Monday, August 8, 2011

China to U. S.: Live Within Your Means; U. S. to China: Stuff It

 A Sentiment Everyone Can Agree On

Following the downgrade of U. S. debt to AA+ status by Standard and Poor’s Chinese officials criticized the U .S. in fairly blunt language.  China

said Saturday that Washington needed to “cure its addiction to debts” and “live within its means,” 

Yes it's a nice wall; now how about tearing down
that wall between your citizens and political freedom

It has been a bad week, and The Dismal Political Economist, along with every other American is not in the mood to hear any lectures from China.  Yes, China has been doing well recently, but the country is highly polluted and getting more so every day, still has large amounts of poverty, enjoys, if that is the right word, a political system that does not tolerate dissent and has yet to produce a world class NFL team.

 The surging Chinese economy is highly dependent upon Americans buying their products, and the first rule in business is that you do not ever trash the customer.  The second rule in business is that if someone owes you a lot of money, their welfare is tied to your welfare. Unofficial estimates are that the U. S. government owes China somewhere between $1.1 and $1.5 trillion.  And our message to China ought to be along the lines of

Sorry China - We Don't Do This Anymore

“if you want to see any of that money, quit lecturing us and start buying some of our products.  We’re your best customer, and smart businesses reciprocate with their best customers by buying from them.

And China, if you don’t like holding $1 trillion + of U. S. paper, go sell it.  Except there is no one to sell it to, is there?  Like it or not China you are addicted to exporting to the U.S. and you are stuck with U. S. debt holdings. And if you want your economy to prosper you are going to be stuck with a whole lot more because we have to borrow from  you to pay for what we import from you because we don’t have the money to pay you cash. Get it?!

Don't Make Us Mad China
You Won't Like Us When We are Mad

Paraphrasing a point supposedly made by Keynes, here is the message that China should understand. 

If the U.S. owes China $1 billion and cannot pay, the U.S. has a small problem.  If the U. S. owes China $1 trillion and cannot pay, China has a big problem.

Harbor Freight Tools Discount Tool & Hardware Store
Because They Are Made - You Know Where
 Got that China, let’s hope so. And now The Dismal Political Economist is going down to Harbor Freight Tools to buy a circular saw. And yes, he does plan to put it on his credit card.

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