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China threatens 'nuclear option' of dollar sales


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China threatens 'nuclear option' of dollar sales

China could hurt the USA severely if they sell off their one-trillion in US monetary assets. The US is quite weak financially. Think of the US as a beautiful chocolate Easter egg on the outside but the inside is hollow due to the amount of debt that has eaten it away!

The US has the strongest militarily but it does have weakness!

Cordially,

JB

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If China economically devastates their best customer, where will they sell all their...stuff? It ain't gonna happen. Americans may end up speaking a dialect of Mandarin, however... :D

Hey, someone's using their brain! Like the way China is having a go at reducing waste and inefficiency in their energy use: forget about the feel-good politics of the green-than-thou west, how about having a manufacturing industry that can produce at twenty percent less cost because the political process isn't tied to outdated and inefficient infrastructure and the profits generated therefrom.

I can't see the Yanks speaking Mandarin. Spanish, however, or Portugese... there's something to be said for the Vatican's ban on contraception: they'll outbreed, and in the long term that's all that matters.

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Last thing I read, the EU/eurozone is China's biggest export market... Which isn't to say that devastating the economy of your second-biggest currency-defined market makes any sense either, since there's not much of a difference in quantity.

Nevertheless, China does have the wherewithal to put some serious pressure for extended periods of time on both the dollar and euro markets, and probably sterling too, keeping those currencies where they want 'em to keep their economy booming at the level they need to suppress internal dissent.

The importing countries need to impose levies on Chinese (actually all third world) imports based on their human rights and ecological shortfalls, I reckon. Not enough to make things cost the same in a market as they'd cost if made by labour in that market, but enough to encourage the emerging economies to rush past the sweatshop/child labour/suppression of the press stage in order to make more money.

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If China pushes the value of another nation's currency down, it makes the industries in that country more competitive in the market. The only way China can keep the value of foreign currencies high is to keep buying them, which means they require a return on those currencies - they can't afford to have the value disappear altogether or they'll have severe problems paying their pensions, etc. So, unlike the West, which still believes in a laissez-faire market and the law of the jungle, China needs to manage the world economy in a way that benefits all parties: it is only by doing this that they can guarantee their own rising standard of living and long-term survival.

I wouldn't worry about it, it's about as fantastic as the threat of nuclear war in that no rational entity can seriously consider instigating it. China is already too expensive for lower end manufacturing. You can pay $1.49/hr in China or move next door and pay the Vietnamese $0.75/hr. The difference is pure profit! How can it go wrong?

In a couple of decades the poms will be back to having a competitive manufacturing environment - if they can fund their education system that long. The yanks, well, who can predict what they'll do?

Workers of the world, back to your chains! Marx must be spinning in his grave.

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The only problem is, will there still be a middle class in Western Europe - and particularly in the US - after this is all over?

Well, that is a question, isn't it? My guess is the the Middle Class will do what it's always done and reinvent itself by doing all the skilled jobs that the Upper Class doesn't want to bother itself with and the Lower Class doesn't have the talent or education for.

Michael

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