What is to protect us from real bad stuff, like...

[bonitahi]

Economically, I think, in our country, our collective scrotums are being slowly cut at the top of its cage.

If life were a chess game, China is making two moves for our one. At its will, in its proper time, they could have the capacity and desire to stop buying our debt. They would still receive the interest owed by us on the large paper they already own. We would and must continue to pay the interest on such. National bankruptcy would not (initially) be an option.

Where would we get our new money from? The dollar would freefall. The Euro and Yen would peg down the dollar to almost nothing. With no buyers from our depressed printing press, we could not sell treasuries, unless we offered usurer interest, which again would increase our negative spiral. Inflation would be rampant. We then must cut our expenditures--military, health, infrastructure, funds for catastrophic emergencies, all amounting to hundreds of billions- trillions: and raise taxes just to pay past debt and meet our depleted national expectations. Social Security would collapse, unemployment would see levels beyond the 1930s. Consumer buying would cease. Corporate profits would be nil. Mortgages would not be paid. Homes would go without insurance. Local governments would receive a pittance from their r/e taxations. Local services would cease. Schools would close. Continued inflation would be unstoppable. Financials would be doomed. The climate of the masses within the world would cause the hawks here to send troops (low paid mercenaries) throughout the world, aided by a national draft- for both male and female. Marshall Law would be imposed. Police/fire persons would not be paid. Then looting. Each man for his/her self.

Those holding market indices would be selling apples or pencils on empty street corners.

The US would be vulnerable for a fascist or totalitarian takeover.

With luck, China will hold off until our personal demise, allowing just us, to die with our balls intact. But maybe not!

[Duke of Rat]

We impose a ban on all Chinese imports, they start losing $1 kajillion a month, a compromise is reached?

[bonitahi]

We impose a ban on all Chinese imports, they start losing $1 kajillion a month, a compromise is reached?

What then if they stopped buying our treasurys? Hmm.

Also, could they just lower their cost for their goods even more and sell to the rest of the industrialized world? Causing what the OP said could happen to the US?

[mswas]

In China at this moment someone is having this exact same argument about America.

[tomndebb]

It is only the consumer mad spending of the U.S. that is keeping Chian afloat. If they hang us out to dry, they effectively destroy their own economy.

Despite the opinion of some Chinese bureaucrat in a section of government that is not even pertinent to the discussion, I really do not believe that China has a death wish.

[mswas]

The debate in China right now is how to limit foreign investment in strategic economic sectors that they don't become a colonial state yet again.

[Terrifel]

Economically, I think, in our country, our collective scrotums are being slowly cut at the top of its cage.Apologies for the brief hijack, but may I ask for an explanation of the "cage" metaphor? It sounds fascinating, and I'd like to be able to use the expression properly in the future.

[The Controvert]

Marshall Law would be imposed.Aherm, this is Marshall Law (http://en.wikipedia.org/wiki/Marshall_Law_(Tekken)) and this is Martial Law (http://en.wikipedia.org/wiki/Martial_law). (Although admittedly it's possible you meant the former as a way to "protect us from real bad stuff".)

[bonitahi]

Aherm, this is Marshall Law (http://en.wikipedia.org/wiki/Marshall_Law_(Tekken)) and this is Martial Law (http://en.wikipedia.org/wiki/Martial_law). (Although admittedly it's possible you meant the former as a way to "protect us from real bad stuff".)

Correction noted. Thank you.

However, Martian Law might prevail if Kucinich is correct.

[bonitahi]

Apologies for the brief hijack, but may I ask for an explanation of the "cage" metaphor? It sounds fascinating, and I'd like to be able to use the expression properly in the future.

Guess I was speaking without using my head. I was looking for a word that was meant to incarcerate, surround, impound or mew the testes within the scrotum.
Hope it works for you.

[jshore]

Aherm, this is Marshall Law (http://en.wikipedia.org/wiki/Marshall_Law_(Tekken)) and this is Martial Law (http://en.wikipedia.org/wiki/Martial_law). (Although admittedly it's possible you meant the former as a way to "protect us from real bad stuff".)

