In his “enough’s-enough” speech in Hawaii, Obama castigated China for its currency peg, a perennial complaint. Congress too regularly hyperventilates about the yuan being “artificially undervalued.” If China just allowed the yuan to trade freely, they say, it would solve the U.S. economic quagmire. Cheap political posturing—and full of bitter ironies.
For months, rumors China would use its foreign exchange reserves to bail out the Eurozone with the stroke of a plastic pen goosed financial markets. But China has a list of demands. German industry refuses to cede ground. People shudder at becoming dependent on money from the communist regime. Clearly, the debt crisis isn’t deep enough yet.
At $46 billion in August and a hair-raising $376 billion year to date, the trade deficit is a powerful descriptor of what’s wrong with the U.S. economy. By year end, it will amount to half a trillion. Economic activity gone overseas. The cause: an ancient and valid business principle that is now harming the overall economy.
Bubbles go on much longer than a rational mind can fathom, especially bubbles that are supported by governments and central banks. Everyone benefits, so everyone (except for a few hapless shorts) pushes to keep them going. But when they burst, they wreak havoc. And in China, there are new ominous signs.
All heck broke loose in China when Zhejiang’s Provincial Administration announced that 30,000 blood nests, the rarest and most expensive bird’s nest, contained high concentrations of sodium nitrite. They’d all been imported from Malaysia. And it opened the door to a huge scandal.
And BMW blinks. With sales of new vehicles approaching 18 million units in 2011, China is the largest car market in the world, far ahead of the US. No major car maker would want to miss out on the opportunities in China. Yet, there is a problem: Pressure by the Chinese Government to transfer the newest technologies.
Incredible that a Democrat would propose that our Social Security system should be gutted starting immediately to get an up-tick in GDP just before the election. But President Obama’s proposal to cut payroll taxes in half will do just that.
Remember him? Went after Social Security too.
Chinese inflation numbers just came out, and they’re sizzling. But those are the official numbers, and even officials admit that actual inflation is much higher still. Labor costs are spiraling out of control. And it’s all blowing our way. Exactly what we need.
The President’s Council on Jobs and Competitiveness has descended on Palo Alto to meet with the usual suspects in Silicon Valley. Their topic, hilariously: How the public and private sectors can team up to create jobs. Hilariously because California—Silicone Valley in particular—has been on the forefront of transferring jobs to China and other countries.
Remember him? Creating jobs in China….
So people ask me that after reading the post below. All sorts of researchers are studying this phenomenon, and they’re coming up with a laundry list of reasons, which I may or may not buy, but here is a thought from memory lane.