Krugman: China may have an economic crisis of its own

[^_^ 5,021]

China has stumbled into a monetary muddle that’s getting worse with each passing month.

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The root cause of China’s muddle is its weak-currency policy, which is feeding an artificially large trade surplus.

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Chinese currency policy is a lose-lose proposition, simultaneously depressing employment here and producing an overheated, inflation-prone economy in China itself.

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China’s leaders are, however, trying to prevent this outcome, not just to protect exporters’ interest, but because inflation is even more unpopular in China than it is elsewhere.

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The Chinese public is angry about inflation, and ... China’s leaders want to stop it.

But ... they’re not willing to deal with the root cause and let their currency rise. Instead, they are trying to control inflation by raising interest rates and restricting credit.

...

However ... it’s not working. Credit limits are proving hard to enforce and are being further undermined by inflows of hot money from abroad.

With efforts to cool the economy falling short, China has been trying to limit inflation with price controls — a policy that rarely works.

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So what’s left? Well, China has turned to the blame game, accusing the Federal Reserve (wrongly) of creating the problem by printing too much money.

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Could all of this really turn into a full-fledged crisis? If I didn’t know my economic history, I’d find the idea implausible.

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But I do know my economic history, which means that I know how often governments refuse, sometimes for many years, to do the obviously right thing — and especially when currency values are concerned. Usually they try to keep their currencies artificially strong rather than artificially weak; but it can be a big mess either way.

So our newest economic superpower may indeed be on its way to some kind of economic crisis, with collateral damage to the world as a whole.

http://www.nytimes.com/2011/01/21/opinion/21krugman.html

[I AM NOT THAT GUY 5,715]

NY Times! Pffft!

Paul Krugman is obviously another mentally unbalanced individual.

ETA: I wonder if he has a red beret and a set of army fatigues.

Edited January 21, 2011 by Some Old Guy

[I AM NOT THAT GUY 5,715]

http://www.youtube.com/watch?v=fWe3jyqRo-4#!

Edited January 21, 2011 by Some Old Guy

[The_Dude 1,142]

http://www.youtube.com/watch?v=fWe3jyqRo-4#!

Uh ohhhh AJ, you posted a thread by the Republican Boogeyman. The only way to combat the evil New York Times is to post a Fox News video about buying gold

[^_^ 5,021]

Uh ohhhh AJ, you posted a thread by the Republican Boogeyman. The only way to combat the evil New York Times is to post a Fox News video about buying gold

[웃 910]

I'd say a GDP per capita of $4000 per year is a crisis in and of itself.

And 1/10th that of rival Japan, ouch!

8/16/2010

Oh Please, Chinese GDP Did Not Pass Japanese GDP*

Let's just put some of today's headlines about Japan's GDP being surpassed by Chinese GDP in perspective.

In the quarter, Japan had economic output of $1.28 trillion, or $10,085 per capital, based on a population of 127 million.

China?

It had economic output of $1.337 trillion for the quarter, but a population of about 1.3 billion, so per-capita output of... $1000, about a 1/10th as big.

Let us know when China passes Albania.

Read more: http://www.businessinsider.com/china-vs-japan-gdp-2010-8#ixzz1BgtG3dRN

[I AM NOT THAT GUY 5,715]

You obviously missed Jim Rogers' comments about Krugman and free trade with China.

[The_Dude 1,142]

You obviously missed Jim Rogers' comments about Krugman and free trade with China.

How long was I supposed to sit through the build up to some Fox news commentators advert to buy/sell gold? I watched it a bit, it played like Beck's infomercials. I think Krugman has now replaced the clintons as the republican boogeyman. Nothing draws their ire, or posts on forums faster than posting one of his articles.

[I AM NOT THAT GUY 5,715]

How long was I supposed to sit through the build up to some Fox news commentators advert to buy/sell gold? I watched it a bit, it played like Beck's infomercials. I think Krugman has now replaced the clintons as the republican boogeyman. Nothing draws their ire, or posts on forums faster than posting one of his articles.

Skip ahead to 3:37.

[The_Dude 1,142]

Skip ahead to 3:37.

Are you going to watch a Michael Moore youtube video while I watch that? That seems like a fair trade.

[mawilson 2,133]

I wouldn't put my money on anything that Krugman says or does.

[alienlovechild 75]

The root cause of China’s muddle is its weak-currency policy, which is feeding an artificially large trade surplus.

...

Chinese currency policy is a lose-lose proposition, simultaneously depressing employment here and producing an overheated, inflation-prone economy in China itself.

...

The Chinese public is angry about inflation, and ... China’s leaders want to stop it.

But ... they’re not willing to deal with the root cause and let their currency rise. Instead, they are trying to control inflation by raising interest rates and restricting credit.

I wish our country had deal with a huge trade surplus and a manageable level of inflation in contrast to where we are headed.

There's a reason why most of the world see the China as a rapidly rising power and the U.S. economy is on a slow boat to China. Only 3 or 4 nations in the world have matched China's growth over a thirty period. They've got a long way to go to match per capita income levels with developed nations but they will rise.