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BREAKING: Even Motley Fool is predicting a U.S. market crash
Reposted from JerseyThursday
Even Motley Fool is predicting a U.S. market crash
I often find their advice all over the place. But, this time I think they are suggesting something a lot of us have been saying for awhile now... the U.S. market and dollar dive.
http://biz.yahoo.com/fool/060925/115919648505.html
Submitted on Mon, 2006-09-25 23:22
Re: The Hard Landing For Housing is Already Here
Solve,
How much is the monthly nut on the Ashram?
The Hard Landing For Housing is Already Here
The Hard Landing For Housing is Already Here
The market is suddenly assuming that since energy prices are declining and mortgage rates are drifting down, consumer spending will pick up and the housing industry decline will end. In our view this outcome is highly unlikely. Our negative outlook for consumer spending is based far more on the end of the housing boom than it is on high oil prices. In turn, it is now evident that housing is already undergoing a hard landing that can?t be cured by a downturn in mortgage rates, and that the situation is likely to worsen. Here are some facts to consider.
Continue to read:
http://makeashorterlink.com/?Z1DA438DD
[Edited by: oD Forum Moderator. Shorter link included.]
Re: The Hard Landing For Housing is Already Here
Solve
Let's hope there isn't a flood of Ashrams on the market.
Apricot Jam
Apricot's odd posting aside, it's rather interesting to re-vist Roger's posting nearly a year later and note the hollowness of his predictions.
The US Stock Market is at an historic high...what say you now?
IM
China threatens 'nuclear option' of dollar sales
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
I figured I'd post this article before Solve does, there, take that Solve. It is interesting though to try and understand exactly why Americans have allowed themselves to be put in such a precarious position where they are now somewhat at the mercy of another nation.
I've been somewhat pleased recently with the assertiveness of American legislators when it comes to, what I perceive to be anyways, the unfair trade practices by the Chinese, yet in the end Americans, and Canadians as well, really have no one to blame but themselves. We're both so obsessed with consuming and accumulating products that most of us now live on borrowed money, and at the same time we're so bargain hungry that we've driven hundreds of thousands of jobs overseas just so we can buy our products on the cheap. Now Americans are stuck with an enormous debt, a shaky economy, a crashing housing market, cheap products with lead or other hazardous materials in them and all that comes to mind, is that you reap what you sow.
Or am I just Asiaphobic?
Yes, you're just "Asiaphobic!"
It's hard for me to understand how, during wartime, when we have record low unemployment and record high stock market, that you can characterize the US economy as "shaky."
The housing market has been through a correction after a dangerous period of inflation--that's hardy "crashing." What's a greater impact is the effect of sub-prime mortgage defaults. Not surprising. They are high risk--hence the "sub-prime." The greedy got burned. The smart investors made money. Welcome to the free market--it's a no whining zone.
Yes, we have a lot of debt to the Chinese. But that makes them equally dependant on us since that "debt" is worthless if they intentionally tank our economy. The effect on them will be devastating. It's sort of a "mutual assured destruction" economic deterrant. Hey, it worked with nukes in Soviet Union---why not with debt in China?
IM
I call it shaky because the
I call it shaky because the economic foundation is shaky. Living on borrowed money is always a risk, and you Americans are the kings of living on borrowed money. What's one of the consequences of such behavior? Well, how's about another country having a lot of control and power over your countries economic policies, does it feel good?
Sorry, I see the glass half-full!
C'mon Chris--get a grip! The Chinese own 4% of the US total debt...that's hardly "control and power" over economy and even less over policy. Want a reference?
http://www.optimist123.com/optimist/2007/03/updated_pie_cha.html
In fact, the Japanese own double the debt of the Chinese. Where's the hysteria there?
Imagine opening up the sports page to see how your local sports teams did yesterday, and seeing the following "scores":
• Baseball: NY Yankees 4
• Football: NY Jets 28
• Basketball: NY Knicks 101
That wouldn't tell you much about what happened yesterday, would it? In fact, you'd probably consider switching your subscription to a better newspaper. I would, anyway.
