to bid on that, too ;-)
Do you have prior military service? If so, may I ask in what capacity?
I grew up around military views. My father was an American GI , my mothers brothers served in the german armed forces in WWII.
I thought you were Smedley Butler for a sec there.
on Sat, 04/10/2010 - 19:11
#295012
If the US ever considers waging war on China, it has forgotten Vietnam. A war that cannot be won.
Harbourcity,
Internal or Civil war for China... due to working / living conditions... I thought was more the point than the U.S. attacking who buys our debt, in bulk... weekly.
But I could be wrong.
by Segestanon Sat, 04/10/2010 - 18:31
#294988
<<<<At the end of the day, a few hundred million angry Chinese is a greater mobilizing force than a few hundred thousand US union workers. Hopefully American politicians will figure this out soon.>>>>
A race to the bottom? Disagree. If it's good for China we don't need it. Unions may be over paid but compared to what.. near slave labor....Free markets? Is this really needed in a progressive western nation? My advice to Timmy .. Don't listen and stop playing the role of patsy!! China will fold like tin foil or be forced to show there hands through war.
It's decided by market demand and supply," he said.
Supply and demand economics? He sounds like that crazy President who used to do B movies.
What is this nut talking about. B. Hussein Obama will prove him wrong.
Wasn't much of China's supposed defecit due to it's stockpiling of raw materials ?
Apart from the rhetoric, what I take from this is that by engaging in this echange, there is still some pretense that China actually cares about the criticism levied against her, suggesting/reinforcing the perception that the current system of monetary control has legitimacy.
China being labelled as currency manipulator by US Congress should pick up steam again any time soon. Getting Interesting.
Sticks and stones, etc. Label them whatever you want. Will that change anything?
The only way to prevail over China is to reclaim our industrial base. We must learn to create value in society. Flipping burgers, shining shoes, trading pieces of paper doesn't do it.
If you take some materials (even if it is just a few electrons) and build a house or a car or some kick-ass software, you create far more value than you consume in way of resources.
Revamping has to start with an industrial policy. Unfortunately, that would require a complete overhaul of our education, financial, legal, social and governance systems, to mention but a few.
Good luck with that, especially as long as we keep watching Americal Idol while our own government robs us blind.
I'm palpably refreshed to read a comment wherein the root cause of our dilemma is highlighted. Thank you.
So many others here, sitting in the dark proselytizing about war, conflict, liberals, cabals, blah, blah, blah. Too much time on the internet can be just as damaging as too much time with American Idol.
ZH is education of the highest order, not mindless entertainment.
"war, conflict, liberals, cabals,"...hey, I do not like conservatives either! Politicians in general! I take offense to your use of Hegelian dialectic. We here reference "us vs. them" except when referring to the banking oilgarchs as the enemy. I also think you are misinformed, as "war" and "cabals" are serious issues.
I think I will **junk** you.
Well, you are free to do so. Though I must admit a bit of confusion over the actual reason for the junking. I contend that "us vs. them" is only appropriate for games of sport, which our current situation most certainly is not.
We all, and I'm not excluded from this statement either, hold some level of personal or professional responsibility for the state in which we now find ourselves. Also, I'm not entirely sure why you're offended by the use of anything in an attempt to root out the fundamental causes of our collective; at this point, shouldn't we throw everything against the wall to see what sticks?
As for being misinformed, I think you've extrapolated a bit much from a couple of short sentences. I have first-hand experience with both cabals and war; rest assured, sir, that I take neither one lightly. In fact, I've sacrificed my professional career precisely because of them.
What I took from the previous poster's comments is that perhaps cabals and war aren't directly to blame, but are instead effects of the true cause. It was that to which I was endeavoring to speak.
Oh, a minor point: the "blah, blah, blah" part of my previous comment was meant to include conservatives, politicians, generals, and anyone else you wish to lump in with "them." And Hegel actually referred to his methodology as intellectual property of Kant, so Hegel would probably be compelled to **junk** that part of your comment.
