off to the usa we go to study..more and more

[Yamaka]

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Why a Single Party Chinese Capitalism is Very Bad for the World? - An Inquiry.

1. The economic efficiency that Red China has attained is because of its Single Party Decision Making.

What Chinese Communist Party claims is "Oh whoever wants to participate in politics, they can join CCP and deliberate internally in bringing forth new Policy or Policy Changes... we need not have Multiple Parties and Open Fights like in the US or in India... that's counter productive".

2. Consequently, there are about 80 million registered members in the CCP, and they RULE about 1.5 billion Chinese, who have been deprived of the Freedom of Speech, Assembly etc (violating Charter 08 of the Chinese Constitution).

This the world should not tolerate... ALL Chinese must be allowed to express in their own ways the political debate, not according to what the CCP wants.

3. Therefore, the so-called high Economic Efficiency that China has over other countries (like US, UK and India etc) has a real cost... the basic Human Rights of Chinese. This is how the whole world should think, and they should insist that China implements its own Charter 08.

(This is similar to the "Low Cost" of Chinese products - this is due to violation of labor laws and the environmental degradation I talked before, meaning every thing that China does has a hidden COST)

4. If the world allows Chinese AS IS, there will be economic destabilization leading to World War III or whatever.

India's multi-party democracy could bear the brunt of this upheaval because of shared borders with the Red Chinese!

Watch out...

 

[biswa]

Mr Y, again agreeing with you in principle. I think the Chinese only understand punitive measures. Unfortunately in these times the West cannot impose punitive measures without punishing itself. Even their arch enemy Japan is running scared. You can match China only if you can band together US, Europe, India, Korea and Japan and that's not going to happen. Perhaps the only answer is to try to starve it of oil.

So to summarize, I don't think the west can change China from outside. But it can coax China to change itself...

 

[prasad1]

The original post was about the type of students going to USA these days. Which is different from what it used to be.
Now the "cream of the crop" is staying back in India, and the second tier, but rich kids are coming to US, Australia, and others.
These kids have no desire to stay in US. They are citizens of the world and will locate anywhere, where there is a demand for their services.
:focus:

 

[prasad1]

Biswa & Yamaka your post are wonderful and should be read by others, preferably in a thread by itself.

 

[Nara]

...So to summarize, I don't think the west can change China from outside. But it can coax China to change itself...

China is a rising power to recon with, no doubt, but the threat it is supposed to pose is being blown all out of proportion. I disagree with Y that China has adopted the U.S. model, which is free-market entrepreneurial capitalism. What China has is managed crony capitalism. The structural weakness of such a system, one that relies on authoritarian one-party dictatorship, is China's Achilles heel.

Then there is China's $1 trillion + treasury holding. What is China going to do, dump T-bonds and go to Euro? Also, in as much as these are $ instruments, all U.S. has to do to pay this back is just print some money, which these days is nothing more than a few keystrokes by the Fed. This would be detrimental to U.S. no doubt, but it will be equally devastating to China. So, relax, nobody is going to upset the apple cart.

The economic growth in the future will come from innovation, new technologies, new products that people want. What new technology has China developed so far? What new product has China developed so far that everyone is going nuts over?

In as much as all the major economies are interconnected, no country can dominate or dictate terms in the future, and that is a good thing. If one fails, it is a disaster for all, cooperation is the key to success for all.

So, I think, viewing China as a threat, and acting on such a mistaken assumption, is a huge mistake.

Cheers!

 

[prasad1]

Nara good sane advice in post#30.
There is time but we need to stay ahead of the curve.

 

[biswa]

Then there is China's $1 trillion + treasury holding. What is China going to do, dump T-bonds and go to Euro? Also, in as much as these are $ instruments, all U.S. has to do to pay this back is just print some money, which these days is nothing more than a few keystrokes by the Fed. This would be detrimental to U.S. no doubt, but it will be equally devastating to China. So, relax, nobody is going to upset the apple cart.
Cheers!

Gold Mr. Nara, both of the black and the yellow kind!

 

[subbudu1]

There are two groups here. One feel that India and China are giving a stiff competition to the west and are bound to overtake them. There is another group which feels that there are intrinsic strength in the economies of the west.