And, here's (http://en.wikipedia.org/wiki/Marshall_Law_%28disambiguation%29) the more complete Wikipedia disambiguation page. Personally, I thought that the Marshall Law thing you linked to would somehow refer to Justice John Marshall (http://en.wikipedia.org/wiki/John_Marshall), but that didn't even merit a reference on that disambiguation page. (I guess because while the terms "Marshall" and "law" may go together in this context, they aren't used in the phrase "Marshall Law".)

[athelas]

I think that all the fuss about China is largely hype. Yes, the Chinese economy is growing at 12% a year, but it's a very poor country to start out with (even now, its total GDP is only a fifth of that of the US, let alone the per capita GDP), and there are still large areas of poverty, particularly in the less-visible interior. Barring catastrophe, China will eventually have a first-class economy, but it's going to be on the order of 50 years, rather than the impending disaster that pundits seem to predict.

[China Guy]

Lessee, who owns the national debt besides the 50% held by the US government: That’s leaves a little over $4 trillion in public hands. The biggest chunk (about 25 percent of the $8.5 trillion total) is held by foreign governments. Japan tops the list (with $644 billion), followed by China ($350 billion), United Kingdom ($239 billion) and oil exporting countries ($100 billion). (http://www.msnbc.msn.com/id/17424874/)

So, first go after Uncle Sugar and then Japan when ranting. There's approximately $8.5 trillion in debt, and China holds $350 billion, which is what 4% of the outstanding debt and less than 10% owned by non US government institutions.

Both China and Japan have watched the value of their US debt holdings plummet as their own currencies appriciate and the greenback falls. Both Japan and China have the US as their biggest trading partner.

The US by contrast is spending how much on Iraq? If you want to protect treasuries, I think there are better ways than going after the China boogey man in this instance.

[BrainGlutton]

What then if they stopped buying our treasurys? Hmm.

Also, could they just lower their cost for their goods even more and sell to the rest of the industrialized world? Causing what the OP said could happen to the US?

IOW, each country has the other by the nads -- and not only does not dare to let go, but has no way to let go.

[Ocean Annie]

Creating some resemblance of fair trade with China would be a good thing. The United States allows China to dump and export subsidized goods into the US market. The Chinese exploit US intellectual property and violate copyright laws. One of the most disturbing practices is China’s failing to reveal the true value of the yuan and refusal to pony up the yuan to the open market currency exchange rate. The Chinese have managed to keep the yuan artificially low, a practice that went unchecked for years.

China has surpassed all predictions of its economic growth and is currently the fourth largest economy in the world, quickly moving into number three passing Germany. With its current growth rate, some economists predict China will surpass the United States by 2050 others say 2020. Although figures seem to indicate a trend towards slower Chinese growth, the actual growth rate is probably much higher. China’s control of information doesn’t allow economists to calculate an accurate figure.

It is corporate capitalism that drives US trade policy. Americans are waking up to a new, economically powerful China that has been allowed to create its own rules while the US loses its global edge not only economically but in R&D, education, and health.

I do understand that this is a global economy and countries are economically connected, but that doesn’t negate China’s unfair methods of climbing to the top while the US passively allows it.

BBC (http://news.bbc.co.uk/2/hi/business/4773443.stm)

Trade deficit (http://www.census.gov/foreign-trade/balance/c5700.html#2007)

[athelas]

One of the most disturbing practices is China’s failing to reveal the true value of the yuan and refusal to pony up the yuan to the open market currency exchange rate. The Chinese have managed to keep the yuan artificially low, a practice that went unchecked for years.Now this I don't understand, and maybe someone can explain it to me. If the yuan is being kept artificially low, that means that China's subsidizing its export industries at the expense of its own people, who demand some foreign goods. (Pretty much, taxing its people to support its industries.) What that means for us is a larger consumer surplus, as we get goods at a rate cheaper than they can normally be produced. As I've explained in a previous post, economists believe that free trade, even with a country that subsidizes its industries, is beneficial, since the gains by the consumers outweighs the loss of the domestic producers. Why do people, including top advisors in both parties, believe that the devaluation of the yuan is a bad thing?

[Ravenman]

So, first go after Uncle Sugar and then Japan when ranting. There's approximately $8.5 trillion in debt, and China holds $350 billion, which is what 4% of the outstanding debt and less than 10% owned by non US government institutions. Darn you, China Guy, I wanted to ask the OP what his estimate of what percentage of US bonds he thinks China owns. Like people who think that foreign aid constitutes a large percentage of the federal budget because it makes it easier to criticize, I think most people who rail the most against China must think that they own like 40% or more of US debt.