Phew I was worried you found Hegelian dialectics offensive.
"If you take some materials (even if it is just a few electrons) and build a house or a car or some kick-ass software, you create far more value than you consume in way of resources."
We must be richer than hell, then, because we took materials and built lots of empty houses and shopping malls and warehouses and commercial office space. Phew! I thought that stuff was a problem.
We built ours with debt. It turned out badly. China is building theirs with debt. Any reason their overbuilding should end better?
on Sat, 04/10/2010 - 19:42
#295037
Sticks and stones, etc. Label them whatever you want. Will that change anything?
The only way to prevail over China is to reclaim our industrial base. We must learn to create value in society. Flipping burgers, shining shoes, trading pieces of paper doesn't do it.
If you take some materials (even if it is just a few electrons) and build a house or a car or some kick-ass software, you create far more value than you consume in way of resources.
Revamping has to start with an industrial policy. Unfortunately, that would require a complete overhaul of our education, financial, legal, social and governance systems, to mention but a few.
Good luck with that, especially as long as we keep watching Americal Idol while our own government robs us blind.
Ungaro,
http://www.youtube.com/watch?v=wYuLjGQQ-jg&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=132
Protectionism... thru pricing constraints?
http://www.youtube.com/watch?v=JaF-fq2Zn7I&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=161
Of course it will change something. It would change everything.
The western world is animated by a mob mind and is constantly looking for a scapegoat. An action supported by a global media network.
Remember when Han shop owners'properties were assaulted by Tibetan locals and the mass hysteria that followed the deployment of order forces? It still goes on one year after the event.
Set the same scenario in the US (which happened) and assess the differences.
Suddenly, the assaulters are no longer oppressed people by rag tag with no respect for private property and who should be deported back to their home.
The Chinese are not stupid, they perfectly know they are antagonized for behaviours the Western world practise largely.
Being labelled a currency manipulator would be the official kick off for the "lynch your chink" campaign. The US is a solid currency manipulator. It is not about currency manipulation. It is about a part of the world who has no way out and is dying for air. China is aware enough not to play the safety valve part.
They will try as much as possible to stay out of the path of the charging bull and wave a red cloth under its bully eyes.
"Our belief is that the deficit will drift slowly higher, however what will become evident will be the ever greater absolute amount of both imports and exports in China."
anyone know the exact point when this occurred in the 30's between england & the u.s.?
"At the end of the day, a few hundred million angry <horny male> Chinese is a greater mobilizing force than a few hundred thousand <lazy male> US union workers."
upon reading this, just had a thought: what if the 'one child policy' was Mao's version on the second amendment?
the ultimate hormonal insurance policy.
aka don't.fuck.with.us.
Try to remember there are two sides to every coin.
An excess of chinese males was not a result of the one child policy but due to a cultural preference for male heirs.
In asian cultures, along with ours, males carry on the family name. Girls do not hold as high a status in rural China because males are expected to take care of the family and many are aborted with hopes of getting a male child the next time.
While an excess of males could be used to wage wars, they could also run amok and cause internal dissension. There is already a shortage of brides for these males which could result in rage against government policy.
absolutely...great point. well aware of the chinese bias towards men, as i'm around it quite often. misogyny runs deep in that culture for sure. maybe 'one child policy' was just that bias amped on steroids? Mao was definitely a master at recognizing the dark side of his culture and turning up the squelch on it several notches.
and yes, let's hope for everyone's sake that that feat of sociopathic engineering comes back and bites his cold, fat, dead, mole-covered ass. but that's up for the chinese people to decide for themselves, individually & collectively.
we got our own problems and blaming the chinese and/or pointing out their dysfunctions ain't gonna help with the cure for ours. (that goes for both sides, myself included)
China is pegged to the US dollar, not the rest of the wold. China still has a surplus with the US. So the the argument that China needs to adjust relative to the dollar still stands.
They are pegged to the USD because we are their largest consumers. Their surplus is not the cause of currency imbalances but the effect. The cause is that they have a 1.3 billion people willing to work for $5/day, 10 hours a day, six days a week (and you aren't) so you can buy your shirts at WalMart for $7.99 or whatever.
