China threatens to crash dollar

[MadScot]

Decades of trade deficits have left the US in a vulnerable position. You don't need to have a degree in economics to see that free trade has destroyed our way of life. In my mind the politicians who are responsible are guilty of nothing less than treason and should be treated accordingly. Most of the problems in our society can be traced to the breakdown of the family. Kids grow up with little supervision due to the work demands of the parents trying to survive. Before free trade one parent could support a family, now it takes both working sometimes more than one job. We have two choices stop the runaway corporate greed or face a unprecedented depression. People are often shocked when personal tragedy strikes. It is a pervasive thought that it won’t happen to me. This belief extends to the country as a whole. History shows that great civilizations tend to follow the same life cycle. They become agrarian giants then an industrial giant. Then they become consumers relying on outside labor and imports. Then comes the collapse. The recent bridge disaster should be a wakeup call on a large scale that the foundations of our country are crumbling.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
China threatens 'nuclear option' of dollar sales
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

[Yosemite_Wolf]

NAFTA fugged this country.

[Chem101]

Interesting perspectives..... Let me share my observations from one of those greedy old corportion's perspective.
Like it or not the world has shrunk into a global economy. As consumers, we all like to buy neat stuff..... the lower the price, the better. Manufacturer's are driven to find ways to lower the cost of manufacturing to meet the competition. If that means tapping lower cost labor then that's what you have to do. It's not a matter of greed. It's a matter of survival. Does profit fit into the picture? Of course!. If you have a 401K for retirement, you want to see it grow. Most likely it is tied in with the stock market. So... you as a stock owner qualify as one of those greedy old corporations. At least you own a piece of it.

Now, as far as China goes, I had the opportunity to visit the mainland last year on a business trip. I was impressed. What was interesting was the business management folks I delt with were all singing the same tune. It was great while it lasted but this expansion boom in China is coming to an end. They were projecting a couple more years of expansion before the business boom moves elsewhere. (Vietnam?) China has a rapidally expanding middle class of consumers itself and the vast majority of it manufacturing capacity is consumed internally. Regarding China using US dollars as a weapon? Think of it this way. You are in business. The US is one of your best customers. Would you mess with your best customer? I don't think so. Could they? Yes. Could the US use it's nukes? Yes. Neither are very likely. In Bejing, there is a banner on one of the government buildings that reads something to the effect " We are commited to becoming a good global citizen. Find that on a Washington poster! Don't get me wrong. I love my country, but China is getting a bad rap by our government and the news media.
As far as the US's woes.... keep in mind the the United States manufactuing productivity per man hour worked is one of the highest in the world. We do good.

Yosemite..... As far as NAFTA goes it's a joke. We have a facility in Mexico. If you add up all the bureautic hoops to transfer goods back and forth across the border, the only ones making money are the Mexican and US government. We're seriously thinking about closing that facility because we can produce the goods more cost effectively in the US. NAFTA supports government employees and that's about it.

In my humble opinion.