View Full Version : The recession was made in China - CNN.com
Interesting read an opinion:
http://www.cnn.com/2010/OPINION/10/11/frum.china.currency/?hpt=T2
We did more or less the same thing with Japanese electronics a few decades ago and turned Japan into a powerhouse at the expense of our economy.
You would think that we'd learn.
“Dubai times 1,000 — or worse”
-James S. Chanos
FromMyColdDeadHand
10-12-10, 01:36
That just goes to show how the relationship between China and the US is a lot more complicated than either side makes it out to be.
Just a few comments:
The boom in housing was going well before 2005. That may have been its height going into the 2006 home buying season.
I was in China and there was a report that their housing price boom is making them have people put down more money for their 1st home (I think it was 40%, maybe 30%) and they were no longer going to write mortgages for third homes.
It is a lot easier to control the currency and finance markets when you have a system like the Chinese have.
I think the Chinese have more to fear in the next five years than we do. Let's just say we have a trade war with China. We can just go and have our stuff made in Brazil, Vietnam, or India- where is China going to find a customer like us? We have the most open market to them. All of a sudden they are sitting on excess capacity and a crap load of dollars, that we'd be more than happy to buy back, at a discount. Sure, we would run short of goods for awhile, or they would be expensive, but I'm not so sure some austerity might be good for us. Tough economic times gives us good priests and nuns.
In the 10+ year realm, the Chinese home market will be big enough that they will support their industries with internal usage, and also maybe bring in goods on the cheap to placate the middle class.
I think this zero precent lending is really abad idea. Let the weak die and be restructured. Allow people who had a robust business plan to prosper. Why be rich when money isn't worth anything? You can 'buy' money for nothing. We need to make it pay to be rich (interest) and make it difficult to speculate with cheap money and walk away when things tank. Real money, real assests.
The GFC gave us an clue that our current model is unsustainable and I think all we did was dilute and spread out the pain. Look at the unemployment dips from recessions since WWII and you can see that they go from V shaped to spread out U shaped as it takes longer to get back to pre-recession employment levels.
PS. Want to make a Chinese business dinner go silent. Call Tibet a country. Opps.
ForTehNguyen
10-12-10, 07:58
The funny thing is the Chinese people manufacture many goods and save a ton of money but they dont get to reap the benefits. Why, because the Chinese govt is stupid enough to blow it on letting the US borrow money it cant pay back. They let us borrow their savings so we can buy their goods. What a sweet system, the US gets to consume without having to produce something in return. The Chinese would be better off depegging its currency and letting it appreciate. If we turn on the printing presses, China has to also and its already triggering a housing bubble there. If they let the RMB appreciate, sure it will hurt exports but that means the Chinese can consume more themselves because of bigger purchasing power. China doesn't need the US to consume their goods, they have 1+ billion people for christ's sake. The only thing missing is their purchasing power, and its held down by the Chinese govt blowing their savings and pegging their currency to US paper thats being devalued. What the Chinese are doing is essentially national welfare, and the US is the recipient. We get to consume all these goods without producing goods of ourselves hence the huge trade deficit. Our main export over the past 30-40 years has been inflation, dumping our paper across the world. The party will have to end someday and it wont be pretty.
In the end the Federal Reserve bears responsibility for everything, none of this shit wouldve happened without too low interest rates for too long. Cheap money was the booze at the Wall Street frat party and the Fed's provided all of it.
This CNN writer smells like another Keynesian tool.
variablebinary
10-12-10, 08:45
In the end the Federal Reserve bears responsibility for everything, none of this shit wouldve happened without too low interest rates for too long. Cheap money was the booze at the Wall Street frat party and the Fed's provided all of it.
Very very true. Then again, Wall Street didn't really care if borrowers could pay it back because they absolutely knew the tax payer was going to be left holding the bag regardless..
If these banking scumbags thought for a second they were going to have eat those losses, there is no way they would let cheap credit flow so easily.
I stand by the free market principles. If you can't turn a profit in FAIR and FREE market conditions, you have no right to exist.