I also think that there's a lot of mispercentions about what trade means for countries, in that trade generally doesn't mean that one country grabs the other by the balls, but that the mutually beneficial business of trade links economies together because buyers are as dependent on sellers as sellers are dependent on buyers.

It is really ironic that those who claim that China is "making two moves for our one" or "they see five moves ahead of us" simply can't look beyond one move themselves: China does something to try to trash the US economy. Alllllllright, but what happens next? The Chinese export driven economy hits a wall, economic growth tanks, and the Chinese people who have enjoyed growing standards of living suddenly end up begging on the street. Seeing as how the Chinese people have been willing to tolerate a repressive government because it has brought economic growth, Chinese leaders certainly understand that the only real think standing between them and widespread rebellion is continued economic growth.

[Throatwarbler Mangrove]

Why do people, including top advisors in both parties, believe that the devaluation of the yuan is a bad thing?

Because they are in the pockets of minority special interest groups, not the economically ignorant general public.

[Ocean Annie]

I also think that there's a lot of mispercentions about what trade means for countries, in that trade generally doesn't mean that one country grabs the other by the balls, but that the mutually beneficial business of trade links economies together because buyers are as dependent on sellers as sellers are dependent on buyers.



The undervalued yuan keeps Chinese products artificially cheap to encourage exports while causing American products to be too expensive for the Chinese to import. Instead of importing from the US, China produces goods for their domestic market. The US has roughly a $250 billion a year trade deficit with China which has become trillions over the long term.

The massive trade deficit with China equates to a lower GDP and lower economic growth for the US. In contrast, China has trillions in reserves, 75 percent of the reserves is estimated to be US treasuries, and double digit economic growth. China has money in the bank to invest and lend while the US is sitting on a $6 trillion debt. As China’s economy grows, the US economy shrinks, and the US is now a debtor nation.

I don’t understand how a massive trade deficit and debt is good for this country. Debt is a controlling force.

http://www.globalresearch.ca/index.php?context=va&aid=5039

http://www.ustreas.gov/tic/mfh.txt

[Throatwarbler Mangrove]

Are you one of those guys who thinks whenever someone buys a Honda, a little piece of America is permanently lost to the Japanese? This isn't rocket science - trade is a two way street. If Honda makes a car that will do the job for $100 less than GM can, then buying a Honda frees up $100 of your Bush Pesos to be invested in the apple pie factory of your choice. If the evil Japanese manipulate their currency so that their cars are $200 cheaper than the American model, well that's an extra $200 in your pocket that you can invest, maybe even in GM, courtesy of the Japanese. What's not to like?

The real "problem" that Americans are lamenting is the extremely low rate of national savings, even compared to developed countries in the EU. Greenspan (or was it Bernake?) calls this the "Asian Savings Glut", because you know, those inscrutable Orientals have learned nothing about money in their 4000 years of history, and anyways it's always the 'furriner's fault. The real driving force behind the economic development of most of the Asian "tigers", Japan, and China is simply the fact that their national savings rate outstrips the US by a huge margin, giving their governments and corporations (the distinction is blurry in a lot of Asian economies) the capital to plow back into industries while Americans spend their extra $100 on spinning hubcaps.

America has always managed to win in the end because the US economic model of free markets and free trade is so much more robust than everyone else's. Ask the Japanese how well closely-linked megacorps with incestuos ties to the government worked out for them in the 1990s. The US is still the center of global innovation. No one is even close to matching Sillicon Valley or the Eastern Biotech corridor, and the world's brightest and best will always choose the US over anywhere else. There's nothing to worry about.

[Ravenman]

I don’t understand how a massive trade deficit and debt is good for this country. I'm not going to say that the decline of the US manufacturing sector is a good thing, but let's get real: Walmart owes its success to Chinese made goods. If Walmart sold only higher-priced US made goods, Walmart would not be found in every hamlet from Bar Harbor to San Diego, and we'd have tens of thousands fewer jobs for low wage earners.

Oh, shit. I guess that's a reason we should stop buying Chinese goods.

