A Forum for Grinches and Ho-Ho-Hoes

[Hank Chinaski]

Originally posted by Tyrone Slothrop
If this was so simple, Robert Zoellick wouldn't be a household name.

you shouldn't be raising children.

[Hank Chinaski]

Originally posted by Sidd Finch
I am not proposing tariffs to make imports more expensive.

I am proposing not engaging in "free trade" with countries that use government policies to reduce prices on exports -- whether that be dumping, unfair subsidies, or refusal to float currency despite a reasonably developed economy.

I can answer, and did.

Now, can you answer my question: If, say, France gave a 30% subsidy to every French company on all products exported to the US, and imposed a 30% tariff on all products imported from the US, would you say "Great! That benefits the US consumer! It makes wine cheaper, and think of all the jobs that we'll create with all that extra disposable income!"?

Well, I would actually ban imports from France, but I'm not pushing that here.
If we have a free trade agreement they can't do that right? Or are you saying that some countries do that, even though there is free trade? Like Fringey said, I'm not up on everything.

Would you just do a "reverse" on every crutch a country gives itself?

[Skeks in the city]

Originally posted by Mmmm, Burger (C.J.)
So what's the other approach? You deflate the currency internally, so that 1 yuan buys twice as much. But how does one accomplish this? One way is to stop printing money, or even take it out of circulation. Another is to jack up interest rates, which at least temporarily can cause deflation. but are either of those sensible strategies? Nein! Either one will stifle domestic growth in anything beyond the short run.

What the Chinese government does is print yuan to buy US dollars. This has the effect of depressing the value of the yuan relative to the US dollar. The Chinese government has been building a huge reserve in US dollars. The Japanese government does this as well, so do other Asian countries. They use the US dollars to buy debt issued by the US government or quasi-guaranteed by the US government (ex Fannie Mae or Freddie Mac securities).

Periodically, there is concern that China or Japan will sell off large quantities of US dollars and cause a currency crisis in the US. Last week, there was a scare that South Korea was going to do that.

[sgtclub]

Originally posted by ltl/fb
No, I just am starting to see you more as a gullible child than a thinking adult. Sort of another club.

Spanky, don't worry. Nobody takes her seriously.

[sgtclub]

Originally posted by Skeks in the city
Periodically, there is concern that China or Japan will sell off large quantities of US dollars and cause a currency crisis in the US. Last week, there was a scare that South Korea was going to do that.

My understanding is that this is a real problem. Apparently, the Japanese have continued to buy the dollar because they have a 30 year policy of doing so and are historically slow to change major policy decisions. However, a movement has begun in Japan to reevaluate the policy. South Korea has not said it will sell off their positions, but has said they are not going to add further to them, which will likely have a depressive effect on the dollar. Bottom line is that our debt is becomming a bigger and bigger problem, which has not been helped by Bush's fiscal policy, the completely irresponsible prescription drug program, and the spiraling amounts relative to GDP that we are now dedicating to health care.

[Mmmm, Burger (C.J.)]

Originally posted by Skeks in the city
What the Chinese government does is print yuan to buy US dollars. This has the effect of depressing the value of the yuan relative to the US dollar.

Who are the suckers who are willing to trade a dollar for a yuan at the pegged rate, though? If they're printing worthless money, who's the idiot who accepts it at face value?

[ltl/fb]

Originally posted by sgtclub
Spanky, don't worry. Nobody takes her seriously.

You are SO CUTE. If Spanky is indeed some long-time friend of Less, his hide is thicker and hornier than, uh, the thickest, horniest thing you can think of.

[Skeks in the city]

Originally posted by Mmmm, Burger (C.J.)
Who are the suckers who are willing to trade a dollar for a yuan at the pegged rate, though? If they're printing worthless money, who's the idiot who accepts it at face value?

It's easy to maintain a peg that depresses your currency. Every time the intrinsic value of the US dollar falls below the peg, the market sells enough US dollars to the Chinese government to keep the price at the peg. Where a government can runs into trouble is when they try to maintain a strong currency. Soros broke the English pound that way. If the market starts abandoning it, a country needs to repurchase its currency with is reserve of foreign currency. Once a country burns through its reserves, it options are limited. The way you can tell the Chinese are depressing their currency relative to the dollar is that they huge and still growing reserves of US dollars, US government debt &c. If they were propping up the yuan, their reserves would fall.

One effect of the Chinese and Japanese holding so much US government debt, fannie mae debt &c is that it depresses medium and long term interest rates in the US, which has helped the real estate market in the US and helped US corporations finance operations. The Chinese and Japanese policy has also hampered the Fed's attempt to increase medium and long term interest rates by increasing short term interest rates. If Asian countries stop accumulating reserves in US currency, or accumulate at a slower rate, US interest rates are likely to increase and the US real estate market is likely to cool. If Asian countries actuall dump their US reserves, the US will have a financial crisis because US interest rates will spike and the US real estate market will crash. A crash in the real estate market would throw the US into a recession because the US consumer has been driving the current expansion and in contrast business hasn't been spending on hiring, acquisitions &c.

