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2007-08-08 China-Japan-Koreas

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Posted by bigjim-ky 2007-08-08 08:50|| || Front Page|| [4 views ] Top

#1 They won't do squat until after the Olympics.

The Chinese, government and people, view the Olympics as an opportunity to show off the country's economic success and to further establish its reputation as player on the world stage. The government will do anything to keep the economy growing through August of 2008. Addressing issues relating to pollution, corruption, SARS, tainted food, etc., will be put off until until 2009 if the fixes will cost jobs or prestige. Nothing would hit the Chinese economy harder than a dollar collapse and a U.S. recession.

Posted by DoDo 2007-08-08 10:32|| 2007-08-08 10:32|| Front Page Top

#2 One can only hope the geniuses who run this country have an effective set of options ready to deploy to keep the commies from burying us since it was their idea to make us so vulnerable to this kind of economic blackmail. But I'm afraid we're screwed.

Posted by treo 2007-08-08 10:32|| 2007-08-08 10:32|| Front Page Top

#3 Who will the Chicoms sell them to? What will the Reds take in exchange for their securities? A trillion Euros? What EUnuch would give them a trillion or even a half trillion Euros for securities the EUros already passed on? Do they think they can go to ~~CitiBank~~ BNP and sell them in small quantities and not affect the market before they unload everything?

Clever Chicoms are about to find out that when you owe a little, you've got a creditor breathing down your back. When you owe a whole lot, you've got a partner. Oh, and they better have a good story for all those Chinese who are going to be out of work when their plants move to India.

Posted by Nimble Spemble 2007-08-08 10:46|| 2007-08-08 10:46|| Front Page Top

#4 Simple question, why should the Chinese have to revalue if they don't want to?
The U.S. is getting cheap goods which keeps inflation down. To force the Chinese to revalue stinks of protectionism.

Posted by tipper 2007-08-08 11:03|| 2007-08-08 11:03|| Front Page Top

#5 If they do, it will hurt the US for a while, but not permanently China, however will be seriously screwed. Too much of their economy depends on selling goods to the US.
So, go ahead China. Do you feel lucky. Well, do you punk?

Posted by DarthVader">DarthVader 2007-08-08 11:05|| 2007-08-08 11:05|| Front Page Top

#6 A wise man once observed: "Most money is just numbers in a computer somewhere."

Posted by mojo">mojo 2007-08-08 11:06|| 2007-08-08 11:06|| Front Page Top

#7 $900 billion? That's all? If they dumped 900 bill worth of US securities on the open market, like Nemble said, who's going to buy them - and what would they be willing to pay for them? Petroleum is still sold in dollars, for instance.

Some perspective: In the US stock market downturn of 2002, the country's financial system took a major hit

As of September 24, 2002, the Dow Jones Industrial Average had lost 27% of the value it held on January 1, 2001: a total loss of 5 trillion dollars. It should be noted that the Dow Jones had already lost 9% of its peak value at the start of 2001, while the Nasdaq had lost 44%.

Wikipedia

Our financial market system is far more resilient than the PRC's. We are capitalists, not communists, and they need us a helluva lot more than we need them.

Posted by mrp 2007-08-08 11:27|| 2007-08-08 11:27|| Front Page Top

#8 "Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

"No, never! We just like to sit around and threaten our biggest trading partner for gits and shiggles."

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

Sounds like a threat to me.

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Some highly selective defaulting could sure as hell solve that little problem.

We need to smack down China and smack it down hard. This shit has gone on for far too long. Ruining their Olympics would be a great way to do it, too. Boycott it like the Russian Olympics in 1980. Lack of American participation would totally delegitimize the event outcomes and irreparably harm China's prestige. On top of the boycott, also institute a travel ban to China for the event's duration and let them watch several million dollars worth of tourism revenue go by the boards as well. Beijing's Mandarins are begging for a gobsmack and we desperately need to be the one who delivers it. Too bad all of our politicians are bought and sold in denominations of yuan.

