For those out there, like me, who had a sense that China was bankrolling our debt, here is a good summary of the issue: http://www.chicagotribune.com/news/...864.story?coll=chi-newsopinionperspective-hed Buyer's market The Bush administration's economic understanding with China puts U.S. companies on the auction block $170,000,000,000 ANNUAL U.S. TRADE DEFICIT WITH CHINA By Richard C. Longworth, a former Tribune senior correspondent and executive director of the Global Chicago Center at the Chicago Council on Foreign Relations Published July 10, 2005 Ah, those were the god old days when the Chinese were a billion red-book-waving communists and the China syndrome meant a nuclear meltdown, not a financial one. Now the Chinese are our bankers, and Beijing wants to buy us, not nuke us. Mods note -- please only post a few quotes with links. There are clearly a couple of things at work here. First, in virtually every way, we are becoming a nation without equity. Individuals increasingly owe more than they own, and our government can't control itself. I will be interested to read the "deficits don't matter" crowd respond to this.
This is an excellent discussion of points that most Americans like to bury their head in the sand about. Predominance in manufacturing leads to predominance in technology, research and development. We are givimg away the future every time we buy a product from China. I'm sure I'll hear from the same bunch that always apologizes for the Chinese and says I'm being alarmist and anti-Chinese. How slow and thick you show yourselves to be!
As Americans age, we need to sell our assets in order to pay for our lifestyle and eventually our retirements. Asset appreciation can only be realized by selling the asset, so the Starbuck's stock we bought in 1992 has appreciated and needs to be sold to pay for our SUV, vacation, kid's college, etc. And the Chinese are buying these assets, with an eye on strategic value, e.g. Unocal, Intel, natural gas fields in the Sudan, etc. With a large current account deficit with China, we also need to balance the accounting equation by turning over assets in exchange for the debt generated by trade. So the Chinese are only too willing to buy our assets.
So what ever happened to the "buy american" movement I remember from the late 80s and early 90s? I mean, I'm still down with that but it's hard to do at Wal-Mart.
It's a bit annoying that the writer hasn't bothered to check the currency market in months. The Euro is back down to where it was at the end of 2003. Sure, it's nowhere near its lows vis-a-vis the US dollar, but any tourist or importer of European goods is pretty f-ing happy right now.
US$1.20 = EU1.00. Not exactly a recipe for happiness, although not near its peak of US$1.35. US$ appears to be strengthen on increased interest rates. In the 1980's we had this whole concern going on with the surplus accumulated by the Japanese. Their infrastructure couldn't support their growth rates, and their assets turned out to be over-valued. They still haven't recovered. (hehehe, couldn't have happened to a nicer bunch. now, where is China's Achilles' heel? Corruption and market manipulations? Lack of transparency? They, too, have their limits.)
The first order of business has got to be getting our financial house in order. The combination of a congress that can't get enough spending, a WH that has not yet sought to use its veto power to get spending in line and a decrease in revenue from the tax cuts are all working to put us in a bind. I think there was a misconception in the 90s that the surplusses we were running meant that we didn't owe any money. The surplusses were for those specific years only, and didn't do much to pay down the debt we had incurred for years. Yet, in 2000 you had both parties drooling over the opportunity to use the surplus. Bush wanted to give it back to those who pay the bills and many democrats (and republicans) were looking to expand the pork barrell. That is like an individual with 20 years of mounting credit card debt having a couple of good years where more money came in then went out, but that person decides to buy a bunch of new stuff while continuing to make minimum payments on the existing cards. I was arguing back then that the thing to do was pay some extra principal, and pay back some of the entitlement programs that we had been raiding for years to hide the true amount of federal debt. Putting something away for a rainy day is an idea that is completely foreign to our elected officials. As far as protecting american companies from being bought up by China, there is not much to do. Once you make a company a publicly traded entity you run the risk of foreign ownership (See Malcolm Glazer). Finally, while we still have some clout and bargaining power left, we need to insist on reforms in China so that they can't charge ridiculously low amounts for goods. I am not an advocate for tarrifs and embargoes as they never work, but insiting on some minimum levels of environmental compliance and labor fairness will have positive effects in China and on our trade imbalance. You only have to look as far as the $7,000 car thread to see the disadvantage we are at.
Thank you for the responses, this is an area that is not a strength of mine so I am learning as I read.
Could the US impose penalties on pirated copies of US products such as MS Windows and other copyrighted properties the US has? I know it wouldn't be much, but if the US cracked down on that would it make a difference or just exacerbate the situation?
The Euro debuted at $1.19 and now it's $1.197. Maybe not a recipe for happiness, but I'll take it. Its high was $1.37, btw.
