Silver lining of the Pandemic. Countries rethink China supply lines. - Page 6
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  1. #101
    Join Date
    Jun 2013
    Northern Il
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    Quote Originally Posted by nyc123 View Post

    I think having a lower dollar would be a good thing for the US.
    The problem is that since the US dollar is a reserve currency, everyone else is trying to position themselves in a favorable position for their best economic advantage.

    The the QE that the Feds used during the last recession is a prime example of how little effect our attempts at cheapening the dollar were. We quite literally printed trillions of dollars and hardly moved the needle.

    One thing that seems to be missed in most trade discussions is the effect that taxes on profits have on choosing where to do business. This also has a huge effect on corporate profitability. A 10% difference on the corporate tax rate and how taxes are calculated is a major factor in global corporations locating specific plants in specific locations.

  2. #102
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    Feb 2012
    The warm desert of Phoenix Arizona
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    Quote Originally Posted by dalmatiangirl61 View Post
    That sounds vaguely familiar to a problem the USA is dealing with

    I agree we need to bring back manufacturing, needed a few general household items from a big box store last week, every damn one was "Made in China", I did think about not buying them, but no idea where I would find a plain pipe fitting or light bulbs that were from USA. So either I bought them, or I went without water or light, please forgive me.

    Very rarely I praise the city of Phoenix for anything....
    They have a no Chinese pipe fitting regulation for city projects. When I first encountered this I thought Ohh boy where am I gonna find USA made pipe fittings. And its easy... and priced comparably ...

    The box stores profit margin is improved by cheap shit from over there. Buy from a local suppler and be amazed what can be found with a made in the USA stamp on it.

    While Im ranting on box stores...
    has anyone noticed the Orange place and the Blue place have nearly the exact same product line?

  3. #103
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    Jul 2019
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    Quote Originally Posted by nyc123 View Post
    I highly doubt it. If it dropped 25% overnight, then yeah, but if it were a slow decline (and 25% would be quite a stretch, I'd think it'd be less than that), I don't think it'd have much effect on us. Food? We are largely self-sufficient, not even considering the fact that we export tons of food. Manufactured products? I would argue that it would make the US cost basis more competitive for manufacturing.

    Let's think of the inverse - China's weak yuan (or in the past, if you take the view it's not undervalued now), Japan's weak yen (they do speak about keeping the yen down in the Diet and did this pretty openly during their industrialization), or other countries....they're not suffering from that, or maybe I should say that it's hard to say that they are in dire straights and it's caused by their currency being weak.

    Nobody wants to be the reserve currency (which would mean their currency is going to be super strong), because of the upheaval it'd cause economically). Everybody wants to export, and it's easy to point at export-led growth in Japan, China, Korea, Taiwan, or many other countries. I'm not saying we should become an export powerhouse necessarily, but rather that running large trade deficits year after year after year (and getting larger and larger) is, imo, not a good thing. The old ideas on trade made some crucial assumptions that just don't hold true anymore - one big one is...

    We don't have currencies backed by gold anymore, whereby you'd have currencies get weaker as they lose gold, and stronger as they get more gold reserves. In other words, under that old system when Adam Smith and others wrote their books, trade balances would correct themselves over time. Obviously that isn't the case anymore as the dollar is the reserve currency, most currencies aren't backed by anything, and they even peg themselves or keep things within a band (I find it funny how the word "currency manipulator" is used - many major economies are technically "manipulating" their currencies). To make it worse, instead of putting that money back into the FX market and letting their currencies get stronger, they put those dollars earned back into dollar assets, like Treasuries (of which Japan and China hold the most in the world).

    I remember reading over Ricardo's writings (the other well-known and frequently cited economist for international trade theory along with Adam Smith) and seeing where he said business owners would "be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations". Times have changed. Massively. Many of these old theories just do not hold anymore because the world has become massively more complicated, not to mention that no one was really practicing the free trade they so often promote back then anyway. Economics isn't a hard science where you can just do experiments like that - we have empirical evidence now. And it's a lot more mixed.

    I think having a lower dollar would be a good thing for the US.
    I like your open minded points it is refreshing.

