China Currency and Trade

Re: [spiers] Re: China Currency and Trade

Anthony,

For what's going on, check in with Bill Gross at PIMCO, a fellow working at the
level of Warren
Buffett and such...

http://tinyurl.com/fjrrq

but to answer specifically...

On Mon, 01 May 2006 05:35:39 -0000, "mgranich" wrote :

But why would China allow it's largest customer's currency to tank?
> Lets say the dollar looses 50% of it's value. Even Chinese goods
> would become expensive. Chinese exports would slow. Millions of
> Chinese workers would be jobless, political unrest would surely
> follow. It sounds like a recipe for disaster.

***USA policy helps extremely few people and harms all the consumers, no matter
which
party is in power. There are two sides to the distortion, and the Chinese are
simply playing
the other side of our policy. Our disasters are being authored by us.

Having said that, as Japan's products got more expensive for USA, Japan got
richer and we
bought ever more. Don't look at what China sells, look at what they buy. If
our dollar tanks,
they get our oil and our food much cheaper than they do now. How is that bad
for them?

I was at both phases of the Chinese Export Commodities Fair over the last two
weeks, and
rarely saw an american. China is packed, 100,000s of thousands of young people,
from
around the world, flooding in to buy Chinese goods. Since USA policy causes USA
manufactories to transfer technology to China, Chinese quality and ability has
risen greatly.

Again, forget about cheap labor. Labor rates are shooting up in China because
China has a
tremendous shortage of labor. Yes, there are billions of farmers in China paid
little, but you
can't take some hillbilly and put him on welding cars. Hong Kong has a higher
per capita
income than USA, but Hong Kong is suffering a youth drain of young people moving
to China
for opportunity.

If China stops selling to us, so will all those Venezuelans, Congolese and
Romanians... the
deal where we exract their natural resources and sell them our manufactured
goods in return
will simply transfer to the Chinese.

Had a long talk with a educational official in Hong Kong who badly wants
training, in china.
The Chinese won't settle for diploma mills, they want accredited schools from
usa set up in
china. The last thing they want that they are not getting enough of is usa
education. I
promised to do what I can.

As we pursue disastrous policies slow motion, the Chinese will play the other
side, and slowly
move into position #1, compliments of USA politicians, who were given their
power by we
USA citizens. The millions of jobless and political unrest is far more likely
in our future than
in chinese future, and I'll say it again: the chinese are far freer
economically now than we are.
(I'll have some anecdotes later, but as a practical matter when the Chinese govt
is not
applying its rules, it is the same thing as freedom. ) Chinese genius has been
loosened, and
Chinese economy is soaring likes its skyscrapers in its cities. Don't blame the
chinese for
taking the other side of the bet when we stacked the deck.***

>
> And, What are the chances the US will end up like Chile, or
> Argentina of old with runaway inflation? Will my retirement
> savings be wiped out, worthless?
>
***Well, retirements being worthless is nothing new...in the 70's we were warned
of it, in the
80's they got the truckers, in the 90's they got the pilots, now they are
nailing the auto
workers... it will get around to us all.

You cannot have these destructive policies and expect all to turn out well. But
it is all
tradable, meaning, no matter what there is a buck to be made. Whatever field
you are in, you
will always be able to serve others, and do better. This the key,
self-employment.

Who knows what magical thing will happen. Millions of immigrants are taking to
the streets
in USA, displeased that the policies to benefit a few are costing the many much.
There is
even some talk of reconquista, or taking back California! I think it rather
wierd for a people
who fled a country for its poor policies, in this case mexicans fleeing mexico,
to seek to bring
the new country under the control of the old country. How does that make sense?
Far better
for the immigrants to seek Indepencia then reconquista. I would welcome
millions of
mexicans turning california into another Hong Kong, a free market zone, or even
just Los
Angeles or the Bay Area. Do what Singapore did, gain independence without
firing a shot. I'd
move there in a flash.

Or better yet, turn the Seattle area into another Hong Kong. Hmmm... I'll have
to think about
this.

John

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