I see this one's flushing out the usual anti-Americans. The idea that the US would stand idly by while China absorbs Taiwan is just completely, utterly, absolutely fantastical. As for us suffering if China let the yuan float, yes in the short term. In the long term, no way. The US didn't become the richest country on the planet because of resources, accident, or anything else. It got that way by way of the enterprise of its citizens. That will defeat any and all comers until it goes away. And that ain't happening for a long time. As for Iraq, we won the war part. What we lost was the political part. In the Rep debates, Brownback got that one right.
The middle class is in an economic bind. The savings rate reached zero percent in June 2005. This is not because many households donât want to save more, but because they often canât. Stagnant wages and rising prices have caused families to borrow record amounts of money to make ends meet. Many familiesâ financial situation is actually worse than it appears on paper because the majority of their wealth is in the housing market, which is likely vastly overvalued. A reasonable correction in the housing market could quickly lower household wealth relative to familiesâ incomes. Without sufficient savings as a safety net for emergencies and as something to rely on in retirement, many more families will continue to struggle not only in their working years, but also well beyond. A reasonable savings policy could address this shortfall by increasing middle-class familiesâ income growth and providing them with adequate tax incentives to save. http://www.americanprogress.org/issues/2005/08/b1001921.html
Jim Rogers is scheduled to be on cnbc in a few weeks and again in december prior to the release of his new book on china. Tuesday Nov. 20, 2007 Maria Bartiromo CNBC 3:00pm ET Monday, Dec. 3, 2007 Kudlow & Company CNBC 5:30-6:30pm ET
Western dollars built China. And Western demand drives its growth. The key question - when will Chinas middle class, still in its infancy, stand on its own? Given exports account for nearly half Chinas' GDP, the embryotic middle class needs at least another decade to develop. More like two. Blowing out the American middle class only to rebuild it decades later is silly and wholly counter productive. Slave labor is a cheap fix for companies that otherwise loathe R&D investment Its that very R&D, or technological innovation, that provides the only lasting driver for long term economic growth. This is how we, as a nation, lost our manufacturing base - multinationals bought off politicians to push "Free Trade". And the American public was too distracted and stupid to realize they had voted themselves out of work... America is an unmatched entrepreneurial powerhouse. No doubt. But our enterprising business class in no way offsets the disastrous fiscal path our "wise" stewards have led us down. Inflation will get out of control soon. We are really headed for major stagflation or a major recession. This will bring serious pain for everyone except the most rich. This tumultuous period could easily last 5 years, or more. Look how long it took Japan to recover from their late 80's credit bubble. Almost 10 years!! Floating the Yuan would only serve as an immediate catalyst to the inevitable.
Whoa Nelly! You are one spot-on mofo! I agree with everything you said here except for, "... blowing-out America's middle class only to rebuild it decades later..." Unfortunately, this is a one-way street. America's middle-class will NEVER be rebuilt. That which has been given away to Asia so that we might continue to buy cheap, imported goods at Wal-Mart will not be regained.
Thanks, Gnome. And you're right - the US industrial base is gone for good. I was playing along more for the uninitiated. Ironic how the public presumes our leaders as blundering morons yet everything about their posture, tone, speech and rhetoric would suggest otherwise. At least for those in the upper echelons of Government. Most Americans cannot fathom they're getting gamed. But thats the way its always been. Theres some real entertainment value in these drive-by commentary's. But I really fear things will take a turn for the worse. I say that not just from an economic perspective, as you know. Our policies aren't conceived and executed in a bubble. Its the "Geopolitical" context that deeply disturbs me. The borders. The vanishing middle class. The Iraq "Terror War". Suspension of Habeas Corpus. Widespread Domestic Spying. Now the drumbeat has started on Iran. All during wild money printing. This is all very reminiscent of pre WW2 Germany or Rome save hyperinflation -- YET! (who will be the scapegoat if that card is played??? ) The Country is beginning to turn on itself. Cannibalize itself.
When Bernacke starts warning against inflation - and raises rates accordingly. That will be preceded by increasingly expensive Chinese goods (at a fixed Yuan-USD exchange). The Governments game has been to manage, obfuscate and suppress inflationary stats as to not "tip off" the American worker. Once the American worker awakens to the fact that prices are really going up and their pay check is the same, people demand raises. Or leave for higher paying jobs. This starts the second type of inflation - wage inflation - which, if handled responsibly, must be met with an increase in interest rates to normalize (decrease) prices. Bernacke may do the opposite or prolong the medicine. The longer he prolongs, the deeper the hurt. Hyper inflation hurts even worse, just in a different way. The economy won't contract as hard but most people will lose most of their savings by default. The elderly, young, poor and middle class will get robbed. And won't have much, if anything to fall back on. Save rich parents. Or the Government (Welfare). This means more money printing and more inflation....
Tre - Gotta disagree with you here. Taiwan is toast, unless we have not made sufficient strides to move chip fabs from there that have significant defense importance. (not sure if that reserve capability exists. Anyone?) You have until 2015-2025 however until Taiwan does down. US will not defend it at that point. That's the deal for leaving Japan & possibly Korea alone which are other vulnerable asian nations to China with Japan of more importance financially (but probably not geopolitically). I will state it publicly here, and have said it before. The US will not go to war with China over Taiwan. (Now either Iran, Iraq, or the Stans are a potentially different story) It is not important enough, and may even be absorbed by political means (like HK).