NYT's a brief explanation of why we are in financial trouble:

[rasputin1952]

Chinese New Year
By PAUL KRUGMAN

<snip>

China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory.

Here’s how it works: Unlike the dollar, the euro or the yen, whose values fluctuate freely, China’s currency is pegged by official policy at about 6.8 yuan to the dollar. At this exchange rate, Chinese manufacturing has a large cost advantage over its rivals, leading to huge trade surpluses.

<snip>

In the past, China’s accumulation of foreign reserves, many of which were invested in American bonds, was arguably doing us a favor by keeping interest rates low — although what we did with those low interest rates was mainly to inflate a housing bubble. But right now the world is awash in cheap money, looking for someplace to go. Short-term interest rates are close to zero; long-term interest rates are higher, but only because investors expect the zero-rate policy to end some day. China’s bond purchases make little or no difference.

Meanwhile, that trade surplus drains much-needed demand away from a depressed world economy. My back-of-the-envelope calculations suggest that for the next couple of years Chinese mercantilism may end up reducing U.S. employment by around 1.4 million jobs.

<snip>

Let me quote from a classic paper by the late Paul Samuelson, who more or less created modern economics: “With employment less than full ... all the debunked mercantilistic arguments” — that is, claims that nations who subsidize their exports effectively steal jobs from other countries — “turn out to be valid.” He then went on argue that persistently misaligned exchange rates create “genuine problems for free-trade apologetics.” The best answer to these problems is getting exchange rates back to where they ought to be. But that’s exactly what China is refusing to let happen.

The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation. So I’d urge China’s government to reconsider its stubbornness. Otherwise, the very mild protectionism it’s currently complaining about will be the start of something much bigger.


http://www.nytimes.com/2010/01/01/opinion/01krugman.html?hpw

[Hannah Bell]

1. Half of China's exports are wholly owned by foreign corps, & the "Chinese miracle" is the product of

western capital investment searching for bigger profits.

Orchestrated starting with Nixon's opening to China, continuing through all future admins. Bush's uncle Prescott (II) being a major player in laying the groundwork.



Prescott Bush, Chair (retired) US-China Chamber of Commerce, & Premier Zhu Rongji


President's uncle shares Bush family ties to China

By Debbie Howlett, USA TODAY

CHICAGO — When President Bush arrives in Beijing on Thursday, he'll embrace a policy that's something of a family tradition.

Bush's approach centers on promoting U.S.-China economic ties. That's a course favored not only by his father, the first President Bush, but also by his uncle, Prescott Bush Jr., a longtime acquaintance of Chinese President Jiang Zemin...

The Bush family's ties to China go back to 1974, when President Nixon named George Bush ambassador to China. The college-age George W. Bush spent two months in China visiting his parents during his father's two-year stint...

Seven years after his brother left the ambassadorial post, Prescott Bush made his first trip to China...

http://www.usatoday.com/news/washington/2002/02/19/usat-prescott-bush.htm

"Mr. Bush has been engaged in business projects with China since 1983 and has advised such companies as Anheuser-Busch and ADM concerning their business development in China. He worked closely with Chinese conglomerates such as Cereal Oil Food Import/Export Corporation and Norinco. He is also a consultant for Wanxiang America. He has many friends in China. With Chinese and Japanese joint venturers, he developed the Shanghai International Golf and Country Club in Shanghai, China of which he is Vice Chairman. He is Chairman of the Advisory Board of Global Access, Incorporated, member of the International Advisory Board of the Culture and Civilization of China, member of the Advisory Committee of AmeriCares (international relief organization), director of Citizens Democracy Corps and of United Equity Holdings.

"Mr. Bush is a founding member of the U.S.-China Chamber of Commerce and Chairman of its Board of Directors. From 1989 through 1992, Mr. Bush was a member of the U.S. delegation on the U.S.-Hong Kong Economic Cooperation Committee. In addition to his work in China, Mr. Bush has done consulting work for Johnson & Higgins and for several Brazilian companies. He visits China 2-4 times a year."

http://www.sourcewatch.org/index.php?title=Prescott_Sheldon_Bush,_Jr.



The "mercantilist" thing = distraction. The US & UK were both mercantilist when building their power: its how you accumulate capital in the location you're using for a base.

Now those same capitalists are using other locales as bases for their continuing accumulation of capital. They're working hand in glove with Chinese pals for their mutual enrichment.

[rasputin1952]

2. I agree...

but because of the massive influx of capital into China, (and other places), it has had a dramatic effect on the world economy.

[Hannah Bell]

3. sure. so did the influx of capital to spain, then holland, then britain, then the us.

capital movement has always affected the world economy. but this article doesn't inform. it implies the chinese are the villains of the piece, & the cause of our economic woes here is something labeled "mercantilism".

it suggests that the US is powerless against this "mercantilism".

But of course the reason the US is signing all sorts of free trade agreements is precisely so its capitalists can invest overseas & lower wages here & suck money out of the us economy with the imports they produce in china for much lower wages.


The article is just designed to keep people following the "Evil empire" script: we can't do anything, so sorry your jobs & wages are pitiful, it's the evil japanese/chinese/commies etc.