Why, then, do so many editorial writers and Capitol Hill politicians think we'll keep taking them seriously when all they tell us is "The national debt is at an all-time high of $8,942,383,522,008.61"? Or "The debt is growing by $8,872.90 per second"? Or "Each person's share of the national debt is $29,610.54"? Do they really that kind of meaningless drivel won't make us switch to a better source of information?
Why don't they think we'd also like to know that "The size of the economy is at an all-time high of $13,818,809,181,973.50"? Or "The economy is growing by $19,869.16 per second"? Or "Each person's share of the national output is $45,757.65 per year and growing"?
I can't explain why. But I can provide the complete score for anyone who prefers the bigger picture.
The debt clock shifts into reverse: The debt clock is now ticking backwards.
As a portion of GDP, total debt is 64.6% and dropping; publicly held debt (the more important statistic) is 36.2% and dropping.
The reason for the backwards-ticking clock is simple: the economy is growing faster than the debt. GDP is growing at an annual pace of about 4.5%; total debt is growing at 3.1%; publicly-held debt is shrinking at 0.8% (all current-dollar rates). Those relationships cause the ratio clocks to tick backwards.
In short: The Yankees beat the Blue Jays 4-0, and GDP growth is beating debt growth 4.5% to 3.1%.
Isn't that information a lot more useful?
Well Chris, I guess that's why I'm an optimist and you see the glass half-empty.
IM
You're no optimist!
Strategically the Chinese now have some weighty leverage over your government and surly you can't think that is a good thing. Yet curiously, your only reaction to this fact is to throw your hands up in the air and cynically talk about economical "mutual assured destruction' with China, a cynical and fatalistic view, not an optimistic one.
Optimism vs Fatalism
Noting the interdependance of the Chinese and American economies is not cynical or fatalism. it's a pragmatic observation that "we're all in this together." Our success or failure is linked and the optimists (on both sides) say, "I guess we better make this thing work, since failure is not an option." In fact, the same economic interdependance has compelled the Chinese to change their foreign policy just to preserve the Olympics. Debt is a good thing. Debt fuels the future.
It's also worth repeating...The Chinese own 4% of the US debt---half of the US debt owned by the Japanese! Where's the pressure?
It might be fun for "America Haters" to predict the fall of the USA. But in the words of Mark Twain, "Rumors of my demise have been greatly exaggerated."
IM
['It might be fun for
['It might be fun for "America Haters" to predict the fall of the USA']
First, what does discussing the very real problems of Chinese owned American debt have to do with the fall of America?!!!
Secondly, if you don't see a difference between America owing Japan money and America owing China money, then your head must be buried in the sand.
Thirdly, noting the interdependence of the Chinese and American economies and proclaiming that 'we're all in this together', is simplistic, empty of any real thought or insight, and clicheic. The point remains, Americans have put themselves in a compromising position by this type of thinking – 'debt is a good thing' – and nothing you've said has addressed that fact.
Nabobs of negativism
Chris,
You were not open to facts i provided or even comment upon them, so I figured you were looking for something more simplistic. Seems you are looking for neither.
Nothing you've said proves the US is compromised or at risk by the Chinese owning only 4% of the US debt. Your mere opinion (or anyone else's) does not make it so.
Strategically the Chinese now have some weighty leverage over your government...Chris
Pony up some facts to go with that assertion or it's just speculation. It's a GLOBAL economy! China cannot hurt the US without hurting itself and other countries whose economies are tied to the US dollar. You are unwilling (or unable) to acknowledge the self-defeating future of China attempting to leverage that debt to coerce US foreign or economic policy.
So that pretty much puts you in the ideologue category of those who prefer to sit on the sidelines waiting for a train wreck rather than dirty your hands with the capitalist dream. Is that enough insight for you?
