Home › Forums › Financial Markets/Economics › Euro in the tanks, What is China gonna do
- This topic has 45 replies, 6 voices, and was last updated 14 years, 5 months ago by MadeInTaiwan.
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May 27, 2010 at 9:31 AM #17498May 27, 2010 at 10:42 AM #554968MadeInTaiwanParticipant
I really suggest reading Michael Pettis, mpettis.com. His last post on the 19th actually talks about consequence for China of the Euro crises.
To summarize.
1) Global trade has to balance out. Trade deficit equals buget deficit. Less consumption in Euro deficit countries (Greece, Spanish, Portugal etc) needs to be balanced out by less export by exporting countries or the excess export needs to be absorved by someone else.
2) The biggest exporter and importer are China and U.S. While China is attempting to re-balance its economy (from export dependent to more internal consumption), it still relies too heavily on exports. Euro import contraction will put additional pressure on China to adjust faster than it wants.
3) U.S. needs/wants to adjust by importing/consuming less and producing more. One way for that is currency devaluation. (As an aside w/o devaluation economies can expect massive unemployment in the 20% range) It does not want to take up additional import.
4) Rest of the world already angry at China for increasing market share of global export at time of expansion. The added tension with U.S will likely lead to trade war in the next few years.
May 27, 2010 at 10:42 AM #555069MadeInTaiwanParticipantI really suggest reading Michael Pettis, mpettis.com. His last post on the 19th actually talks about consequence for China of the Euro crises.
To summarize.
1) Global trade has to balance out. Trade deficit equals buget deficit. Less consumption in Euro deficit countries (Greece, Spanish, Portugal etc) needs to be balanced out by less export by exporting countries or the excess export needs to be absorved by someone else.
2) The biggest exporter and importer are China and U.S. While China is attempting to re-balance its economy (from export dependent to more internal consumption), it still relies too heavily on exports. Euro import contraction will put additional pressure on China to adjust faster than it wants.
3) U.S. needs/wants to adjust by importing/consuming less and producing more. One way for that is currency devaluation. (As an aside w/o devaluation economies can expect massive unemployment in the 20% range) It does not want to take up additional import.
4) Rest of the world already angry at China for increasing market share of global export at time of expansion. The added tension with U.S will likely lead to trade war in the next few years.
May 27, 2010 at 10:42 AM #555926MadeInTaiwanParticipantI really suggest reading Michael Pettis, mpettis.com. His last post on the 19th actually talks about consequence for China of the Euro crises.
To summarize.
1) Global trade has to balance out. Trade deficit equals buget deficit. Less consumption in Euro deficit countries (Greece, Spanish, Portugal etc) needs to be balanced out by less export by exporting countries or the excess export needs to be absorved by someone else.
2) The biggest exporter and importer are China and U.S. While China is attempting to re-balance its economy (from export dependent to more internal consumption), it still relies too heavily on exports. Euro import contraction will put additional pressure on China to adjust faster than it wants.
3) U.S. needs/wants to adjust by importing/consuming less and producing more. One way for that is currency devaluation. (As an aside w/o devaluation economies can expect massive unemployment in the 20% range) It does not want to take up additional import.
4) Rest of the world already angry at China for increasing market share of global export at time of expansion. The added tension with U.S will likely lead to trade war in the next few years.
May 27, 2010 at 10:42 AM #555651MadeInTaiwanParticipantI really suggest reading Michael Pettis, mpettis.com. His last post on the 19th actually talks about consequence for China of the Euro crises.
To summarize.
1) Global trade has to balance out. Trade deficit equals buget deficit. Less consumption in Euro deficit countries (Greece, Spanish, Portugal etc) needs to be balanced out by less export by exporting countries or the excess export needs to be absorved by someone else.
2) The biggest exporter and importer are China and U.S. While China is attempting to re-balance its economy (from export dependent to more internal consumption), it still relies too heavily on exports. Euro import contraction will put additional pressure on China to adjust faster than it wants.
3) U.S. needs/wants to adjust by importing/consuming less and producing more. One way for that is currency devaluation. (As an aside w/o devaluation economies can expect massive unemployment in the 20% range) It does not want to take up additional import.
4) Rest of the world already angry at China for increasing market share of global export at time of expansion. The added tension with U.S will likely lead to trade war in the next few years.
May 27, 2010 at 10:42 AM #555553MadeInTaiwanParticipantI really suggest reading Michael Pettis, mpettis.com. His last post on the 19th actually talks about consequence for China of the Euro crises.
To summarize.
1) Global trade has to balance out. Trade deficit equals buget deficit. Less consumption in Euro deficit countries (Greece, Spanish, Portugal etc) needs to be balanced out by less export by exporting countries or the excess export needs to be absorved by someone else.
2) The biggest exporter and importer are China and U.S. While China is attempting to re-balance its economy (from export dependent to more internal consumption), it still relies too heavily on exports. Euro import contraction will put additional pressure on China to adjust faster than it wants.
3) U.S. needs/wants to adjust by importing/consuming less and producing more. One way for that is currency devaluation. (As an aside w/o devaluation economies can expect massive unemployment in the 20% range) It does not want to take up additional import.
4) Rest of the world already angry at China for increasing market share of global export at time of expansion. The added tension with U.S will likely lead to trade war in the next few years.
May 27, 2010 at 2:07 PM #555840meadandaleParticipantBet the oil companies are glad they didn’t switch to the euro for oil trading.
May 27, 2010 at 2:07 PM #556117meadandaleParticipantBet the oil companies are glad they didn’t switch to the euro for oil trading.
May 27, 2010 at 2:07 PM #555746meadandaleParticipantBet the oil companies are glad they didn’t switch to the euro for oil trading.
May 27, 2010 at 2:07 PM #555155meadandaleParticipantBet the oil companies are glad they didn’t switch to the euro for oil trading.
May 27, 2010 at 2:07 PM #555257meadandaleParticipantBet the oil companies are glad they didn’t switch to the euro for oil trading.
May 27, 2010 at 2:32 PM #556131briansd1GuestBy historical standards the Euro is not doing too badly. A lower Euro will stimulate European exports.
The Euro came out at near parity to the USD.
The lowest was $0.83 = 1 Euro.
It’s now about $1.25 = 1 Euro.
May 27, 2010 at 2:32 PM #555170briansd1GuestBy historical standards the Euro is not doing too badly. A lower Euro will stimulate European exports.
The Euro came out at near parity to the USD.
The lowest was $0.83 = 1 Euro.
It’s now about $1.25 = 1 Euro.
May 27, 2010 at 2:32 PM #555272briansd1GuestBy historical standards the Euro is not doing too badly. A lower Euro will stimulate European exports.
The Euro came out at near parity to the USD.
The lowest was $0.83 = 1 Euro.
It’s now about $1.25 = 1 Euro.
May 27, 2010 at 2:32 PM #555855briansd1GuestBy historical standards the Euro is not doing too badly. A lower Euro will stimulate European exports.
The Euro came out at near parity to the USD.
The lowest was $0.83 = 1 Euro.
It’s now about $1.25 = 1 Euro.
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