Have you been blogging long? %TTITLE% is a great blog, you have a great writing style too. Found this post last Friday and i’ve been reading your blog since. I’ve subscribed to your RSS feed and I am excited for more quality posts like this one …

in the next 12 months we will see the option arms peak, which with all of the other financial problems the US is facing, it will be intresting to see how a democratic president reacts.

China is definitely doing the right thing for China. For the whole world, I doubt it.

The total amount of manufacturing goods sold on the international market is a finite amount – not a constant amount, but a finite amount. Competition for that total, whatever it is, is a zero-sum game, in that whatever % of the total is won by country A means that country B cannot have that %.

It is true that the total grows each year and the competition among nations provides better opportunities for consumers throughout the world.

It is also true, that growth of the share that goes to China results in some country, probably the U.S. since we have by far the larges trade deficit, losing share.

The U.S. is made worse off when a share of world exports is reduced in the U.S. and increased in China.

China’s growth is disproportionately exports and manufacturing, for which there are increasing returns to scale and a lot of learning-by-doing. Keeping their currency artificially cheap helps China develop a long-run comparative advantage and thereby helps long-run growth.

This is the kind of stuff Krugman just won the Nobel for. It makes a lot of sense.

So, China may be doing the right thing, not just for China, but for the whole world.

And I agree with your comment about comparative advantage – that it works between two equal nations. But population density is a major factor in that equation. Free trade between two nations of grossly disparate population density will result in a trade deficit for the less densely populated nation almost every time.

I’m not disputing that the banking industry employs more people than the auto industry. I’m disputing the causal relationship you asserted: *because* they employ more, they were bailed out.