Posted on 11/15/2009 12:42:40 PM PST by bruinbirdman
Far from taking over as the engine of growth from an exhausted West, China is making matters worse. Its "beggar-thy-neighbour" policies continue to play havoc with global trade and risk tipping the world into a second leg of the Great Recession.
"The inherent problems of the international economic system have not been fully addressed," said China's president Hu Jintao. Indeed not. China is still exporting overcapacity to the rest of us on a grand scale, with deflationary consequences.
While some fret about liquidity-driven inflation, Justin Lin, World Bank chief economist, said the greater danger is that record levels of idle plant almost everywhere will feed a downward spiral of job cuts and corporate busts. "I'm more worried about deflation," he said.
By holding the yuan to 6.83 to the dollar to boost exports, Beijing is dumping its unemployment abroad – "stealing American jobs", says Nobel laureate Paul Krugman. As long as China does it, other tigers must do it too.
Western capitalists are complicit, of course. They rent cheap workers and cheap plant in Guangdong, then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage.
At some point, American workers will rebel. US unemployment is already 17.5pc under the broad "U6" gauge followed by Barack Obama. Realty Track said that 332,000 properties were foreclosed in October alone. More Americans have lost their homes this year than during the entire decade of the Great Depression. A backlog of 7m homes is awaiting likely seizure by lenders. If you are not paying attention to this political time-bomb, perhaps you should.
President Obama said before going to China this week that Asia can no longer live by shipping goods to Americans already in debt to their ears. "We have reached one of those rare inflection points in history
(Excerpt) Read more at telegraph.co.uk ...
To the extent that the Chinese are killing off inefficient businesses and driving down production costs and wages they are doing the world a favor. Making things cheaper means more people can have more things. Any argument to the contrary is just rent-seeking. What does one suppose we did to the British in the 19th century?
And do what? You can't force people to pay you.
The risk is of tarriffs as a populist policy, followed by a trade war.
Wal-Mart!
Which will make the crisis worse.
Did none of todays leader read anything about the lessons of the great depression?
The Great Depression was caused by a reduction of the US money supply by 1/3, not protective tariffs. In fact, both Harding and Coolidge, both conservative, advocated and maintained high tariffs during the economic boom of the 1920’s.
You are right. We should take advantage of low cost Chinese manufacturing to bring down the cost of goods so we can all afford them. I hear the Chinese can build our aircraft carriers, Stealth Fighters, Agesis radars much cheaper than our high cost American contractors.
The risk is of tarriffs as a populist policy, followed by a trade war.
And Free Trade with Communist China has worked?
Probably could use a good trade war to stimulate the economy....and create jobs. Neither is being done by Liberal Free Trade Globalism.
We can continue to subsidize Communism in China with Free Trade....or we can start fixing our US economy. As an American, and a real conservative, I prefer fixing our American economy
If that were actually true then we probably would be buying weapons from them. Why do you think other countries buy weapons from us?
Protectionism never works, and you don’t want to be sending you gold to other countries right about now.
The Great Depression was caused by a reduction of the US money supply by 1/3, not protective tariffs. In fact, both Harding and Coolidge, both conservative, advocated and maintained high tariffs during the economic boom of the 1920’s
Good points....and it has been only a recent trend by some to blame “protectionism” and “Americanism” on the Great Depression....which was not the case.
It is sad that a large number of GOP have adopted the George Soros mantra of Free Trade...note that most of the liberal Democrats (Gore, the Clintons, and many others) are unabashed Free Traders.
Our economy will never improve as long as we continue Free Trade deals that ship American wealth and jobs to Communist China, and other places. The supporters of Free Trade have no clue, or explanation, on how Free Trade has led us to our current economic situation
Statist mythology. The Fed tried everything to inflate the money supply but the banks wouldn't take the money (kinda like now). Deflation was an result of the depression, not a cause. The cause was the inflation carried out by the Fed during the preceding decade.
No matter how many times that Fed idolizing myth gets told it isn't going to be true.
And yes, of course protectionism made everything worse. How could reducing foreign trade by 60% not harm the economy?
There seems to be some good cheap labor unused in the Western Hemisphere.
Haven't heard much about Hussein taking his Secretary of State on this trip.
Did he take his Energy Commissar and former director of Socialists International, Carol Browner?
Perhaps The Obammunist is getting some private pointers from his comrades in Communist China.
yitbos
Pardon me but what are you smoking?
Soros and the rest are all Socialists who support central planning. You can't get any more protectionist than that. They are all also big union supporters. None of them support free trade. Clinton had it shoved down his throat by the conservatives when he was in office.
In a just world that would be true, but in Obama’s America the UAW seems to have done so.
Is that beggar or bugger?
As Chinese workers demand better pay and conditions, and they will, this equation will even out. Of course we’ll all be dead when that happens, such is life.
Bump
you = your
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.