How much will taxpayers shoulder?

[Jester]

Hardly. They also make much of the parts (electronic and otherwise) used in American and European products, you know.

What I mean to say is that the relevant figures are agglomerated, not just "well, what do you see in your daily life"? There's a lot I don't see in my daily life that's incredibly relevant to the economy, and I lot I do see that isn't. Asking people how much "made in China" they see is an appeal to their prejudices over their reason.

That's a rather strong statement, but I'm sure you can show some proper references to it.

What, that the state of the Chinese Yuan vs. the US dollar is depressing US exports to China, and inflating US imports from China? If that isn't obvious to you, then I'm not sure why we are having a discussion. That's day one macroeconomics.

Which is all the difference that matters. Being able to produce much in absolute numbers while needing even more doesn't make things easier. It's the shortage that counts.

No, it really isn't. You have made a series of bold, unfounded, and wrong statements in this thread, notably along the lines that the US is no longer a producing nation, and that it doesn't have a lot in the way of exports that people want. Neither of those things is even close to true. What is true is that the US is not a NET exporter. However, neither is much of the developed world. This is a perfectly normal consequence of economic theory: rich countries consume more because they have more wealth to consume with, whereas developing countries consume less because they have less wealth. Not surprising, and something that will go away as their respective currencies adjust, *unless* one country forces them not to, as China is doing.

You should try selling that desire_and_ability_of_the_American_consumer_to_consume phrase to some Republican PR commitee in the USA:)

I have no idea what you mean by this. All I'm saying is that people who have money and want stuff will, in a free market, spend their money on stuff. People who have less money will make that stuff for them, because they want money.

Do you really think it would be a good idea, to have all Chinese living like Americans and Europeans do right now? With their numbers, they are causing enough environmental damage as it is.

No, it wouldn't be. But is the alternative that the Chinese population lives under the boot of their government, unable to improve their quality of life except in the slow drip allowed to them? Other countries do not suffer under this kind of restriction. Why should China? Surely they can enjoy some small increase in wealth (not enough to bring them to the American standard of living by a country mile) in a green way?

-Jester

[kandrathe]

... I won't have much to add.

I believe that was my opening salvo in our discussion where I said, "You really don't understand this topic." You have failed to educate yourself on it or attempt to understand how "free" trade is akin to "fair" trade. Why should I spend my time trying to educate you when you fail to comprehend the most basic of economic principles? I can only imagine that you so despise the USA, that you would never allow yourself to believe that it could be victimized. My claim (with ample evidence in the press) is that China has (through currency trading) fixed the yuan to the dollar in such a way as to make Chinese goods very attractive for export, and US goods very unattractive for import. So, show me some evidence that I'm wrong, or quit yammering on about things you don't understand. So don't believe me, but here are the words of Pres. Elect Obama to the National Council of Textile Organizations from October 2008. He says, "A fair trading system requires fairness in each country’s foreign exchange practices. The massive current account surpluses accumulated by China are directly related to its manipulation of its currency’s value. The result is a large imbalance that is not good for the United States, not good for the global economy, and likely to create problems in China itself. China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth. That is why I have said that I will use all diplomatic means at my disposal to induce China to make these changes." Which is what Jester and I have been saying as well.

Funny, I never realized the USA imported even cars in substantial numbers :whistling:

Yes, we import cars from Europe and Asia. However, my point was that no one is buying them so they are piling up on the docks, and being moved into storage lots all over the SW USA. Europe and Asia don't get paid for the cars until an American consumer buys them. So, the storage is just more red ink for their owners, Toyota, Hyundai, BMW, Mercedes, etc. This economic downturn will have ripple effects around the world resulting in massive pain in underdeveloped nations within a year.

[Taem]

We have better things to do than work in factories, so we get other people to do it for us.

I'm sure your just being sarcastic, however FYI, when Obama takes office, he told Congress he is going to create several "shovel ready" jobs to fill the loss of jobs thus far. What does Obama mean by shovel ready? Well, I assume anything to help the economy and get people earning money, so if that requires American's working in factory's, you can bet your ass American's will be there to get the job done. Don't think just because a job is labor intensive that it is "above" us in any way, shape, or form. That generalized thinking is very prejudice and accomplishes nothing.

