What kind of policy is this one? We beg China to buy our debt while corporations offshore outsource manufacturing and our jobs to China?
From voice of America:
The top U.S. diplomat says Washington must incur more debt to China to boost the ailing U.S. economy and stimulate demand for Chinese products. She says it would not be in China's interest if the U.S. is unable to get its economy out of a recession.
China is the largest holder of U.S. Treasury bonds. Clinton says China's continued investment in U.S. Treasuries is a recognition of the interconnection of the U.S. and Chinese economies.
Chinese Foreign Minister Yang Jiechi told Clinton Saturday that both countries should boost economic policy coordination and reject protectionism in trade.
Get that? Ok United States, we will continue to buy your debt but you must continue to ship your jobs, technologies, manufacturing and now advanced research and development to us.
What a Faustian bargain this is!
According to Bloomberg:
China, the largest holder of U.S. government debt, boosted purchases by 46 percent last year to a record $696.2 billion as the global recession spurred demand for the securities. The Chinese government said last week it plans to keep buying Treasuries, adding that future purchases will depend on the preservation of their value and the safety of the investment.
The treasury has the numbers of U.S. treasury holders online. You can see other nations have reduced the amount of treasuries they hold.
Just a few days ago, China warned the United States about the ballooning deficit and the possibility of inflation and a dollar devaluation. China also said it was a bad investment to continue to buy U.S. debt.
Gee wiz, notice nothing about buying U.S. goods is ever mentioned!
What else beyond global economic disaster can possibly come from this game of offshore outsourcing U.S. jobs, large swaths of the U.S. economy and expecting China to also buy U.S. debt?
These idiots continue to believe the United States is the weathiest consumer market in the world but the truth is the buying spree is fueled by debt.
If we reign in our current account deficit ...
... we will not need China to buy any more debt than they have to buy in order to keep their currency undervalued.
That involves moving strongly toward energy independence, to close that gaping hole in our current accounts, and finding something OTHER THAN weapons and airplanes and raw materials that people overseas would want to buy ...
... and of course, if we move strongly toward energy independence, we will be developing a lot of capacity to produce renewable energy harvesting equipment, together with the expertise to put it to use ... so that one policy is a two-for-one on our runaway current account deficit.
However, with people like Summers and Geithner in the economic policy team, we cannot expect the White House to be thinking in these terms, so if we want to increase the intensity of the drive to Energy Independence, we are going to have to push for that from the outside.
China trade deficit is not energy
Sorry, we need a U.S. manufacturing policy that grabs critical advanced manufacturing AND we need to modify extensively the China PNTR.
Energy independent sounds all find and good but that's not the issue with China.
PNTR? nt
nt = non texte
Permanent Normalized Trade Relations
That is the title for the China trade agreement with the United States.
Do you have details?
We're always going to be running an account deficit, at least as long as the dollar is the de facto reserve currency. We can criticize China for undervaluing the yuan by pegging to the dollar, but I think they remember from the last time crisis hit that part of the world just how much currency speculation hurt the other Asian Tigers and Russia, thanks in large part to actions by the IMF. They trust our dollar (or at least distrust it least) but not our policies.
That said, our account deficit is insane, but that's as much our fault as theirs. We didn't have to cut taxes, gut IRS enforcement for the wealthy, and increase government spending.
on the China PNTR?
It's massive. I guess I could write up a post as a project on the various problems with that trade deal but not off the top of my head!
Oh, yes, the agreement to treat the ...
... Chinese the same way we treat everyone else.
That seems to me to be a red herring ... the problem is not that we should discriminate against the Chinese, the problem is that we should pursue our trade policy with all our trade partners in pursuit of the public interest rather than the interest of large multinational corporations.
discriminate?
Sorry but the trade agreement means China is a preferred trading partner and China has a notorious tariff schedule designed to completely capture U.S. sectors until they reduce those tariffs.
Sorry, I don't know what keywords like "same as everyone else" and "discrimination" are doing in a comment on a bad trade agreement.
autarky
Is the issue with China- the fact that they're our biggest potential military opponent out there, but control a LARGE portion of our manufacturing.
Only with a semi-autarky, in which we produce everything we need and trade only out of our surplus, can we fix that problem.
-------------------------------------
Maximum jobs, not maximum profits.
Which deficit?
You're referring to our account deficit (gov't spending), but not our trade deficit. Per Pat Buchanan's blog, "A week ago, the Washington Times (”Volcker Blames Recession on Trade Imbalances”) reported that ex-Fed Chair Paul Volcker told Congress the 'massive trade-related imbalances in the United States economy were the source of the financial crisis.'" He further says, "Since 1982, the United States has run $5.7 trillion in trade deficits in manufactured goods, and $2.1 trillion in trade deficits in auto parts, trucks and automobiles. In the Bush years alone, the United States ran more than $1 trillion in trade deficits in auto parts, trucks and cars."
I saw that!
I also saw you posted on trade reform. (we like them, they are focused in on trade policy and I believe they are non-partisan as well).
Volcker has been speaking some great pain truth. Shame his "economic adviser" panel is a bunch of corporate lobbyists and special interests.
If we can find a video clip on that testimony, we can post it in an Instapopulist.
Do you remember when any major economic figure in an administration acknowledged the trade deficit? I don't.
Deficit
China has been acting in the capacity of the "Company Store" in America's coal mining towns. Basically, a payday lender.
Job outsourcing
I keeping looking to see if there is a link between job outsourcing and China agreeing to buy our debt. Should I say: was China offered our jobs if they buy our debt?