    Who can deny that when a tariff is implemented on foreign metals that it does not cut down on purchases. The US government has a valid interest in protecting the economy and all of its outputs. Considering these broken supply lines isnt it important for someone to protect our superpower status? Dont kill the golden goose.

    China is losing manufacturing now too. Is it reasonable to say that the persons or multinational Corporations or individuals are just using the same old model to stay rich or get richer? I believe this is the case. Some of this is very valuable to the US like in dealings with our close friends and neighbors Mexico and Canada. The economy in Mexico was hurting before NAFTA and since Mexico has come a long way.

    The term rising tides bring up all ships is true in trade. Until the ships because of Nationalism start pirating and firing on each other. What if you cant even make your own ships? It is sort of a flawed concept especially when it is allowed to run full speed. It has run full speed long enough.

    The top countries in economic prowess are not in the business of destroying their economies by being completely reliant on imports of necessities and desirable goods. The Netherlands has very good food production for its size but face it they can not make a large dent in world hunger. Can they just give the food away all the time? No they can not.

    Food is cheaper in China and so the concept of the buying always goes to the cheapest place is a lie. Anyone who sells a quality product for a much higher price knows this.

  4. #104
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    Sep 2011
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    Quote Originally Posted by Trueturning View Post
    China is losing manufacturing now too.
    That particular worm turned nearly five years ago for PRC.. in favour of "the usual" in DEVELOPED economies, no matter the political hood-badge.

    Rising "real" wages and concurrent increase in DOMESTIC consumption and the reliance ON it. And then.. they were deeply into "outsourcing" and dependency on OWNERSHIP of biznesses in other-people's economies.

    Yah can OWN 'em.. but it is HARD to pick up the dirt and foreign worker-bees and MOVE them, even if yah don't get clobbered by riled-up local governments and consumers gone all suspicous and defensive.

    "Western" biznesses? F**k "IRR". We goal for TWO YEAR payback, on average, ONE if we can get it, then try to BEAT any such numbers. Abandoning an entire "production" campus is already built-in to OUR plans. Bugger paid for itself, already, was going to be made obsolete in any case, and "obsolete" is not a high-grade asset. It's a liability to be shed.

    Problem for Xi in that? The growth rate trends toward that of developed countries in general.

    TWO percent or less. Not six percent or better.

    Which "traps" PRC short of the top of the hill they were climbing.

    Demographics, y'see.

    PRC relaxed the "one child" policy because their CITIZENS were choosing to have one chid - and LATE in life - or even NONE at all - so as to chase costly living space, automobiles and s**t they had not been used to having, nor even actually needed - instead of creating and educating children. "Replacement" level, after all, is slighty ABOVE two live-births per couple.

    Total fertility rate - Wikipedia

    Annnnd.. China already has, as THEY put it themselves "too many people". As with a Learjet pushed into the corner of its performance envelope, "Mach tuck" arrives as to velocity. Damned if you do. Damned if you do not.

    Human nature for personal - and family - self-interest to find ways around national philosopy and policy. Few folks have more experience at it than the Han Chinese, win, lose, or draw.

    And recently? Even BEFORE the virus? "Tougher times" already hinted their arrival?

    The inherently frugal Chinese consumer sucked-in their TEMPORARY drunken-sailor discretionary spend.

    And the performance numbers funding the power-chasing took it intheirear....

    The Wuhan virus is but the tip of the anxious iceberg as to what Xi's economy has been hiding.

    Sound familiar?

    Welcome to the classical human growth curves.. "communist" badged, or other... three steps forward.. two . or more.. back.

    Tough times for the PEOPLE of China? Not really.

    They are inherently free-enterprise folk with a vengeance since time immemorial.

    But at FAMILY, then "clan", "corporation" level. Not national, nor even "provincial".

    They'll not go hungry.

    Their central government's political ambitions?

    Could was... Not new. Dig you their most-recent 2500 years.

    Mind.. best you started that read thirty or forty years go.. There's a LOT "in there".

    "So much history. So little TIME!"

    But at least the wimmin' are lovely!

    Last edited by thermite; 05-18-2020 at 11:13 PM.

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