Wednesday, October 20, 2010

export to nowhere

here's german economist Rolf Langhammer laying down the awful truth behind the howling us politicos and their high dudgeon over China's currency policy. An higher yuan will help US exports, supposedly, in one of those thought experiment kind of ways. there's an ugly reality confronting this experimental thought.
SPIEGEL: China's currency reserves have grown to a breathtaking $2.65 trillion (€1.9 trillion) and the imbalance in world trade is growing larger all the time. Can a revaluation of the yuan, as the US is calling for, halt this trend?

Rolf Langhammer: It would be welcome -- and also in China's own interest -- if the yuan exchange rate was more flexible than it has been up to now. China's recent moves in that direction (i.e. the small revaluation since June) are far from sufficient. I would caution against overblown expectations, though. It would hardly be possible to eliminate the global imbalance in that way.
SPIEGEL: Why not?

Langhammer: A weak dollar won't automatically allow the Americans to export more goods. We shouldn't be under any illusions about that. In many cases, companies that are based in the US can't survive on the global market because they don't have innovative products or the qualified workforce required to develop them.

the final thrust.
SPIEGEL: Are interventions in exchange rates even capable of eliminating global imbalances?

Langhammer: When China allowed the yuan to gradually appreciate by some 20 percent between 2005 and 2008, there were no signs that this helped US businesses on the global market. The crucial thing is that a country must be well positioned with the range of goods that it wants to export. The US is still lagging well behind in that respect.
SPIEGEL: As opposed to German industry?

Langhammer: Definitely. Germany produces high quality goods that, to a certain extent, are independent of international price competition. To put it bluntly, people outside the European Union who buy a luxury German car or a machine tool don't make that decision based on the exchange rate.
touché, sir. touché.

'course, the very large point that america just doesn't make much shit that anyone wants. 'cept guns 'n ammo, bombs 'n planes. aerial death robots. make a shitlooda that shit. sell it everywhere. weapons mill for the world america. 'part from that glorious shit, though, ya gotta wonder: what the fuck does america make anymore? it says there in that 'pedia thing that 50% of us exports are "capital goods" wonder if that means iphones made in china and then "exported" to the uk. shit like that.

the whole discourse surrounding temporal sino-us trade disputes is a veil over what is really expected, based on what is going on now. the fed looks certain to do some trillion of qe on your ass, and that money, just like the last $2 trill, rather than directed toward the purported intent -- swing the nation out of negative equity -- will be used, has been used, to create a series of currency runs, as hudson calls it "predatory finance: a new mode of global warfare." we've seen it already: yen, sterling, euro, cdn dollar, real, and on. next up is a big fat china. billions to be skimmed and creamed. hence the excitement by all the aspirants. can't help notice krugman leading the charge 'gainst bad ol' china. been harpin' on those chinese all of a sudden, hasn't he? does he really not know what is going on?

predatory finance. this is what the us exports now. that, and pointless, hypocritical political harping. not exactly coveted must-haves for the rest of the world.

well, there goes big mean china, with a big fat fuck u:
The Chinese government plans a further reduction, of up to 30 percent, next year in its quotas for exports of rare earth minerals, to try to conserve dwindling reserves of the materials, the official China Daily newspaper said on Tuesday.

Plans for smaller export quotas come just four days after American trade officials announced that they would investigate whether China is violating international trade rules with a wide range of policies to help its clean energy industries. One of the policies under investigation involves China’s steady reductions in rare earth export quotas since 2005 and its imposition of steep taxes on these exports.
finally, you really gotta wonder 'bout the strategic thinking going on in the hallowed halls of deep state security continuity when it apparently allowed this situation to develop.
China mines 95 percent of the world’s rare earths.
anyone ever notice the trajectory of this development there in that pentagon, or whatnot? ah, what the hell do they care? they gotts them some chinese makin' chips and stuff for 'em already.

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