So far, Asian countries have been afraid to dump US currency because their economies are dependent on exporting to the US, and dumping would make their exports less competitive in the US and throw the US into a recession where consumers would buy less of everything including imports from Asia.

[Skeks in the city]

The US produces more college graduates than college-level jobs. Consequently, how is it that training will help workers hurt by trade make as much money as they did before they lost their job? There's already an oversupply of college graduates.

According to the Bureau of Labor Statistics (BLS), there were about 250,000 more college graduates entering the labor force each year between 1986 and 1996 than there were new college-level jobs. This number represents about 1 in 5 of the college-educated entrants to the work force. The difference between the number of college-educated entrants and college-level job openings from 1996 to 2006 is projected to remain around 250,000 - which means 18 percent of new college graduates may not be able to find college-level jobs.

This excerpt is from this article.

[sgtclub]

• Iraqi officials said Sunday that Syrian authorities had captured Saddam Hussein's half-brother and 29 other officials of the deposed dictator's Baath Party in Syria and handed them over to Iraq in an apparent goodwill gesture. ...
  
  They added that al-Hassan was captured and handed over to Iraqi authorities along with 29 other members of Saddam's collapsed Baath Party, whose Syrian branch has been in power in Damascus since 1963.

Courtesy of Capitan's Quarters

[sgtclub]

Originally posted by ltl/fb
You are SO CUTE. If Spanky is indeed some long-time friend of Less, his hide is thicker and hornier than, uh, the thickest, horniest thing you can think of.

Another Saturday night home alone, huh? Explains the image.

[Tyrone Slothrop]

• Bush's Egyptian Success
  
  After the hard-edged partisanship of the post below, let me extend more proper congratulations to the Bush administration regarding yesterday's developments in Egypt. Last night, I got a chance to talk to a veteran Arab journalist who had some very convincing things to say about this. First off, unlike developments in Lebanon and Palestine that were mostly (I don't say entirely) fortuitous coincedences that happened to coincide with administration policy goals, on this front the administration's second-term decision to stark exercizing mild rhetorical and symbolic pressure on Mubarak really does seem to have been the difference-maker here. All throughout the first term, I was arguing Bush should do something of this sort. When he started doing some of it, I was glad, but also very skeptical that he was doing enough. It turns out, though, that relatively mild measures worked.
  
  Second, there's good reason to temper one's optimism. Mubarak and co. are savvy, and don't intend to see themselves booted from power. They're trying to make small concessions in hopes of getting the heat turned off them in order to recover on a later day. The key thing is to make sure that whatever concessions are on offer become a fixed ratchet. The administration -- and, crucially, its successors -- need to be prepared to do this all over again, and probably again and again several more times -- in future opposition-government conflicts in Egypt. What we learned this week is that American pressure really does work as a way of getting moderate change. It's pressure we need to be prepare to use again in the future.

Matt Yglesias

[Tyrone Slothrop]

[Mmmm, Burger (C.J.)]

Originally posted by Skeks in the city
It's easy to maintain a peg that depresses your currency. Every time the intrinsic value of the US dollar falls below the peg, the market sells enough US dollars to the Chinese government to keep the price at the peg.

Agreed that you can do this to a degree, but only to a degree, because it relies on keeping the currency at a point where fluctuations will still bring it back into line with the peg.

The problem (if any) that you posit--greater ownership of american debt--is far different than "depressing" the currency to make goods cheap. That's just not a sustainable strategy, with or without a peg.

[sgtclub]

• Lebanon's Prime Minister Omar Karami has announced he and his government are resigning, two weeks after the murder of former PM Rafik Hariri.
  The move came as crowds protested in Beirut, calling for Syrian troops to leave the country.
  
  The Lebanese parliament was also debating an opposition-sponsored motion of no-confidence in the government.
  
  "I am keen the government will not be a hurdle in front of those who want the good for this country," Mr Karami said.
  
  "I declare the resignation of the government that I had the honour to head. May God preserve Lebanon."
  
  His announcement came after a break in the parliamentary debate, which was being televised live.
  
  A cheer went up among more than 10,000 protesters who had gathered in Martyrs Square to demand the resignation of the government and the withdrawal of Syrian troops.
  
  They had defied a ban on demonstrations, which Interior Minister Suleiman Franjieh said had been made on the grounds of "supreme national interests".
  
  
  

http://news.bbc.co.uk/2/hi/in_depth/4305927.stm