Well, let's try this on for size: consumer spending on crap that people don't really need -- like 26 different "seasons" of clothes coming out each year, iPods, and whatever other things you can think of -- are a very important part of our economy. Though it would be much preferable if US manufacturers could compete with Chinese made goods, it ain't gonna happen, and we'll just have to settle knowing that the more iPods there are out there, the more iTunes are sold, and the more money will be made by Taylor Hicks and the Black Eyed Peas. Cheap Chinese imports made American consumers happy and fuel our service sector.

But you're missing the point that I'm making: a big trade deficit has undesirable effects, but the bottom line is that China does not have us in a stranglehold because they sell us lots of cheap clothes and electronics. China needs a wealthy market for all that stuff just as much as we need those consumer goods. When it comes to the consumer economy, the US has at much at stake as China does, no more, no less.

The same can be said of trade in financial instruments. China's got to do something with the dollars it earns, so they buy bonds. So what? What are you afraid of, that China's going to dump them all on the market for pennies on the dollar? That would be bad, but do you seriously believe that China, still a developing country, would essentially light a match and burn up $300 billion?

I'm not saying that everything is hunky-dory with US trade competitiveness, but this idea that China is either going to end up owning the US or that we will be brought to our knees by some fiendish Commie plot is nothing more than a repeat of the hysteria of 20 years ago with respect to the Japanese.

If anything, we ought to be taking solace in the fact that China's economy, while superficially formidable, is brittle. Its currency is worthless on the international stage, labor problems are brewing, political stability over the next 20 to 50 years is not guaranteed, the state-owned enterprise issues continue, its stock market is a joke, and a huge number of Chinese are and will continue to be engaged in something slightly more than a subsistence economy. The US economy, on the other hand, is less diversified than a decade ago, but continues to be incredibly powerful, our workforce (esp. when immigrants are included) is unchallenged when considered in terms of size and expertise, and if we can get a few tough issues under control (such as deficits, energy, and the baby boomer issues) we can continue to be the preeminent economic power for at least another couple of generations, and there ain't nothing China can do to stop that.

[Ocean Annie]

Are you one of those guys who thinks whenever someone buys a Honda, a little piece of America is permanently lost to the Japanese? This isn't rocket science - trade is a two way street. If Honda makes a car that will do the job for $100 less than GM can, then buying a Honda frees up $100 of your Bush Pesos to be invested in the apple pie factory of your choice. If the evil Japanese manipulate their currency so that their cars are $200 cheaper than the American model, well that's an extra $200 in your pocket that you can invest, maybe even in GM, courtesy of the Japanese. What's not to like?

I am far from a rocket scientist, but I do get it. Trade is indeed a two way street. Fair and equal trade keeps both countries healthy. Japan and the United States have always had a good trade relationship. The Japanese brought manufacturing into this country and the US auto industry frequently out sources to cheaper foreign labor markets. The competitive automobile industry and our trade relationship with Japan has nothing to do with the unprecedented trade imbalance between the US and China.
No, I am not a flag waving buy American zealot, nor am I afraid of them thar furriners.
I did read that Japan wants to pull manufacturing out of the United States because of the weak dollar.

Sure, Chinese goods are cheap and stock the shelves of Wal-Mart, but it doesn’t benefit American workers or consumers. It only benefits corporate America’s bottom line. Wal-Mart generates low paying menial jobs and clobbers competition. Oh, I forgot. It is capitalism and the American way.

This is not the same global market it was twenty years ago. It is a global market dominated by conglomerates. The artificially low cost imports from China keeps corporate America happy but stifles economic growth and does nothing to benefit the vast majority of Americans. When everything is owned by a few and all manufacturing is outsourced there isn’t any real competition. Well, the service sector is thriving. The greeter at Wal-Mart has job security.

But you're missing the point that I'm making: a big trade deficit has undesirable effects, but the bottom line is that China does not have us in a stranglehold because they sell us lots of cheap clothes and electronics. China needs a wealthy market for all that stuff just as much as we need those consumer goods. When it comes to the consumer economy, the US has at much at stake as China does, no more, no less.

I agree that China needs our market as much as matell needs the cheap Chinese labor. China is even willing to finance our debt so we can continue to buy their cheap goods, with the exception of the occasional recalls.