In India and China corruption is high. Both have their own unique problems. Though China is rising rapidly its well being depends on the well being of the west less so now than before. But it has problems with its communist rule. This will be a problem in the long run.
India's corruption needs no mention. If India discovers its NRI , it is in no way because it is offering better amenities than the west. It may be because the shops are closing down in the west.

I had earlier highlighted the quality of education in India. There is less conceptual foundation and lesser so at the practical level. I am told from my dear purple of my eyes, she has done her engineering from a premier institution in India, before moving to the west. She says that even now she is amazed by the products(meaning who had undergrad education) from american universities. From a practical level , she just managed to catch up. From a theoretical point of view there is no issue, but when it comes at the practical level. How do you put the system as per changing circumstances and modify and adapt them, Indians like herself find them beaten by the americans. From a theoritical point of view, how do you derive this or that mathematically Indians dont find it a difficulty.
There is much to be desired at the way we work professionally in India.

India's IT Sector may have boomed but how many original IT Products are engineered in India? I had recently held a discussion with the CEO of an IT Company, which is listed by some experts as a company making major innovations in India in its field of expertise. To my specific question on R&D in a particular area of my concern, he replied, I have not seen any original product engineering from India( in that area). In his view america continues to top the list as far as innovation is concerned. Who is to blame ? Is it the CEO's lack of vision or is it the failure of the country as a whole. I will second the latter view. It is the failure of India. There is less capacity to do innovation. I feel it is largely because of our education system. After going to the west their horizons broaden. From within India, we have become a very lack-lusture nation.

On the other hand I do not accept at all, that the west is going the right away. I see corporate greed as having taken over the nation and landed it in miserable debt. Indians in US and may be other Asians may be good at saving and preventing themselves from falling into a debt crisis. But the vast majority lead an irresponsible lifestyle which affects the life of the rest of the world. What is the purpose in a family having so many cars. But they do in America. In Europe one can manage without a car with an affordable public transport. Why is that not happening. Corporate greed! Why should the developing world pay the price for the pollution caused by road - traffic in the west. To top it, Indians have aped these very traits. How to teach well in a University, this in India we dont want to copy the west. But we want to copy the irresponsible lifestyle in the west.

Anyway the lesson is there. I do see the west's power waning inspite of its innovative abilities because it has not tackled problems created from within the society. Economists seem to be writing off that 11% unemployment will be a regular feature in the west. I do not disagree and I see this as the very result of capitalist greed, almost making Marx's classical prediction true. The solution does not lie with Marx's ideology. I think the government's role in controlling the corporate behavior needs to be increased.

I feel the only place Nehru had gone wrong with our semi-socialist approach is that, he did not address the problem of rural education and corruption effectively. These problems will prevent India from being a super power for a long long long time. In the meantime we may watch the weakening america deal with hostile countries , who have been affected by its policies.

The world is nowhere likely to see a real super power anytime in the near future!

 

[subbudu1]

China is a rising power to recon with, no doubt, but the threat it is supposed to pose is being blown all out of proportion. I disagree with Y that China has adopted the U.S. model, which is free-market entrepreneurial capitalism. What China has is managed crony capitalism. The structural weakness of such a system, one that relies on authoritarian one-party dictatorship, is China's Achilles heel.

Then there is China's $1 trillion + treasury holding. What is China going to do, dump T-bonds and go to Euro? Also, in as much as these are $ instruments, all U.S. has to do to pay this back is just print some money, which these days is nothing more than a few keystrokes by the Fed. This would be detrimental to U.S. no doubt, but it will be equally devastating to China. So, relax, nobody is going to upset the apple cart.

The economic growth in the future will come from innovation, new technologies, new products that people want. What new technology has China developed so far? What new product has China developed so far that everyone is going nuts over?

In as much as all the major economies are interconnected, no country can dominate or dictate terms in the future, and that is a good thing. If one fails, it is a disaster for all, cooperation is the key to success for all.

So, I think, viewing China as a threat, and acting on such a mistaken assumption, is a huge mistake.

Cheers!

