Posted on 02/10/2010 5:35:21 AM PST by usalady
China may, eventually, do what they say they're going to do when it comes to the dollar and our bonds. Even if they do, I'm sure many here will continue wringing their hands while expecting the worst when these actions wouldn't be all that bad for us. The Chinese alone have placed themselves in the position they are in today (dependent on exports, cash inflows and FDI) and have shown no ability (or desire) to extricate themselves from this cycle. However, that won't stop them from influencing the markets with their empty rhetoric. The fact is we could hurt them badly by shutting off their exports but we'd need to accept the fact that prices would increase along with interest rates.
OK, let me stifle the impulse to come back with "ever hear of the national defense?".
How about we agree that everyone here loves America, nobody here's an idiot, and the only thing we're not together on is how much a priority we need to give our military presence in the Pacific.
Off hand, I'd say it's more important than Obama's new Global-Warming Agency.
Pretty much everything you said made sense but that.
China's a big place and they got lots of opinions. What I'm getting is that the rhetoric is from China's military, and it runs contrary to the desires of China's financial leaders.
well we can certainly agree on that! :)
Maybe so. Maybe I'm giving the Chinese more credit than they deserve. Rather than "markets" I should have probably said their rhetoric is designed to influence public opinion (which I suppose can influence markets). Why we think we're beholden to China when just the opposite is true is beyond me. China may someday move away from the dollar, they may someday also adopt policies that stimulate domestic consumption. Slower growth, less debt purchases and less dependence on the dollar would be, in my opinion, a good thing for everyone involved. Unfortunately, they are stuck in their current cycle and don't seem all that interested in getting out. I don't know exactly what the long term impact of this behavior will be but I don't think it will end well.
That's a safe bet, just like someday the sun will nova and wipe out all life on the planet. Not to worry, we've got enough resources to handle both, just like we can be sure things will be better after we've recovered from the Maoist in Chief term in office.
What's we don't know is how bad things will get before then.
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.