High Noon at the Economic not OK Corral

duhavid

Tue Aug 07 20:51:45 -0700 2007

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Seems like a replay of trade with Japan back in the day ( and probably still today ).

Our "bring it on" attitude rapidly disappears when it comes to opposing trade that
is not truly free.

High Noon at the Economic not OK Corral

Martin Blank

Tue Aug 07 22:57:07 -0700 2007

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Note that most of the trade problems with Japan ended with their own economic meltdown as their real estate market collapsed.  It may be the same thing here, where China's economy tips over because they're not being careful enough with it.  Long growth rates in the high percentage brackets may well lead to some very sharp inflation spikes, especially for energy, as their demand is rapidly outpacing their ability to supply it, even with dozens of power plants scheduled for construction.

High Noon at the Economic not OK Corral

duhavid

Tue Aug 07 23:08:26 -0700 2007

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Quite, but it was not because we stood up on principals.

High Noon at the Economic not OK Corral

hal9000_sn3

Tue Aug 07 20:56:52 -0700 2007

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Never should have let them in on the milk drinking secret. Everything was going along fine until they figured that one out. Now, just shut up about the caffeinated diet soda motivational beverage thing, or we are doomed.

High Noon at the Economic not OK Corral

Carl

Wed Aug 08 02:33:22 -0700 2007

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Now I'm curious. What secret? That most Chinese are unable to drink milk because of lactose intolerance?

On topic: Two overheated economies threatening eachother to see who has the longest breath. I hope, really hope, that cold war #2 is on the rise. A cold war costs no lives, but compels the participants to stay one step ahead of the other, and innovation is one of the more important roads to walk in that scenario. Can't be bad for the world in the long run.

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 03:19:28 -0700 2007

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On topic: Two overheated economies threatening each other to see who has the longest breath. I hope, really hope, that the free market is on the rise. A free market costs no lives, but compels the participants to stay one step ahead of the other, and innovation is one of the more important roads to walk in that scenario. Can't be bad for the world in the long run.

Fixed...

High Noon at the Economic not OK Corral

Carl

Wed Aug 08 04:47:04 -0700 2007

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You mistake "competition" for "free market". Often the free market is glorified by examples that can exist without the free market. Personal liberty is not linearly connected to market liberty. Competition, striving to outdo the other, innovation, "survival of the fittest", improvement, advancement, growth are all goals and means that can be achieved without a free market. A free market is strangling the competition to death, then trying to become the biggest, baddest mofo on the block and smother new competition as soon as it raises its head. That, my friend, is the practical side of the free market.

Now, if you would say that the current state of affairs is not a truly free market, then I say that the free market you mean is merely a utopian theory, and that communism, in utopian theory, works even more efficiently, so we should get rid of the free market pipe dream as soon as possible.

High Noon at the Economic not OK Corral

phred14

Wed Aug 08 05:23:23 -0700 2007

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The "free market" is a tool, one of many tools, of government. (That's government with a little 'g', as in the way large assemblies of people regulate themselves. Government with a large 'G' is The State, what we normally think of as a government.) Libertarians appear to think the "free market" is the only tool, if not a near-religion, and IMHO that's a bit of a problem. I happen to think that the "free market" is a very handy and powerful tool, but recognize that it has its limits and problems, not the least of which is the tendency toward lock-up and short term extreme oscillations. I'd really like to see some sort of "Signals and Systems" analysis applied to the free market, and rather than some of the silly regulations we have today, use regulations to attempt to apply proper damping, etc.

High Noon at the Economic not OK Corral

disco

Wed Aug 08 08:47:01 -0700 2007

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> Personal liberty is not linearly connected to market liberty.

The use of the word "linearly" makes you technically correct, but take that word out and you're historically wrong.

> Competition, striving to outdo the other, innovation, "survival of the fittest", improvement, advancement, growth are all goals and means that can be achieved without a free market.

