jump to navigation

Trade War with China October 1, 2010

Posted by hslu in China, Congress, Economics, Global Affair, jobs, Obama, Politics.
Tags: , , , , , , ,
add a comment

US House of Representatives passed a bill which allows the Commerce Department levy heavy tariffs on Chinese goods if China does not appreciate its currency, Renminbi, more aggressively. Although the fate of the bill is in doubt in the Senate, the Congress is doing that to look for a scape goat for the high unemployment rate in this country.

The reason for the political posturing one month before the mid-term election is about jobs. The United States has argued that Renminbi is under value by as much as 40% which out-sourced 2 million jobs to China. While America is asking China to raise the value of Renminbi, China has to keep its value low because a high exchange rate with the United States will put millions of Chinese companies into bankruptcy, force millions of its citizens onto unemployment lines and cause social unrest in the years to come.

Bill Clinton in 1993 decided that the best way to engage China was to have free trade with the country because China was an open market for American companies to make a few bucks. If the United States stayed away from this opportunity, companies from other countries will grab the market share and leave American companies playing catch-up from behind. As a result, American companies stepped over each other and opened shops and plants in China for the past 17 years.

Now with  unemployment close to 10%, the United States are crying wolf and the Congress is asking for a trade war with China.

Haven’t they learned their lessons form the Great Depression? Didn’t they know that a trade war after the signing of the Smoot-Hawley Tariff Act of 1930 was one of the major reasons why the Depression last more than a decade?

If the Congress and Obama want a trade war with China, China will give them one just to teach the US a lesson. An all out trade war will reduce bilateral trades, further increase unemployment rate in this country and, worse, Americans will pay through their noses on almost every items they buy at Wal-Mart.

The bottom line is this: The United States is looking after its interests when dealing with China. One has to realize that China is looking after its interests too. China will raise the value of Renminbi when it is beneficial to China’s economy. The high unemployment rate in the United States has more to do with the structural change of its economy and less to do with the value of Renminbi.

The Third Depression July 7, 2010

Posted by hslu in Economics, Global Affair, Health Insurance, Obama, Politics, Small Business, Taxes.
Tags: , , , , , , , , , ,
add a comment

The Third Depression

Paul Krugman on June 27, 2010 in a New York Times Op-Ed page argued that we are in the early stage of a long lasting third depression.

He argues for more spending in time of economic slowdown and warned that austerity programs such as those adopted by Greece, Ireland, England and Germany and now considered in the U.S. Congress will lead to a Japan-style deflationary traps in the US and Europe. And tens of millions of unemployed workers will pay the price and remain unemployed for years.

In a word, he wanted to spend our way out of his look-more-like-the-Long-Depression depression. To be more precise, he wanted the government, not private sector, to spend our way out of what he called the third depression.

He didn’t say anything about incentives to the private business. He didn’t point out the enormous burden the U.S. government has added to the private sector in the form of a national health insurance program. He didn’t mention the TARP money benefited the financial firms on the Wall Street. He didn’t question the failed policy of withholding more than half of the $787 billion stimulus program money until 2011 and beyond. He conveniently avoided citing the example of Japan’s long depression during which the Japanese government initiated spending program after spending program since the early 1990’s but still failed to pop up its sagging economy. As a result, Japan is saddled with a national debt that’s more than 200+% of its GDP which Japanese has no hope of ever paying it off.

Instead, Krugman relied on the experience of Great Depression and urged Obama and Democrats to spend our tax money in inefficient, government-sponsored programs.

He wanted to dig a deeper hole first. It is the same liberal rhetoric all over again.

What this country needs right now are more company-friendly policies such as the repeal of Obama’s national health insurance law which will give the private sector more incentive to expand their businesses. The way it stands now, the private corporations will not hire any people because they still don’t know how this national health program will impact their bottom line. With that dark cloud over their heads, they will wait and hire nobody.

Krugman’s third depression will definitely come to reality if United States continues the liberal and Democrat’s tax and spend policy.

%d bloggers like this: