Reply #72: No worry [View All]

[aneerkoinos]

US is no competition to EU even with weakening dollar (and yuan). In 2003 EU-China trade caught the same level as US-China trade, and surpasses it widely this year, even if the EU enlargement is not taken into count. So EU is now China's biggest trade partner, with deficit that is not nearly as bad as US deficit, while US is number one source of direct investments (read outsourcing).

So what will happen if China uppegs yuan from dollar? EU exports to China, that have been doing well relative to US even under unfavourable currency movements for three years (euro strengthening against dollar-pegged yuan), will become even more competitive as yuan stops dropping against euro. And same for Japan. Dollar takes the free fall alone, destroyed middle-class can't afford the now more expensive wall-mart shit from China, but the ruling class of US still keep buying their posh luxury products from Europe. All you bases are belong to us.