Technically true again, but a free market guarantees that the playing field is even. Take the free market out of the equation and some are handicapped. The best team doesn't necessarily win. All the things you mention may still occur in a non-free market, but at a slower pace. All consumers and all but a select-few businesses lose. You add restrictions and it becomes unfair. Yes, there are losers in a free market, but they typically had the same chances at winning as everybody else. This is what pisses me off about most of those who complain about how they are worse off because of the free market. Assuming they are, which in a lot of cases is debatable, who's to blame? Take a look in the mirror. If you're in some industry that's been outsourced or mechanized then retrain for another.

> A free market is strangling the competition to death, then trying to become the biggest, baddest mofo on the block and smother new competition as soon as it raises its head. That, my friend, is the practical side of the free market.

That's what we have anti-monopoly laws for. How many of these are a monopoly? What was that "practical side" thing you were referring to?

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 10:50:32 -0700 2007

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Almost all of the Forbes 2000 list are either a monopoly in and of themselves, or participating in an anti-competitive oligarchy.  Our anti-monopoly laws are so outdated as to be practically worthless.

High Noon at the Economic not OK Corral

disco

Wed Aug 08 11:51:29 -0700 2007

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I don't think you know what monopoly means. A quick scan of the first page tells me that Microsoft is one, although they are (slowly) losing that position. IBM and AT&T once were but are no longer.

Name me a few others that are monopolies. Hint: mono=1.

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 12:28:14 -0700 2007

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Read what I said.  Those that aren't monopolies are actively engaged in anti-competitive oligarchies- which are just as bad as monopolies when it comes to the standpoint of what is good about the free market, but don't rise to the level of being noticed by the law. 

Don't believe me?  Go anywhere in the country where there are competing gas stations next to each other.  Most truck stops have these.  Under classic competition, such stations would be in an eternal price war, keeping prices within a cent or two of cost of production+taxes, just enough to make a profit, and neither station would ever be able to raise prices without losing so much market share that they go out of business.  Instead, they raise prices together- still within a cent or two of each other, but always together.  And always to the detriment of the consumer.  That's an oligarchy.

EVERY business on the Forbes 2000 does this within their own industry.  The laws are outdated, and have yet to actually notice this behavior except in very rare cases when one member of the oligarchy gets pissed off enough to complain.

High Noon at the Economic not OK Corral

disco

Wed Aug 08 13:22:42 -0700 2007

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They raise prices simultaneously because the costs go up simultaneously (e.g. crude oil prices). If you think these station-owners are making such a killing at consumers expense then why don't you open one up next to them, undercut them, and still become a gazillionaire. Oh, maybe it's because, once again, you have no idea what you're talking about.

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 13:54:13 -0700 2007

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They raise prices simultaneously because the costs go up simultaneously (e.g. crude oil prices).

And yet a station of the same brand, a mile away, doesn't. 

If you think these station-owners are making such a killing at consumers expense then why don't you open one up next to them, undercut them, and still become a gazillionaire. Oh, maybe it's because, once again, you have no idea what you're talking about.

Who ever said it was the station owners who were setting prices? 

High Noon at the Economic not OK Corral

disco

Wed Aug 08 15:08:13 -0700 2007

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The vast majority of station owners are independent (even though a lot are affiliated with a particular has gas company) and do set the price themselves, but yes, it is subject to the price they buy it from the gas company. So for what you suggest to be occurring gas companies must be colluding to sell it to their corresponding affiliated stations in the same vicinity at the same rate. Maybe there is some reaction going on, but I very much doubt there is collusion. If, as you suggest, the gas station a mile away is such a different price then people will just buy it from there, resulting in your two colluding stations having to drop their price to compete. i.e. Market forces keep the price low.

