Cancun and China

RE: [spiers] Cancun and China

John:



In the seventies people were concerned all the oil money flowing to the
middle east was going to bankrupt us. Didn't happen. All the Sheiks
needed a place to safely park their money. After a short flirtation with
holding gold(which produced no income) they discovered as the Chinese
will, that you have to put the money to work at real rates of return and
no finer place than in American Banks (that loan money globally
quaranteed by the American Tax payors) and in american corporations
because of the

hugh amount of money to be placed. Saudi's are the largest holders of
Disney Stock. Guess they know a good money maker when they see it.



RoseFab



-----Original Message-----
From: Eloisa Ramos [mailto:ramoslucky16@yahoo.com]
Sent: Tuesday, September 23, 2003 11:59 AM
To: spiers@yahoogroups.com
Subject: Re: [spiers] Cancun and China



John,

I really like your comments on the current events going on in our
economy. However, since I only had one econ. class, I feel like I'm
missing some of your points. Do you think you might want to teach a
basic
econ class in the near future on line? Something to help us understand

what is currently going on better. I would definitely take it.


"Elote"


wileyccc@aol.com wrote:Greetings!

The news this week about the "failure" of the WTO meeting in Cancun and
the story of our Treasury Secretary trying to get the Chinese to revalue
the Renminbi Yuan (the People's Popular Liberated buck) are actually
related.

In both instances, our trading partners are declining to accept the
present USA govt's plan for world trade.

In Can , he developing nations have no interest in policies that
continue to allow USA to blanket the world with subsidized agriculture
(our #1 export) which lays waste third world growers, and at the same
time we curb third world textiles coming into USA. Of course the
fastest and best policy is to simply rid ourselves of farm subsidies and
open our borders to textiles. (Nothing would reinvigorate the domestic
small business in both fields faster as well). I'd go further, but that
would be a start. In the meantime, the current regime cannot expect
cooperation from WTO members.

China has maintained a currency rate of about 8.5 yuan to the dollar for
nearly 20 years. Business likes stability. USA has inflated its
currency wildly. Most countries float their currencies against ours, so
we in effect export our inflation. By maintaining the ratio, China
avoids importing USA inflation, but the side effect is Chinese goods get
cheaper and cheaper for USA consumers.

The plot thickens: with all the dollars China is earning, where does it
invest those dollars? US Govt T-bills! They lend it back to Uncle Sam!
The bottom line is, who is going to get hammered by the malfeasance of
USA monetary policy? Borrowers or lenders? Communist China will decide
for us when it is good and ready.

The last 30 years have been fascinating, but I think the next 30 are
going to be better yet.

John

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