China is Unloading its Treasury Bonds

[Crash999]

I am giving myself another 3 years to exploit this situation til it is over

 

I give it 10... The government won't appreciate the RMB too quickly for fear of disruption the exports that underpin the economy. And there are still plenty of cheap laborers in China in the North and (years away) the interior.

 

For apparel and textiles China is already facing heavy competition against the likes of Pakistan, India, Bangladesh and elsewhere. And in many cases it is cheaper in those countries than in China.

 

But for hardgoods there simply aren't competitors in place for many products outside of China. Toys is a good example- there are so many component suppliers and material suppliers clustered in one area in China that alternatives like India and Vietnam aren't viable as they would need to recreate not only the finished product factories but all of the suppliers.

 

I don't like doing business in China very much, but unfortunately I think the country will dominate manufacturing for quite some time to come.

[LizardKing]

But for hardgoods there simply aren't competitors in place for many products outside of China. Toys is a good example- there are so many component suppliers and material suppliers clustered in one area in China that alternatives like India and Vietnam aren't viable as they would need to recreate not only the finished product factories but all of the suppliers.

Bingo. This Bloomberg interview with Intel's Andy Gardner nails that same fact, a fact I've been blovating on about for at least a decade re: the US killing itself. The past eight years of GOP rule and accompanying lack of concern for manufacturing have pretty much sealed the deal in the US tho'. It'll cost too much to bring it back, barring some unforeseen natural or political disaster.

[cavanami]

For me, the loss of jobs in the USA started when Jimmy Carter was President. Just got worse over the years and finally NAFTA...

[LizardKing]

I go that it started with Reagan, just looking at the published data from the folks who count that sorta thing....

[cavanami]

I was working in the Carter White House in 1979-80. Unbeknownst to the president, [color:red]Federal Reserve Chairman Paul Volcker[/color], another Rockefeller protégé, [color:red]suddenly raised interest rates[/color] to fight the inflation the bankers had caused by the OPEC oil price deals, and [color:red]plunged the nation into recession[/color]. Carter was made to look weak and uninformed and was defeated in the election of 1980 by Republican candidate Ronald Reagan. It was through the “Reagan Revolution†that the regulatory controls over the banking industry were lifted, mainly in allowing the banks to use their fractional reserve privileges in making mortgage loans.

 

[color:red]Volcker’s recession shattered American manufacturing and hastened the flight of jobs abroad[/color]. Under the “Reagan Doctrine,†the U.S. military embarked on an unprecedented mission of world conquest by attacking one small nation at a time, starting with Nicaragua. Global capitalism was also on the march, with the U.S. armed forces its own private police force. With the invasion of Iraq under George H.W. Bush in 1991, mainland Asia was revealed as the principle target.

 

The economy was floated by productivity gains through computer automation and a huge sell-off of assets through the merger-acquisition bubble of the late 1980s which ended in a recession. This resulted in the defeat of Bush by Bill Clinton in the election of 1992. Clinton was able to create another bubble through a strong dollar policy that attracted foreign capital.

 

The dot-com bubble that resulted lasted all the way through to the crash of December 2000. Meanwhile, the U.S. Air Force led the way in the destruction of the sovereign state of Yugoslavia, whereby the international bankers took over the resource wealth of the entire Balkan region, and the U.S. military gained forward bases for further incursions into Asia.

 

Do we need to say that [color:red]none of this was ever voted on by the American electorate[/color]? But they bought into it nevertheless, both with their silence and through participation in a generally favorable job market in the emerging service occupations, particularly finance.

 

By the time George W. Bush was inaugurated president in January 2001, the U.S. was facing a disaster. [color:red]$4 trillion in wealth had vanished when the dot.com bubble collapsed[/color]. [color:red]NAFTA caused even more American manufacturing jobs to disappear abroad[/color]. The Neocons who were moving into key jobs in the Pentagon knew they would soon have new wars to fight in the Middle East, with invasion plans for Afghanistan and Iraq ready to be pulled off the shelf.

 

But the U.S. had no economic engine available to generate the tax revenues Bush would need for the planned wars. At this moment Chairman [color:red]Alan Greenspan[/color] of the Federal Reserve stepped in. Over a two year period from [color:red]2001-2003 the Fed lowered interest rates by over 500 basis points[/color]. Meanwhile, the [color:red]federal government removed all regulatory controls on mortgage lending, and the housing bubble was on[/color]. $4 trillion in new home loans were pumped into the economy, much of it through subprime loans borrowers could not afford.

 

The Fed began to put on the brakes in 2003, but the mighty work of re-floating a moribund economy had been accomplished. [color:red]By late 2006 another recession loomed, but it would take two more years before the crisis of October 2008 brought the entire system down[/color].

 

The [color:red]impact on the job market was immediate and profound[/color]. By the time Barack Obama was elected president in November 2008, the [color:red]U.S. was mired in seemingly endless wars in Afghanistan and Iraq, and the worst recession since the Great Depression was picking up speed[/color]. In order to prevent total disaster, the [color:red]Bush administration[/color] ended its eight years of catastrophic misrule with a flourish, by allocating [color:red]over $700 billion in financial system bailouts[/color] to cover the [color:red]bad loans the banks[/color] had been making since [color:red]Greenspan[/color] gave the housing bubble the green light.

 

It is now November 2009. Since Barack Obama was inaugurated in January, [color:red]unemployment has soared from 7.9 percent to 10.2 percent[/color]. A few hundred billion dollars were allocated for “stimulus†purposes, but most of that went to pay unemployment benefits and to keep state and local governments from laying off more employees.

 

A fraction has been distributed for highway improvements, but largely through the bank bailouts the federal deficit has been running at an annual rate of $1.5 trillion, by far the largest in history, with the national debt now topping $12 trillion. Ironically, those Americans who still have productive jobs continue to grow in efficiency, with productivity up over five percent in the last year...

 

http://www.infowars.com/the-economic-crisis-and-what-must-be-done/

[LizardKing]

Wow, that there's some nice revisionist history. Volcker is the one whom every economist (no matter what discipline they support) agrees made Reagan look good and busted the early 80s recession.

[Nervous God]

Cav - "WHO" was working in the white house? Anyone of importance or a dust bin boy?

[cavanami]

Check the link...I am farrrrrrr to lazy to do so

[RayRay]

Regarding China owning a bunch of USA IOU's; I like this saying. If I owe you $10,000 I have a problem. If I owe you a million dollars, you have a problem.

[chuckwoww]

I think China and America both have problems.