:)
['Nothing you've said proves
['Nothing you've said proves the US is compromised or at risk by the Chinese owning only 4% of the US debt.']Mikeheadinthesand
It's pretty much self-evident that any leverage a country has will be used to its advantage. Leverage amassed by China over America due to holding so much of America's debt is leverage.
Is this reasoning to difficult for you?
Here's an article to chew on if you want. http://www.thetrumpet.com/index.php?page=article&id=2265
Some highlights from it:
The irony is that the three countries in the world adding to reserves the fastest and thus buying the most U.S. debt now are China, Saudi Arabia and Russia'
'the value of the dollar is increasingly dependent upon foreigners. This makes the U.S. vulnerable to coercion and blackmail.'
'The more closely economists study that data, the more they worry,” especially over America’s “decrease[d] influence over … the world’s largest market, the $2 trillion in foreign exchange that changes hands daily. The dollar forex market can increasingly be shifted by decisions that foreign governments make about selling dollar assets. What’s also at stake is leverage on matters as diverse as U.S. home mortgage rates and America’s global political clout'
'if China even “reduces its Treasury purchases, the U.S. would run into difficulties” financing its debts,'
and finally,
'America’s indebtedness is endangering the nation. Edwin Truman, who directed the Federal Reserve System’s Division of International Finance for 20 years, is not a doomsayer, but even he is warning America that there is now a 10 to 15 percent probability of a “catastrophic collapse of the financial system.” Never mind about the regular-type collapses: He is warning about a “catastrophic” disaster on the scale of the Great Depression or worse (Wall Street Journal, op. cit.).'
Mike,
I think the problem is
Mike,
I think the problem is that you're too defensive and that's why I can't relate to you. The article I posted a link to today was meant to highlight the problem with the Chinese holding so much American debt.
Now, being defensive, you'd prefer to argue that the problem dosen't even exists, yet if you actually took the time to read that article it might occur to you how stupid it sounds to suggest America isn't compromised by China holding so much American debt when the article is about how the Chinese are using this debt to make economic threats against the US.!!!!!!!
….Has it dawned on you yet?
Peace.
Not defensive, just unconvinced.
Sorry Chris,
I'm not defensive, just unconvinced. But I appreciate your willingness to engage; just wish you'd look at MY article and explain why it's wrong.
It's pretty much self-evident that any leverage a country has will be used to its advantage. Leverage amassed by China over America due to holding so much of America's debt is leverage. ~ Chris
That's absurd. It's a question of scale. If I owe you a dollar, I guess you could claim some leverage over me. It might even make me somewhat defensive...but not a whole lot. :) After all, we're talking a dollar here. China owns 4% of US debt....HELLO? Are you reading this? Four freakin' percent! How much leverage do you get for 4%---especially if leveraging it endangers the value of the debt you own!
Is this reasoning to [sic] difficult for you?
The article I posted a link to today was meant to highlight the problem with the Chinese holding so much American debt. ~ Chris
The article I posted included a pie chart that even a Canadian could understand. It included a companion article that suggested doomsayers over Chinese held American debt are more interested in headlines and politics, than facts.
http://www.optimist123.com/optimist/2007/03/updated_pie_cha.html
...Has it dawned on YOU yet?
Peace...through superior capitalism.
IM
Ah, denial is a lovely thing.
Mike,
I know you're in denial that China has any potential the hurt the US economically by virtue of their holdings of American debt, but just for the record, your president has responded to that unconfirmed threat by China, as mention in the article I posted yesterday, by stating that 'If that's the ... position of the government, it would be foolhardy for them to do this', and when asked if such a position by China would hurt them more than the US, President Bush replied 'Absolutely. I think so'.
Interesting Mike, that the president of the United States didn't say 'China dosen't have the ability to threaten American economically, or that 'the four percent debt that China holds is insignificant and so he's not worried and neither should his fellow Americans', which is what I would expect him to say if you were correct, but he didn't, I wonder why.
'China Holds Debt Knife to
'China Holds Debt Knife to U.S. Dollar Throat'
http://www.thetrumpet.com/index.php?page=article&id=3549
Mike,
Here's another interesting article, if you care to read it, that I read this morning which seems fairly balanced. Seems to me, especially with a US election coming up, that this issue is only going to get heated up.
You're missing the forest for the trees.
Chris,
'China Holds Debt Knife to U.S. Dollar Throat'
THAT headline suggests a "fairly balanced" view to you??? Perhaps...if you also think "The Texas Chainsaw Massacre" suggest a light-hearted chidren's fable. More scare tactics and half-truths that fail to acknowledge the effect of an expanding economy on debt. I refer you again to my link which debunks your article.
I might point out the source of your article is somewhat suspect.
...the Trumpet uses a single overarching criterion that sets it apart from other news sources and keeps it focused like a laser beam on what truly is—even in an absolute sense—important. That criterion is prophetic significance. The Trumpet seeks to show how current events are fulfilling the biblically prophesied description of the prevailing state of affairs just before the Second Coming of Jesus Christ.
Ok...no problem with that--except if you are looking to publish stories that support your view of a coming biblical Armageddon, I guess that just might color your perspective. Contrast that with the charts, graphs, and economic analysis in the source I provided you. Sorry--it's apples and oranges here.
...your president has responded to that unconfirmed threat by China, as mention in the article I posted yesterday, by stating that 'If that's the ... position of the government, it would be foolhardy for them to do this', and when asked if such a position by China would hurt them more than the US, President Bush replied 'Absolutely. I think so'.
Woohoo! You acknowledge the president SUPPORTS my position! We're still talking scale here. It's not that 4% would not hurt at all, but it would not cause collapse or devastate (fatal wound) the stock market ir US economy which was the contention of this thread. He also supports my contention that China will lose more that the US by such action, which defuses the whole extortion (or "knife at the throat") argument.
The fact remains that we are one of China's largest trading partners. China tanking the market in which they sell their products would be somehow beneficial? MAD works militarily and economically. That's not cynical; that's just pragmatic. It's also likely the reason the "threat" from China was "unconfirmed."
Mike,I think my position
Mike,
I think my position has always been that Americans have put themselves in a compromising position vis-à-vis the fact that China is not only presently the biggest buyer of American debt, but that China is also a substantial American debt holder.
The degree to which this compromse has taken is obviously open to debate, but I do not believe the idea that this comprimise has taken place is.
Honestly, I'm not even sure what your position is other than to be disagreeable. You use double-talk and cliches, which is all very good and nice but it dosen't help me understand your position.
OK...no double-talk or cliches
Chris,
Sorry you find my position disagreeable--it's certainly not my intent. My attempt to keep this lighthearted seemed to have been interpreted as "defensive." I suppose that can be the risk to this kind of exchange. On the other hand, perhaps you find my position disagreeable because you do not understand it. Let's see if I can summarize it for you...
1. China owns 4% of US debt. You are impressed with that--I am not.
2. The degree to which that amount of debt constitutes "leverage" that compromises US economy is most certainly debatable. I obviously believe it is far less significant that you do--an opinion obviously shared by the President and leading economists which I provided.
3. I contend the Chinese ability to hurt the US economy is offset by disproportionate effect to themselves. In effect, an economic Mutual Assured Destruction if you will.
4. If you are of the mind to believe the end of the world is near and you have a front row seat for the big finale, then conspriacy theories about Chinese leverage and compromised US policy make perfect sense. If you believe that global markets make interdependant global economies, then any action taken against the US by China is not in their own interest.
['If you are of the mind to
['If you are of the mind to believe the end of the world is near and you have a front row seat for the big finale']
You see, this is exactly the kind of reason I find discussion with you difficult as well as tiring. Why the need to inflate my position? Do you not follow American politics? The current trade imbalance with China is fast becoming an important issue in your country, more certainly now that a Presidential election is on the horizon. The US Senate is currently weighing bringing in sanctions against China in response to perceived unfair trade practices by China and is why China has moved on the defensive and started making their own thinly veiled economic threats against the US.
