The us could respond to a chinese policy that has led china to be a far bigger source of global supply than global demand by restricting through policy its own demand growth. but that is a rather harsh thing to do — and something that “hits” the us more than it “hits” China.

It’s difficult to negotiate in those terms even if politicians were able to.

Are they able to? Really?

As an US x-pat in Greece, major inflation is predicted in the basic commodities here. (wheat, milk,) etc) i forget the exact # but 60%? inflation predicted short term…
I duno about other parts of EU, but I don’t see why it shouldn’t be different.

Meanwhile ‘Liquidity Credit, is constantly reaching new levels, and going bad. ( I can go into some stores and buy EVERYTHING on no interest payments…)

With the continued weakening of the Dollar to the EU and the RE ‘bubble’ back home)… I worked in the Real Estate market for a long time, and if I could use a Put on house prces i would. (Boat and Auto prices stagnant as well.) FL-

From talking to people in England I get a since of a very similar real estate situation, at least in the the early part of 07

At least in Spain you have industry, – went to Barcelona this summer, -

Well I know I’m more micro examples oriented; but how can you not see it all around you?

Excuse me while I go back to studying the markets as a technician, and forget about all this mess. Z;-)

Fez

“so to continue blaming china is disempowering, whether justified or not. to blame china noisily, furthermore, risks being counter productive.”

The first point seems to me to be true. I tend to think it is fair to blame china for maintaining its dollar peg even tho this has meant a big increase in uts current account surplus — a surplus that has to be absorbed elsewhere. but it is — at noted — disempowering. “Empowerment” though means threatening to cut off trade flows (or limit investment flows)absent a change in Chinese policy; the US (Europe) cannot prevent china from buying $. It can tax Chinese imports (tho not without violating trade commitments) or restrict the kinds of assets China can buy.

I honestly would be a bit happier if I could easily point to US policies (beyond the absence of an energy policy, as noted earlier) for the us deficit, b/c that is empowering. you can change your own policies. but the second w term hasn’t produced the kind of fiscal deficits of the first term, so it is hard to make that argument with a lot of vigor. and over the past couple of years, the us hasn’t had a particularly loose monetary policy (despite DC’s arguments, which fit 02-04 better than 05 to mid 07) either. US policy rates have generally been higher than the policy rates in the other major economies (Aussie and New Zealand are the exception, but only australia is a major, and only just …).

So my analyical work — here i would particularly note the rise in china’s surplus with europe and china’s decision to effectively lend the proceeds to the US — has led me to the conclusion that chinese policy matters, and that it determines the global equilibrium as much as the US. that is an uncomfortable argument for me. Us policy is easier to change than chinese policy

obviously, the us could respond to a chinese policy that has led china to be a far bigger source of global supply than global demand by restricting through policy its own demand growth. but that is a rather harsh thing to do — and something that “hits” the us more than it “hits” China. Things targetted at China are unattractive on other grounds, so the world is left more less waiting for the internal contradictions in chinese policy to work themselves out (and for the party congress).

hope that sort of addresses the topics raised on this thread.

I’m afraid that big enterprises in the west will go on, not just only outsourcing, but up-ing the price of everything (bread, milk, eggs, energy, etc) until they realize that the consumer is dead, and their business model goes down.

The talk about core-inflation and liquidity is no-sense.

They are corrupt and so will be until the chicken has no eggs.

Today I heard to W. Bush to say “Viva Cuba Libre”.

I don’t know if he was referring to a Coca-Cola with Havana-Club, or was making a joke about freedom!

USA has made very clear decisions about weak countries, but where is their power in front of China?

The enemy is among them, much more clearly than Cuban intelligence has been inside CIA all the time.

The difference is that Cubans inside CIA were pro-Cuba, and US businessmen in USA are pro-China.

Chinese products are flooding Europe, but prices are going up not down. At least in Spain.

Spanish corporations, Zara, Corte Ingles, Cortefiel…, the distribute very Chinese products in european prices (50 TO 80% profit). But ordinary shops, with several good firms, are dying . But the prices are just a bit lower, just enough to kill them.