[kandrathe]

I'm sure your just being sarcastic, however FYI, when Obama takes office, he told Congress he is going to create several "shovel ready" jobs to fill the loss of jobs thus far. What does Obama mean by shovel ready? Well, I assume anything to help the economy and get people earning money, so if that requires American's working in factory's, you can bet your ass American's will be there to get the job done. Don't think just because a job is labor intensive that it is "above" us in any way, shape, or form. That generalized thinking is very prejudice and accomplishes nothing.

I heard something about creating jobs within the eco-energy production area to "kill 2 birds with one stone" so to speak. I assume it is something like we will hire many people to build wind mills, solar farms, and then run power lines to them all. Go T-Boone, Go! Or, maybe there will be thousands of jobs planting trees and reclaiming wetlands.

[Rhydderch Hael]

I heard something about creating jobs within the eco-energy production area to "kill 2 birds with one stone" so to speak. I assume it is something like we will hire many people to build wind mills, solar farms, and then run power lines to them all. Go T-Boone, Go! Or, maybe there will be thousands of jobs planting trees and reclaiming wetlands.

I'll one-up those two birds with this idea: thousands of bicycle frames hooked up to an alternator set, and thousands of people pedalling away like mad. You get clean energy, gainful employment, and you combat obesity all at the same time.

[kandrathe]

I'll one-up those two birds with this idea: thousands of bicycle frames hooked up to an alternator set, and thousands of people pedalling away like mad. You get clean energy, gainful employment, and you combat obesity all at the same time.

A trifecta! Only those with a BMI > 25 need apply.

In New York I guess they use children as alternative energy sources. We just need to install tread mills everywhere that dispense one "Ike and Mike" per KW generated. It keeps them off the streets too.

[Thenryb]

I'm only blaming the Chinese for being prosperous, which is hardly something we should get upset about. I do hold a grudge regarding their currency manipulation, and my weak kneed government's refusal to do anything about it. But, be that as it may, they quickly piled up a ton of capital that needed to be reinvested somewhere. For every hungry mouth fed there is a pile of poo somewhere. In this case, the poo ended up on Wallstreet.

Some questions come to mind regarding this topic of currency manipulation by China:

1) Why has the Bush administration been so steadfast in its refusal to accuse China of manipulating its currency?
2) What is the true market value of the yuan vs. the dollar?
3) What would the trade deficit between the two countries be if the yuan were allowed to float? I suppose this question is impossible to answer. The better question, also impossible to answer I suspect, is what would the deficit be had the yuan been allowed to float for the past few years?

[kandrathe]

Some questions come to mind regarding this topic of currency manipulation by China:

1) Why has the Bush administration been so steadfast in its refusal to accuse China of manipulating its currency?
2) What is the true market value of the yuan vs. the dollar?
3) What would the trade deficit between the two countries be if the yuan were allowed to float? I suppose this question is impossible to answer. The better question, also impossible to answer I suspect, is what would the deficit be had the yuan been allowed to float for the past few years?

To answer (as best I can);
1) I'm not sure. Maybe Henry Paulson is in denial. For me, the evidence is in the outcome, and not in the process. I think the problem is that China desires to become an economic power, however if that is built on domestic demand for goods it is a drastic step away from communism and toward capitalism and consumerism. So, China's government is trying to be an economic giant feeding off international consumption, and denying its wealth and products to its own people. This results in a massive distortion of the free market, because it is not really free. Europeans and Americans do not need to compete with the Chinese for the goods and services China produces which has a negative impact on the producers (manufacturing, etc) outside of China.

2) That is unknowable until it is allowed to float freely, and until Chinese consumers are free to buy what they desire. The estimates are that it is devalued by 20 to 40 percent. This means that products made in China would be say 30 percent more expensive to the world, and the worlds products would be 30 percent cheaper to the Chinese consumer. This would create a vast shift in the flow of product.

3) Lower, but if China's people are allowed to buy foreign and Chinese goods, then it would eventually be more balanced and fair. In the modern global economy, the wealthier nations will always consume more than they produce. Production will migrate to where labor, and raw materials are the cheapest (baring quality factors). The pure idea here (without exploitation) is that the producers then eventually catch up and wealth generally becomes more evenly distributed. But, if you compare wages and cost of living across wealthy and poor nations you will see a vast disparity. Even the term "poor" means something entirely different between Europe or the USA, and someplace like Nigeria.

The way China has set up its economy, the Chinese worker's quality of life and wealth are only growing slowly. A person in China is considered well off with a salary of about $440/month ($5,300 annual salary). Wages in neighboring Taiwan are 8 times higher, and in the USA they are 12 to 16 times higher. To put that in perspective, before I retired I was earning about $800 per day. Removing the artificial walls between nations means that (all things being equal) this disparity around the globe will normalize.