Nara, I am very much with you in that China has intrinsic problems. However I am not sure about the innovation part ! If the chineese professionals decide to return back to India, likely that many will, China will only stand to gain in innovation. I am using an innovative Chinese product for pulling out water in my home. It is a very funny product made from suction principle. It costs dirt cheep, quality okay, but works like magic. Simple ideas great utility. Leave that alone. Those people have got dedication. Years of working hard and tilling the soil have made them very sturdy and a very tough people. I have not only heard but I have seen with my own eyes. Young kids came over for training in India, they might have passed out of college. They were so very dedicated , while the rest of the Indians took it easy. I hear it is the same level of competitiveness that is shown in America. You should know better.

China does have an edge. No doubt it cannot dump the bonds it has. But have you heard of blackmail ? There is a phrase called tightening the noose around the neck. I think China definitely has an edge over the USA. Have we not heard of the days of the East India Company. Courtesy Chatranj Ki Khiladi. The Nawab's people say that East India Company will never take over Awadh. The delusional belief was that East India Company needed Awadh for milking money and tax. It would be easier for them to govern as a proxy without shouldering Awadh's burden One fine day...

US is in serious trouble and somebody sooner or later will upset the apple cart unless things are changed quite fast.

 

[kunjuppu]

subbudu

take please india out of the calculation.

we dont make any dent in the world arena. a few indians and even fewer westerners make predictions. it is just that. predictions.

china is a diffferent story. it IS a major power -military, economic. let us not kid ourselves.

the chinese, i think, would not hesitate to write off their entire dolla holdings, if doing so, would bring usa to its knees. china i think, has no love for anyone, except china.

india is a bit player re chinese politics, and that too only because of tibet. india would do good, to keep china happy.

if it comes to war, china has thrashed us in 1961, and capable of thrashing us again. even more worrysome, it can wage proxy war through pakistan and kashmir, and we would be in lot of trouble. hope common sense prevails in new delhi. and not hear usa flattery about india being a counter weight to china.

usa is in trouble vis a vis china, and looking for friends to help manage this super power created at the expense of american jobs, factories and money. the rise of china is the most extreme example of 'beggar thy neighbour' capitalism.

 

[Nara]

Gold Mr. Nara, both of the black and the yellow kind!

Treasury instruments are payable only in $, not commodity.

 

[zebra16]

subbudu

take please india out of the calculation.

we dont make any dent in the world arena. a few indians and even fewer westerners make predictions. it is just that. predictions.

china is a diffferent story. it IS a major power -military, economic. let us not kid ourselves.

the chinese, i think, would not hesitate to write off their entire dolla holdings, if doing so, would bring usa to its knees. china i think, has no love for anyone, except china.

india is a bit player re chinese politics, and that too only because of tibet. india would do good, to keep china happy.

if it comes to war, china has thrashed us in 1961, and capable of thrashing us again. even more worrysome, it can wage proxy war through pakistan and kashmir, and we would be in lot of trouble. hope common sense prevails in new delhi. and not hear usa flattery about india being a counter weight to china.

usa is in trouble vis a vis china, and looking for friends to help manage this super power created at the expense of american jobs, factories and money. the rise of china is the most extreme example of 'beggar thy neighbour' capitalism.

Very difficult post to respond to. Cant agree with any of the conclusions. May be some statistics will help.

Mr. K : "we dont make any dent in the world arena. a few indians and even fewer westerners make predictions. it is just that. predictions."

May be so, but today India is the fourth largest economy, just behind Japan, but ahead of UK, Germany, France etc. India's economy is 40% of China, and in international trade front that clout counts a lot. 2.5 India can replace China any day. Reference:The World


Mr. K: "the chinese, i think, would not hesitate to write off their entire dolla holdings, if doing so, would bring usa to its knees. china i think, has no love for anyone, except china".

Precisely for the reason that chinese love themselves more than anyone else, they cant afford to write-off a trillion dollar loan. After all a trillion dollars is not peanuts, even for the chinese!

Writing off US Dollars 1Trillion mean that China has been supplying "goods for free" to the U.S. since 2007 and would undo all the good work achieved since 1985. Reference: Foreign Trade - U.S. Trade with China)

Mr. K: "usa is in trouble vis a vis china, and looking for friends to help manage this super power created at the expense of american jobs"

U.S. is in NO REAL TROUBLE, because the chinese holding of treasury bills of U S $ 1 T is just 7.14% of its (US) external debt, whereas the same is 250% of chinese external debt. Reference: List of countries by external debt - Wikipedia, the free encyclopedia
Nobody cuts off the nose to spite the face.

