Krugman: Everything we talk about in politics is ignorant fucking nonsense

[Kurt_and_Hunter]

Okay, this Krugman blog entry isn't really titled "Everything we talk about in politics is ignorant fucking nonsense" but it might as well be.

The bulk of our national political/economic dialog is the equivalent of denying evolution. It is not merely wrong, it is incoherent, illiterate and mirror-universe and/or maliciously false.

It is half cynical con-game, half some shit a psychotic man babbles on the sidewalk until the white-coated boys take him away.

Health care, climate change, stimulus, unemployment, free trade, the deficit, the debt... it never ends. And it isn't just the Republicans. Democrats spout the worst sort of gibberish routinely. Even the President says nonsense about the economy that would mark him as some kind of RW dolt except for the fact that it is universally accepted nonsense.

Today's edition of shit everyone knows that is, and was always, crap:

Everyone knows that China holding a lot of our debt represents some sort of threat to us.

(Particularly comical since China has a great stake in the health of our economy while our own true-blue American billionaires and financial institutions seem to view our economy as little more than a short-term smash-and-grab opportunity.)

March 14, 2010, 7:54 am
Israel, China, America

In debates over what to do about China’s currency manipulation, one constantly hears the refrain that we don’t dare alienate the Chinese, because they own so much of our debt. What would happen if they took their dollar holdings, equal to around 10% of US GDP, and switched them into other currencies?

Well, we don’t have to speculate. Consider the case of Israel, which in the face of the economic crisis engaged in massive foreign currency intervention to weaken the shekel. What happens in a foreign currency intervention is that the central bank buys foreign securities while selling domestic securities — that is, the Bank of Israel was doing, as a deliberate policy, exactly what we’re supposed to fear the Chinese doing.

How big was the intervention? More than 10% of GDP:



And by all accounts, this was helpful to Israel’s economy.

Right now, China’s dollar holdings don’t give it any leverage over the United States. On the contrary, by dumping dollars China would be doing us a favor.

http://krugman.blogs.nytimes.com/2010/03/14/israel-china-america/

[xchrom]

1. The collective wisdom of being afraid of china is hogwash.

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[ChairmanAgnostic]

2. On one level, I agree, but on another, I do not.

The only country to modernize its military faster than the US is China. They are building a sizeable navy, their subs are already damned hard to find, and getting much harder. They will soon reach the quiet that our still floating subs achieve (the propeller design they stole is but one issue. The close to silent powerplant designs we either sold or they stole is even more dangerous).

Their missile technology continues to grow, while ours languishes without a coherent plan. Their ground hugging supersonic cruise missiles have become stealthy, and our defenses surrounding our carriers may not be enough to protect our fleets. China's efforts to build bases around the world, especially near Panama, means that China intends on "protecting" its trading routes. For a historical view, recall what happened when the British built military ships to protect "trade" and its merchantile economy. The US took over that task shortly after WW1 and expanded it greatly after WWII. China is taking over that role now.

[RandomThoughts]

4. I'll make it easy to understand

Some of the elite love the China Totalitarian governance system.

They want us to be like them.

[Zynx]

5. I think that our navy is still heavily dominant at the moment.

I wouldn't want to fight a naval war off the coast of China, but in the true open ocean, I think we still probably have them hands down.

[Warren Stupidity]

6. Total world military expenditures, 2008.

US: 41.5%
China: 5.8%

please stop with the 'Chinese military threat' nonsense. We are the only military threat on the planet. We spend 8x more than anyone else.

[TheBigotBasher]

9. And?

Even with all of that technological advances do you really think that China would invade the US or start a War with her?

China, even communist China is about trade Always has been. That is why Hong Kong remains pretty much the same Hong Kong it was in 1997. It is also why they are more than matching the US in Africa. They do not care about the politics of the situation, they want the trade.

The same is true of China in the Middle East. They will trade with Iran and Israel. In fact we give Israel weapons and Israel sells them on to China.