I don’t think that protectionism will resolve it, but you’d have some alternatives if you dare to defy corporations.

As a Mac user, do you think that Apple, who yesterday surpassed IBM and Intel in market capitalization, would be theere wihout China? What keeps the Dow Jones more or less up? The real economy? For who?

I’m pleased that mac-s are now as cheap as pc-s, but I prefer to keep my job.

Best Regards, and really like your comments.

koteli

I do not think there is any choice but to go all the way. The question is, to what level. China’s relative rise depends mainly on them, not us. As the British found in the 1960s and 70s, protectionism does not help, because you cannot protect third country markets such as the commodity producing nations. Protectionism just damages global prosperity.

the question – ‘why doesn’t china do something ?’ is an evasion of a debate that needs to take place in the united states, as to whether globalisation is to be taken ‘all the way’ until chinese wages and those of the developed nations are equalised – or is the current bout of globalisation to be brought to a close in competitive devaluations, new protectionisms, and nationalism fed by phoney threats from pygmy enemies ?

the debate in the u s should be out in the open in an election period, where is it going on ? is democracy too important to be left to the people ?
.

After China does this, the resulting global industry evolution will still happen, just a bit slower, hence less pain.

The big picture is not just China or trade imbalances – it is the global supply chain.

The sub-groups of the global supply chain – North America, West Europe and East Asia move at a glacier pace, but the movement is unmistakably clear. Eventually, East asia will dominate. Within East Asia, China will dominate – barring a catstropic global event, like a global nuclear war. There is a gloden rule in East Asian industrial expert circle: ” Once China learned how to do something, nobody can compete against her on price”.

The North American and West European supply chains are structured tree-like, gravitate toward their high-tech nerve centers, the East Asia supply chain – Japan, Korea, Taiwan, China and likely Vietnam to be included in 5 years, is structured like a giant color plate ( China ), the high-tech centers only provides spices and flavors, which implies a shortened Darwinian cycle – a business model that is, by fate, slim, mean and sometimes brutal. Aided by sea transport, it is geography that pre-ordained East Asia and China in our globalized world.

The EU and the US draw all the attentions, but it is the small countries neighboring China that are forced into impossible choices right now. Burma’s tragedy is one example. Even without the stupid military leadership and the nasty oppositions that show zero ethnic toleranc among them, without the US and the EU market access and competes against China head-on ……Burma – to a less extent, many other similar countries – needs to ask China sincerely, “Please assist and advise how to proceed …” …. This is a cruel world indeed.

I’m afraid that nobody wants to take your argument, because you hit the nail on the head, and they haven’t any solution (RMB up-ing apart).

2fish could have an answer, but he keeps silent. So is Brad.

Maybe, they are used to analyze the world economy from power positions, or knowledge-power positions.

Maybe, they don’t accept that an unfair political situation could destroy their economics and knowledge positions.

An american corporations-convenience dictatorship, destroying the democratic USA doesn’t mach. But what’s happening?

In the end, don’t they have some hole in their support of multinational corporations, or some naiveness in free trade, now that someone is becoming getting bigger than them?

In Europe, we have the great example of Germany, a country that assimilated eastern Germany at the same time it was supporting and giving lots os money to countries like Spain, Greece and Portugal, after a hangover of eating 18 million people in their economy.

If the Germans are the third exporting nation in the world, after China and Japan, after assimilating East Germany and financing Spain, Portugal And Greece infrastructures, what’s happening to “The Greatest Nation of the World”?
Peg-s or bubbles, some policy answer is needed, not only in economics or macroeconomics.

As you said, more or less a month ago, to bring the 1.3 billion Chinese people to west economy, will have very big consequences and hangovers in West economies. You don’t need to be Brad, to understand that.

That’s the core of the matter they don’t dare to defy, with climate-change, with peak-oil, overpopulation, lack of water, of soil and so on.

It’s a pity.