We already have deflated China's money. It's worth at minimum, 38% less, on a relative basis against the world's other main currency, the Euro, in just the lasts several years. It's also worth far less against gold, oil, or just about any other commodity or currency, than it was just a few years ago. The bind for China is how to divest of U.S. dollars without causing central bank tightening. If China (and others) divest, no matter what happens, we're likely to see fed reserve hikes. It would be the only way to support our deficit spending. No one will bid at treasury auctions if they fear another precipitous decline in the dollar, unless the yield compensates them for it. China and the U.S. have a special relationship. Maybe it's ending. It used to be that they bought our debt, even losing money in the process keeping interest rates low, and our consumers bought all the stuff their factories could produce. We both understood things perfectly well. And the owners of the factories and those who finance them and sell their stock, became fabulously rich in this offshoring of production to China. They can only lose now if there truly is a trade war. And they can lose a lot. And they will do everything possible with the politicians they have purchased to make sure things don't escalate and they don't lose money.
I ran an export business in China from 2003-2005 working with low-tech products. Since the summer of 2005, most of the client base had begun to purchase from Vietnam and away from China. According to them, Vietnam= Lower prices than China Same shitty quality I also have an uncle who used to import from China, now has moved to manufacturers in Philippines where prices are lower than China, too. China doesn't necessarily have the low-price edge anymore. It's losing ground in the eyes of the US gov.
It just is what it is at this point. Its a shame they are giving American manufacturers even a ray of hope so late in the game. I'm amazed at this point that there is any manufacturer still left standing to file a complaint. I'm sure it wasn't planned that way.
Here's the ULTIMATE IRONY: GM is protesting the tariffs. Yes, that's right. GM, now fully betting on China to save it, after spending billions there in the bast several years aligning supply contracts with Chinese parts' manufacturers, and building vast assembly facilities, is resisting... ...while Nucor and U.S. Steel prepare petitions of their own. Ahh, how times have changed.
Well, you KNEW as desperate as what American manufacturers were left have gotten, that they had to be NEXT. Nothing made here can compete with the 30 cent an hour wages there, even without any subsidy. I'm amazed anyone is left still trying. Given that, do we even care anymore if GM survives? In the rest of the world's eyes Americans exist as "consumers" to "consume" for the corporation's benefit, until our nation is but a wasteland of debt, devoid of productive capacity, and unable even to feed and clothe itself. Once we start burning all the corn this year, that will become inevitable. The solution, if you aren't willing to limit the imports to the level of exports, is of course to raise Chinese wages and overheads, and lower ours via dollar devaluation, until we reach the point at which we can compete. Its pretty far down, I'm afraid. Another 50% devaluation like in 1933 would barely even scratch the surface. No average American would be able to afford a car or the gas to run it down at that point, let alone pay back the debts we individually, or as a nation have run up.
I am not a fan of one way free trade like we have with so many countries (Pat Buchanan may turn out to have been the one with the most foresight on this issue) but I can't help wonder if this move isn't the begging of a policy to paint China as the new threat for the GOP to run on in 2008.
Its sort of like watching a race car doing 175 coming up the straightaway after seeing its brakes on fire at the previous turn. The driver might have noticed the smell of brakes burning, or seen the smoke, but if he did, he didn't heed the warning signs. It hasn't wrecked yet, but you know its either going to spin or go into the wall. Its way too late. They needed to do something starting back in the 70's and 80's. Ross Perot gave us one last chance to see it coming in 1992. The only thing he was wrong about was that it was the giant sucking sound from the East, not the one from the North or South, that will have done us in. Buchanan has been echoing that same sentiment the past few years, I think. Anyway, its way to late now to avoid the wreck. Best to just get out of the way if you can.
As far as I know Buchanan has been beating this drum since at least 1993 when he was one of the most vocal opponents of NAFTA. I don't think it is too late yet but it is high time we stopped giving away the store just so multimationals can net bigger profits.
That is not true. The markets, like the Law, are what you make them up to be. Each is easily twisted, turned and obfuscated to suit the strongest party. The general theory is that the party that purchases the debt has the stronger hand. But in reality it's the party that is selling the debt that has the upper hand since after the transfer of wealth, it can default on the debt at will. The condition being that the party in default has to be militarily strong to withstand a physical threat from the party that purchased the debt. You should look at how the Debt crisis in Argentina or Iraq was resolved.
Blast, no disrespect, not only chinese labour are cheap ($130 USD a month, including overtime, in south china), the country have the logistic (materials, shipping etc)to do export. Africa labour is cheaper still, but why didn't the US company buy from there? US can't move their purchuse elsewhere in a hurry. It take much more than labour to do come up with good for export. Chinese had created an enviorment that US buyers choose to go china. Remember they didn't put a gun in the buyer's head, they only should they the price. A little bit off topic, people complains chinese goods are not durable. Remember it is the US importers who control the specification of the products, US importing craps, coz that's what your retail market cannot afford it. (why else Civic out sell BMW 3 series?)