How much will taxpayers shoulder?

[Jester]

Indeed, and that is the whole point isn't it. We can keep blaming China, but if we don't buy their stuff the people don't have to fabricate it in poor conditions.
And as the guy who buys up the stuff a junkie steals from people's houses is responsible and will go to prison when cought, the people who buy the stuff are to blame.
Our economies are (were) so good because we could get loads of useful cheap stuff from poor countries and nobody ever complained. Companies like wallmart thrive on these situations (yes owned by those god loving real americans that wont sell your album if it has a naked person on the cover).

I think I have to agree with Zenda here.
Of course I also understand that the US, just like any other country will try to do everything in its own interest, but the non-fair thing seems to pop up now because China is getting such a strong economy (10 years ago we didn't see working conditions in China as such a bad thing). In that sense the bully comparison works for me.

If your idea is that the US has to shoulder most of the blame for the situation they're in, you're right.

If your idea is that shutting down trade with China will help the Chinese, the Americans, or anyone else, you're wrong.

-Jester

[kandrathe]

It's cool you are there seeing it first hand! I always wanted to live in a 3rd world country, but I never imagined I would be able to stay home in the USA to do that!

[Thecla]

Couldja pick something up at their WalMart for me please?? About a dozen would be good.

A dozen chicken feet coming up. Somehow I always missed spotting them in the US Walmart delis.

Just put them in a shipping container. Better make that two dozen, so that a dozen will make it all the way.

Two dozen it is. And I'm pretty sure they'll all make it all the way (unless the USDA gets their hands on them).

I'm not sure yet what I'll do with them.

Well, you could eat them. A little ripening in a shipping container for a week or two should really add to the flavor.

I think while I'm waiting for them to arrive I'll start a pharmaceutical company, and when they get here I'll have them start making generics. I'll go to the grocery store and get some baking soda so I'll be ready.

I just hope you're planning on paying yourself peanuts, since I don't think you'll find a workforce to pay peanuts to, not in the US anyway.

Oh! Maybe send some "heavy metal" paint, too, so they can make some toys.

Some Shanghai tap water should take care of the heavy metals.

ps. Good to see ya! Here, have a bamboo calendar!

Yum, Yum!

[Palpy]

There was a colossal post here, but I figured a more elegant way to put it would be to just link to the summary of what Paulson presented to congress earlier in the year.

*Snip*

-Jester

From everything I've read and what I've been told by my Econ profs, that is about as straightforward a response you are going to get out of anyone from the Treasury Dept. or anyone with the Federal Reserve. They say one wrong thing and markets start crashing. It's clear they know what's going on and anyone familiar with economics can read between the lines on that statement.

As far as taking any action to prevent it, the US isn't in a great position to make demands to China.

[eppie]

If your idea is that the US has to shoulder most of the blame for the situation they're in, you're right.

If your idea is that shutting down trade with China will help the Chinese, the Americans, or anyone else, you're wrong.

-Jester

No I didnt talk about benefiting someone, I was talking about fairness. However fairness will not always be the most beneficial.

[kandrathe]

No I didnt talk about benefiting someone, I was talking about fairness. However fairness will not always be the most beneficial.

You will need to explain that one. Robin Hood was being beneficial to the poor, but still by a criminal act of violence. It might also have been considered fair if the Normans were wrongly over taxing and abusive to the Saxons. Here is a case where lawful, fair and just have different meanings depending on which side of the equation you stand.

The question is "Should the US surrender its manufacturing capacity for a short term increase in GDP?" I'm sure what was meant was "mutually beneficial". Why would the US and China engage in trade that was not mutually beneficial? You and Zenda might appreciate the siphoning of money and power from the US to China, but the attitude on this side of the Atlantic is that we should preserve our standard of living, and economic power.

[Jester]

You will need to explain that one. Robin Hood was being beneficial to the poor, but still by a criminal act of violence. It might also have been considered fair if the Normans were wrongly over taxing and abusive to the Saxons. Here is a case where lawful, fair and just have different meanings depending on which side of the equation you stand.

