Economic Warfare

[Beetwasher]

Is the international community fighting the US on an economic front? The rapid decline of the dollar, the pulling out of foreign investors are signs that the rest of the world might be taking the US on economically, since they can't do it militarily and because they are pissed off at the US for becoming a dangerous, rogue nation. Is it possible that this is somewhat of a coordinated effort to hurt Bush and bring him down by hitting him where it counts, in the pocketbook?

[Beaker]

1. We can only hope.

nt

[Ready4Change]

2. I'm no expert...

But I'd say they are viewing this administrations actions regarding the economy, deficits, and tax policies that favor the rich and damage the middle and lower classes. They correctly see that this administration is making all the wrong moves and therefore the US economy isn't going to recover any time soon. So they are putting their money where they'll see more secure gains.

[AntiLempa]

3. Not really a Bush thing. . .

The US has been viewed as a rogue for quite sometime. This really isn't a Bush thing. Nor is it a Democrat versus Republican thing.

[Bandit]

16. Oh really? Just what happened to the US Dollar in the eight years before

Bush*. If I recall correctly the dollar became stronger than any other time in history. During Bush 1 it fell dramatically as it did under Reagan. Economics is something that if looked at with a historic perspective is clearly the domain of the Democrats but they have lost the propaganda war about it. Name one Democratic President that had a recession during their time in office.

[papau]

4. Decline in dollar is Bush attack on rest of world - exports some of

our problems via "unfair trade advantage" - at a future cost of some inflation.

This is the reason the Japan Stock market has begun to tank. Our economic attack on their exports - and Germany's exports - will set back both economies

But we do get an economic jump start at a critical before elections 04 time that our very analytic smart fair and unbiased media will run with to proclaim the Bush Tax Cut economy is booming.

[Beetwasher]

8. It's a risky game

devaluing the dollar. Foreign investors are pulling out AND the trade deficit is massive AND consumers are not buying AND we have very little manufacturing to sell overseas AND the international community is already NOT buying much US products. The ONLY upside to a devalued dollar is increased exports. Trade wars w/ China and Europe would devastate that strategy, and it looks like trade wars are coming...

[Yupster]

10. No sympathy for China

they've been waging an unfair trade war on us for years. About time we did something about it.

[Spazito]

5. I believe they are fighting the US economically as well as....

denying Bush an easy out in Iraq. The world realizes what a danger the neo-cons are.

[Gulf Coast J]

6. I doubt it

We might have a trade war brewing in retaliation for our damn-fool steel tariffs, but it's in nobody's interest for the US economy to be weak. Like it or not, the US is the most important engine of growth in the world. Rich nations would be shooting themselves in the foot if they punitavely destroyed the US economy.

The dollar has been declining because of unsustainable trade balances, not because of a coordinated attack. Some foreign investors might be pulling out because they are pissed at us, but I don't recall reading anything about a massive sell-off.

[Beetwasher]

7. You haven't been paying attention then

I did read that foreign investment was down something like 80%. I'll see if I can find the link.

And while a weak US economy would shake things up, it would also give other countries an opportunity to step into the void...Europe, China, Russia would all like to step up to the plate. There's no rule and no law, nothing at all that says the US has to be the main economic player in the world. If the US economy goes down, it opens up opportunities for others. Who says the dollar has to be the benchmark for trade? That could change, there's no real reason why it can't, and it would be devastating to the US.

[Gulf Coast J]

11. Good luck with that link!

Foreign purchases of stocks and bonds were off sharply, but foriegn investment comprises much more than that.

Think about what was said in the original post for a second.

The dollar is depreciating. Who does that hurt more, the US or other nations that allow their currency to be traded on the market? What happens when American goods become relatively cheaper than foreign goods? Do you think that's in the best interest of people in other countries declaring economic war on us?

[Spazito]

13. You are making two assumptions...

1. That there are a surplus of American products to purchase - manufacturing in the US has dropped - fewer products made

2. That other countries will purchase US products even if they are a little cheaper - if there is, in fact, a concerted effort to reduce US influence, the products will not be purchased - an unofficial boycott, if you will.

One last note, check out Walmart, it exists because it offers cheaper products because it depends on cheap imports.

[Beetwasher]

14. If the Dollar is depreciating solely as a result of US policy

to weaken the dollar I might agree with you. However, that's not the case.

The US dollare is weakening because of a loss of confidence in US financial systems. It's not a controlled weakening, it's a plummet. There's a BIG difference.

Also see Spazito's post.

Foreign investment is down across the board, not JUST in the stock and bond market.

[Tansy_Gold]

18. I agree

And since many of *'s backers are not dependent on a strong U.S. economy -- they've invested elsewhere, moved production facilities elsewhere, etc. -- they are poised to make a killing from the collapse of the U.S. manufacturing economy.

An economy as large as ours cannot continue without some kind of strong manufacturing base. As someone wise once said, labor creates all wealth. What we have now in our economy is a massive shift from making things to selling things and facilitating the sale thereof, either through the credit card systems, health insurance, etc. We don't MAKE anything any more and therefore we don't MAKE wealth.

The wealth-making is going on elsewhere; the U.S. retail and services economy just serves as a transfer vehicle.

The collapse of the U.S. economy will not hurt the BFEE; they are not likely to do anything to stop it. The real strengthening of the U.S. economy, on the other hand, will put the kabosh to their plans. Not a strengthening of the retail/services economy we now have, but a return to the manufacturing base that they've been shifting -- coupled with a sensible downsizing of our level of consumption of cheap crappy merchandise. This will allow not only our economy to strengthen, but the economies of the low-wage nations the BFEE corporations have been enslaving.

But what do I know? I'm not an economist.

I'm just

Tansy Gold

[MrPrax]

9. Convergence....?

Most of what others have responded is basically correct...
1) Bush admin has 'attacked' on the trade front: from steel to agricultural subsidies and there will of course be an evitable response
2) Domestic policies are reckless, lack efforts towards capital diversion for infrastructure and only adding to domestic instability--instability is not a very good investment climate for anyone
3) Many of the domestic security efforts have scared away 'foreign' investors and must be part of any 'risk management' investment profile, as well as, arbitrarily designating anything a 'national secruity' problem or simply 'seizing' assets accroding to whomever might be the 'flavor of the month' terrorist group
4) American economic hegemony has in the fifty years been based a lot of 'image branding' of the American cultural product and post-911 activities (Bush: fer us or agin us logic) have irrevocably 'tarnished' that brand, making it unacceptable in many macro- and mirco-economies
5) the hypocrisy of American attempts in the 90s to get other countries to 'harmonized' their accounting, stock and securities practices, while the US ignores and celebrates it's own deficiencies and covers up it's own banking corruption
6) US patents, copyrights and 'intellectual' property (not in itself a problem) but the US preference for relying on it's own domestic laws and 'extra-territoriality' and a contempt for international law, tribunals and other trade blocs
7) The continued framing of domestic politics and economic priorities in the terms of the Cold-War and military spending in which consumer investment is an offshoot of largely 'corp' military investment

etc etc...sorta snowballing

[Beetwasher]

12. Yup, all good points

Devaluing the dollar in response to all the bad news is a very risky strategy...Foreign investment is crucial to the US's economy and it seems they are losing confidence in it big time...

[TreasonousBastard]

15. We're always in competition...

with other trading blocs. Nothing new there. It was really bad just before the Depression when there were real trade wars going on.

You can't get the entire world to act in concert against us, but every bloc and power acting in its own interest might have that effect. We have pretty much declared war on the world, and they are defending themselves. China's interests are not the EU's, nor are they South America's or Japan's. Or India's. Each one, though, might end up with pretty much the same defenses and reactions against us.

Don't forget that part of the original PNAC is to maintain economic hegemony in the world, not just military power. Unlike prior administrations that preferred to thrive working with other nations, this one has the stated objective of identifying and dealing with any competing economy that threatens our economic leadership.

That means we throw banana peels under the feet of Germany, France, China, and Japan to slow European and Asian growth. They are well aware of this attitude, and are doing what they can about it.

They are also aware that even if they could bring down our economy, it would likely destroy them, too. Europe alone could probably do without us, but I doubt they want to take that chance.

[Spazito]

17. Was surfing regarding foreign investment and found this...from Sept 2003

China leads for foreign investors

China overtook Britain and the US as a destination for foreign investment last year, as cash-strapped multinationals sought low-cost economies in the wake of the dotcom crash, a United Nations report showed yesterday.

Global flows of investment plunged in 2002, falling to half the level reached in 2000 at the height of the hi-tech frenzy, according to the authoritative World Investment Report, published yesterday by the UN conference on trade and development (Unctad).

While Britain saw inward investment more than halve, from $62bn (£39bn) in 2001 to $25bn, its low-cost competitors in Asia and eastern Europe managed to attract increasing flows of foreign funds.

Direct investment into China jumped to $53bn from $47bn in 2001, beating France, the US and Britain, all of which saw inflows decline sharply - by a huge $280bn over two years, in the case of the US.

more

http://www.guardian.co.uk/china/story/0,7369,1036144,00.html

[Beetwasher]

19. Good Article

Thanks...