I think the idea that the global community still treats China like a developing country is a mistake. China is a significant economic force and should be treated like one. I know the US economy is still significantly ahead of China, but the US has roughly three percent growth while China has double digit growth. The gap is closing quickly.

What am I afraid of? I am afraid that the United States will no longer have the global economic edge. I am afraid that the world is losing faith in the dollar. I am afraid that the US will be in so much debt that China will become the global lenders. Money is power and debt controls. Are my fears irrational?

[athelas]

Sure, Chinese goods are cheap and stock the shelves of Wal-Mart, but it doesn’t benefit American workers or consumers. It only benefits corporate America’s bottom line. Wal-Mart generates low paying menial jobs and clobbers competition. Oh, I forgot. It is capitalism and the American way.Cite?

[Throatwarbler Mangrove]

No offense, but No, unconventional, you don't get it.

Sure, Chinese goods are cheap and stock the shelves of Wal-Mart, but it doesn’t benefit American workers or consumers.

Of course it does, that was the whole point of my post. Do you regularly buy stuff that you have no use for? If American consumers didn't benefit, they wouldn't be buying it, the other thing about free trade being the "free and willing" part. Chinese manufacturers are not charities, any more than Honda is. When American consumers give them money, they are getting something in return. I deliberately used Honda because buying a Hondas is generally accepted in polite society. It isn't any different for any other product.

For every dollar you save on a Chinese product, that's an extra dollar in the AMERICAN economy that can be invested in AMERICA. You and the country are one dollar richer. Now you may choose to use it on crack or prostitutes, which are generally not considered economically productive uses (investment vs. consumption), but that's not the 'furriner's fault.

[Ocean Annie]

For every dollar you save on a Chinese product, that's an extra dollar in the AMERICAN economy that can be invested in AMERICA. You and the country are one dollar richer. Now you may choose to use it on crack or prostitutes, which are generally not considered economically productive uses (investment vs. consumption), but that's not the 'furriner's fault.


…absolutely no offense taken.

The problem is that there is no productive investment. Americans are in debt. The economy is floating on debt. The tax payers subsidize conglomerates and in return everything is outsourced. Even the service sector is outsourced. There is massive corruption in corporate culture which results in creative tax loopholes, fraud, aggressive lobbying, and the amassment of obscene wealth that is beyond the average American.

We aren’t really saving money on cheap Chinese imports; we are losing money when the unprecedented trade deficit is considered. The enormous trade deficit equates to lost production and stagnant economic growth. The result is low salaries and a general free fall of our standard of living. The housing market crashed. Small business can’t afford to provide employees with basic benefits like health care. The dollar is weak. It is obvious the US economy is in trouble.

Unregulated, corporate capitalism is good for corporations and countries like China and India but not the US economy.

I don’t think this is the global economy that we all had in mind. I will only buy a Japanese car. I try to stay away from the cheap lead filled products.
But, this isn’t about buying American made products or imports. It is about a corporate culture without any regulations dominating the direction of the US economy. Global corporations are rich and powerful at the expense of Americans.

[China Guy]

Unconventional, the problem is not that China is a cheap producer of goods. The problem as you pointed out is that Americans and bad savers and living beyond their means. When you calculcate all the debt your average american has (mortgage, credit card, school, etc) versus their savings (home equity, savings, investments), it's pretty piss poor.

Then if a poor country like China, pools a high savings rate, and then buys up part of America, I'm not real sympathetic.

Do keep in mind that a couple of hundred million people in China live in pretty dire poverty, a couple hundred million more have a pretty low standard of living, I would be surprised if you wanted to trade your american house and lifestyle for the typical Chinese middle class. You sure as hell would not want to live the life of the average Chinese worker that is feeding the export machine that puts cheap goods on WalMart shelves.

China is a dualistic economy. Some parts are pretty well off and should not be considered developing, other parts wish they were off the bottom rung and could be considered developing.

[Ocean Annie]

Then if a poor country like China, pools a high savings rate, and then buys up part of America, I'm not real sympathetic.

Do keep in mind that a couple of hundred million people in China live in pretty dire poverty, a couple hundred million more have a pretty low standard of living, I would be surprised if you wanted to trade your american house and lifestyle for the typical Chinese middle class. You sure as hell would not want to live the life of the average Chinese worker that is feeding the export machine that puts cheap goods on WalMart shelves.


