CVN off-topic chat, page-45

Anthony,

I totally agree with you about Australia - we are probably one of best Free Trading countries in the world. As to us being a quarry, well that is our competitive advantage and that is why we have a Trade Surplus with them (China). We also have a competitive advantage in fresh food, IT, education, medical and AI.

There is nothing wrong with that - you need to focus on what you are good at and where you have a competitive advantage. More than happy by having a $50B trade surplus every year with them.

My view is: a country is like a company - it has a limited amount of money to invest in - that means they should not invest in uncompetitive industries (like our car industries). To me, that simply means you are throwing good money after bad; we did that in our car industries for decades but to no avail.

Our rebalance (as painful as it was) have resulted in us being competitive and having a Trade Surplus with China of about $50B a year. But on the other hand, we have a continual Trade deficit with the US of about $20B a year (mainly from buying military equipment). You should further note, we haven't had a recession since (actually 27 years now).

As to currencies, all countries start off fixing it and then floating it (like Australia). China have floated theirs since 2006 (within a basket of currencies). From time to time, all countries intervene in the currency fluctuations, either via direct intervention or via Quantitative Easings.

As to the US going back to protectionist policies. We will be one of the victims of these protectionist policies. If the US succeed in this - they will demand China buys an extra $350B of goods from them to even out the deficit, then China turns around to countries with surpluses against them like us and demand we buy another $50B of goods from them and on and on it goes. The next thing is, every industry will demand theirs to be protected.

That was what we had before (early 1970 to 1980s) and it failed; resulting in high inflation (stagflation), high interest rates and high unemployment.

Since the free flow of trades and capital, all the world have benefited - for example, we have a trade surplus with China, balanced out by a trade deficit with the US.

Many people have the mistaken belief that somehow China's surplus with the US is horded away somewhere. That is not what happens. Some of it, they reinvest back in the US by buying US treasury, some of it to buy goods and services from Australia (including properties), Germany, Korea and African countries -all have trade surpluses with China.

In stating the above, I am not saying China is a perfect trader, neither is the US or EU. The fact is, few are - countries like ours, NZ, HKG and SG are probably some of the best. There are a lot that countries can do to improve international trades IMHO.

Any way, I would have preferred an international venue or arbitration for all sides (CHINA, US, AUS, JAP, KOR, EU, AFR) to work out fairer trade rules. Unfortunately that is not what the US want - they want impose bi-lateral agreements.

The US is not doing this for us or the world. They are just doing it for themselves at the expense of the rest of the world.

We have tried protectionist policies in the past. Short run, it might give you a sugar hit, but long run, its disastrous - we saw that in the 70's and 80's.

Any way, more than happy to have exchanges of different opinion. Fortunately on this forum, we have very mature members.

Let hope tomorrow bring good news on Dorado.