3/23/2010
Talking cock about China and Yuan revaluation
The Western media and the US Congress have been talking cock about the Yuan as the main cause of their economic misery. So China must revalue its Yuan to make its export more expensive and save the US economy and American jobs. China cannot keep on growing at the expense of America and Europe.
The assumption of these attacks is that China's economy will keep growing relentlessly, unstoppable. The Chinese will probably hope so.
Then we read another bunch of cock stories that the Chinese economy is a big bubble waiting to explode. The Chinese housing is a bubble, the car industry is a bubble, and what not is a bubble. The rich and poor gap is going to break China, the corruption is going to break China, the cities are over built and wealth inequalities will cause unrest in China. The minorities insurgency is going to cause upheavals. In other words, China is at the brink of a collapse of gigantic proportion. The biggest economic tragedy in history is about to happen to China.
With such a scenario, should the Chinese revalue its Yuan to invite an immediate collapse? Its economy and political system are so fragile and so unsound. How could the mean westerners demand that it revalues its Yuan knowing that it is going to collapse soon?
There is no need for China to revalue its Yuan. China will collapse in no time and it will turn into a house of cards. And all the problems of America and Europe will solve by itself.
How's that for talking cock? As good as Paul Krugman and all the professional western experts, journalists and reporters huh!
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7 comments:
Wat baffles me is that the Americans and its' allies seem more keen to save China than saving themselves. Btw, Obama can't save the US by printing more Greebacks nor can he jus creates jobs with his mouth. Quite a big mouth he got too, hope his voice is louder than his white compatriots.
Wat baffles me is that the Americans and its' allies seem more keen to save China than saving themselves. Btw, Obama can't save the US by printing more Greebacks nor can he jus creates jobs with his mouth. Quite a big mouth he got too, hope his voice is louder than his white compatriots.
If all these cannot work, perhaps they may resort to the old tried and tested method, and that is try to create internal chaos to destablise the country.
The US Government will use the CIA, who in turn will engage non-Americans to do the dirty job. You see, in this way, they are always clean and holy in the eyes of the world.
The US-China trade war isn't likely to end anytime soon.
The confusion here is the confusing between "fact" and "value" -- the basic problem in philosophy which no one has solved yet.
It is a FACT that the Chinese are deliberately suppressing the value of their FIAT currency. The point here is that their currency, like everyone elses currency is FIAT -- in that it is not tied to an OBJECTIVE STANDARD -- for e.g. a precious metal -- so it essentially means the govt (state) can assign any value it chooses to to the national currency.
Actually to the rest of Asia, the under-valuation of the yuan is of more concern, but no one has come out publicly to scold the Chinese. Quite frankly, if I were a Thai, Malasian or Indonesian trade or employment minister, I would be pissed off at China for keeping its currency TOO CHEAP which makes my country uncompetitive. The only recourse for my country is to also inflate and debase our currency -- exposing the population to the danger of currency collapse, hyper inflation and asset bubbles... simply to keep "competitive" with China.
In fact, this is exactly what has been happening: other Asian countries are also inflating -- notice the rising prices and asset bubbles especially in property.
China is in danger of being hammered -- there is a serious property bubble in the A grade cities, and there are growing debt defaults.
However one point (fact) the Chinese have in their favour is that their savings rate is VERY HIGH and therefore can weather just about any financial storm which hits them.
The Chinese are going to be hit. That is inevitable. No one can say when or how bad it will be, but they are very strong because of their reserves.
If China revalues its Yuan, all the commodity producers are going to lose out as the Chinese would be able to buy more with less. They could use the cheaper raw materials to off set their higher cost due to more expensive Yuan
It would be LPPL.
Nothing beats the simple economics of being cheap, lower cost, and these can be achieved by lower cost of living, cheaper lifestyle and eat lesser, spend lesser.
No matter how much the Yuan is revalued, if the west wants to continue to live their affluent lifestyle, it is going to cost them and make them uncompetitive. The Chinese will continue to live frugally and need very little to survive on.
Of course as standard of living goes up, the cost will go up. But they will not allow cost to spiral to no man's land like what we are doing. We are also going to be like the Americans, like dodo, if our cost is not cut to size.
No need rocket science to understand such basic principles.
With such a stunning ANALysis, I think redbean should be hired by the Chinese govt to advise them on political and economic issues.
Thank you Matilah, thank you.
If Krugman can talk cock about economics and being so much for it, I don't mind being paid half of what he gets for talking cock too.
Anyway, the Chinese have much more brilliant economists than Krugman and all the Americans had. That is why they are squeezing the Americans by their balls.
The reality is that China is not a net exporter. It also imports helluva lot of commodities and raw materials. A higher Yuan would benefit them in those sectors which will balance off their prices for exports.
They could raise the Yuan if they wanted to. They are refusing to do so to frustrate the Americans and showing them the middle finger.
Either way it is not going to make a difference to the Chinese. And either way, the Americans will still be in deep shit. Funny huh?
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