 

[kunjuppu]

Treasury instruments are payable only in $, not commodity.

thankfully there is no power or paper shortage in the usa (yet)

 

[sangom]

China is a rising power to recon with, no doubt, but the threat it is supposed to pose is being blown all out of proportion. I disagree with Y that China has adopted the U.S. model, which is free-market entrepreneurial capitalism. What China has is managed crony capitalism. The structural weakness of such a system, one that relies on authoritarian one-party dictatorship, is China's Achilles heel.

I agree China is a one-party rule; but in the Politbureau, I understand from reliable sources, it is not one person's whims and fancies that rule but the decision of the clear majority, created by discussions and, if necessary, keeping decisions in abeyance.

Then there is China's $1 trillion + treasury holding. What is China going to do, dump T-bonds and go to Euro? Also, in as much as these are $ instruments, all U.S. has to do to pay this back is just print some money, which these days is nothing more than a few keystrokes by the Fed. This would be detrimental to U.S. no doubt, but it will be equally devastating to China. So, relax, nobody is going to upset the apple cart.

No thinking sane person is likely to upset the apple cart but I will say that imperceptibly, China will switch to gold, Euro, or even Indian rupee (!) securities and reduce its $ holdings; in fact India has already started doing this so that the cost of such "switch" is within some laid-down limits. These limits are reckoned on the basis of risk perceptions in continuing to hold on to US$. But what India does is just a small pittance, so there is enough scope to relax.

The economic growth in the future will come from innovation, new technologies, new products that people want. What new technology has China developed so far? What new product has China developed so far that everyone is going nuts over?

In my view the US and the west european economies in general have reached a plateau as regards their ingenuity for "innovation, new technologies and new products" which will have a ready market among the common masses. (They may have exotic items like most modern genetics or AI but, again, these will have to be sold, just like US armaments, nuclear reactor parts etc., by resorting to subterfuge.) The case of US automobiles is one example. China has not developed any "new technology" but its metallurgy itself is too good an example, imho. An ordinary sewing needle set, made in China and purchased 30 years back, still works amazingly well, and so are safety pins which cost a good amount if made in US. Then there is the mobile phone market in India and south asian countries; all the latest brands come so cheap as mfd. in China.!

Why should China dig out any new technology when it can produce anything under the sun, so cheap and sell throughout the world, including the Dollar Stores and the 50 cents shops of UK?

In as much as all the major economies are interconnected, no country can dominate or dictate terms in the future, and that is a good thing. If one fails, it is a disaster for all, cooperation is the key to success for all.

So, I think, viewing China as a threat, and acting on such a mistaken assumption, is a huge mistake.

Cheers!

It is the view from the US that "all the major economies are interconnected, no country can dominate or dictate terms in the future". This may be theoretically true but the reality is that economies like those of China (and India too), can remain mostly independent of the many other economies if there is a strong compulsion to do so. Of course the country will pay a price for it, but then if there is a strong patriotic tinge, the difficulties can be faced. This is because, for a good percentage of the masses in India (or for that matter, China) the products from abroad do not figure in their lives at all.

Hence, the debtor's philosophy of "If I drown, I will pull him also down" may not necessarily work when the chips are down. China is a major threat for India and an economic threat to USA. Of course, if the planets refrain from decreeing another Gorbachev in China who will be lured by the US' tactics, and destroy China as a country, the world may see a unipolar super-power in China, not many decades from now.

 

[subbudu1]

U.S. is in NO REAL TROUBLE, because the chinese holding of treasury bills of U S $ 1 T is just 7.14% of its (US) external debt, whereas the same is 250% of chinese external debt. Reference: List of countries by external debt - Wikipedia, the free encyclopedia
Nobody cuts off the nose to spite the face.

I am not an economist so I will go by my common sense here.
Suppose I have lent money to you. You have borrowed from a a two dozen people. You are not repaying the debt given to anyone. As long as I have other benefits coming out of you, I will keep quiet. Once I dont get the benefits out of you, I will see if I can threaten you. If threatening you puts me in trouble, I will be unhappy but keep quiet. Now suppose I am at loss and I need money desperately, I will try more tricks to get some money out of you. On the same lines because you have less spending power, you are not able to protect yourself in the same manner anymore. when you become weak and I become desperate, the first thing I will do is stop lending you, if it goes beyond control. If that does not help me , I will try to take advantage of you when you are most vulnerable.