Ok, for you perhaps this isn't interesting, but for me to consider that the US has compromised themselves so foolishly by being in debt to a foreign country like China to the point of finding themselves now handcuffed, or at the very least limited, in making measured responses to China's trade practices is astounding.
That's it. What's the big deal? Why all the end of the world talk? And you wonder why I think you're defensive.
Lighten up Chris!
Geez...now you're getting bit cranky and hyper-sensitive. Are you sure you're Canadian? Is English your second language? You really need to cultivate a sense of humor. I'm not suggesting you believe in the end of world and in an effort to keep you from taking it personally, I am merely suggesting that if one is predisposed to the negative, it will only be the negative that one sees. OK?
If I inflate your position, it it only to demonstrate what I see as the weakness of your argument. For instance, you argued that ANY US debt owned by China gives them leverage over the US. OK...then in order of percentage of debt owned, the following countries have compromised our national policy and threaten the US economy?
Japan, China, United Kingdom, Brazil, Luxembourg, Hong Kong, Taiwan, Korea, Germany, Carib Bnkng Ctrs, Mexico, Singapore, Canada, Switzerland, Turkey, France, Netherlands, Thailand, Sweden, India, Israel, Italy, Ireland, Belgium, Russia, Poland, Malaysia http://www.treas.gov/tic/mfh.txt
Of course not! But taken together, they represent the oft-quoted and deceptive 47% of the US debt! For a debunking of that canard, here's a great article.
http://www.optimist123.com/optimist/2006/03/three_card_mont.html
What is most puzzling to me is you seem unwilling to acknowledge the risk borne by China by threatening to or actually dumping US debt on the world market. You do not see that threatening one of your largest customers is not good for your business? Not defensive--just wondering.
IM
['What is most puzzling to
['What is most puzzling to me is you seem unwilling to acknowledge the risk borne by China by threatening to or actually dumping US debt on the world market.']
Mike,
I wasn't aware that you needed people to state the obvious, but since you obviously do, yes, there is a risk to any economic action taken by China, or the US. As to your parroting the number you are so impressed with – four percent, it might be important to remember that economics don't exist in a vacuum. Usually, though not perhaps in your bizarre world where debt is a good thing, the creditor has the advantage over the debtor. You see while America is scouring the planet looking for countries to but its debt (China being the biggest buyer right now) China is scouring the planet looking for places to invest its money. In fact, China dosen't even have to threaten the US economically to hurt it, all they really have to do is stop buying US debt, and then who the hell else is going to buy it given the US shaky economy (I thought I'd use that word again given the past few shaky days of the US investment markets, how's the denial going BTW)
Can one be in denial, if denying denial? Hmmmm
Chris,
Nicely done--both defensive AND patronizing! You have me beat! Please share some more of your "obvious" wisdom with me.
Please enlighten me, Oh oracle of the great white north!
...you needed people to state the obvious, but since you obviously do, yes, there is a risk to any economic action taken by China, or the US....not perhaps in your bizarre world where debt is a good thing, the creditor has the advantage over the debtor
Actually, in my bizarre world--one shared by the rest of the planet, the debtor and creditor are interdependant. The creditor does not seek the destruction of the debtor for fear of losing the debt. The creditor WANTS the debtor to succeed in order to get a return on the investment.
....China doesn't even have to threaten the US economically to hurt it, all they really have to do is stop buying US debt, and then who the hell else is going to buy it given the US shaky economy
While it's true the US market is volatile (different from shaky), volatility = opportunity. The US market growth has far outpaced any other international markets, while unemployment is historically low, tax revenues are up and the national debt is decreasing. Good business suggests investing money in markets that show growth, not stagnation. The higher the risk, the higher the profit potential.
