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Maybe we won't be innundated with cheap Chinese crap now... bring on the cheap Indian crap!
(I love the poster, that kicks ass.I think those posters were created to be tongue in cheek, but they end up just being plain funny.)
China Severs Its Currency's Link to Dollar
Thursday July 21, 8:23 am ET
By Stephanie Hoo, Associated Press Writer
China Severs Currency's Peg to the U.S. Dollar, Retains Controls on Its Exchange Rate
BEIJING (AP) -- China dropped its politically volatile policy of linking its currency to the U.S. dollar but retained controls on its exchange rate, switching the link to a basket of foreign currencies in a move that could push up the price of Chinese exports to the United States and Europe.
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China strengthened the state-set exchange rate of the yuan currency to 8.11 to the U.S. dollar from 8.277, where it had been fixed for more than a decade, the government said in a surprise announcement on state television's evening news. That raised the value of one yuan by about one-quarter of one U.S. cent to 12.33 cents.
China had been under pressure for years from its trading partners to let the yuan float or at least to raise its exchange rate. The United States and others said it undervalued the yuan by up to 40 percent, giving Chinese exporters an unfair price advantage.
The change Thursday appeared to be too small to satisfy the United States or other governments, which say inexpensive Chinese imports are threatening thousands of jobs.
"This is the start of a gradual appreciation process," said Frank Gong, managing director of JPMorgan Chase & Co. in Hong Kong. "It will help balance Chinese trade flows. Export volumes will come down. Import volumes will pick up. It will help reduce trade tensions."
Malaysia simultaneously announced it was dropping its own policy tying its currency, the ringgit, to the U.S. dollar and would adopt a similar arrangement.
Some U.S. lawmakers had threatened to impose retaliatory tariffs if China didn't adjust its yuan trading scheme.
The yuan will now be allowed to trade in a tight 0.3 percent band against a basket of foreign currencies, the government said. It didn't say which currencies.
It said the central bank would announce the yuan's closing price each day, and that rate would be the midpoint of the next day's trading band.
Chinese leaders have said for years that they eventually would let the yuan trade freely on world markets. But they said any decision would be based on China's economic needs, not foreign pressure.
Chinese officials said any abrupt change in its currency system would cause turmoil, hurting its fragile banks and financial industries.
Maybe we won't be innundated with cheap Chinese crap now... bring on the cheap Indian crap!
(I love the poster, that kicks ass.
Chinese crap is good.. Walmart cheap..
The problem with buying from the Chinese instead of other countries is that they're no good MFers and dangerous as .
" China's military put its new guided missile destroyers on display last week, disclosing its two new warships that are equipped with Aegis-type battle management systems.
The two Luyang II guided missile destroyers are Beijing's first Aegis-type ships. The ships are currently undergoing sea trials.
U.S. intelligence officials say China stole the technology for the Aegis battle management system by setting up a front company in the United States that became a subcontractor for the Aegis system manufacturer."
"Both types of destroyers are equipped with Russian military equipment and weapons, including missiles, as well as indigenous Chinese anti-ship missiles.
The four warships are part of China's military buildup that U.S. officials say is designed for more than just a Taiwan conflict. The Chinese are building a deep-water navy able to project power, especially against the United States."
Paul Krugman, NY TimesThursday's statement from the People's Bank of China, announcing that the yuan is no longer pegged to the dollar, was terse and uninformative - you might say inscrutable. There's a good chance that this is simply a piece of theater designed to buy a few months' respite from protectionist pressures in the U.S. Congress.
Nonetheless, it could be the start of a process that will turn the world economy upside down - or, more accurately, right side up. That is, the free ride China has been giving America, in which the world's richest economy has been getting cheap loans from a country that is dynamic but still quite poor, may be coming to an end.
It's all about which way the capital is flowing.
Capital usually flows from mature, developed economies to less-developed economies on their way up. For example, a lot of America's growth in the 19th century was financed by investors from Britain, which was already industrialized.
A decade ago, before the world financial crisis of 1997-1998, capital movements seemed to fit the historic pattern, as funds flowed from Japan and Western nations to "emerging markets" in Asia and Latin America. But these days things are running in reverse: capital is flowing out of emerging markets, especially China, and into the United States.
This uphill flow isn't the result of private-sector decisions; it's the result of official policy. To keep China's currency from rising, the Chinese government has been buying up huge quan ies of dollars and investing the proceeds in U.S. bonds.
One way to grasp how weird this policy is would be to think about what a comparable policy would look like in the United States, scaled up to match the size of our economy. It's as if last year the U.S. government invested $1 trillion of taxpayers' money in low-interest Japanese bonds, and this year looks set to invest an additional $1.5 trillion the same way.
Some economists think there is a deep rationale for this seemingly perverse policy. I think it's something the Chinese government stumbled into as it tried to protect itself from the 1997-1998 crisis, and it is reluctant to change because the Chinese economy has been doing well. That is, China's leaders don't want to mess with success.
But pressures against China's dollar purchases are building. By keeping the yuan down, China is feeding a trade surplus that is creating a growing political backlash in America and Europe. And China, which is still a poor country, is devoting a lot of resources to the ac ulation of a basically useless pile of dollars instead of to higher living standards.
The question is what happens to us if the Chinese finally decide to stop acting so strangely.
An end to China's dollar-buying spree would lead to a sharp rise in the value of the yuan. It would probably also lead to a sharp fall in the value of the dollar relative to other major currencies, like the yen and the euro, which the Chinese haven't been buying on the same scale. This would help U.S. manufacturers by raising their compe ors' costs.
But if the Chinese stopped buying all those U.S. bonds, interest rates would rise. This would be bad news for housing - maybe very bad news, if the interest rate rise burst the bubble.
In the long run, the economic effects of an end to China's dollar buying would even out. America would have more industrial workers and fewer real estate agents, more jobs in Michigan and fewer in Florida, leaving the overall level of employment pretty much unaffected. But as John Maynard Keynes pointed out, in the long run we are all dead.
In the short run, some people would win, but others would lose. And I suspect that the losers would greatly outnumber the winners.
And what about the strategic effects? Right now America is a superpower living on credit - something I don't think has happened since Philip II ruled Spain. What will happen to our stature if and when China takes away our credit card?
This story is still in its early days. On the first day of the new policy, the yuan rose only 2 percent, not enough to make any noticeable difference. But one of these days Chinese dollar purchases will trail off, and we'll find ourselves living in interesting times.
China is nuts... I say let them have Taiwan...
we got enough problems to deal with right now.. err country's to invade still.
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