The question is "Should the US surrender its manufacturing capacity for a short term increase in GDP?" I'm sure what was meant was "mutually beneficial". Why would the US and China engage in trade that was not mutually beneficial? You and Zenda might appreciate the siphoning of money and power from the US to China, but the attitude on this side of the Atlantic is that we should preserve our standard of living, and economic power.

The big picture of the argument in McKinnon is correct, though. Revaluation would reduce the trade deficit *with China*, and would increase US manufacturing power in those areas currently dominated by China, but it wouldn't help the trade balance in the long run. Savings vs. consumption is what is going to change that overall picture, and so long as the model is "don't save in private, don't save in public, and spend as much credit as you can get your hands on", the US trade deficit will continue even if you shut off 100% of trade with China. You'll just import from Mexico, Canada, Indonesia, wherever.

The big differences would be that your standard of living, especially at the poorest end, would drop with the end of the cheapo-Wal-Mart era, and China would be forced to sell to someone else. The geopolitical situation might dictate fighting back with protectionism (if you're the kind of person who believes in US power, which of course I don't) but the economic situation doesn't.

-Jester

[Taem]

Your argument is fallacious. All taxpayers do not have loans, and for the subset of taxpayers that do have loans many are perfectly solvent. Then again, all loan holders are not taxpayers. For example, the people who justify a home loan on AFDC and welfare payments.

Your implication however is that loan holders created the mess, and specifically the loan holders who should not be loan holders. That was one subset I mentioned. The other culprit I mentioned was the lenders who offered risky loans and repackaged them into MBS's. Not all lenders, just the ones who were stupid and took the stupid risks.

You might as well broaden the category to "humans", because after all it was "humans" that created this mess. All "humans" must pay!

I would like to add to this that in the past few months, several well known companies have tanked, costing thousands upon thousands of jobs you would of considered "secure" in banking terms. It seems this whole bailout discussion really started *before* all of the massive layoffs and big-name store closures going on, so factor in the thousands upon thousand more people who now can't pay for their homes, and you have an even bigger mess than a measly $700-billion can afford. I don't think anyone thought it was going to get this bad, and the sad part is economists have it penciled to get "much worse" before it gets better. I'd like to see what Obama has planned for the rest of that $250-billion, and wouldn't put it past congress to raise the ante even higher before the years up.

[kandrathe]

I would like to add to this that in the past few months, several well known companies have tanked, costing thousands upon thousands of jobs you would of considered "secure" in banking terms. It seems this whole bailout discussion really started *before* all of the massive layoffs and big-name store closures going on, so factor in the thousands upon thousand more people who now can't pay for their homes, and you have an even bigger mess than a measly $700-billion can afford. I don't think anyone thought it was going to get this bad, and the sad part is economists have it penciled to get "much worse" before it gets better. I'd like to see what Obama has planned for the rest of that $250-billion, and wouldn't put it past congress to raise the ante even higher before the years up.

This was a foreseeable consequence to the implosion from a few months ago. With the financial institutions in turmoil, from what started as leveraging over leveraged assets (or at least assets with variable worth), has become a shortage of mobile capital in the form of short term loans (which many companies need at times even to float a payroll or two during a year). This is all coupled with "all the bad news" discouraging investors and consumers who want to hang on to their cash, or gold waiting for the storm to blow by before spending their money foolishly. Voila! Recession. A shortage of income results in the need for short term borrowing, and with stock prices plunging a company may not have the borrowing leverage it did before. On paper now, what looked like an acceptable debt to earnings or debt to assets ratio may begin to look quite distressingly bad now. This of course results in the scared banker to deny the loan, and the result is either chapter 11 reorganization, or actual bankruptcy. I predicted this recession over a year ago actually (based then only on the rapidly rising cost of fuel and its impact to the supply chain), and moved most of my riskier stocks(retirement, etc.) into cash.