I just think you and many others here are too alarmist. You on the other hand, think people like me are living in a fool's paradise. That's OK. You are also entitled to keep your money in a mattress and I'll keep mine in the market. We'll see who will be living on dog food in our golden years.
Too late, you're already in
Too late, you're already in your golden years, hah!
I can accept the term volatile, basically what I meant anyways - see I'm accommodating, you're not.
['The creditor WANTS the debtor to succeed in order to get a return on the investment.']
Agreed, but this dosen't change the fact that the leverage of the creditor over the debtor exists.
For a true capitalist, EVERY year is a "golden" year!
...but this dosen't change the fact that the leverage of the creditor over the debtor exists.
Ok...I'll accomodate you there (if only to prove I'm capable of doing so), but would take it a step further and suggest there are very real limits to leverage. That's where we differ; you see any amount of leverage as gving a potential enemy control over the economy and foreign/trade policy of the US. I see give and take in an economic relationship that can be a win--win. Influence and coercion are two different things. Apply too much leverage and you have coercion and that's self-defeating. China has a stake in the success in the US economy. That interdependance will preserve the peace and in my simplistic mind, peace is a good thing.
All I've said is that the US
All I've said is that the US government has put themselves in a precarious situation by becoming so dependent on China by being so indebted to them, and then I merely referenced a recent economic threat from China to underscore that point.
I have not tried to quantify nor qualified this economical relationship – though you argue as if I did
I have not implied that China would actually go through on any threats – though you argue as if I did
I have not said the end of the world is coming - though you argue as if I did
I have not eaten green eggs or ham, Mike I am.
Question: do you do this on purpose, and by this I mean do you purposely try to inflate, confuse, and deflect a posters question in order to stop discussion on it?
Agreement
Any individual or business that puts itself behind the eight ball with debt is not financially secure from leverage. America leaves the door open to exploitation day by day as we maintain a staggering national debt. Living for today has its consequences; the example of billions of dollars in failed subprime mortgages being a perfect example. Spinning stark reality into optimism will not change the fact that China has a sizable portion of our debt setting in the palm of their hand. Optimism does not put a chicken in every pot, it simply provides the illusion that someday we might eat.
['Optimism does not put a chicken in every pot']
The only chickens here are "chicken little"--sky falling yet?
All I've said is that the US government has put themselves in a precarious situation by becoming so dependent on China by being so indebted to them, and then I merely referenced a recent economic threat from China to underscore that point. ~ Chris
When you say, [The] "US government has put themselves in a precarious situation," you have identified this dependency as a "vulnerability" and you reference an unsubstantiated threat by China to exploit it. You further defined an "end state" ---that of a negative effect on US economy and foreign/domestic policy. And your analysis of this threat is...what?
I have not tried to quantify nor qualified this economical relationship...I have not implied that China would actually go through on any threats ~ Chris
No kidding? That's exactly my point. What I've argued is that you identified a vulnerability and threat, but failed to analyze the quantity or quality or degree of risk of this vulnerability/threat. The mere existence of a perceived vulnerability/threat, does not make an inevitable end state, without arguing "means, opportunity, and motivation." Your failure to make this case calls into question the existence of the threat itself. After all, what you call "China buying debt" a free market proponent would call, "China investing in America." It amounts to the same thing. It's no different than me "buying debt" through mutual funds shares.
It's not enough to suggest an end state is inevitable, based upon a perceived, but unsubstantiated threat. I'm not trying to "inflate, confuse, and deflect" your posts. I'm trying (in vain apparently) to get you to be intellectually honest and "connect the dots" between your contention and your conclusion. If you see a threat...fine...PROVE it by analysis and "connect the dots." If it's so obvious, lay it out for all of us with lesser minds.
Question: Do you often throw out unsupported contentions and whine if your logic is challenged in order to stop discussion on it?