Not so different from having the Mexican braceros work the fields of California for the same $5/day just so that we can have lettuce for $1 a head.
The solution to the problem is within, not in China or Mexico or India. We must start producing more than we consume and we must produce real value that people in other countries want to buy.
Right, and we will do that by working for $5/day, 10 hours a day, six days a week.
China, Mexico and India all have the same "advantage", incompetent governments that have impoverished their citizens.
You go ahead, I will do my thing. There is little value in sewing disposable slippers and T-shirts all day, that can be automated.
There might be a better way. The labor-intensiveness of production is decreasing (automation, software, etc.) We must learn to produce real value that people in other countries want to buy, instead of focusing on how to best amuse ourselves.
We can do this, we have done it before; we have put a man on the moon, conquered the Arctic, etc.
If labor intensiveness of production is decreasing, why can't we spend more time amusing ourselves? We only live once, so why work ourselves to death (especially to pay interest on thin-air money from the rent seeking banksters)?
Sure we can, we have the freedom to do or not do whatever we choose. We can lay on the beach all day but then we must not complain that others who work harder and/or smarter than us have more.
It is really simple, on an individual as well as the national level. If we produce more than we consume, we'll have more - this is immutable.
If we had honest money (not fictional money created out of the thin air of debt profligacy) and government spending curtailed to bounds of reason (e.g. not more than 3% of GDP) and we exported more than we imported, we would have sound currency and would not have to worry about what other countries do with theirs.
They are beating us in things like electronics which are highly automated. Highly automated in china, just like it was here! They work cheap in all things, not just manually intensive labor. They use the same equipment (from Japan) that we use!
We cannot compete with peasants trained to run high tech assembly lines! or Engineers that are paid $15K when we pay $70K, whatever we make they can make cheaper.
Vietnam POW camp administrator, abt 1967:
How can your country is able put a man on the moon, but cannot stop a war?
+1
hahahaha......Tyler is funny on Saturdays.
At the end of the day, a few hundred million angry Chinese is a greater mobilizing force than a few hundred thousand US union workers. Hopefully American politicians will figure this out soon.
Fri Apr 9, 4:47 pm ET
WASHINGTON (Reuters) – The Senate could vote by the end of May on legislation to prod China to raise the value of its currency, a spokeswoman for Senate Majority Leader Harry Reid said on Friday.
"If China does not satisfactorily address the concerns raised by its currency policy, this legislation could come to the floor in some form during the upcoming work period," Reid's spokeswoman said.
One suspects that pandering to populist revisionist history (or for the sake of simplicity, just making it up) will reach epic proportions as we enter the t-6 month countdown to the mid-term elections.
Insanity gone extreme. We print all this money so that debt is virtually our only export. We debase our currency yet insist that our trading partners must not debase theirs along with us.
I am apalled by the arrogance of "only we and our good friends can" (debase the currency, borrow in our own currency, have nuclear weapons, dictate to others how they should govern themselves, etc.)
Imagine if the tables were turned. How would we feel if some other country demanded that we value the USD a certain way, or the kind of government and weapons we should or should not have -- we'd put them down like a lame horse.
Insanity gone extreme....
Imagine if...
You are on to something. Imagine a scenario in which the apparent insanity makes sense, albeit madness of a sort, yet is inclusive of your observations.
E.g., deliberately creating chaos can enable an outsider to enter and take control;
Or, debasing one's superpower currency that is also the world's "reserve" currency can set-off destruction of others' currencies to such extent that the others are forced into dependency, and thus become compliant to the [one-ring that rules them all] superpower's dictat.
Or,covertly blowing-up your own Battleship, and blaming Pablo, can justify invasion and takeover of Pabloland.
Or, arranging crude oil to reach $147/bbl [or $60, $80, $100] could finance a war if the oil-exporter[s] also needed/wanted that war but had to claim the opposite. The excess profits easily could be funnelled to support the war... and very few the wiser.