High Noon at the Economic not OK Corral

President4242

Thu Aug 09 06:44:18 -0700 2007

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The vast majority of station owners are independent (even though a lot are affiliated with a particular has gas company) and do set the price themselves, but yes, it is subject to the price they buy it from the gas company. So for what you suggest to be occurring gas companies must be colluding to sell it to their corresponding affiliated stations in the same vicinity at the same rate. Maybe there is some reaction going on, but I very much doubt there is collusion. If, as you suggest, the gas station a mile away is such a different price then people will just buy it from there, resulting in your two colluding stations having to drop their price to compete. i.e. Market forces keep the price low.

The lack of consumer knowledge of the gas station a mile away means that the price isn't affected.  This is slowly being rectified by the internet however- Portland Gas Prices is one among many websites that you can use to see prices across a metro area.

However, notice that it isn't the gas companies that are reporting these prices- but individual consumers.  The gas companies STILL are in collusion.  Just like every other industry out there.  Do you really think that the physical cost of producing oil fluctuates as much as the price of oil does?

High Noon at the Economic not OK Corral

Uncle Entity

Thu Aug 09 00:30:36 -0700 2007

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I wish I could find the story -- ok, truthfully I'm too lazy for even a simple google search...

So anyway, classic price war between two gas stations gets pretty heated. One station starts selling gas at way below cost so the other station goes and rents a tanker and proceeds to fill 'er up. Don't think they got very far before the pumps got turned off but certainly someone somewhere learned a lesson over this incident.

I don't know about up in Oregon where you aren't even allowed to pump your own gas but pretty much everywhere I have ever gone, excluding out in the middle of nowhere where you just get straight ripped off, there is usually a variation in price between stations close to each other. Mostly the little chain will be a few cents cheaper than the big chain but I think that has more to do with gas cards than anything else. A $.01 difference is really not enough to do something crazy like make a U-turn in a busy intersection to save 10 cents on a fillup so they don't have to compete like you believe. Don't forget branding and the immoral advertising to induce customers to come get the good gas for their sports car.

Oh, and the dumbass driving around Idaho in a white Corvette with the plate 'playboy1', you know you're an idiot right? Just had to document that...

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 09:18:18 -0700 2007

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You mistake "competition" for "free market".

Not at all. I was just correcting the fallacy in your statment.

High Noon at the Economic not OK Corral

Carl

Thu Aug 09 08:55:20 -0700 2007

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And wrongly so. Your "fallacy" clearly indicates a war that incurs material damage, which the cold war did not have (except maybe for a few small covert operations). Therefore, your argument is invalid.

High Noon at the Economic not OK Corral

Uncle Entity

Thu Aug 09 11:16:37 -0700 2007

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Rebuilding after the destruction is clearly the second application of broken window fallacy. The first applies clearly to a cold war situation as you describe it.

You actually believe taking money away from the majority and giving it to a minority, military industrial complex in this case, is good for the economy?

There are better fitting fallacies but I know I'm wasting my time so just went for the first thing that clearly fit.

High Noon at the Economic not OK Corral

Carl

Thu Aug 09 23:24:25 -0700 2007

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The Cold War initiated the space race. Since it ended, noone was interested in space anymore. Case closed :P

High Noon at the Economic not OK Corral

maethorechannen

Wed Aug 08 04:39:50 -0700 2007

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What secret? That most Chinese are unable to drink milk because of lactose intolerance?

I'm guessing it's a reference to the article "China Drinks It's Milk", on the BBC. Basically, the price of dairy products and other foodstuffs that depend on dairy products (such as pizza) are set to rise, due to an increase in Chinese demand for dairy products.

High Noon at the Economic not OK Corral

Carl

Wed Aug 08 04:52:47 -0700 2007

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Ah, thank you, I missed that significant piece of information in decyphering the message :) I also just now remember that lactose intolerance usually tolerates small amounts of lactose, so it is possible for them to drink it. I live on at least a liter of milk a day, so anything less doesn't really count as "drinking milk" for me, as much as an alcoholic wouldn't consider three beers as "drinking alcohol".