One can only hope the geniuses who run this country have an effective set of options ready to deploy to keep the commies from burying us since it was their idea to make us so vulnerable to this kind of economic blackmail. But I'm afraid we're screwed.

Word, treo.

Posted by Zenster">Zenster 2007-08-08 12:43|| 2007-08-08 12:43|| Front Page Top

#9 But what does a dollar crash mean? Does it mean that China will increase the value of its currency vis-a-vis the dollar? No. It means that the dollar will fall relative to the other major currencies. Another way of saying this is that American exports will suddenly become much cheaper in euros, yen or any of the other hard currencies. I can't help but think that those countries will end up having their central banks soak up the Chinese dollar sales to avoid having their price competitiveness go in the tank. Bottom line is that the Chinese threats are empty ones that will cost them a lot of money if they go through with it, while having little or no impact on the dollar exchange rate.

Posted by Zhang Fei 2007-08-08 13:11|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2007-08-08 13:11|| Front Page Top

#10 You should have seen the TV news today...live broadcasts to commemorate that it's only 1 year until the Olympics. The Beijing Olympics are a big big big deal in China, and China anticipates winning the Olympics. After that, they'll consider themselves a Great Power and start throwing their weight around. But until then, they're vulnerable.

Posted by gromky 2007-08-08 13:15|| 2007-08-08 13:15|| Front Page Top

#11 I agree, ZF, and add that the very execution of a "nuclear option" would inform the markets that the PRC was in a catastrophic financial meltdown (to follow the metaphor), at which point the matter shifts quickly into the military/diplomatic realm.

Posted by mrp 2007-08-08 13:18|| 2007-08-08 13:18|| Front Page Top

#12 they're communists , and thats their downfall, pure and simple. As nimble Semple put it, they're our partner, like it or not...
they're an evil corrupt partner, but a partner none the less, so go ahead you wining babys, do your worst.It'll just rearrange the world powers and we will still be on top because we are so far up there that we can hardley be affected adversly by anyone, Adverse being a relative term, Think chinese losing civil infrastructure vs US losing a good deal at WalMart.

Posted by Mad Eye Jineper7321 2007-08-08 13:23|| 2007-08-08 13:23|| Front Page Top

#13 If the Fed keeps printing money, the Chicoms won't have to.

Posted by doc 2007-08-08 13:26|| 2007-08-08 13:26|| Front Page Top

#14 China's not really talking about collapsing the dollar. They don't have to dump everything they have. But they do possess enough treasury bills to manipulate our economy, and that gives them a certain amount of political leverage with our politicians, as economic downturns cost political clout at election time.

Posted by gromky 2007-08-08 13:27|| 2007-08-08 13:27|| Front Page Top

#15 The Chicoms need the U.S. markets to sell their subpar, poor quality, $hit.

Posted by JohnQC 2007-08-08 13:30|| 2007-08-08 13:30|| Front Page Top

#16 But...if they collapse the economy how will I pay for their lead painted toys for Christmas?

Posted by tu3031 2007-08-08 13:38|| 2007-08-08 13:38|| Front Page Top

#17 as a country we need to decide the 10 dollar toaster is not worth it...our economy is the only one in the world that can produce and sustain a multi trillion dollar economy with domestically production --- the cavaet is a 20% or greater reduction in our economy; i can live with that but the chicoms ecomony (and the rest of asia) would crash...they depend on exports for too high a percentage of their respective economies -- the euros are not going to pick up the slack (maybe zimbawe..hehehe)

I suggest a 1 month halt to all chinese imports to our country -- let them sit in the water and wait -- in one month their factories productivity will be cut or they loose money keeping the lines open (then after the squable there is a huge surplas that would need to be sold heap cheap)
Let them have a real taste of the 'Nuclear option'...our only pain would be higher costs (if it supports an amercian working or shafts the chinese give me the higer cost)
bottom line is we need to tell to call their bluff and essentially tell them to fuck off...they are commies but they also want to make money...

