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I am retired from Fresno County. I like to blog and comment on financial matters. I knew of the housing bubble in late 2005, way before Cramer. And I am an all star on Hubpages with over 100 hubs published. My handle is "bgamall" on Hubpages. I am most proud of:... More
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  • More about Chinese Mercantilism Versus US Mercantilism. 0 comments
    Nov 21, 2009 08:44 PM
    In my Instablog I attacked the Mercantilism of Wall Street and Trish Regan's defense of this system.

    I wrote this in reply to an article critical of Chinese mercantilism:

    "What makes you all think that a change would help the US consumer? My assumption is the US consumer is the only serious consumer in the world. Therefore, my view is that it is sour grapes to complain about the Chinese currency.

    If the Yuan appreciates, it will be more expensive for American consumers who are laboring under a massively high cost of living still, with gasoline and other commodities and products artificially high.

    If my assumption is correct, that the only consumer who matters is the US consumer, then it is necessary for the US to allow the dollar to rise. Interest rates must go up and the dollar must strengthen. We need to have less debt if we are going to be Japan.

    The author talks about Chinese mercantilism. But who is more of a mercantilist than Wall Street, Goldman Sachs, JPM, etc. They think the US can bail herself out with exports to China. I doubt it. The Chinese save massively and over 1/2 of GDP is saved.

    So, we need to quit this hot money carry trade which will make this asset bubble the world over all the more impossible for consumers everywhere.

    Cavuto and Schumer want one thing, for the Chinese to be up to their eyeballs in credit debt just like us! At least Chinese mercantilism produces things!"


    My point is that the administration truly believes that China's consumer is the hope of the US recovery and that our export of credit debt to China will become the way Wall Street makes money like the go go days.

    I don't believe it. So I  think that a lot of this talk about the US consumer and recovery is not the key issue anyway. The key issue is that Wall Street has a lot of hot money that flowed into China recently, hoping for big bucks quickly. This didn't pan out as Obama didn't help ole Cavuto and Schumer's Wall Street pals out much as the Chinese didn't budge regarding their currency peg to the dollar.  

    While Wall Street politicians like Schumer and Wall Street commentators, like Cavuto claim a populist position versus the Chinese, it is all a diversion. They are likely just mad that the hot money will up and leave China with Wall Street investors disappointed like it left in early 2009!

    My point in this article is a big shame on you to these guys like Schumer who don't care about US consumers, Chinese consumers, or anybody but their Wall Street buddies. We would be better off as a nation if we just burned the hot money, stopped the casino on Wall Street, and try to rebalance the cost of living so that main street has a chance. 

    Main street is not happy with Wall Street, and only corrupt people would attempt to divert this anger to China. If the Chinese had real white hot consumers like the US did, then perhaps this would be a legitimate argument by Cavuto and Schumer, to blame China for our woes. But since I don't believe that they have a consumer driven society at all (with consumption merely 30 percent of GDP), I think this argument against the Chinese is just a bunch of propaganda.    


    Themes: mercantilist, mercantilism, schumer, cavuto, wall street, consumer, china, credit debt, hot money, economics, international trade, finance
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