Today the US Economy is surviving on a lifeline because of other country lending them help. But as US Economy crashes other countries are getting into adverse situation. US, Europe all of them are in a recession. To some extent they will try to save each other's skin. But for how long? It is a cascading problem. India and China will have to start delinking their economies from the west to sort out. This will reduce their growth and revenue. On top of it pressure of war and terrorism. These elements grow powerful at that time. Spending and country wide sacrifice on security puts pressure on society and creates civilian distrust. The national funds for retirement and other concerns are depleted. Therefore there is further insecurity. I see the UK Riots as a classic example of what will become the norm in the future.

Pessimistic? The real world is there. I do not believe that some invisible savior is going to come and save us . World has seen human catastrophes and this will be no different. May be who knows the outcome of this will be another great famine. It seems that many people in Bengal took to fish and meat eating when the crops failed. I see a similar situation in non agricultural nations when this might economic catastrophe hits the world. Not even the orthodox TB will be spared.

Alas we may have disagreed with the solution of Marx, but we should have realized that the capitalist greed . that Marx had visualized was a given thing. Marx is back into reckoning in my view. The visionary comes back alive!

 

[sangom]

U.S. is in NO REAL TROUBLE, because the chinese holding of treasury bills of U S $ 1 T is just 7.14% of its (US) external debt, whereas the same is 250% of chinese external debt. Reference: List of countries by external debt - Wikipedia, the free encyclopedia
Nobody cuts off the nose to spite the face.

Shri Zebra,

Some glitch in the above; how can China have two and a half times its external debt to US? Then China's total external debt has to be three and a half times what US owes to it? Am I right, ...or wrong?

 

[kunjuppu]

sangom,

good post #39.

i would only add one more point to it.

in the west, the expectation of individual comfort and selfishness (i use this word softly) has reached an extent, that no government can afford to take away entitlements without being booted out of power.

whereas in china, i think, if it comes to a matter of national pride or advantage, the beijing govt will have no hesitation in calling for and imposing sacrifices on the citizenry even to the point of writing off all usa paper debts. if that is what will make china a super power and usa a pauper.

it is interesting to note, that modern empires scuttled due to budgetary constraints and not militarily. ussr buckled under the heavy expenses incurred in afghanistan. usa is going into deep debt to fight in iraq and afghan. the british empire went bankrupt after the second world war. so did french empire.

iran, iraq, libya, saudi arabia, all countries with so much oil, should ideally have standards like the gulf states. except the idiots who rule these places follow stupid economic policies, spend most of the oil wealth on arms or stacking them away in swiss banks.

i met a thoughtful israeli a long time ago. he was ruing the usa support for israel, for otherwise he felt, israel would have settled with the arabs. and together with jewish ingenuity and arab oil wealth, they could have made the mid east an economic powerhouse.

oh well!! the saddest words in any language, is 'what could have been'

 

[zebra16]

Shri Zebra,

Some glitch in the above; how can China have two and a half times its external debt to US? Then China's total external debt has to be three and a half times what US owes to it? Am I right, ...or wrong?

I think I have not brought out my thought well. What I meant was :

China's external debt US $ 406.60 B
Addition to debt by waiver
of dues from US 1000.00 B (I presume that external debt
is netted against external
receivable/treasury hldgs.

Total US$1406.60
Increase (250%)
Total increase in debt (350%)

 

[biswa]

i met a thoughtful israeli a long time ago. he was ruing the usa support for israel, for otherwise he felt, israel would have settled with the arabs. and together with jewish ingenuity and arab oil wealth, they could have made the mid east an economic powerhouse.

This gentleman is living a utopian's dream. The only thing the Arabs will settle for is the total destruction of Israel.

By the same token what is preventing India from settling with Pakistan by giving away Kashmin and forming a grand confederation with the best cricket team in the world? As any pragmatist knows, it is not going to end with that.

India should go all out in its support for Israel.

 

[Yamaka]

On US Debt, GDP and Jobs - An Inquiry

US public debt is about 90% of the GDP and increasing and the GDP is about $14.9 trillions (made by a labor force of about 150 millions) a year and is growing at an anemic level of about 1-2% a year.

Our population is increasing about 1.2% (which means about 3.7 millions) a year, half of which is due to births inside the country and the rest by immigrants born outside the country.

This means we need to create 3.7 million new jobs a year to absorb all the new entrants to the Job Market... we hardly produce 100,000 per month when the need is about 310,000 per month. This is the problem seriously undermining our "American Dream". We need to come up with all the needed adjustments in policy to re-invent and re-invigorate the economy to keep the American Dream alive, for the sake of our kids and grand kids.. that's the Dharma we must pursue, which is the ONLY Dharma that we should care!

Many observers in this Forum have said so much about the problems of America -

Now I plead with you to consider the following basic facts:

US total assets amount to $78.2 trillions and according to Mohamed El-erian of PIMCO, the present value of all liabilities amounts in his calculations to be $72 trillions.

To me STILL US is a solvent nation, with its massive infrastructure, unparalleled R&D in the world, greatest Universities under the Sun and a very vibrant population of "Home of the Brave" making the "Land of the Free"...

In this context, think of the external debts US has...about $1.2 trillion held by China! This can be sold anytime in the open market and China will get her money in U$ immediately... what will she do with that U$ is up to them to decide!

They can buy Euro, Gold, Indian Re or bury in their back yard...

So far, THEY have decided to keep the U$ Treasuries... its' their CHOICE...

I am asking Chinese Authorities to give the same CHOICE to their fellow citizens: Implement Charter 08 and free Liu Xiabo from the prison.

That's what America and the world should tell Red China loud and clear!

More later....

ps. I am asking Speaker John Boehner to pass the Anti-China Trade Policy Bill passed overwhelmingly in the US Senate...Why is he delaying it? Allow an UP or Down vote in the House and send the Bill to the White House NOW... that's the way to solve the Persistent Trade Deficit with Red China... I am not really against China... as long as they follow FAIR trade practices and give political Freedom and CHOICE to her own citizens.

 

[Haridasa Siva]

The new students coming from India are different than the one's who came 30 years ago.
The present students are coming for undergrads. Their parents are rich and these students even fly back 2 times in the year.
I recently went for a new student from India reception, and saw and heard from the young one's. It was a revelation, as I did not have the first hand experience of meeting the very rich young people from India.
The tuition was $50,000/year and hostel rent was $9600.00 + food and incidental.

And a recent survey says only 0.4% of Indians have net worth of US $ 100 000 or more.:violin:

 

[sangom]

On US Debt, GDP and Jobs - An Inquiry

ps. I am asking Speaker John Boehner to pass the Anti-China Trade Policy Bill passed overwhelmingly in the US Senate...Why is he delaying it? Allow an UP or Down vote in the House and send the Bill to the White House NOW... that's the way to solve the Persistent Trade Deficit with Red China... I am not really against China... as long as they follow FAIR trade practices and give political Freedom and CHOICE to her own citizens.

Shri Yamaka,

If by some magic, US is able to effectively stop all imports from China, I guess the American dream which you refer to, will come to a sudden and possibly catastrophic end. Since the perception of US from here is that it is an unscrupulous nation (government?) which will resort to any low-level tricks to achieve its aims, I can bet the Anti-China Trade Policy Bill will not be passed so easily as you may wish.

And, if US does pass it into law and allows import of Chinese made goods through third parties some more countries may benefit the honour of US$ bond holding status.

BTW, I had once arrived at the following estimate in this post:—

From the US Govt sources as well as wikipedia, I get the following numbers:

US agricultural trade surplus 2009 =26,912 m $
(ERS/USDA Data - Foreign Agricultural Trade of the United States (FATUS))

The Nation’s international trade deficit in goods and services increased to $40.3 billion in April from $40.0 billion (revised) in March, as exports decreased more than imports. (June 10, 2010)
(Foreign Trade - MAIN)

Foreign debt of US 13,450,000 m $(as of june 2009)
(List of countries by external debt - Wikipedia, the free encyclopedia)

So, even if US exports all its surplus agricultural products it will take 13,450,000 divided by 26,912 , i.e.,500 years to pay off its foreign debts.
The total agricultural production of US in 2007 was 329.2 billion $ (329200 m $). So even if US exports all of its agricultural produce, with the population starving, it will take 13,450,000 divided by 329200, i.e., 41 years to clear its entire foreign debt. The scenario, therefore, does not seem to be as rosy as you think it to be.
PS: US has a trade surplus only in agriculture, imho.

I would like to know if my reasoning is correct or not.

 

[ShivKC]

By the same token what is preventing India from settling with Pakistan by giving away Kashmin and forming a grand confederation with the best cricket team in the world? As any pragmatist knows, it is not going to end with that.

India should go all out in its support for Israel.

i would dream every day to have a grand confederation of PakIndia with the best cricket team in the world

 

[sangom]

I think I have not brought out my thought well. What I meant was :

China's external debt US $ 406.60 B
Addition to debt by waiver
of dues from US 1000.00 B (I presume that external debt
is netted against external
receivable/treasury hldgs.

Total US$1406.60
Increase (250%)
Total increase in debt (350%)

May be I am dull, but how will China burning its USD bonds add to its external debts? Maximum it will reduce China's foreign assets, is it not? When China gets the USD bonds, it has already paid for those bonds.

 

[Yamaka]

Shri Yamaka,

If by some magic, US is able to effectively stop all imports from China, I guess the American dream which you refer to, will come to a sudden and possibly catastrophic end. Since the perception of US from here is that it is an unscrupulous nation (government?) which will resort to any low-level tricks to achieve its aims, I can bet the Anti-China Trade Policy Bill will not be passed so easily as you may wish.

And, if US does pass it into law and allows import of Chinese made goods through third parties some more countries may benefit the honour of US$ bond holding status.

BTW, I had once arrived at the following estimate in this post:—

From the US Govt sources as well as wikipedia, I get the following numbers:

US agricultural trade surplus 2009 =26,912 m $
(ERS/USDA Data - Foreign Agricultural Trade of the United States (FATUS))

The Nation’s international trade deficit in goods and services increased to $40.3 billion in April from $40.0 billion (revised) in March, as exports decreased more than imports. (June 10, 2010)
(Foreign Trade - MAIN)

Foreign debt of US 13,450,000 m $(as of june 2009)
(List of countries by external debt - Wikipedia, the free encyclopedia)

So, even if US exports all its surplus agricultural products it will take 13,450,000 divided by 26,912 , i.e.,500 years to pay off its foreign debts.
The total agricultural production of US in 2007 was 329.2 billion $ (329200 m $). So even if US exports all of its agricultural produce, with the population starving, it will take 13,450,000 divided by 329200, i.e., 41 years to clear its entire foreign debt. The scenario, therefore, does not seem to be as rosy as you think it to be.
PS: US has a trade surplus only in agriculture, imho.

I would like to know if my reasoning is correct or not.

Dear Sangom:

1. I am for managed trade with China and ALL other nations - my only objection is the PERSISTENT trade deficit with anyone nation, now like China. In my view and of many others, China is a TRADE MANIPULATOR via Currency Manipulation. This must stop immediately; I believe the anti-China Trade Bill in the Congress will set the stage for a quick remedy.

2. Another place we have persistent trade deficit is with OPEC - US must expand its oil exploration on shore and off shore - with an eye on clean environment, by using modern technology - to minimize the petro $ going to OPEC. Clean energy technologies will help a lot. And US must use public transportation as much as possible to cut down excessive consumption of fossil fuels.

3. I am afraid your calculation with export and import has serious error. As per Bond Vigilantes of the World (the real Policemen of the world in economic sense), what's needed is technological and GDP growth, stable Govt and robust political process and strong entrepreunerial culture to borrow any amount of money from them...trade deficit of $1.3 trillions in an economy of $14.9 trillion is quite low and manageable. Because of this, you know how popular US Treasuries are these days... 10 y T yields at about 2.5% or less, which means the Bond Vigilantes are willing and able to finance the US with very cheap money.

You may compare and contrast the 10 Y T yields with other countries like Japan, Germany, UK, India, China, Brazil etc.. to get a comparative evaluation in the eyes of the Bong Vigilantes! The picture of US is quite good there.

You may ask why to borrow any money at all from anybody? But, if you can borrow very cheap money long term AND you can refinance it anytime, this will not hurt your life style or your kids life style one bit. Instead, it could for ever improve your life style, which may look very weird to "conservative thinkers". But it is fine in New Economics! Lol

Where's the problem?