
The Dollar Shift: Chinese Pockets Filled as Americans’ Emptied - kalvin
http://www.nytimes.com/2008/12/26/world/asia/26addiction.html
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tokenadult
"For China, too, this crisis has been a time of reckoning. Americans are
buying fewer Chinese DVD players and microwave ovens. Trade is collapsing, and
thousands of workers are losing their jobs. Chinese leaders are terrified of
social unrest."

That is the worry on the Chinese side.

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jmtame
"China is kicking our ass right now because they can work harder, faster, and
cheaper." - Michael Arrington at LeWeb 08

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jfornear
The real problems are coming when China wants to cash their bonds to fund
their $500b infrastructure rebuilding projects and the US simply can't pay up.

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DenisM
Two reasons why it may not turn out a problem you think it will:

1\. Demand for US treasuries is highest it's ever been. So long as the rest of
the world is on the brink of collapse (together with USA) people will believe
that American paper is the most reliable one, compared to all others.

2\. There is no such thing as "can't pay up" when you own the printing press.
Bernanke will print the money (paper or electronic) and give it to the Chinese
- the problem will start when those money will trickle back to US and create
consumer price inflation. it may also affect exchange rates and makes imports
more expensive (inflation again).

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jfornear
Why paper? What about gold? If the dollar collapses a printing press won't
help much. Aren't the rates dropped in order to stimulate higher demand, not
because of higher demand?

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DenisM
US debt is nominated in US dollars. An easy way to pay up _all_ debt is to
devalue dollar 1,000,000,000 times and then repay all debt with a week worth
of McJob salary.

Since you borrowed dollars backs when they were expensive and returned them
now when they are cheap you win. Of course the lender will not be too pleased
and likely will not want to lend you again.

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olifante
those pesky chinese! The economy didn't tank because we didn't save enough,
it's their fault for saving too much and ramming their money down our throats.
</sarcasm>

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DenisM
One of the few articles that get to the bottom of the problem.

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jhancock
This information was available over the past 8 years since China has been
member of the WTO.

Why did it take until now for NYT to bother reporting the "full story"?

I have been in Shanghai those 8 years. I have lived this story. The only ones
America has to blame are themselves. China has its own set of problems. They
didn't setup a global conspiracy to achieve their current position. China
simply took advantage of horrifically bad U.S. management and took care of
their own country. U.S. business and government leadership were always the
front runners in "enabling" this relationship. If you want to start a mob
frenzy, do it on Wall Street.

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DenisM
You answered your own question - everone who's anyone was deriving short-
term(~5-10 years) benefts from this.

I disagree with you on "China ... took care of their own country". They did
not come out of this any better than Americans and their actions were just as
shortsighted. While Americans will lose ability to pay for SUVs, plasma TVs,
and middle-east wars, Chinese will lose their jobs. It's a lot better to still
have a job and only be able to buy half as much as you used to, then not to
have a job at all.

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jhancock
I only partially agree with this. The Chinese can spend their entire 7++
trillion in cash reserves over the next 5 years to support domestic economic
maturity. The U.S. must continue to borrow and sell off assets in order to do
so.

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DenisM
How would they go about spending 7 trillion? Serious question.

If money is given to citizens they will likely hoard it rather than spend.
Instead Chinese government used to give the money to American citizens because
those never really save anything and it comes all back to stimulate the
Chinese economy. Now this meachanism is broken. The only option left is
government spending - "the new deal for China". Indeed that's what they are
planning to do, but I don't think the new deal can replace the employment
opportunities lost.

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ruslan
I applaud to China. Well done!

And I wonder how americans could allow to settle themselves so tight on this
"cheap" money drug ?

------
est
Wallstreet capitalists & CCP members' pockets filled, Americans & chinese
ppl's emptied