Posted by Dan 2007-08-08 13:41|| 2007-08-08 13:41|| Front Page Top

#18 Dan: the cavaet is a 20% or greater reduction in our economy

Chinese imports are 2% of the US economy. And 10% of the Chinese economy. Given the tyranny of fixed costs, China's economy would go into depression if we embargoed them. We'd probably have a recession.

Posted by Zhang Fei 2007-08-08 13:48|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2007-08-08 13:48|| Front Page Top

#19 my apologies -- I was alluding to the us economy being roughly 20% dependant on the world market...we could weather this storm but the chicoms would wither...they need our market more than we need their cheap (and dangerous) products...yes we would have a recession..but i am sure we will have another one either way...we must stop pandering the chinese..recession be damned

Posted by Dan 2007-08-08 13:56|| 2007-08-08 13:56|| Front Page Top

#20 I just want to point out that were are dealing with Communists. Communists think nothing of killing off 70 million of their own people ala Mao. They do not deal with problems the way we rational people do in all cases. We are "white devils" to the Chinese their interests and ours are not at all the same. They are not even playing the same game as we are.

Instead of screwing around with protectionism Congress should be dealing with making sure US Citizens have access to safe, plentiful, cheap and, reliable food and energy of domestic origin.

Anyone that thinks politicians can't run us off a cliff needs to go back and study what a disaster the Hawley-Smoot Tariff Act was.

Back to lurking.

Posted by Sock Puppet of Doom 2007-08-08 14:24|| 2007-08-08 14:24|| Front Page Top

#21 I suggest a 1 month halt to all chinese imports to our country -- let them sit in the water and wait -- in one month their factories productivity will be cut or they loose money keeping the lines open (then after the squable there is a huge surplas that would need to be sold heap cheap)

What's not to like? Make sure the embargo is totally unexpected and quietly infer that it will remain in place until China revalues the yuan to realistic levels. We need to eat China's lunch while there's still room at the table. Sadly, our thoroughly purchased politicians do not have the ~~spine~~ appetite for such bold measures. China needs to experience some extremely interesting times.

PS: Great post, Dan.

Posted by Zenster">Zenster 2007-08-08 14:38|| 2007-08-08 14:38|| Front Page Top

#22 The Chinese government ~~has begun~~ began a concerted campaign of economic threats many years ago.

Posted by Besoeker 2007-08-08 14:41|| 2007-08-08 14:41|| Front Page Top

#23 I suggest a 1 month halt to all chinese imports to our country

Sorry, but this is nuts. We get tons of good stuff from the Chinese and they get...paper from us. I think it's a helluva deal. Think of China as our overseas empire. It's a better deal than the Brits ever got off their empire.

If you really want to screw the Chicoms, get a do over on is the Clinton decision to admit China to the WTO. (How does commie China get into the WTO but non-commie Russia doesn't?)But we don't get a do over on that, so we're stuck.

Posted by Nimble Spemble 2007-08-08 14:48|| 2007-08-08 14:48|| Front Page Top

#24 When a gov't fights the market, the market wins.

Posted by Mark E. 2007-08-08 15:26|| 2007-08-08 15:26|| Front Page Top

#25 You want to see the Chicoms squirm? Look no farther than what we're doing in India. This is giving the Chicoms the gwobblies like nothing we've ever done. Move some production from Chinese factories to Indian factories, and watch the Chicoms come unglued. The Indians already have an indigenous shipbuilding capability greater than China's, and it's expanding. They have an indigenous aircraft industry that builds everything from small crop-dusters to military aircraft to medium-haul (I.E., internal) passenger aircraft. The Indians will launch an indigenous aircraft carrier several years ahead of China. Provide competition to Chinese industries by buying from Indian, Latin American, and African nations, and the Chicoms will go belly up. It'll take about ten years, but they will IMMEDIATELY begin to go into decline.

Posted by Old Patriot">Old Patriot 2007-08-08 16:33|| http://oldpatriot.blogspot.com/]">[http://oldpatriot.blogspot.com/] 2007-08-08 16:33|| Front Page Top

#26 If China were stupid + arrogant enough to really consider this, as President I would offer this reply: If China wishes to engage in economic warfare, we will block their oil shipping lanes and see if they enjoy going back to an oxen-driven economy.