I may be crazy, but didn't the Euro used to be less than a dollar? My bad, it debuted at $1.19, then went down, then came back up.
How does the Chicago Tribune allow an article to go out with a glaring spelling error in the first sentence?
LMAO when I read to this sentence. What kind of crap capitalism you are advocating that bans low prices? That's racism equivalent to not hiring a black because of his dark skin. I thought the whole idea of capitalism is competition, which means that my prices are lower than you therefore I kick your a$$. You can't change the rule of the game when you are a loser. I don't think you can force American consumers buy Americans because they have to be patriotic. That's not patriotic, that's dictatorship.
What particular brand of idiot are you? We insist on human rights and environmental compliance all of the time in trade agreements. If you haven't noticed, we have things like a minimum wage and labor laws and environmental laws. These things are all anti-capitalism, and things that we have collectively agreed are worthwhile. There is nothing racist about telling a trading partner that they can't pay someone 50 cent a day. And, in case you weren't following the logic -- which it is clear that you weren't -- I wasn't advocating a ban on low prices, I was advocating demands that they do the minimum for their workers and the environment, which by definition will raise the cost of their goods.
Now that's BS. Since when you can tell a US corporation that they must not pay its CEO 9.99 million dollars to his yearly compensation? Can they (Chinese) tell you (US) implement the national health care so that all our minimum wage employees can enjoy their sick day off because US is the only developed country in the world that doesn't give a ******** to the health of its citizens? No, apparently they didn't do that. And I think they should next time you bring up this silly excuse of labor laws and environmental laws: "Could you implement national health care system first before we do business, Sir? It's simply inhumane to treat your own citizens like that in our view." These chinese would ask. There is nothing racist about telling you (US), their trading partner, to do that, right? Labor laws and environmental laws, hehe, who would want to pay attention to labor laws and environmental laws if we are not 600 billion short in the hole? Good excuse. Thanks for the laugh.
Obviously not the particular brand that would take this article seriously and start a thread on it. Forget about the Euro exchange rates and the glaring misspelling pointed out by other posters, how about some fundamental and factual errors? "This isn't working with the Chinese. The reason is that the Chinese don't want their currency, the yuan, to weaken. The Chinese are basing their growth on exports. They need to produce like crazy, to employ all those millions of workers flowing in from the countryside, and they need to export like crazy, because the Chinese themselves can't afford to buy all those goods. The Bush administration has been pleading with China to let the yuan go down so we can sell more, buy less and do something about that trade deficit. The Chinese have ignored these pleas and are getting away with it, because the Bush administration lets them get away with it--indeed, needs them to get away with it." LOL In truth you couldn't care less about their workers, or the enviroment for that matter or you'd be nagging about Bush not signing on the Kyoto treaty. What you're basically asking is now that you're not winning it all, you want them to self-destroy the only competitive advantage they have in the world wide capitalistic market, inexpensive labor capital. As for racist, what exactly are you trying to say by "Chinese eyes" ?
Google Pete Townsend and "All the Best Cowboys have Chinese Eyes" before you start calling people rascits. As to the rest of your post, feel free to bury your head in the sand with the rest of the lemmings. If it doesn't bother you that one particularly huge country is buying up our debt in record amounts, and then turning around and buying up american companies then you need to ask your self a few basic questions. Btw, in a classic "attack the message and ignore the substance posture" the typo appeared in the on-line version, but not in print -- like it really f'in matters.
To the extent that I can understand what the hell you are rambling about, my answer would be, yes, the Chinese could ask us about anything they want in trade negotiations. In fact, if we brought up low pay, I would fully expect them to come back with something about how they provide workers with universal health care, housing allowances -- whatever. But, before you hehe about labor and environmental laws, you should ask yourself whether or not we have a right to try to level the playing field with the countries we trade with. This isn't something new I have cooked up, this is the way we deal with hundreds of countries.
You know, these chinese are playing your money game (and by your rule too) here that you (US) wanted them to play all along. So what's complaint all about? It's about money changing hands, it's about business transactions. If it's played by the rule, we ought not complain. I don't get it why it would bother you.
It's OK to keep at it since someone's got a song about it. Nice logic. I'm sure you could find the seal of approval you need in the popular media next time you feel like using overt slur. BTW, what message? What attack? I had a good laugh about it. Yeah, the Chinese should lower the Yuan.
Dreamer is Chinese and views you as anti-China instead of pro-labor and pro-America. All I can see to him is that you'll rarely see threads complaining about trade with Japan even though they also are buying US companies and own truck loads of US debt. Because they succeed by making better products while paying their workers a good wage.