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Thread: weekend commentary - US Trade Sanctions against China

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    Default weekend commentary - US Trade Sanctions against China

    (snip)"from Financial Sense:

    This fall, providence is bringing yet another dish of trouble to an already over laden table—China may actually prove good on its threat to dump $1.33 trillion of US Treasuries and start the long awaited flight from the US dollar.

    China’s threat to sell its US Treasuries—if actually carried out—will be triggered by the US Congress. This fall, the US Congress will vote on a bill that would impose a 20 % across-the-board tariff on all Chinese goods imported into the US. The supporters of the bill describe its passage as “veto-proof”—that they now possess enough votes to override a presidential veto.

    This possibility calls again into question the very efficacy of democracy, to wit the belief that the collective will of the people is preferable to the capricious stupidity of a king or queen or any other selected or self-appointed tyrant, or indeed, virtually any government official.


    China is watching us very closely. If Congress imposes barriers to Chinese imports, they will and must retaliate. And we are well within their grip. Japan doesn't want this to happen now because I believe Dr. Zhou made it pretty clear to Mr. Fukui that if the US goes after China alone, Japan will be financially sunk by China. So the Japanese are probably applying quiet diplomacy to this delicate matter. The US, of course, should have never ever, EVER fallen for the 'free trade' wench who knew she was simply transfering industry in order to make greater profits for the top holders of US wealth who wanted to 'grow' faster than the rate of inflation, kill the unions and evade environmental and OSHA regulations while exploiting labor and nature to make themselves filthy rich.


    Way back when they hatched this 'free trade' garbage, they assured us all, prices would be cheap and thus, our paychecks would go further and our jobs here would improve because only the most dirty and tedious jobs would be outsourced. Ross Perot ran for President by running against free trade. He coined the 'Giant sucking sound' as jobs vanish phrase and he was spot-on. Yes, the giant sucking sound has vacuumed up and taken out the vast majority of our industrial base. I warned the government back in the late 1980's and I supported Perot's run because of this, thinking that we can outsource to everywhere is very foolish since we can't dominate all the places taking up our industries.


    Indeed, specifically with China, I said, 'China is an empire, a potential world power, they have nuclear bombs and missiles and a huge army. Any factories we ship there will be under the total control of the Chinese government and we won't be able to intimidate them or force them to do our bidding. This is a ONE WAY STREET.' Of course, no one listened to me. When Clinton signed yet more 'free trade' pacts, I threw up my hands in despair. The unions that trusted him were stabbed in the back and unions continued their long march into the night of servitude."(snip)

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    Default Re: weekend commentary - US Trade Sanctions against China

    Trade sanctions against china are dumb but so is the article's slandering of free trade with China.

    Trade with China HAS made us richer and allowed our paychecks to go further.

    On top of that, China subsidizes us to a huge degree, we should be sending them flowers.

    OSHA, mentioned in the article, has killed more US business than China ever could. Domestic unions have as well. Anybody cheering unions has to have a pretty big gap in their knowledge of our economic history. Environmental regulations as well. Most of them are not about the environment, but a form of political-economic warfare(coal plants using it to ban nuclear power, etc).

    Adding a tariff to the China trade does NOTHING except subsidize already uncompetitive domestic producers and gives them even more incentive to be worthless.

    China has already shifted away from the petrodollar, a wise move on their part, so they've already basically jumped ship on their dollar future. Which ultimately will be good for us.

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    Default Re: weekend commentary - US Trade Sanctions against China

    China has already shifted away from the petrodollar, a wise move on their part, so they've already basically jumped ship on their dollar future. Which ultimately will be good for us.
    I would state that this point is entirely dependent on whether one's viewpoint is as an American investor / business owner or a semi-skilled / unskilled American laborer. The de-facto exit from the US dollar standard by China / India / Dubai will also guarantee that every 'world priced' commodity i.e. gasoline, food, metals and products made using large amounts of metals, will leap upward and stay high !!!

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    Default Re: weekend commentary - US Trade Sanctions against China

    It'll be good for the economy as a whole because it would mean a return to rational economics, not politics based economy.

    Again, you mention the fake dialectic, the investor and the blue collar guy. They are not at ends with each other. The real conflict is between tax payers(including those who pay via inflation) and tax "eaters", as I call them:those who get tax money/state-privilege.

    The exit of the petrodollar would be a blessing to countries other than the US, who suffer from it. It would benefit us in the long run by removing a big chunk of what influences our foreign policy, saving us money in adventurism. It would also restore rational calculation to our import/export picture, giving Americans much better price signals with which to make decisions.

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    Default Re: weekend commentary - US Trade Sanctions against China

    It would also restore rational calculation to our import/export picture, giving Americans much better price signals with which to make decisions.
    in theory I agree with you. However in practice, there are still the 'extra' costs of doing business in the USA vs overseas i.e. minimum wage, EPA compliance costs, OSHA compliance costs, mandatory benefit costs (comp, unemployment etc.), product liability lawsuit costs etc. The 'Fair Tax' does nothing to address these extra costs of doing business in America ... it only increases the after tax price of American goods and services by a smaller amount than it increases the after tax price of imported goods and outsourced services !


    It is also very arguable that this differential in after-tax cost of American goods and services vs after-tax cost of imported goods and outsourced services will simply prompt yet another round of 3rd world exploitation i.e. shifting Chinese operations to Vietnam or Myanmar to cut offshore production costs even further to 'cancel out' the new Fair Tax tax rate differential. After all, in some Fortune 500 board rooms you can already hear complaints that 'uppity' Chinese skilled workers are now demanding upwards of two dollars per hour in pay, as well as grumblings from Chinese gov't officials that the dumping of raw waste products is making the air in Chinese industrial areas unbreathable and the water in Chinese industrial areas undrinkable !!!

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    Default Re: weekend commentary - US Trade Sanctions against China

    The presence of those things doesn't change anything with regards to allowing free trade. Even when things are not perfect at home, free trade is still the best option. Piling on more bureaucracy is never the solution.

    Free trade is one release valve for Americans to get a break when domestic regulations are crippling everything.

    Things should be harmonized DOWNWARD in terms of regulation, not upwards.

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    Default Re: weekend commentary - US Trade Sanctions against China

    Free trade is one release valve for Americans to get a break when domestic regulations are crippling everything.
    the 'tin foil hat' crowd would tell you that the Fair Tax proposal is merely a means of imposing a 30% tariff on all imported products, in a manner which is indirect such that (hopefully) the Chinese and Japanese will not take the de-facto new 30% tariff personally and start dumping US T bonds again (as reportedly happened a month ago, resulting in one trillion dollars worth of western central bank intervention to avoid western banking crises).

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    Default Re: weekend commentary - US Trade Sanctions against China

    The Fair Tax will indeed mean all sorts of added tariffs, there is nothing contraversial there.

    And it will indeed cause a reciprocal trade war.

    I don't think the Fair Tax has any chance of passing, however.

    China has made moves towards abandoning the dollar but Japan has not yet, as far as I am aware. They have politely declined all of Iran's overtures asking instead for a formal request of action, which they have made pretty clear they will follow.

    Japan and China don't even have to be upset at us to dump T-bills. They simply can't afford to hold on to those losing propositions forever.

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