Krugman and Palast reflecting on China un-pegging the Yuan to the Dollar.

[JanMichael]

First the Krugman article.

Quote:

"An end to China's dollar-buying spree would lead to a sharp rise in the value of the yuan. It would probably also lead to a sharp fall in the value of the dollar relative to other major currencies, like the yen and the euro, which the Chinese haven't been buying on the same scale. This would help U.S. manufacturers by raising their competitors' costs.

But if the Chinese stopped buying all those U.S. bonds, interest rates would rise. This would be bad news for housing - maybe very bad news, if the interest rate rise burst the bubble.

In the long run, the economic effects of an end to China's dollar buying would even out. America would have more industrial workers and fewer real estate agents, more jobs in Michigan and fewer in Florida, leaving the overall level of employment pretty much unaffected. But as John Maynard Keynes pointed out, in the long run we are all dead.

In the short run, some people would win, but others would lose. And I suspect that the losers would greatly outnumber the winners."

Next the Palast piece.

Quote:

"It is not the Guangdong skyscrapers and speculative bubble which allows China to sell us $162 billion more goods a year than we sell them. It is that China's government, by rejecting free-market fundamentalism, can easily conquer American markets where protection is now deemed passé.

And that is why the yuan has kicked the dollar's butt.

America’s only response is to have Alan Greenspan push up real interest rates so we can buy back our own dollars the Chinese won in the export game. The domestic result: US wages drifting down to Mexican maquiladora levels."

I don't know precisely what will happen in the near future to the US economy but from the looks of it it will be significant.

But how? Will it balance out what people do for work in our economy like Krugman says it might or will it "Maquiladora" all of us like Palast suggests? Or are they saying essentially the same thing?

Oh well, I guess we'll all just have to wait and see the results for ourselves:shrug:

[porkrind]

1. Could you please summarize?

I don't do the NYT registration crap.

[SHRED]

2. For that registration crap...

http://www.bugmenot.com/

[porkrind]

6. Thanks, I'm aware of this.

Sometimes, it's just not worth the fight. :)

[SHRED]

8. Real easy for me

Cookies are saved and I only "register" once.
Good luck.

[JanMichael]

3. I added a couple of quotes from both articles.

BTW the Palast article does not require registration.

[porkrind]

5. Thanks.

It looks like bad news according to either article. Until we get the right-wing out of majority, our economy will always be weak. Republicans have consistently shown that they can't manage the economy, even aside from their stealing from the treasury. They have a slash-and-burn approach, while the left understands that the middle-class must be protected instead of exploited.

[mhr]

4. Palast Nails Bush's Butt To The Wall Of Stupidity

As if we didn't know he already belonged there!

[PeachyDem88]

7. Gah!!! *Head Explodes*

It is frustrating to think that Pat Buchanan has better ideas about trade than half our Dems.

We can only hope that a Fair Trade, America First, Pro-Labor Democrat becomes president before we become a Third World nation...

Maquiladoras, indeed.

[HereSince1628]

9. A generation of DLC effort has undermined Dem connection to labor

The DLC, turned to corporate dollars to support them and as that connection grew, DLC interest in labor collapsed. DLC domination of the party has left it unable to help labor.

[ihaveaquestion]

10. We're following the Spanish model - from the 1500's???

From Krugman's article...

"The question is what happens to us if the Chinese finally decide to stop acting so strangely.

<snip>

And what about the strategic effects? Right now America is a superpower living on credit - something I don't think has happened since Philip II ruled Spain. (emphasis mine) What will happen to our stature if and when China takes away our credit card?"

So what happened to 16th century Spain? It didn't remain a superpower, though it did have colonialism to fall back on for a while and after that - Franco. We could do the same, I suppose. We're already working on the colonialism. All we have to look forward to is the dictator who will liberate us.

:eyes:

[AndreaCG]

11. We already got him

"It would be much easier if this was a dictatorship, just so long as I was the dictator." Guess who?

[SammyWinstonJack]

12. Commander Cuckoo Bananas?

:silly: Do I win a Kewpie Doll? :bounce:

[Zorra]

13. Thanks. Great stuff.

Palast:

"China won't join NAFTA or CAFTA or any of those free-trade clubs. In China, Chinese industry comes first. And it's still, Mssrs. Friedman, the Peoples’ republic. Those Wal-Mart fashion designs called, chillingly, "New Order," are made in factories owned by the PLA, the Chinese Peoples' Liberation Army."

I would like to add:

"In America, Chinese industry comes first."

[necso]

14. Without really knowing

much about Mr Palast, his is the better read on this, I think.

The bottom line is that Chinese goods will cost more (etc), but not enough more to make the US competitive. This may slow the loss of jobs to China, but with job loss (generally) spreading to more and more areas, any benefits are likely to be overwhelmed by losses (again, generally).

And this change can be sold as though we are really doing something serious (our masters, overlords, speculators, etc, have fought for this), while we are not, really.

Like I have said, (I think that) we need some new economists.

The neocons are playing one game, other countries are playing their own games... and too many on our side seem to think that the answer is some ideal "free and fair trade".

I call bullshit.

But then, I am no economist. I just look at what happens (or can be expected to happen), and then compare it to what is (and was) "supposed" to happen.

And while I am on a rant, China is a lousy place to send jobs. They are a police state, corrupt, aggressive (look at Tibet) and hardly altruistic.

And India is scarcely egalitarian, what with a caste system and the way women are often treated.

Economics, politics, the national interest and our ideals (etc) are all tied together. It is foolishness to push any economic "theory" without considering not only the big picture, but what happens in practice.