Krugman At His Best Today

[Yavin4]

Globalization is nothing more than currency manipulation, esp. China and India's manipulation. American multi-nationals want China's currency de-valued so that they have an enormous pool of cheap labor to send mfg jobs off to. They want to make products cheap in China and sell them at marked up prices here in the U.S. In essence, they are creating global economic imbalances which is at the heart of why our economy is so stagnant.

The answer is strong tarriffs against China or at least the threat of them in order for them to appreciate their currency against the dollar. Alas, don't hold your breath waiting for that to happen. Those same American multi-nationals own our congress lock, stock, and barrel. There will be no such discussion of tarriffs while the whores still write policy.

http://www.nytimes.com/2010/09/13/opinion/13krugman.html?hp

[earcandle]

1. Please... NAME THOSE WHORES.... people who do it for favors... lets remove those warts.

[Yavin4]

2. All Senate and House Republicans

Landrieu
Ben Nelson
Joe Liberman
Evan Bayh

...Among others

[Skittles]

15. in other words, The Usual Suspects

[flyarm]

3. WOW!!!!!!!!!!..good truth Paul!..and it is on both sides of the isle! eom

[Yavin4]

4. Currency Manipulation Is The Reason Why Private Sector Hiring Is Declining and/or Stagnant

and will continue to decline for the forseeable future.

[harun]

9. There is no reason to let people trade currency quickly. They should

limit currency trading to one transaction per individual per day. Meaning they can't buy 1 million $ worth of Euro's, sell it an hour later, buy 1 million $ worth of Yen, sell it an hour later and buy 1 million $ worth of $.

It is not investing when they do that, it is gambling/looting/gaming.

[Yavin4]

10. It's Not The Traders Per Se, But Entire Nations

China and India engage in a national strategy to artificially keep their currencies low in order to subsidize their exports.

[harun]

13. Yah, that too.

[truedelphi]

5. Ah, where was this guy twenty years ago?

The bastardized version of Friedman's Supply Side economics stressed cheap goods (and thus cheap labor)

The results were that it was an absolute necessity to allow the concept of tariffs to fall by the way side.

Although shutting the gate to the corral may always be a good idea, one does wish that at some point the "experts" would consider doing so BEFORE the cattle got out.

[Hekate]

16. He was plugging along doing the work that earned him a Nobel in 2008

However, it doesn't necessarily win you friends in the halls of power and money to preach restraint and fairness, as he did in his columns (at least that's how I interpreted it -- he made no bones about being politically a liberal).

It's so much more fun and glamorous for people like the Bushes if they can get an economist to tell them to do whatever they want, deregulate everything, and that he who makes the most money wins.

Hekate


http://www.nytimes.com/2008/10/14/business/economy/14econ.html

[Tatiana]

6. Thanks for posting this.

It's what I've always felt about the exportation of our jobs to China, and now Krugman has finally explained what the true cost of cheap labor overseas means for our own workers and economy.

[Yavin4]

11. Not Just China. India As Well

Globalization is code for currency manipulation.

[flpoljunkie]

7. K&R!

[KoKo]

8. I read another article saying Tarriffs are the way...but we are too afraid the Chinese

will dump the US T-Bills that they've bought and still are buying. If a way could be found to relieve them from their treasuries then tarriffs might help.

Actually Krugman has a good solution. Took me awhile to get a readable link to Krugman's article.

Krugman says:

One answer, as I’ve already suggested, is fear of what would happen if the Chinese stopped buying American bonds. But this fear is completely misplaced: in a world awash with excess savings, we don’t need China’s money — especially because the Federal Reserve could and should buy up any bonds the Chinese sell.

It’s true that the dollar would fall if China decided to dump some American holdings. But this would actually help the U.S. economy, making our exports more competitive. Ask the Japanese, who want China to stop buying their bonds because those purchases are driving up the yen.

[Yavin4]

12. It's Not That We're Afraid of the Chinese

It's actually two things:

(1) American Multi-National corporations want a compliant and extremely cheap labor source for mfg. In the U.S. and Europe, they would have to deal with unions to get crap made. Not so in China. Keeping the currency artificially low accomplishes this desire.

(2) The war hawks in America don't want the Chinese to intervene with their plans to invade and occupy Iran. Allowing China to manipulate their currency buys their "cooperation" with our invasion plans.

[pampango]

17. Krugman indicates that it is corporate fear of China that is a bigger factor than government fear.

"Clearly, nothing will happen until or unless the United States shows that it’s willing to do what it normally does when another country subsidizes its exports: impose a temporary tariff that offsets the subsidy. So why has such action never been on the table? One answer, as I’ve already suggested, is fear of what would happen if the Chinese stopped buying American bonds. But this fear is completely misplaced: in a world awash with excess savings, we don’t need China’s money — especially because the Federal Reserve could and should buy up any bonds the Chinese sell.

It’s true that the dollar would fall if China decided to dump some American holdings. But this would actually help the U.S. economy, making our exports more competitive. Ask the Japanese, who want China to stop buying their bonds because those purchases are driving up the yen.

Aside from unjustified financial fears, there’s a more sinister cause of U.S. passivity: business fear of Chinese retaliation.

Consider a related issue: the clearly illegal subsidies China provides to its clean-energy industry. These subsidies should have led to a formal complaint from American businesses; in fact, the only organization willing to file a complaint was the steelworkers union. Why? As The Times reported, “multinational companies and trade associations in the clean energy business, as in many other industries, have been wary of filing trade cases, fearing Chinese officials’ reputation for retaliating against joint ventures in their country and potentially denying market access to any company that takes sides against China.”

Similar intimidation has surely helped discourage action on the currency front. So this is a good time to remember that what’s good for multinational companies is often bad for America, especially its workers."

So if China sells American debt, the dollar falls helping our exports and the renminbi rises in value which is what the Chinese don't want. Seems that any fear of China selling our debt is overrated. The Japanese seem to have it right. They want China to sell Japanese debt or at least stop buying it since that raises the value of the yen and hurts their exports.

[Supersedeas]

14. and yet many in the Patriotic Flag Waving War Drum beating media can handle that truth