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 03:13:08 -0700 2007

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Lets say that China goes ahead with this threat and dumps all their US holdings. Just to simplify lets also say that their $1.33 trillion is solely in Treasury Bonds.

So they dump the bonds on the market and they depress the price by say 30%. That works out to around $400 billion in profits sitting there just waiting to be taken with zero risk. These bonds get snapped up real quick, it would closely resemble the Oklahoma land race from that crappy Tom Cruse movie. Bond prices stabilize as quickly as they fall.

Now the Chinese have $900 billion in dollars that they have to get rid of. Can't trade it for gold bullion thanks to Nixon so the only choice is to sell it on the international currency market. Price of the dollar only drops 15% this time because people were kind of expecting this to happen and were waiting to trade their foreign currencies. Investors only make $135 billion this time and the dollar quickly stabilizes.

Totally oversimplifying here because of the long tail effect or whatever its called. Chinese would get a little over 57% of their investment from this stunt but the amount of wealth transfer to the already super rich would be legendary.

Short version would be 'nothing to see here, please move along.'

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

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

What better way to protect the good citizens of America than to collapse the world economy.

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 10:56:43 -0700 2007

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In the long run, from a military standpoint, it's better for ANY country to be self-sufficient than dependant upon foreign trade.  This may well be a blessing in disguise.  The business community will scream and howl, but local production will insure that nobody in America starves over this.

The problem with free trade is when the other guy doesn't play by the rules.

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 11:17:55 -0700 2007

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They own our debt, we own others debt. All these global ecomonies are as intertwined as the Eurozone. Unless you're shunned by the international community like N Korea then you have a vested interest in assuring the other guy doesn't go down in flames -- like us bailing out Mexico a while back or China keeping our 'service' economy going. Once one goes down it takes others with it like the Asian currency meltdown back in the late '90s.

Its the opposite of Mutually Assured Destruction, kind of like the Red Cross ready to step in and help out a brother in need.

Like I said, nothing to see here. Hillary just needs to pull that stick out of her ass and campaign on *real* issues.

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 12:22:11 -0700 2007

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They own our debt, we own others debt. All these global ecomonies are as intertwined as the Eurozone. Unless you're shunned by the international community like N Korea then you have a vested interest in assuring the other guy doesn't go down in flames -- like us bailing out Mexico a while back or China keeping our 'service' economy going. Once one goes down it takes others with it like the Asian currency meltdown back in the late '90s.

If we learn our lesson, then it'd be worth it.  MAD didn't work, and neither does this, at least, not from the standpoint of our own citizens.  It'd be better for a large self-sufficient country to be shunned than to be sucked into the crisis of every other little guy on the planet.

Its the opposite of Mutually Assured Destruction, kind of like the Red Cross ready to step in and help out a brother in need.

The problem being that in the end result, they aren't our brotheres, they are our competitors.  Until we begin to understand that, Free Trade MAD will work just about as well as the nuclear version did- more damaging to our own people than to the other guy.

High Noon at the Economic not OK Corral

Martin Blank

Wed Aug 08 12:28:13 -0700 2007

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MAD didn't work?

Considering the number of generals on both sides who were pushing for war in the 1950s to get the competition overwith, and the civilians who feared the worst that held them in check, I'd say it worked out relatively well.

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 12:35:42 -0700 2007

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MAD didn't work?

If anything, it made regional conflicts worse- longer and more protracted, where a judicious use of a nuclear device could have ended the conflict (I happen to agree with McArthur that the easiest way to prevent the Chinese support of North Korea would have been to nuke the trade routes between China and Korea, for instance).

Considering the number of generals on both sides who were pushing for war in the 1950s to get the competition overwith, and the civilians who feared the worst that held them in check, I'd say it worked out relatively well.

And instead, we got 10 years of war in Vietnam and 5 years in Korea, both of which could have been over in a matter of days.  It continues today with our lack of ability to use nuclear power in the War on Terror- thus we got sucked into Iraq for years, an invasion and destruction that should have been over and done with in weeks if not days.

