- This topic has 6 replies, 4 voices, and was last updated 18 years, 5 months ago by lostkitty.
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May 13, 2006 at 8:45 PM #6597May 15, 2006 at 12:51 AM #25398lewmanParticipant
Export is bread and butter for China so an artifically depressed currency means keeping those factories humming and helping put food on the tables of hundred of millions of low skilled laborors. And it is the fear that a revalued RMB will cost massive job losses that stop the Chinese gov from letting RMB appreciate too much too fast. There are already reports some savvy manufacturers are scouting places like Vietnam where labor cost is even cheaper than China and gradually moving the assembly lines over there.
Now the US is a different story. The US economy is driven mostly by consumption (approx 2/3s). And since the US don’t really make much anymore, it has to import just about everything (how often do you see a Made in the USA label in Walmart?). If the USD continues to decline, it’ll soon take more dollar for you to buy that nice set of wheels made by Toyota, playstation for your kids by Sony, etc etc. For now, companies have been able to resist raising prices by enhancing productivity, but sooner or later, it will have to pass on the increase to you and you’ll have to cut back because there just isn’t enough money to buy everything. Alternatively you speak to your banker about an equity loan and next thing you know you’re swimming in debt. The US savings rate is already negative. How much more negative could it get before the system crumbles ?
Now, how does one get a canadian citizenship ?
May 15, 2006 at 5:38 AM #25404powaysellerParticipantSo a manufacturing economy benefits from a devalued currency, while a consuming economy prefers a stronger currency.
Yet, our leaders don’t seem to mind a devaluing dollar. I’ve read this in several commentator reports. Also heard that a lower dollar will finally increase our exports, so again, it’s a positive development.
“The Treasury Department has suggested it won’t stand in the way of a weaker dollar as it has refrained from protesting the currency’s slide, said George Kapasakis, a senior trader at Mizuho Corporate Bank in Sydney.”
May 16, 2006 at 7:44 AM #25457lostkittyParticipantDoes it stand to reason that being in manufacturing is a wise move for Americans as employees right now – vs services? If we will not be consuming as much – due to less spending money – then the service industries like the airlines (in addition to from high gas prices) will certainly take a hit. Same for hotels, restaurants, etc. Just writing off the top of my head here… My husband has been offered a job in aerospace manufacturing (he would have to leave service industry) and maybe it is a wise move. Any opinions?
May 16, 2006 at 10:50 AM #25476powaysellerParticipantIs this aerospace manufacturing related to military? These are cyclical jobs. Have you researched who are our aerospace competitors, and how we are faring against them? What is the job outlook for American aerospace? I don’t know. I’ve had good luck with e-mailing economists. If you have a well worded question, they actually write back. Start out by making a positive comment about something they wrote. Or check out their blog, if they have one. Some economists and business writers give e-mail addresses in their articles. I would write to many, and sift through the responses, for the ones which make the most sense. Lostkitty, if you come to Coronado this summer, I’d love to meet you. If you want to, we can both send our e-mail addresses to Rich, and he can forward them. I think he won’t mind.
May 16, 2006 at 2:03 PM #25488barnaby33ParticipantA weak dollar is not that simple, nor is a strong RMB. Our economy is more complex than the chinese economy, but even so the repercussions of a strong and or weak currency aren’t so easily discerned. For instance the US is still the worlds largest manufacturer, just not of clothes or electronics. So a weak dollar seems like it helps us sell our end products, but those end products are in turn made up of constituent parts made in other places. Any gain in end sales tends to be offset by a rise in cost for imports.
Conversely the Chinese make lots of stuff, but have to import most of the basic commodities to produce those things. Therefore the weak currency adds to the cost of production. For example if you think oil is expensive for us, trying being a chinese business. All of your commodities are artificially expensive. In essence the chinese govt is attempting to subsizdize exports with imports.
Josh
JoshMay 16, 2006 at 5:06 PM #25494lostkittyParticipantLove to! We will be staying in Solana Beach/DelMar this summer though. The water in Coronado was absolutely NASTY last year. They had the same red tide in North County, but it did not last as long, nor did it have the same aroma….. better waves up north too. I am determined to catch a decent wave one of these days and my brothers are great teachers.
I never remember anything so awful as that red tide as a child growing up in San Diego, and I was at the beach constantly for 25 years or so.
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