So, imagine away! When you hit on a workable hypothesis, you will see some lights go on. Worked for Sherlock Holmes.
Only a newby looks for someone else to hand him the answers to every riddle...and so stays a newby.
To paraphrase Jimmy Buffett:
Yo, bartender! Make mine a double.
An economy that imports raw materials and exports finished goods is getting stronger. An economy that is importing finished goods and exporting raw materials, or nothing, it getting weaker.
Which situation do you think fits the Chinese, and which do you think fits the US?
China: Huge importer of oil, housing at a high (bubble?), worlds largest gold producer, currentsea only backed by 5% tungsten, has the sixth largest tungsten reserve in its Central Bank, exporter of barbies, cheap clothes, and other crap. Facist government.
America: Oil peak production in '79, in the middle of a housing crisis (RE about to get its ass handed to it oficially within the next 5 months), no gold production, world's largest tungsten reserve, relatively no exports. Facist government.
I can not tell which is which.
Game over, own precious metals.
Might want to try this one: China: free economic zones around major cities allow citizens to open businesses with no requirements, paperwork, and minimal overisght. Taxes within these zones are non-existant.
Low/no taxes in a minimal regulatory environment looks like what type of economic system?
Well, that makes it easier for the thugs to shuffle their junk-rate goods across the world.
That's like how they have company towns that make Blankenship of Massey look saintly. They kill/disappear/etc. their critics with those instruments.
Which comes first, hyperdeflation/hyperinflation (deflation in excess goods ie houses, TVs, hookers, and inflation in necessary goods, REAL currentsea-this includes gold/silver and oil), or world war?
How about both at nearly the same time?
This is absurd. The net Chinese trade data is meaningless with respect to the bilateral trade issues with the US.
Listen, whether you like it or not, China is spending $1-2B to manipulate their currency. It is simply NOT reflecting natural trade flows, and this amounts to an effective export subsidy and import tariff on US goods. This is trade theft, pure and simple.
I hope Obama and Geithner don't drop these issues because a few Chinamen and their Western pimps are crying foul. The facts remain, and the only people against standing up to the Chinese are involved directly with their growth and profiting from it in some way.
I hope Obama and Geithner don't drop these issues because a few Chinamen and their Western pimps are crying foul. The facts remain, and the only people against standing up to the Chinese are involved directly with their growth and profiting from it in some way.
I believe the proper term for folks like Elaine Chao (that aid and abet China) in the US in that respect is 'Madam'.
maybe Tim Aling Ading Dong can help them establish some human rights and environmental standards and labour standards, etc. etc.
or maybe he is prepping his escape.
future not so bright.
...and China has chosen to be tariffed by refusing the revaluation. If they want to drink from the golden cup and not the wooden one, they have nobody else to blame.
Perhaps some hardball on trade would make that country do something more meaningful. That is, they don't make a minor appeasement, but take a major blow to their pride (if not a collapse of their regime). If they're going that far to hold up their house of cards, it would not take much to collapse them(and discourage other Third World countries from taking their place).
The "rumour" is 5 to 10%+ hike on the 15th, my guess is 8.88% hike. Remember the Chinese are excellent guests, to come empty handed would be to "loose face" not likely.
I have been advised to go long on HK listed companies with large USD debt, airlines with big USD orders, banking, mines, paper, construction and industries requiring essential foreign parts. Short on exporters and anyone with a USD contract.
Anyone remember the trojan horse story?
+ 8.88...may your horse be stuffed with black swans bearing interesting gifts
China a currency manipulator, slave labor, and communists, human rights violators, yet the U.S. has invested in and supported them. Where is our high and mighty morals of democracy and freedom? In Iraq and Afganistan? Meanwhile we manipulate everything under the sun (including other countries)and are selfrighteous enough to label them. What hypocrisy.
China a currency manipulator, slave labor, and communists, human rights violators, yet the U.S. has invested in and supported them.
