Posted on 09/14/2010 1:44:53 PM PDT by bruinbirdman
A State Council think-tank in China has warned Washington that the US will come off worst in a trade war if it imposes sanctions against Beijing over the two nations' currency spat.
Ding Yifan, a policy guru at the Development Research Centre, said China could respond by selling holdings of US debt, estimated at over $1.5 trillion (£963bn). This would trigger a rise in US interest rates. His comments at a forum in Beijing follow a string of remarks by Chinese officials questioning US credit-worthiness and the reliability of the dollar.
China's authorities seem split over how to respond to moves on Capitol Hill for legislation to punish Beijing for holding down the yuan. The central bank has ruled out use of its "nuclear weapon", insisting that it would not exploit its $2.45 trillion of foreign reserves for political purposes. "The US Treasury market is a very important market for China," it said.
However, the mood is hardening on both sides of the Pacific. The dispute risks escalating if China's trade surplus with the US climbs further and more US jobs are lost. US Treasury Secretary Tim Geithner, who has taken a softly-softly line in the past, said on Friday that China had done "very little" to correct the undervaluation of the yuan since ending the dollar peg in June.
Mr Ding reflects thinking among some in the Poltiburo, who seem convinced that the US is in decline and that China's rise as an exporter of goods and capital give it the upper hand.
"They are utterly wrong," said Gabriel Stein from Lombard Street Research. "The lesson of the 1930s is that surplus countries with structurally weak domestic demand come off worst in a trade war."
He described the implicit threat to sell Treasuries as "empty
(Excerpt) Read more at telegraph.co.uk ...
No, what disappoints me is that you think you are arguing with a figment of your imagination . . . I tried to bring some real-life considerations into our discussion, and I failed.
But let's be real, if Americans make $50,000 a year and foreigners make $2.00 a day, yes, it's going to cost more to make things here. I can accept that since I have one of those jobs, but it's why a lot of our jobs are being shipped overseas.
But, OK I'll say it again, government interference is causing more problems than it's solving with manufacturing here. I will put that in my pipe and smoke it. YOU WIN.
Thank you for reminding all of us that American consumers should buy American products. No one had ever thought of it before.
We should always buy American products....to save American jobs....even if it costs more jobs than it saves.
I have no problem with buying American products, or paying more. But I’m not paying 50 cents more, while thinking that it will somehow stop our government from borrowing from the Chinese in order to fund unemployment benefits, etc.
I am afraid you misunderstood it. I made two points: any enforcement of the prices (including those of labor) are (i) unfair to those whom they supposedly are intended to protect, and (ii) impractical. I would add the third, which is the real reason I am replying at some length: by advocating "protections" you empower the government (socialism of fascism, depending on details), which is completely incapable of doing what you want to achieve. You are working against the conservative principles to which you supposedly aspire.
Your remark about illegals is both irrelevant and incorrect. I was giving an example of people being free to buy goods or services wherever those happen to be. This does not involve breaking the law. Outsourcing is in line but not illegal immigration.
As a conservative you should understand that only the employee is responsible for making his job worthwhile, not the government or anybody else. One should be either increase his productivity or agree to lower wages. Only the market knows what our labor is worth.
Here you confuse economics, a body of knowledge, with economists, people who merely profess or use that knowledge. People are imperfect, and economist are know to misuse the pulpit for the benefit of their political views. Things you discuss, however, are basic economics, on which economists have no disagreement. Bailouts are completely irrelevant to what we have been discussing.
If what I wrote has not made you think, I cannot help you any further.
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