Here is what I think you guys are missing. China's whole economy is so manipulated and their currency suppressed that most manufacturers there, at least those state-owned, are only making a 7% profit. Now, the reason that Hu is only going to allow the yuan to increase in value slowly, is because to do otherwise would quickly wipe-out these profits and cause massive lay-offs in the country. The yuan is estimated to be undervalued at 20%, thus only by moving slowly can China allow their manufacturers to raise the cost of their products as the yuan rises. If they raised it all at once, then the mass job loss would undermine the governments legitimacy which is a very big deal in China. The government must prove that it is legitimate by providing jobs and a stable economy. Now, US manufcturers there will certainly be upset that the yuan will be on the rise and will also start moving out as wages and the cost of business in the country rises. That is why Hu is resisting, their feeble system, while appearing very strong and on the rise from the outside, would take very little to completely collapse.
"And in the end, we were all just humans, drunk on the idea that love, only love, could heal our brokenness."
I just can't believe everyone is just sitting back and watching Obama give away the US's future to China... not that McCain would have done any different, but this is literally the last peg stopping the US from becoming of third world status.
I do think that when the US economy does take it's final plunge that unless China is very careful they will destabilize simultaneously... I would expect that such a shift will have an impact the world over.
I don't know which is worse, the Democratic Party or the Chinese Communist Party! Neither one of them gives a **** about me.
"Quantitative easing" as the bernanke calls it, is actually an economic school of thought that was inspired by one president Mugabe. Yes, that's right, it's a page from the Zimbabwean school of economics... it's not always been like that, but ya...so far it's QE2 and they are printing, if memory serves was 60 billion a month to cover debts.
Last edited by American; 01-20-11 at 10:40 PM.
"He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)