Posted by Glaviper B. Hayes1496 2007-08-08 16:37|| 2007-08-08 16:37|| Front Page Top

#27 Its called Dollar Hegemony. Although fairly controversial it has some deep implications

http://en.wikipedia.org/wiki/Dollar_hegemony

One them just happens to be that export type countries that buy into US currency are essentially forced to buy more US currency.

Posted by Valentine 2007-08-08 17:29|| 2007-08-08 17:29|| Front Page Top

#28 Never happen. Why? Because it would be like WalMart saying that it is tripling prices in all rural stores.

In other words, China would be damaging their own biggest customer. For every ounce of pain felt here, that pain would translate to reduced demand for their own products. Its kinda like a store that shoots their customers BEFORE they get to the cash register. Pretty stupid.

Posted by crosspatch 2007-08-08 17:32|| 2007-08-08 17:32|| Front Page Top

#29 Also, I think the writer of the article is more than just a little extreme and attempting to fan flames of fear. What China is more likely to do is use it's foreign currency reserves to MODULATE the value of the dollar, not crash it. It we set tariffs on their stuff, they have the power to adjust the dollar so that the impact of the tariff is reduced or eliminated.

Dollars are just like any other item on a market. The value of the dollar depends on the supply of them and the demand for them. Iran moving to the euro for oil purchases, for example, reduced demand for dollars to pay for Iranian oil and increased demand for euros. The result was that the euro is now at a record high against the dollar and oil is at a near record high when paid for in dollars.

China can decide to sell some of its dollars thereby increasing the supply and reducing the value of the dollar relative to other currencies. They wouldn't "crash" the dollar because that would hurt them as much as us, but they do have the power to manage the dollar's value on world exchange markets ... as does Saudi Arabian and Russia and a lot of other countries.

Posted by crosspatch 2007-08-08 17:39|| 2007-08-08 17:39|| Front Page Top

#30 Can't they make tainted products in Mexico? Is the Mexican govenrnment and labor force so pathetic they can't compete against communists and prison laborers?

Posted by rjschwarz 2007-08-08 17:59|| 2007-08-08 17:59|| Front Page Top

#31 I don't think the point is whether or not they would do it, the alarming aspect of the article to me is that they would want to. Like crosspatch said, it would be like shooting your customers before they even got to the register. Any devaluation of US money would make chinese goods cost more. Unless they intend to lower the value of their currency too, just to spite us. But that would be defeating their own plan, it just doesn't make any sense, any way you look at it. There is no way to hurt us without sabotaging themselves.

Posted by bigjim-ky 2007-08-08 18:16|| 2007-08-08 18:16|| Front Page Top

#32 Is the Mexican govenrnment and labor force so pathetic they can't compete against communists and prison laborers?

Yes.

Posted by Nimble Spemble 2007-08-08 19:02|| 2007-08-08 19:02|| Front Page Top

#33 c: It we set tariffs on their stuff, they have the power to adjust the dollar so that the impact of the tariff is reduced or eliminated.

By crashing the dollar against other currencies and keeping the yuan-dollar exchange rate the same, they would be - in effect - be crashing the yuan. In other words, it's a competitive devaluation of the yuan vs other world currencies. I doubt other economies would be happy about this.

Posted by Zhang Fei 2007-08-08 20:29|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2007-08-08 20:29|| Front Page Top

#34 Plus, once one starts down that road, it becomes ever more difficult to prevent tit-for-tat sell-offs of one's own currency - which might sound good, until one has to buy say oil using dollars. If the Chinese drop the value of the dollar, the yuan will most likely get hit by other local countries dumping out their yuan reserves. At that point, the fixed price that the ChiComs have with oil suppliers like the Sudan effectively goes up since the yuan is now worth less per dollar and the raw materials exporters are being paid in dollars or other hard currency. Hit the dollar by more than a few cents per unit value against say the Pound, the Yen, or the Euro, and suddenly China is paying a LOT more for its raw materials. Such a campaign would make Russia, OPEC, Sudan, and Cuba {huge nickel supplier to the ChiComs}happy due to increased profits but would bite the Chinese exports hard, due to increased transport costs and relative value of currencies. And believe me, if Wal-Mart decides that the ChiComs are bad for business, it will only take them a few months to a year to have all sorts of cheap item production switched over to Pakistan, India, Mexico, Guatemala, Malaysia, etc.