No, nothing about doing business with China is fair or free market, because they manipulate currency, use slave labor, are communists, and they are an enemy of the USA. We shouldn't be doing business with them at all
ForTehNguyen
10-12-10, 10:06
IMO, the best way you can grow international relations is free travel and free trade. Just cutting off trade (especially with a growing manufacturing country) makes things worst for all sides. These tariffs and trade restrictions just aggravate everything. Like that retarded tariff Obama authorized on tires. Yup guess what happened tire prices went up here for certain makes. How did that help us as a whole other than some union workers not losing their jobs. I am a firm believer in the quote "If goods do not cross borders, armies will"
Look how many people we killed in Vietnam, that didn't improve relations. But look what happened when we opened up factories there. We improved relations far better than what B52s did.
variablebinary
10-12-10, 11:30
You don't empower people that hate you and want to kill you.
It's all fun and games now, until China gets the ability to project force.
jklaughrey
10-12-10, 11:44
I thought China already was projecting power by influencing our economy VB. Or do you mean power in a military sense. It would appear to me they are doing enough damage without firing a shot. Anyways back to SpongeBob...LOL
And by power I mean force.
ForTehNguyen
10-12-10, 12:17
You don't empower people that hate you and want to kill you.
It's all fun and games now, until China gets the ability to project force.
they are already projecting their force - their economic power. We have no one to blame but ourselves because of the high regulation and taxation. We are selling our souls to another country due to our govts reckless spending. Cutting off trade will only weaken us further due to the manufacturing we lost and making our products more expensive. Cutting off trade is a declaration of economic war that we are ill equipped to fight, thus isnt in our best interests.
they are already projecting their force - their economic power. We have no one to blame but ourselves because of the high regulation and taxation. We are selling our souls to another country due to our govts reckless spending. Cutting off trade will only weaken us further due to the manufacturing we lost and making our products more expensive. Cutting off trade is a declaration of economic war that we are ill equipped to fight, thus isnt in our best interests.
+1 I think. I agree with these sentiments. Don't know however to make things better (besides the taxation and regulation part).
ForTehNguyen
10-12-10, 12:33
+1 I think. I agree with these sentiments. Don't know however to make things better (besides the taxation and regulation part).
we just have to repeat what made us great in the first place, low govt, low taxes, low regulation. But govt is getting in the way of all this in almost every sector imaginable.
I fear the only thing that can get all this govt crap repealed is a national bankruptcy. Politicians can try all day to fight a SS/Medicare downsizing, but in the end if the dollar is worth jack and wont buy anything, then the laws of economics repeals it, not Congress.
Look how many people we killed in Vietnam, that didn't improve relations. But look what happened when we opened up factories there. We improved relations far better than what B52s did.
I say we give the B52s another chance. I'm positive we can get it right this time. Only instead of dropping bombs, we can drop actual aging hippies and the new generation greenies/hippies.
By air dropping 75% of the baby boomer population we will rescue social security in a single move. By dropping 50% of the 18-35 population we will dramatically lesson domestic competition for employment.
If any of them actually survive being dropped from 30,000 feet they will finally know the joy of living in a Communist Utopia. I suppose we can drop some bombs too.
It's completely win/win.
jklaughrey
10-12-10, 13:10
Steyr Grrrr, I was eating a Philly cheesesteak man. +1 I would be more than happy to round up some hippies and Kashi bar lovers from around here. Lord knows we have enough dirty long hairs already.
I'll never understand why we have a trade embargo with a shit stain of a communist country off of Florida, yet we openly trade jobs for cheap plastic shit with a monster of a communist country across the pacific.
We're a bunch of hypocritical self defeating dumb asses, that about sums it up.
Hey China!! Wanna buy some more T-Bills! How about some more real estate, hell don't worry about buying it, we'll just give it to you. :D
That is good. I did ponder GWBush's secret parting gift was to backrupt China via our economic woes when this first hit.
Steyr Grrrr, I was eating a Philly cheesesteak man.
Well I don't know where you live, but they are only genuine within a certain radius from the city. Not trying to be a jerk, it's really true.
Sadly, it seems they simply can't be fully replicated from beyond our immediate area.
:D
jklaughrey
10-12-10, 21:16
I am aware of that. I was eating one that was fake!
Bolt_Overide
10-13-10, 04:06
In the end the Federal Reserve bears responsibility for everything, none of this shit wouldve happened without too low interest rates for too long. Cheap money was the booze at the Wall Street frat party and the Fed's provided all of it.
this pretty much sums it all up.
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