China Guy,

I certainly don’t blame China or the Chinese people for US economic failures. I blame free market fundamentalism and the US government for embracing it. The nature of unregulated capitalism is exploitive. Chinese factory workers earning slave wages in deplorable conditions and the skewed concentration of astronomical wealth into the hands of a few are the result of unregulated capitalism. I am only pointing out the fact that the US/China trade deficit is a direct result of corporate capitalism and hurts our economy. Trying to fix the problem with borrowed money has only caused enormous debt and foreclosures.

China is stuffing its piggy bank, smart. The US consumer is out of money and in debt, not smart. I am not sure where Wal-Mart plans to find buyers for all those goodies on their shelves. The machine is out of fuel. Maybe the Walton billionaires will donate to the homeless shelter this year.

[China Guy]

China Guy,

I certainly don’t blame China or the Chinese people for US economic failures. I blame free market fundamentalism and the US government for embracing it. The nature of unregulated capitalism is exploitive. Chinese factory workers earning slave wages in deplorable conditions and the skewed concentration of astronomical wealth into the hands of a few are the result of unregulated capitalism. I am only pointing out the fact that the US/China trade deficit is a direct result of corporate capitalism and hurts our economy. Trying to fix the problem with borrowed money has only caused enormous debt and foreclosures.

China is stuffing its piggy bank, smart. The US consumer is out of money and in debt, not smart. I am not sure where Wal-Mart plans to find buyers for all those goodies on their shelves. The machine is out of fuel. Maybe the Walton billionaires will donate to the homeless shelter this year.Here's something key: China is unbridled capitalism. At least the export machine is. The old command control economy and State Owned Enterprise system is less than 20% of the real economy these days and shrinking.

There is no massive coordinated government conspiracy. It's the free market fucking America. American's choose to live far beyond their means, and leaner, meaner countries with high savings rates are starting to eat the appetizers of our lunch.

[Argent Towers]

Guess I was speaking without using my head. I was looking for a word that was meant to incarcerate, surround, impound or mew the testes within the scrotum.
Hope it works for you.

:dubious:

I'm still not sure what you mean, although I'm having a good laugh over the mental picture. Could you explain further?

[Latro]

It's the free market fucking America. American's choose to live far beyond their means, and leaner, meaner countries with high savings rates are starting to eat the appetizers of our lunch.

For decades America has been enforcing 'Free Trade', which just meant that countries had to accept cheap American goods flooding into their countries, often to the detriment of their own industries.

Now, the system America has set up has turned around and is biting it in the arse.

The turning around began with cheap Japanese camera's and cars and it is still going on.

Hey you set the rules, and now by your own rules, you loose.

[smiling bandit]

Actually, many of thsoe countries were happy to export stuff without tariffs into the U. S., but built protectionist barriers toanyone trying to do the same to them. The American export sector bloomed right after WW2 (when everyone needed more stuff to recover) then withered as more and more countries built up their economies but refused to open up. And of course, many (not all) of them relied on expensive Amerian military power for protection from Communists.

Japan and South Korea are notorious for their barriers. In Japan, for example, Toyota pretty much owns the government departments responsible for car safety, which IMHO is one reason the U. S. car companies were so slow about changing their strategies over. They got blindsided because they could never compete in the markets where smaller cars were desirable, and the concept withered on the vine. When smaller cars became more popular, they literally didn't know how to make them. Plus, Toyota had been stealing American production secrets by getting a look at any car the Americans brought over. Gotta check it for safety standards, donchaknow.

And then you have nations like China which uses its currency to ensure we can almost never export anything back. And the fact that American manufacturing got hit hard because in the 70's huge numbers of foreign firms started competing fresh out of nowhere after building the absolute latest plants and techniques, which our firms couldn't employ without much more expensiv retooling.

Don't get me wrong; there are some industries in America whose own protectionism or incompetence cost them the game, like the lumber industry, where a number of older companies are decades behind the times and get eaten by Canadian firms even with high protectionist barriers.

[LonesomePolecat]

IOW, each country has the other by the nads -- and not only does not dare to let go, but has no way to let go.On the plus side, is it possible that this greatly lessens the probability of open military conflict? If you're even remotely sane, do you want to go to war with your most important trading partner, with the folks who owe you tons and tons of money, with the people who supply you with critically needed imports? Give those sort of economic ties, would you really want to wreck the other guy's economy either covertly or through open warfare? Just trying to be an optimist here.