Posted by Shieldwolf 2007-08-08 20:53|| 2007-08-08 20:53|| Front Page Top

#35 Wel-l-l, in the Battle/Campaign for the Pacific known as the WOT, Radical Islamists and aligned in THAILAND, MALAYA-INDONESIA, and the PHILIPPINES, etal. fight for East Asian spheres and "land bridges/fronts" into Pacific island chains - CHINA and also RUSSIA-SCO handle the economic and geopolitical part. *1960's > Yet another Ollie Stone production of almost a Madonna film, starring a Texas sized asteroid + AEROSMITH[VAL KILMER as GNR's SLASH as MORRISON OF THE DOORS] ETC. No Guam Taotaomonas = Ancestral Ghosts were harmed in the making of this Moud-ian Apocalypse.

Posted by JosephMendiola 2007-08-08 21:11|| 2007-08-08 21:11|| Front Page Top

#36 To better explain my point, the ChiComs have been engaged in a form of mercantilism with the smaller countries in Asia : to buy from the Chinese, you give dollars or other hard currencies; when you sell to the Chinese, they pay in yuans in the main. At a certain point, the Chinese will take back the yuans, but they hit you with a transaction fee for paying in non-hard currencies. This has been expanded to other countries around the world, mainly 3rd world pest holes that want to buy weapons with no questions asked.
The way the ChiComs can screw themselves up is that by dumping dollars, suddenly all of those yuans become valuable as a way to buy now cheap dollars, so central banks around the world buy dollars using yuan accounts. Very quickly the market becomes saturated and since there is no intrinsic value to the yuan, it gets discounted heavily. Then the Chinese are caught in a cycle : the value of the yuan drops externally to the Chinese mainland, and the Chinese Central Bank has to buy up internal yuans or see a major hard currency flight out of the country. Or worse, do nothing and see their exporters which lack the necessary private dollar reserves get whacked hard on exchange rates, since the yuan is worth so much less externally. That is what would raise transportation costs, docking fees, etc to very uncomfortable levels.
Of course, if all the ChiComs do is drop the value of the dollar in comparison to most currencies including the yuan, they have then effectively raised the prices on everything they export, and that produces a major incentive to switch to suppliers in lower cost and/or economically more rational countries.

Posted by Shieldwolf 2007-08-08 21:27|| 2007-08-08 21:27|| Front Page Top

#37 SW: If the Chinese drop the value of the dollar, the yuan will most likely get hit by other local countries dumping out their yuan reserves.

As far as I know, the yuan isn't really available overseas, except via small-time forex dealers, who exchange the local currency for yuan, typically as a service to Chinese tourists. You can't really wire yuan outside of China, and no country has yuan currency reserves as such, since trade - both purchases and sales - is conducted in foreign currencies, not yuan. This is why the yuan was unaffected during the 1998 Asian currency crisis - there's no way to attack a currency that isn't traded internationally.

Posted by Zhang Fei 2007-08-08 21:44|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2007-08-08 21:44|| Front Page Top

#38 And a currency that isn't traded internationally and is tied to the dollar is...

Posted by Nimble Spemble 2007-08-08 22:06|| 2007-08-08 22:06|| Front Page Top

23:59 Zenster
23:54 twobyfour
23:51 Zenster
23:46 twobyfour
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23:36 DanNY
23:30 twobyfour
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22:52 DarthVader
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22:31 Pappy
22:27 Throng Prince of the French1838
22:25 Eric Jablow
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