[Taem]

I found this recent article very interesting. Of note:

One in every 488 U.S. households got a foreclosure filing last month, according to the Irvine, California-based research firm. Filings include notice of default, auction sale or bank repossession.

I never knew that. Considering the sheer number of citizens here in America and the value of homes, we're got to be talking trillions of dollars in bad loans. Wow! How are banks suppose to recover from that? I don't mean to preach doom and gloom, but if this report is accurate, then the economy and jobless rate will only get worse, meaning when that $700-billion bailout hits the taxpayers, those working will have to shovel out even more to pay for this mess, which could conceivably cause even more job losses. I don’t try and rely on my yearly tax-return, but this year, I’m hurting for it, and if instead of getting a fat check back from the feds, I get slammed with an IOU, I’ll be screwed! This whole situation just sucks!

[Zenda]

It appears that Kandrathe gave the 'proof' that was required from me :whistling:

You have made a series of bold, unfounded, and wrong statements in this thread...

Isn't it remarkable, how the US Treasury Department seems to go along with my bold claims? The conclusion of the report that Kandrathe quotes so generously, although he didn't provide the link, is that the department wants certain positive developments to go faster at times. Recently, however, there have been few complaints even on that point:

"The pace of appreciation against the dollar demonstrated in early 2008 is welcome and should be continued."

Anyway, this report gives some pretty good insight in the current 'crisis' situation, if you take the trouble to read *all* of it.

...meaning when that $700-billion bailout hits the taxpayers...

As was said before, I don't think that is going to happen. Maybe some congress member will see opportunity to label a tax for it, but you will never be asked to pay the amounts calculated in this thread. The war in Iraq is a lot more 'costly'. How much extra taxes did you pay for that?

Btw, are you sure about that link? It doesn't contain the quote you gave, as far as I can tell.

[Jester]

Reading through that report, it doesn't seem to offer much in the way of support for your arguments. Would you care to point out where it is, exactly, that the Treasury Department appears to be agreeing with you?

-Jester

[kandrathe]

It appears that Kandrathe gave the 'proof' that was required from me :whistling:

Paulsen is an idiot. Do you want to take his side? My position is that the US Treasury department, and Henry Paulsen has its collective thumbs up congress'... Why would I link to a paper which is an attempt to blow sunshine on Paulsen's thumb?

That paper has one truth, that being a political tool for some in Congress who want to do nothing. Paulsen is a failure, and history will note that this world economic catastrophe was his to avert. Bush was an idiot to appoint him (not the first bad choice of his either).

Here is what the WSJ is reporting today; "Outlook Darkens as Recession Deepens -- Economists Forecast Lengthiest Downturn Since Great Depression"

What I quoted was from a Reuters article; I bolded the portion you failed to read.

The report finds that China allowed its currency to appreciate against the dollar at its fastest rate in the first half of 2008 than at any time since officials stopped pegging the yuan to the greenback in July 2005.

"The (yuan) gained a total of 6.2 percent against the dollar in the first half of 2008, just short of the 6.4 percent gain in the entire year in 2007," the report states.

However, in the past couple of weeks the yuan has slipped back to its lowest level in about five months.

Treasury Secretary Henry Paulson was in Beijing last week for trade talks and there was some worry that China might be losing the stomach to let its currency keep rising. The report raps the Chinese for maintaining a weak-currency policy and says such a posture is stunting economic growth for the world's fourth-largest economy. U.S. Treasury says China not manipulating currency

As of today the Chinese Yuan was trading at 6.8 to a dollar. Up until 2005 it was pegged at 8.3 to the dollar. So, that appears to be about 18% appreciation after un-pegging it, or about 1/2 to 1/3 of the distance it needs to move.

[Palpy]

In related news, the number of forclosures fell last month. This, however, is only because banks decided to not pursue forclosures during the holidays and also the intervention of several agencies trying to assist those going into forclosure. It is expected that January/February will be some of the worst months yet. I'm sure Congress will use that data to avoid having to pass any laws pertaining to forclosures until after the inauguration. In the mean time, it's going to get a lot worse before it gets better. I've heard some estimates that the housing market may not be able to recover until next fall.

Since this thread is about the taxpayers, what does everyone think about the local cities and state that will take in less tax revenue, both from house sales and thos cutting back after losing a job? Do you think they are going to resort to tax hikes or are they just going to cut back so far that they are useless to the citizens. Most states require a balanced budget, they can't just borrow their way out like Congress can.