[Koxinga]

On the plus side, is it possible that this greatly lessens the probability of open military conflict? If you're even remotely sane, do you want to go to war with your most important trading partner, with the folks who owe you tons and tons of money, with the people who supply you with critically needed imports? Give those sort of economic ties, would you really want to wreck the other guy's economy either covertly or through open warfare? Just trying to be an optimist here.

I'm rather pessimistic. (http://en.wikipedia.org/wiki/Guns_of_august#Critical_Analysis) Regarding Barbara Tuchman's The Guns of August

Throughout the aforementioned narrative, Tuchman constantly brought up the numerous misconceptions, miscalculations, and mistakes that she believed ended with the tragedy of trench warfare. Among these were: Economic miscalculation. In Tuchman's view, both European intellectuals and leaders overestimated the power of free trade. These individuals believed that the interconnection of European nations due to this trade would stop a continent-wide war from breaking out, as the economic consequences would be too great. However, this assumption was incorrect.

[DanBlather]

Hey you set the rules, and now by your own rules, you loose.Lose, lose, lose, lose! I loose the dogs on your loose grasp of spelling.

[bonitahi]

To: Argent Towers
Re: "Economically, I think, in our country, our collective scrotums are being slowly cut at the top of its cage."

I meant, economically, China could cut our balls and bag off.

[Voyager]

Much as I hate to help revive zombie threads, recent events have made this one very relevant.
We are now reducing our purchases of cheap junk from China (or even expensive junk) and Chinese factories are closing down by the thousands. China might reduce the purchase of our debt, but not out of spite, but because they seem to need the money to bail out their own companies. it appears that factory workers are moving back to the country just like immigrants here are moving back to Mexico. Free trade is all about two countries becoming co-dependent.

Any participants want to reconsider their postings in the light of the retail crash?

[bonitahi]

I would like to know if some poster's answers have changed- or would be different- due to the recent chances in worldwide macroeconomics...ie, the present depression.

[Leaper]

You think this, right now, is a depression? Really?

[clairobscur]

What am I afraid of? I am afraid that the United States will no longer have the global economic edge. [....] Are my fears irrational?


I don't think so. I expect the USA won't have any more the global economic edge in my lifetime (I'm 43, for the record). I think there's a lot of wishful thinking going on when people keep on stating that the USA will stay on top for three generations at least.

American dominance used to be uncontested technologically, economically and militarily. All is left is the military part. On the two other fronts, American dominance has be steadily declining and IMO will continue to do so. Especially since many seem to be blind to this issue, hence not much is done and the USA is overextending, overspending . Which means that IMHO the US will have to be forced to adapt by going through successive shocks, like the current one.

[clairobscur]

For every dollar you save on a Chinese product, that's an extra dollar in the AMERICAN economy that can be invested in AMERICA.


Or on other goods also produced in China.

[bonitahi]

You think this, right now, is a depression? Really?

Really? No.

You are right to question me. I was wrong in writing that.
We are not in a depression right now (nor is the world).

Thanks for catching that error and correcting me.

[Declan]

On the plus side, is it possible that this greatly lessens the probability of open military conflict? If you're even remotely sane, do you want to go to war with your most important trading partner, with the folks who owe you tons and tons of money, with the people who supply you with critically needed imports? Give those sort of economic ties, would you really want to wreck the other guy's economy either covertly or through open warfare? Just trying to be an optimist here.


Sorry , thats what folks were thinking pre WW1. Admitedly , the conflict had nothing to do with the economic condition at the time , yet it still came to blows.

Declan

[Declan]

For decades America has been enforcing 'Free Trade', which just meant that countries had to accept cheap American goods flooding into their countries, often to the detriment of their own industries.

Now, the system America has set up has turned around and is biting it in the arse.

The turning around began with cheap Japanese camera's and cars and it is still going on.

Hey you set the rules, and now by your own rules, you loose.

You really believe this (the bolded part) You may or may not understand the reference, but the house never loses.

If the USA is in truly a dis-advantages position re the trade imbalance, it will change the rules.

Declan