Mike,
I'm not sure if you
Mike,
I'm not sure if you have a lesser mind, but you certainly do have a defensive attitude when it comes to anything you perceive remotely negative about America, and though you try hard to cloak it with words like optimism and a holier-than-thou attitude, I'm not really sure you've convinced anyone.
Here's my point in a nutshell, China has an extremely large trade imbalance with the US which simply can't be sustained without hurting America in the long run. YOUR government recognizes this and is currently weighing their options which may include trade sanctions to force a Yuan revaluation that China opposes. Coincidentally two high ranking Chinese officials made comments last week about threatening to crash the American dollar. Now, China has not denied those comments, and enough newspapers have now referred to them to consider them real. What this means and here is where you can connect the dots Mike, ready? Is that China is using their ADVANTAGE of vast holdings of American DEBT and American DOLLARS as a bargaining chip to send a message to Congress that if you take measures against us we can take measures against you.
As I said, America has compromised itself by being in such great debt to the Chinese.
Sorry Mike, truth sucks I know, but some of us prefer living in the real world to the holier-than-thou one.
The melting point of Iron Mike is 1535 º C
The melting point of Iron is 1535 º C. The melting point of Iridium would be 2410 º C.... good for you, Iron Mike... smile
Best wishes from Switzerland
LWWB
Roger
Trading Nutshells
Thanks Chris,
Here's my point in a nutshell. I get it--Chinese have a nuclear option and have threatened to use it. But the reality (reported even in The Telegraph) is there is no leverage in making an "empty threat."
Unease at China's threat to sell dollar
Our report about China's use of economic threats against America reverberated around the world yesterday. At the last time of counting, our website version had been read by more than half a million people.
China's comments, that it could cause a further crash of the dollar by selling US Treasury Bonds, upset an already paranoid nation but it's an empty threat. It reminds me of Vladimir Putin's warning earlier this year that he would point nuclear missiles at Europe. Both are statements designed to destabilise and weaken counterparts who regularly sit across from these states at negotiating tables. But neither really wants the outcomes they threaten.
China owns $900bn of US bonds and even Beijing can't afford too much damage to its own substantial wealth tied up in these securities. It needs a strong US economy to sell its wares and the huge trade surplus China enjoys will quite possibly work its way through over the next few years as the yuan is devalued and inflation in China is brought under control.
It's not being defensive or holier-than-thou, just illogical to feel threatened very much by an enemy who stands to lose as much as you--pretty much economic mutual assured destruction, as I've pointed out (and you've ignored) repeatedly.
My compliments to Roger--not sure of the meaning of your post, but at least it wasn't the normal cut and paste posting for which you are infamous. Fortunately "Iron Mike" is an alloy whose boiling point has not yet been reached.
;-)
IM
One Last time...
['get it--Chinese have a nuclear option and have threatened to use it.']Mike
Great! We're in agreement then. China has significant economic power and leverage it COULD exercise against the United States.
Now, you think China would never use this leverage because everything in your world is either black and white (i.e., China can only either only choose an economic 'nuclear option', or chose to do nothing), but I say they already have used this leverage simply by threatening to use it (which you agree they have), which the article you've quoted sums up quite nicely by pointing out how these type of threatening statements are designed to weaken counterparts at the negotiating table.
As I said, the US has put themselves in a precarious position by becoming so indebted to the Chinese which has now even limited the options your government has with respect to dealing with China/US trade relations.
And that's all I have to say about that.
Close, but no cookie.
Chris,
And here I thought we were finally making some progress! :-)
...but I say they already have used this leverage simply by threatening to use it (which you agree they have)...~ Chris
I would suggest it's not a black and white issue so much as it is a Chinese reality that a threat contains only as much leverage as the targets willingness to accept the credibility of Chinese willingness to execute the threat. There is significant evidence to suggest that China would pay an unacceptably high international price for exercising the nuclear option--a price that undermines the credibility of the threat and thereby the amount of the leverage.
And that's all I have to say about that.
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