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World Links 7/16

July 16, 2008

To Revalue or Not to Revalue, That is the Question Facing China’s Leaders Read this very carefully, then go read the entire article – it’s not that long. Further proof of the ignorant bastards that we put in office who are either too stupid or just don’t give a rat’s ass about anything other than their overinflated ego.
China gets it. CHINA GETS IT! And in more ways than one.

American officials and a wide range of American economists argue that the yuan is significantly undervalued. This market-distorting intervention subsidizes Chinese trade, makes Chinese exports artificially cheap, and causes huge job losses in the U.S., they maintain. The result is an alarming trade deficit with the PRC ($110 billion in 2002 and rising this year), and the concomitant huge buildup by China’s central bank of foreign-currency reserves ($350 billion) and U.S. government bonds ($122 billion). China’s trade imbalance with the U.S. has resulted in Beijing becoming one of Washington’s biggest creditors, and this provides the PRC government significant leverage over its American counterparts. American officials and a wide range of American economists argue that the yuan is significantly undervalued. This market-distorting intervention subsidizes Chinese trade, makes Chinese exports artificially cheap, and causes huge job losses in the U.S., they maintain. The result is an alarming trade deficit with the PRC ($110 billion in 2002 and rising this year), and the concomitant huge buildup by China’s central bank of foreign-currency reserves ($350 billion) and U.S. government bonds ($122 billion). China’s trade imbalance with the U.S. has resulted in Beijing becoming one of Washington’s biggest creditors, and this provides the PRC government significant leverage over its American counterparts.

Indeed, it is only because a recession is defined by output declines, rather than employment declines, that the U.S. economy is officially in recovery. It certainly does not feel like much of a recovery to most “blue collar” workers.

Holocaust Survivors in Need of Long-Term Hospital Care Strapped for Funds Why is there any question of these survivors being provided for. WHY?!

Itzhak Widder says that his father now weighs the same as when he was liberated from the Mauthausen death camp in 1945 – 41 kilograms. Shalom Widder, 90, has been at Hartzfeld Geriatric Hospital in Gedera for the past month. He has lost the ability to swallow, so relies on an abdominal feeding tube. Two weeks ago, his sons got a bill for their father’s hospitalization - NIS 97 per day.

But they got a call this week from the hospital’s billing department demanding payment and warning that legal steps would be taken otherwise.

“My father was deprived all these years. I served the country for 26 years in the army. I was wounded in the Yom Kippur War. Is there no sensitivity? They want to suck Dad’s blood dry,” Itzhak Widder said. Then, he burst into tears.

God, what is wrong with people.

Increase in Rhino Poaching

As per latest figures, Kaziranga shelters around 1,855 of the world’s estimated 2,700 one-horned rhinos in the wilds of Kaziranga. However, considering the past, this figure has seen a firm downfall with constant slaughtering of the giant mammal.

Poachers who kill rhinos inside the park kill just because of the high demands of the rhino horn, which many belive contain aphrodisiac qualities, besides being used as medicines for curing fever, stomach ailments and other diseases in parts of South and East Asia.

Not My Grilz!

The tough economy has people taking drastic measures to pay the bills these days.

While some have been pawning-off old coins or jewelry, others are apparently opening their mouths and saying “ahh.”

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2 comments

  1. Our enormous trade deficit is rightly of growing concern to Americans. Since leading the global drive toward trade liberalization by signing the Global Agreement on Tariffs and Trade in 1947, America has been transformed from the weathiest nation on earth – its preeminent industrial power – into a skid row bum, literally begging the rest of the world for cash to keep us afloat. It’s a disgusting spectacle. Our cumulative trade deficit since 1976, financed by a sell-off of American assets, is now approaching $9 trillion. What will happen when those assets are depleted? Today’s recession may be just a preview of what’s to come.

    Why? The American work force is the most productive on earth. Our product quality, though it may have fallen short at one time, is now on a par with the Japanese. Our workers have labored tirelessly to improve our competitiveness. Yet our deficit continues to grow. Our median wages and net worth have declined for decades. Our debt has soared.

    Clearly, there is something amiss with “free trade.” The concept of free trade is rooted in Ricardo’s principle of comparative advantage. In 1817 Ricardo hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. On the surface, it seems to make sense. But is it possible that this theory is flawed in some way? Is there something that Ricardo didn’t consider?

    At this point, I should introduce myself. I am author of a book titled Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America. To make a long story short, my theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (per capita output, which always rises), inevitably yields rising unemployment and poverty.

    This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It’s because these effects of an excessive population density – rising unemployment and poverty – are actually imported when we attempt to engage in free trade in manufactured goods with a nation that is much more densely populated. Our economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.

    One need look no further than the U.S.’s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

    Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is rather unremarkable – nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. In fact, our largest per capita trade deficit in manufactured goods is with Ireland, a nation twice as densely populated as the U.S. Our per capita deficit with Ireland is twenty-five times worse than China’s. My point is not that our deficit with China isn’t a problem, but rather that it’s exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one sixth of the world’s population.

    Ricardo’s principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it’s a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.

    If you‘re interested in learning more about this important new economic theory, then I invite you to visit my web site at OpenWindowPublishingCo.com where you can read the preface for free, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)

    Please forgive me for the somewhat “spammish” nature of the previous paragraph, but I don’t know how else to inject this new theory into the debate about trade without drawing attention to the book that explains the theory.

    Pete Murphy
    Author, Five Short Blasts


  2. Not spammish in the least. You have made excellent points and explained them well. You have certainly shed some light on a subject that is difficult for many of us to fully understand. Like a certain presidential candidate, economics has never been my strong suit. However, the more that I learn, the more alarmed I become. I am angry at administrations that have done nothing more than temporary fixes that only lead to larger problems, and have put our children’s world in enormous jeopardy.

    There is much more for me to learn, so I will definitely come read. I’m posting your comment because it is so important that I don’t want it to be overlooked.

    Thank you for taking the time to share.



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