What it really comes down to is this- which is worse?  Total destruction in a few minutes from which we can rebuild in a couple of thousand years, or a long protracted real violence?

Likewise from the economic standpoint- either way we're going to eventually be forced to live on our own production once again.  We can either bite the bullet now, limit trade to only mutually beneficial trades, or go down the long, slow collapse of the world economy as China becomes the next United States (only worse because then the people who need 40x as much as the rest of the world to survive will number over a billion instead of a mere 300 million).  Either way we'll end up losing the economic war, just as in the long run our "Cold War win" became a repeated hot war loss. 

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 12:59:08 -0700 2007

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Total war went out of fashion right around the same time as the 'final solution'. Either blitzkrieg on Baghdad while allowing the Iraqi forces to surrender or nuke a city of millions to depose a regime. Tough choice there...

Trade is a win-win situation or people wouldn't engage in it. The Zero Sum Game theory also went out of fashion and was replaced with the Mutually Beneficial theory. All the economic meltdowns that have happened within your lifetime were directly caused by government intervention not because of some lost battle in the global economic war.

Some people win, some people lose in life. No amount of government is going to change this simple fact. You had exactly the same chances of success as Bill Gates. Its all about the choices you make...

High Noon at the Economic not OK Corral

President4242

Wed Aug 08 13:21:49 -0700 2007

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Total war went out of fashion right around the same time as the 'final solution'.

And in it's place we got "painless" war- or at least, painless to the politicians.  War isn't supposed to be painless- that's what makes it a thing to be avoided.

Either blitzkrieg on Baghdad while allowing the Iraqi forces to surrender or nuke a city of millions to depose a regime. Tough choice there...

Notice, however, that the blitzkrieg didn't bring peace- just more war. 

Trade is a win-win situation or people wouldn't engage in it.

Unless trade is truly win-win (FOR EVERYBODY INVOLVED, INCLUDING THE COMPETITORS TO THE IMPORTERS) it shouldn't be allowed at all.

The Zero Sum Game theory also went out of fashion and was replaced with the Mutually Beneficial theory.

Which is about as useful as the painless war theory- it's only beneficial to the people who profit from it.

All the economic meltdowns that have happened within your lifetime were directly caused by government intervention not because of some lost battle in the global economic war.

The two are not mutually exclusive- the government intervention has always been against the American worker and for the other side.  That's why I call them Free Traitors- they cause us to lose battles in the global economic war by their utter lack of protection for our own side.

Some people win, some people lose in life. No amount of government is going to change this simple fact. You had exactly the same chances of success as Bill Gates. Its all about the choices you make...

I didn't have a father who was able to give me an interest free $100,000 loan to drop out of college...unlike Bill Gates.  Without that loan, Microsoft would have become yet another failed business in the ruin that the software industry has been.  So don't give me that crap about me having exactly the same chance of success as a college droppout whose daddy rescued him from failure.

We need to either start seeing the United States as OURSELVES, worthy of competing on a world front and using EVERY possible weapon in the economic war that we need to use to win, or we need to admit that we no longer have a democracy- just a puppet government of the rich.

High Noon at the Economic not OK Corral

Uncle Entity

Wed Aug 08 15:23:17 -0700 2007

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I didn't have a father who was able to give me an interest free $100,000 loan to drop out of college...unlike Bill Gates.

I seem to recall people throwing money around in the 90s. If you couldn't get your hands on some venture capital with no business plan and a somewhat good idea then I don't know what to tell you. A web e-mail front end, a video site that has user generated content and a search engine are a few simple examples that made people a lot of money. Daddy's money can't buy you creativity. Or the balls to risk everything...

High Noon at the Economic not OK Corral

President4242

Thu Aug 09 06:54:41 -0700 2007

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I seem to recall people throwing money around in the 90s. If you couldn't get your hands on some venture capital with no business plan and a somewhat good idea then I don't know what to tell you.

I wasn't born into the class that has venture capitalists.

A web e-mail front end, a video site that has user generated content and a search engine are a few simple examples that made people a lot of money. Daddy's money can't buy you creativity. Or the balls to risk everything...

It's more that second than the first....

High Noon at the Economic not OK Corral

Thomas Lord

Wed Aug 08 14:28:43 -0700 2007

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<i>You had exactly the same chances of success as Bill Gates. Its all about the choices you make...</i>


HA HA HA HA HA ... oh, that's rich.

Very funny, really.

-t

High Noon at the Economic not OK Corral

rubycodez

Wed Aug 08 13:28:48 -0700 2007

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That works out to around $400 billion in profits sitting there just waiting to be taken with zero risk.

that assumes a cascading failure of hugely overvalued markets in the U.S. doesn't occur and that the ability of the government to tax we dah peeps to pay national debt isn't affected: in other words, that betting on the future of the U.S. doesn't become a sucker bet.

High Noon at the Economic not OK Corral

Uncle Entity

Thu Aug 09 00:57:31 -0700 2007

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I'm thinking that with the amount of money talked about being thrown around here there are multiple plans in place in case this were to happen. The person putting together the cartel to finance this is bound to get a cut of the profits and even a modest 10% of $400 billion should be enough incentive for some real savvy Big Pig Capitalists to get on the phone with those who really control the wealth of the world and work out some plans. Probably amount to nothing but $40 billion for an afternoon worth of work, it really would be a mad scramble to buy those up...after the bond market took a little hit to maximize profits though.

I also think that the government has to have plans for economic shenanigans on this scale, what are the odds someone won't actually try it eventually. The Prez could get on TV and announce contingency plan B1-3 has been enacted while his masters laugh all the way to the bank.

Even TFA doesn't say anything about market meltdowns or cascading failures just that money will get diverted from other investment vehicles. Housing market I believe they said but that's probably just because that's the fashionable example to use these days. Hits you where you live so to speak...

china vs. congress

Thomas Lord

Wed Aug 08 14:07:17 -0700 2007

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A lot of good reasons are given in comments above why China doesn't quite have an absolute interest in trashing the dollar (but might have a contingent interest).

Part of the political story is that the dialog in congress tends towards being less sophisticated than what we see above.   The main dialog on the world stage here is between a sketchy US congress and a more saavy Chinese government.   They are looking, with justifiable alarm, at some of the sentiment in congress and are, for the most part, just trying to consciousness-raise about the true nature of the situation -- the actual game we all are playing.   They are looking at some of the ideas in congress and pointing out "Well, you could do that but then we'd have to bitch slap you, big time."

The flip side is equally true, though.   Macro-economics are vodoo, to an extent but the concensus opinion all around the world is that China is failing to float its currency rates fast enough -- they're hogging and in ways that most agree are just going to bite them (and all of us) in the ass if they keep it up, unchecked.

China (evidentially) has a lot of sharp economic planners.  My impression is that there is a minority but strong sentiment there that they need to bite the bullet on currency revaluations, give up on simple growth measures, and really double down on "smart growth".    For example, one way to address redistribution problems there might be build-out internally for quality and safety of food-stuffs -- something that can be done even while sliding on trade balances (and that helps to lock in future trade opportunities).   That minority sentiment within China looks, from here, like the smartest move the nation can make.

Congress deserves an occaisional bitch-slap from China and really needs to learn to listen and work with China.   Equally: China needs to learn and work with Congress.

"We're all in this together,"
-t

china vs. congress

President4242

Thu Aug 09 06:52:12 -0700 2007

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Congress deserves an occaisional bitch-slap from China and really needs to learn to listen and work with China.   Equally: China needs to learn and work with Congress.

So maybe we should send Congress to Bejing- where they can work with the Chinese directly- and elect ourselves a government that actually cares about American Interests.

"We're all in this together,"

Except, of course, those who have lost their entire ability to make a living to international cheap labor trade.  They, of course, aren't in this at all anymore- since they no longer have the money to be anything other than substinence consumers.

china vs. congress

Thomas Lord

Thu Aug 09 09:00:18 -0700 2007

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Except, of course, those who have lost their entire ability to make a living to international cheap labor trade.  They, of course, aren't in this at all anymore- since they no longer have the money to be anything other than substinence consumers.


I'm not sure that you can blame that on currency values -- or fix it just by floating the Yuan.   Rather, I think you have to blame that on economic elites and the tactics they  have been using for profit extraction.

The Internet gave rise to unprecedented efficiencies in retail and inventory management -- huge, huge change in the nature of demand placed on manufacturers.  The U.S. had a manufacturing infrastructure that was very 19th/20th century, technologically speaking, and could not easily achieve the efficiencies needed to keep up with retail.   And cheap labor abroad filled the gap -- yes, that's partly a result of currency manipulation but, fundamentally, is just supply and demand (too many workers, in developing economies, not enough jobs).

We went wrong when profit-taking became so short-horizon -- so "near term gains" focused -- that instead of investing to upgrade the manufacturing sector we just gutted it.  Dumb. Dumb. Dumb.

If China is extra special smart, they'll realize that the re-industrialization of the U.S. -- this time in 21st century mode -- is the money-making investment opportunity of our current generations.    There's obviously too much political hair if they try to own and build out factories the way the Japanese did but that's fine: they should just go into the financing market, trading private US$ debt more than public debt.

"Thanks for all the cheap t-shirts.   Here, have some equity.   By the way, you need to make infrastructure investments if you want to see any return. "
-t

china vs. congress

President4242

Thu Aug 09 11:25:51 -0700 2007

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I'm not sure that you can blame that on currency values -- or fix it just by floating the Yuan.   Rather, I think you have to blame that on economic elites and the tactics they  have been using for profit extraction.

Is one of those methods encouraging living beyond our means?  I'm to the point that I'm not sure that easy credit and inflation is a good thing- and that a period of no credit and deflation might be necessary to bring US standard of living more in line with the third world countries we're now competing with.

The Internet gave rise to unprecedented efficiencies in retail and inventory management -- huge, huge change in the nature of demand placed on manufacturers.  The U.S. had a manufacturing infrastructure that was very 19th/20th century, technologically speaking, and could not easily achieve the efficiencies needed to keep up with retail.   And cheap labor abroad filled the gap -- yes, that's partly a result of currency manipulation but, fundamentally, is just supply and demand (too many workers, in developing economies, not enough jobs).

We're headed that way here to.  Perhaps efficiency isn't all it's cracked up to be- of course, our crumbling infrastructure might yet destroy those efficiencies.  Cheap labor doesn't mean much when you can't get your product to the consumers.

If China is extra special smart, they'll realize that the re-industrialization of the U.S. -- this time in 21st century mode -- is the money-making investment opportunity of our current generations.    There's obviously too much political hair if they try to own and build out factories the way the Japanese did but that's fine: they should just go into the financing market, trading private US$ debt more than public debt.

They've got their own billion workers to worry about- why should they worry about American workers?  Just build out their own factories, creating their own middle class, and when the US$ goes underwater let it sink.

china vs. congress

Thomas Lord

Thu Aug 09 12:08:23 -0700 2007

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Is one of those methods encouraging living beyond our means?  I'm to the point that I'm not sure that easy credit and inflation is a good thing- and that a period of no credit and deflation might be necessary to bring US standard of living more in line with the third world countries we're now competing with.