That was a question answered in the Reagan Administration, and later on in 2003 with offshoring. With offshore workers, they could get around having to answer to actual US citizens and the market forces of those citizens. That, and it also "deals with" certain groups that the GOP wants gone(but can't resort to violence from its members).
That, and China still believes in killing/jailing its critics when they become too dangerous to business. That is, we never got rid of the "company town", it just got sent overseas where they don't give a damn(or welcome it). They'll still be up to this in 50 years, if not 100 - barring any regime collapse.
In short, China(and other Third World countries) provide(s) a way to circumvent labor issues and marginalize people of the First World.
A lot of people here who make the error of defining life in China based on your own experiences rather than that of the Chinese. Their new-found capitalism (your peasants, not the government) raises their standard of living greater than yours will ever be raised.
Their reform will come from within, not from pressure by American labor unions who want their bought-and-paid-for government in this country to destroy the Chinese economy in order to make them more competitive. The same thing happened to the Japanese in the 80s. The strengthening of the Yen at the behest of the US led to the destruction of the Japanese economy and brought on the rise of the Chinese economy.
The Chinese may or may not un-peg their currency. They will not do it to appease the US, nor because they are afraid to "loose" face (that would be "lose"). They will do it because it is in their best interests...as it should be.
China is a big country, inhabited by many Chinese.
Charles de Gaulle
Not only that, but they have been steaming along for some four thousand six hundred years, as have the Afghans...
Anyone care to try to get one up on Sun Tzu?
And the best of British luck to them who try.
ATH
Maybe they are pegged to the dollar, but look at Taiwan, S Korea and other Asian traders with China. Yuan at near highs for the last 20 months vs many of these countries currencies. China must raise the value of it's yuan in order to pacify not the US, but other countries they truly compete with in the sense of manufactured goods- those that are simultaneously building renminbi for China
It has signed renminbi swap agreements with Argentina, Belarus, Hong Kong, Indonesia, South Korea and Malaysia. Last summer, it expanded renminbi settlement agreements between Hong Kong and five mainland cities, and authorized HSBC Holdings to sell renminbi bonds in Hong Kong. Then, in September, the Chinese government issued in Hong Kong about $1 billion worth of its own renminbi- denominated bonds.
How fast can Yuan replace the Dollar??? I would suppose once the gold reserves go from 1000 tons to 5000 tons ( IMF is about 3k and US is 8k tons).. The value of the gold is not as important as the symbolism coupled with real manufacturing capabilities vs our debased dollar.
Obama and Geithner will have to maintain this currency manipulation dog and pony show until after the November elections. Politicians are aways fighting the last war. China , of course, has learned from Greenspan and Bernanke. Why work for a living when you can print money and run deficits forever? That leaves Germany as the last major industrial nation that believes it can survive by exporting.
Some odd comments :) . Anyway, it's an interesting shell game stimulating much discussion, US-Sino relations. China makes it, we buy it, works well for us. Cheap goods. Problem is, we've exported most blue collar manufacturing to our sweat shop friends. So, our mentally challenged pot smoking barely graduated from high school masses cannot find jobs making weed whackers.
When you factor in wages, taxes, benefits, unemployment insurance, cost to maintain a safe workplace, it costs a relative fortune to make stuff here. China, Mexico, anywhere but Europe, or Canada, no such problem. Paradoxically, the all consuming Federal and State Governments here in the US have made it almost impossible to manufacture domestically and make a profit, let alone a juicy obscene profit.
Then these same crazy Governmentalists complain that their constituents can't get a job? Say what? The only reason to make stuff here is if the cost of transporting it from abroad is too high. Have the crazy Governmentalists forgotten about the rising minimum wage? Killed the job market for entry level workers (think young people). Now there's a whole generation of high school and college grads who can't even get a job flipping burgers.
And what the heck was the 1 Trillion dollar stimulus package about? You could have suspended all Federal income taxes for half the year with that kind of money. But instead the Feds used it as a political slush fund to bail out their buddies. Most of it hasn't even been spent.
