Nofsdad
Joined: 06 Jul 2003
Posts: 7085
Location: Central CA
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Posted: Wed Jun 18, 2008 11:46 pm Post subject: A New US Strategy in the Global Economy?
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| America's banker isn't happy. At the WTO, China's representatives call on the US to halt the decline of the dollar that has contributed to the rising price of food and oil (and racked up staggering losses in the value to China's $1.5 trillion in dollar reserves). China's leaders blame Washington's "warped conception" of market deregulation for the financial crisis that is rattling the world economy. Liu Mingkang, the chairman of the China Banking Regulatory Commission, scorned distorted US policies: "Does moneymaking or doing business justify the regulators in ignoring their duty for prudential supervision and their job of preventing misbehavior?" |
Someone needs to explain to these guys, just as it was explained to me, that American corporations don't HAVE any duty to provide prudent supervision and that it's not their JOB to prevent misbehavior or to maintain the strength of the dollar or prevent recessions or any of that noble sounding stuff. Thus there is no NEED for any form of regulation to insure the performance of duties that don't exist in the first place.
According to what I've been told, an American corporation has no social responsibilities at all and any "duty" they might have lies solely in enhancing the return to their shareholders and it's beginning to appear to me that more than a few of them are shirking even that one.
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| And when China talks, the US better start listening. Our trade deficit with China last year jumped to an all-time high of $256.2 billion, the largest deficit ever recorded with a single country, and the equivalent of nearly one third of America's total trade deficit. The Chinese have over $1.5 trillion in US dollar reserves, and are now creating sovereign investment funds to purchase US companies and properties at bargain level prices. China's willingness to lend us the money we use to buy the goods they make with the jobs our companies have taken there enables us to spend far beyond our means*. When your banker calls, you answer the phone. |
*I remember posting on the trade deficit a couple of years ago. Another member very patiently explained to me that then not so massive trade deficits with China were actually a GOOD thing because borrowing all those bucks from China allowed the FED to hold down interest rates and that in turn help their mortgage rates down.
Obviously, in view of what later took place in the mortgage "market", it may no have been such a good thing after all.
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| It isn't clear how long the old game can last. The dollar has lost about half its value to the Euro, and US exports are beginning to rise. But the Chinese (and the Japanese) have pegged their currencies to the dollar and not allowed a similar adjustment (The Chinese have allowed the renminbi to rise only about 20% to the dollar since 2005). The result is that the US trade deficits with China keep rising; the Chinese keep pocketing more and more dollars. The Chinese are importing inflation that is ever more difficult to control. And the US is exporting manufacturing jobs, and now service jobs, generating a backlash against trade generally that could grow much uglier. |
And in the meantime, watching our middle class eroding away.
The Rest Of The Story is pretty much what you would expect from this site, a campaign piece for Senator Obama. I would hope that anyone responding to the post would address the figures themselves, which are available many other places, and the personal opinions expressed in the post, and not remake the issue into a hit piece against the Huffington Post or the Obama campaign or a discussion of some "ism". Thank you.
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