For sure, none of us are sure.   But: I strongly disagree about bringing the US down to "third world" standards -- for a fairly simple minded reason.   Looking at my own life, and the lives of many in the surrounding communities, I'm sure that if you gave me and my friends a few million bucks to spend on personal-scale "infrastructure" that we could spend it, winding up with improved standards of living with radically less consumption.   You hear about impoverished people who are forced to live on, perhaps, a couple of bucks a day, right?   Well, very wealthy people, with comfortable lifestyles, can also live on a couple bucks a day,  more or less.   The differences between developed and developing regions is not, ultimately, consumption levels (though that is an issue at the moment).   Rather, the differences are structural -- differences in how much "a good life" costs.

[China has] got their own billion workers to worry about- why should they worry about American workers?  Just build out their own factories, creating their own middle class, and when the US$ goes underwater let it sink.

There are lots of answers.   A common one is that China's growth is by virtue of being a net exporter so they have a vested interest in the wellbeing of their repeat customers.   Another are the arguments for global security.   Another is the deep observation that biotic and cultural diversity are key to sustaining the value of all investments.   Another is simply that the US is a fantastically good supplier of innovation.   Another is that China alone probably can't determine if the US sinks -- others will intervene to limit that -- and so China's main opportunity here is to make money on the deal.

-t

china vs. congress

President4242

Thu Aug 09 12:27:28 -0700 2007

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For sure, none of us are sure.   But: I strongly disagree about bringing the US down to "third world" standards -- for a fairly simple minded reason.   Looking at my own life, and the lives of many in the surrounding communities, I'm sure that if you gave me and my friends a few million bucks to spend on personal-scale "infrastructure" that we could spend it, winding up with improved standards of living with radically less consumption. 

Infrastructure, by definition, is almost never personal-scale.  I'm not sure what you're talking about here.  With standards of living defined by how much you consume in natural reasources, how do you get an improved standard of living with less consumption?

You hear about impoverished people who are forced to live on, perhaps, a couple of bucks a day, right?   Well, very wealthy people, with comfortable lifestyles, can also live on a couple bucks a day,  more or less.   The differences between developed and developing regions is not, ultimately, consumption levels (though that is an issue at the moment).   Rather, the differences are structural -- differences in how much "a good life" costs.

Every developed country I know of requires a higher consumption level to support a good life.  Higher consumption creates more economic mobility, which means more jobs for more people.  How do you do that with lower consumption?

There are lots of answers.   A common one is that China's growth is by virtue of being a net exporter so they have a vested interest in the wellbeing of their repeat customers.   Another are the arguments for global security.   Another is the deep observation that biotic and cultural diversity are key to sustaining the value of all investments.   Another is simply that the US is a fantastically good supplier of innovation.   Another is that China alone probably can't determine if the US sinks -- others will intervene to limit that -- and so China's main opportunity here is to make money on the deal.

The first may be true for now- but I can see it changing quickly, as a billion consumers living at an American standard of living could quickly turn China from being a net exporter to an isolationist that doesn't need trade to survive.  I can't see them caring much about global security- they've got a tundra to the north, an ocean to the east, a desert to the west and the world's highest mountain chain to the south protecting them for the most part.  They don't necessarily need to sustain the value of their investments- not as long as they've got a strong consumer model.  The only reason the US is good at innovation is because of a middle class living a life of relative leisure- and China potentially has 3x as many people who could be living at that standard.  So the only one left is that China can't determine alone if the US sinks- but my point is that sink or swim, it doesn't matter to China WHAT happens to the US economy in the long run, as long as they are able to protect their own jobs and create a middle class there first.

china vs. congress

Thomas Lord

Thu Aug 09 12:46:00 -0700 2007

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Infrastructure, by definition, is almost never personal-scale.


Maybe Zogger should post more about his farm, for example.

-t

china vs. congress

President4242

Fri Aug 10 10:55:24 -0700 2007

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Maybe Zogger should post more about his farm, for example.

I see that as an example of accepting a lower standard of living in return for more freedom from outside influence (in other words, exactly what I'm talking about on a large scale, scaled down for a single human family).  He doesn't even have broadband availabe in his reduced-cost, reduced consumption lifestyle.