Anyway, if you haven't realized yet that we now live in a nation of men, and not laws, and certainly not the Constitution, you are like so behind the times. It's mob rule. Anything goes if you're connected. The laws are what they say they are.
NAFTA blew right past Mexico. The only major manufacturing is China, India, Indonesian Countries and the higher technologies in S Korea, Singapor and Taiwan. Chile and Australia are suppliers of raw material to China. We are not even in the game.
I don't see why this is so hard for us. On the issue at hand, as Species8472 so well wrote: "China is pegged to the US dollar, not the rest of the world. China still has a surplus with the US. So the the argument that China needs to adjust relative to the dollar still stands." Also, I don't understand why so many are so upset that the evil U.S. would want them to depeg? Anyone hear about this 'free market' thing? I don't know, but I hear that allowing the 'market' to set prices (e.g., relative currency prices) does wonders. Be quiet about that one, we don't want it to get out and possibly stop the idiots in Washington from destroying the country further (both at the Fed and Capital Hill). God forbid, at least as a first pass solution, we have market forces determine relative fiat currency levels, interest rates, or healthcare costs. No we can't do that, better just have the red Chinese dictators set our relative currency rates for us, wow that was much better than letting those awful markets decide. Yep, we now don't just have taxation and spending without representation, but also now we enjoy exchange rates with a foreign Marxist dictator deciding for us. Yep, the Founders and Adam Smith would be scratching their collective heads on that one (pun intended).
Second, this notion that the U.S. is somehow the cause of China's manipulation or to blame for their decision to manipulate seems to be an odd rationalization of the staus quo. Alright, we know that, in general as of today, the markets are not truely free and fair (e.g., for tradeable goods and services, the USD relative to the Chinese yuan, etc.) and the U.S. is not perfect, but that hardly justifies another round of making markets less free and fair. Claiming the U.S. is bad, therefore the Chinese government can do as they please hardly makes their case stronger.
Finally, no matter what the Chinese say or do, or our current rulers say or do, as long as the real level of unemployment and underemployment is north of say 15% (Shadow Stats put it at greater than 20%), there will be tremendous pressure, at some point soon, for countries that use an export led economic policy to effectively eat their exports, just like happened many years ago. The wage arbitarge game may not be ending, but it sure won't likley be expanding in the near future. Just based on unemployment in the U.S., some version of trade wars at this point are almost assured, that is, as long as unemployment is as high as it is now (which I expect; and at a minimum I would go out on a limb and state that currency pegging by the likes of China will end in the next year or two). I know, I know times are different and situations are not exactly the same, but here's a thought: prior to the 'Great Depression' the U.S. was an export powerhouse, stock market skyrocketing, housing prices skyrocketing, the Jitterbug, you name it. In fact, you could say it was the China of its day, except it didn't steal its technology from other countries, and actually led in many fields (although, the Germans had chemistry, and other fields). Anyways, back to the story/thought, when we hit the economic wall back in the day and the depression came, which countries do you think fared the best from an unemployment perspective, and why? As a general rule, those larger export led economies saw massive increases in unemployment (e.g., the U.S.) and some even major social unrest (e.g., Germany). As it turns out, that as a general rule, it was the industrialized net exporters that had an especially hard time (i.e., except for exporters that had terms of trade generally in their favor and/or were small enough not to be noticed in playing the devaluation game). Anyways, no history doesn't exactly repeat itself, but it sure does seem to rhyme sometimes. Furthermore, one of the primary reasons China manipulated in the first place was to effectively export unemployment to other countries. The U.S. leadership allowed this to happen and now it is clear, largely because real unemployment is so visibly high now (although most are still connecting these dots). Anyway, whether I like or you like it or not, unemployment is no longer a lagging indicator, but a leading indicator for things like this political & economic issue.
The current administration has pretty much squandered their assets both financially as well as politically.
I agree.
The bear market rally wants to continue for a bit longer ...
DOW/SP500 daily bull signals from Friday 9 April continue.
http://www.zerohedge.com/forum/latest-market-outlook-0