[Zenda]

Reading through that report, it doesn't seem to offer much in the way of support for your arguments. Would you care to point out where it is, exactly, that the Treasury Department appears to be agreeing with you?

Regarding China's socalled unfair monetairy manipulations:

Page 3

Treasury has not found that any major trading partner of the United States met the standards identified in Section 3004 of the Act during the reporting period, January 2008 – June 2008.

The Act states, inter alia, that: “The Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.”

In other words, the US Treasury Department sees no reason to accuse China of gaining unfair advantages.


Regarding US (lack of) productivity:

Page 10

2006 2007 2008(Q1) 2008(Q2)
1036.6 1162.5 320.0 339.4 Total Exports
1853.9 1957.0 524.8 550.6 Total Imports

In other words, US citizens consume roughly $800 billion more as they produce, every year. Having the desire and ability to consume is one thing, but who is going to pay for it? Not the Chinese, ofcourse, although you and Kandrathe seem to think they have that obligation.

[Zenda]

Why would I link to a paper which is an attempt to blow sunshine on Paulsen's thumb?

Yeah, why should you believe the annual report of your Treasury Department, or that very recent Reuters article, when you have a convenient story from 2003? :whistling:

[kandrathe]

Zenda, you might want to take your own advice. Read the lower part of page 16, and page 17 in it's entirety. It is fully damning of PBOC intervention and China's trade policies. That said, this is a government report about its own activities. Do you think they will be critical of themselves?

[kandrathe]

Yeah, why should you believe the annual report of your Treasury Department, or that very recent Reuters article, when you have a convenient story from 2003? :whistling:

Have you suddenly become enamored with the US government, and the party in power? What makes you think they are telling you the truth this time? Also, sometimes its useful to show that an issue has not changed for a long, long, time. I said before, nothing has changed for over a decade, even though in 2005 the Chinese have unlocked from the dollar, they have used other means to keep the yuan nearly the same value as when it was locked to the dollar. It's not reform, it's a shell game.

[kandrathe]

In related news, the number of foreclosures fell last month. This, however, is only because banks decided to not pursue foreclosures during the holidays and also the intervention of several agencies trying to assist those going into foreclosure. It is expected that January/February will be some of the worst months yet. I'm sure Congress will use that data to avoid having to pass any laws pertaining to foreclosures until after the inauguration. In the mean time, it's going to get a lot worse before it gets better. I've heard some estimates that the housing market may not be able to recover until next fall.

Since this thread is about the taxpayers, what does everyone think about the local cities and state that will take in less tax revenue, both from house sales and those cutting back after losing a job? Do you think they are going to resort to tax hikes or are they just going to cut back so far that they are useless to the citizens. Most states require a balanced budget, they can't just borrow their way out like Congress can.

Those areas that decide to try to tax more risk turning their localities into ghost towns as people are forced from their homes. I don't believe that all government services are all crucial, and there are plenty of "nice to haves", like parks and trails, that the governments can still trim back. Then there are rational areas that even essential services can trim back, like high tech equipment on police cars. Maybe they don't need that $50,000 radar gun replaced this year. Our city recently voted down a $5 million bond for a new town hall, opting instead for a $1 million refurbishment of the current one. Another example was with their expansion of city water; rather than force everyone to pay whether they wanted it or not, they decided to only run lines off the main lines (used for fire protection) where the preponderance, (and therefore the funding) of citizens have opted for city water. It's the small stuff that keeps our local taxes smaller. Now if only we could convince the Minnetonka school system to try to control it's budget growth, although its hard to complain with the results.

[Jester]

I don't know what to say. You've misunderstood the relevant concepts, you've misread the sources, you insist people read what you link when clearly you yourself have not understood it. If you don't get it, fine, but don't try to foist your lack of understanding on other people.

Not the Chinese, ofcourse, although you and Kandrathe seem to think they have that obligation.

This clearly demonstrates that you not only don't have the foggiest clue what you're saying, you also don't have the foggiest clue what anyone else is saying.

-Jester

[Zenda]

I have to admit, one week ago I would have misunderstood what 'appreciation of the dollar' meant. But I'm not too old to learn, yet :)

According to officially accepted knowledge, China has not violated any law, treaty or agreement by committing currency manupilations. What's so incomprehensible about that? It's not in Chinese, is it?:lol: