"...We all know the dollar is tanking, and that the Chinese yuan (renminbi) is locked into the dollar's decline. Why? Because we are China's best customers. It is virtually impossible to buy anything not made in part or whole…in China. Chrysler is thinking seriously about having their entire "300" made in China, and that, currently, is a very popular car. Imagine that. An entire car, from bumper to bumper made in China. Would you buy one? I certainly wouldn't, but maybe the sheeple will. It is said that Wal Mart owns close to 1,000 factories in China. The Chinese labor force, it is said, makes about $2 per day. The Chinese are far from stupid, and some say are the most intelligent race on earth. If China un-locked its currency from the dollar, and let it "float" against the rest of the world's currencies, America would probably cease buying Chinese goods, as they would be too expensive.
The Chinese are in the midst of an industrial explosion, which has been unmatched since our own of a hundred years ago, or maybe post WW II. The Chinese are constructing the world's largest dam, which will supply gobs of electricity. They are building more factories, consuming more oil, steel, concrete, and other raw materials, than anyone else on earth. The Chinese economy seems to be booming, even though their banks are in terrible shape, with state owned businesses defaulting on loans to state owned banks. Does that make sense? Maybe not, but that's the way it is. The smallest items at Wal Mart, Home Depot, Hobby Lobby, etc, are made in China. Meanwhile, American factory workers are virtually a thing of the past, with hundreds and thousands of factories rusting away, or being burned by arsonists. Factory workers in America, used to make good wages. Fast food franchises don't pay good wages. American factory workers have suffered mightily, as have office workers. When I pick up the phone to question American Express about a fallacious charge, and a gal answers in India, I get a little peeved. As the trade deficit approaches three quarters of a TRILLION dollars, this means that our capital is going overseas at an ever increasing rate. Ever more American workers are being laid off. This also means that Americans are ever more in debt, and getting more so every day. If a factory or office worker bought a home with a 30 year mortgage, and jobs are lost, there might be a lot of mortgages in foreclosure eventually, if not sooner. Actually, they already are in record numbers.
If the American economy really dumps, in spite of Sir Alan's assurances that it won't, Americans will be unable to buy that Chinese stuff from China Marts, Chinese Depots, and China Hobbys. Americans who cannot spend because of credit cards maxed, mortgages maxed, and credit availability exhausted, will stay home, if they still have one. This explains why Wal Mart, et al, will radically slow buying from China, because they aren't selling much of anything, as witness another dreary Christmas shopping season so far. With business bad, and purchases from China decreased, China may find itself in an over-built situation. Factories which have huge production capacities, but no demand, will be idle. $2 per day workers, who can turn out the stuff, but with no demand, will be out of work. Factories will be shut, just like American ones, but not because of being unable to produce at a low cost, but because of no demand for the products, at any price.
In other words, American factories are out, because of Chinese cheap labor and having few bureaucrats such as OSHA bothering them, running up costs. With Americans being broke, how much longer can they continue buying cheap Chinese merchandise? The Chinese are holding on by a thread, keeping their currency tied to the dollar. If they let it float, there goes the American markets, which are keeping them on a prosperity binge. Economics is pure logic. It is not complex, and only requires reason and common sense to understand. America is China's largest customer by far, and China depends on America almost totally. If the American dream evaporates, this obviously makes China go with us, because we can no longer afford to buy their stuff. They will then be over built. If their business had continued on the current upswing, they would not be over-built, but this cannot exist forever, when their one huge customer is on the skids. We weren't over-built, as long as there were no nations with cheap labor, but now they are in great abundance. Indians speak English, meaning they can answer phones and destroy American office workers' jobs. The Chinese can't speak English, but they can work machinery and load containers with their exports to America. I know, China, and real estate seem impregnable as I write this. The Dow goes up a bit here and there, and the media continually spout off about how wonderful everything is. It is all just a sham, I think. It is a cosmetic façade, just like a movie set. People are struggling out there, and a lot of them are giving up or getting tired. Laws can keep a defaulting home buyer in the home for as long as a year after payments are missed, and hundreds of thousands are currently taking advantage of this, I read. Bankruptcies and foreclosures are at all time highs, and will grow higher till the bubble breaks, as all bubbles do eventually. The trade imbalance continues to grow. A nation which does not make what it consumes, is in deep, deep trouble...." Don Stott at http://www.gold-eagle.com/gold_digest_04/stott122304.html