While the good ol' USA was acting as a Nation State version of Russell Crowe and fighting round the World, China lifted over 200 million of its people from poverty. They raised their definition of poverty as well in order to do so.

In the West we happily lecture China about human rights, while two of the permanent members of the UN Security Council and the most vociferous critics of China, (while at home - rarely to its face), smash through their own laws protecting against legal abuse. The ugliest example of which is GITMO, but it doesn't just rest there does it? Have a look at the prison population. The political nature of drug crimes.

China has its own issues, but unlike the West, it seems prepared to deal with them.

[Hello_Kitty]

14. They have a loooooooong way to go before they catch up to us in weaponry.

We can blow up the Earth 78 times. As a military threat, yes, they could be formidable considering the size of their population and surplus of males.

[RandomThoughts]

3. I do think there are mostly good people trying to make a difference.

But in what comes through the filters from both media, and many of the politicians, it seems like just BS to not admit what they really want.


I sorta figured out that lots of what goes on in politics is like he said.

a psychotic man babbles on the sidewalk until the white-coated boys take him away



Seems sometimes making comments about society, well thought out ones that make sense, is like a sane person trying to explain things to the patients in an insane asylum.

Although I admit I am of coarse not perfect either, but some of the notions used to create defenses for other actions are a bit crazy. Shrug what can you do, I believe in free will, so I try and find the entertaining side of it at least, I think of this song when I see ridiculous stuff from some people that seem to say one thing and want another.

Edit: A bit to much of a song, like I said I make mistakes, God Bless them to, because we all got faults.

[Jeff In Milwaukee]

7. Old Saying that Krugman Uses...

If you owe the bank a million dollars, the bank owns you. If you owe the bank a trillion dollars, you own the bank.

We own China. They screw around with our debt and it could burn down both our houses. They don't want that any more than we do.

[Kurt_and_Hunter]

8. +1

[xchrom]

12. +2

[Astrad]

10. As I understand it,

If countries like China and Japan and Saudi Arabia start dumping their US currency reserves it would mean they are no longer purchasing US debt. Given the size of the budget deficit and the amount of borrowing abroad that that requires, the US would have no choice but to raise interest rates, probably significantly to attract lenders which would be detrimental to any nascent recovery. It would also weaken the dollar, which would be good for exports, but also increase inflation, maybe drastically. So although I don't see why China would want to do it, if it did and other major US debt holders followed suit, it would be traumatic for the US economy. But hey, he's got the Nobel Prize...

[Kurt_and_Hunter]

11. Buying bonds in the future is a separate issue

If China stopped borrowing that would be one thing. That would raise rates, though probably not as much as one would assume. I would guess it would hurt bonds further down the ladder (other nations, corporate, etc.) a bit more than it would US Treasuries.

But their handling of the debt they currently hold--the supposed security issue--is a different thing.

If they handled the debt they hold in such a way as to devalue the dollar they would be dumping bonds for low money (bad for them) thus devaluing the debt they continue to hold (bad for them) while making their exports more costly in the US (bad for them).

It's not that they couldn't do anything to hurt us but that there is no threat they could make *regarding their handling of existing debt* that wouldn't be a bigger disaster for them. And we are a much larger economy... the dollars involved probably mean more to them than to us in relative terms.

The China debt paranoia puzzles me a great deal... I think some of the pundit types who get exercised about it do not realize how bonds work. They seem to think China can call-in the debt at will, which isn't the case. And if China dumps US debt they are merely selling it to someone at a reduced price. And if interest rates go up then the relative value of their holdings (lower rate yields) goes down.

So the assumption is that China would throw away countless billions of their own dollars in order to hurt our economy which they have no reason to hurt.

I dunno... maybe I am missing it but it doesn't sound scary to me.

[Supersedeas]

13. a smash and grab opportunity -- sounds like something you'd find beneath the veil of laissez-

faire deregulatory conservativism.