Thread: Discussion R/C Stores Gone By the Wayside
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Old Mar 25, 2009, 10:34 PM
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TMO
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Frank,
I know you're looking for hobby figures, but in case you're also interested in the big picture, this is place: http://www.bea.gov/newsreleases/inte...wsrelease.html

from the release:
Deficits were recorded, in billions of dollars, with
China $20.6 ($19.9), Japan $4.3 ($5.3), OPEC $4.0 ($4.7), the European Union $3.5 ($7.0), Mexico $2.7 ($4.1),
Canada $2.5 ($2.8), Korea $1.9 ($1.4), Taiwan $1.3 ($1.3), and Venezuela $1.1 ($1.2).

I don't want to give everybody an economics lecture, but the big picture is that our trade deficit shrank dramatically in the most recent report, which is tallied through January. In plain English, for the first time since 2001, we actually exported more in dollar terms than we imported- due mainly to the huge drops in oil, base metals and other industrial commodities. The countries listed above are the ones we were net importers from in dollar terms. So, we imported $20B more from China than they bought from us. Yes virginia, 5 times what we imported net from Opec. At least they buy drilling equipment, arms and technology. The only thing China imports from us is treasuries. Mainland China's holding of US Treasuries are about $745B, and Honk Kong is another $70B or so. For perspective, that makes them the 3rd largest holder of treasuries behind Mutual funds at $770B and the Federal Reserve and Intragovernmental holdings at $4.8T (or so we think- the Fed can basically just make that number up)

And, no, it's not sustainable. If they let their currency float freely it would triple in value, the competitiveness of their exports would drop commensurately and their economy would collapse. They'd actually have to..gasp...import something that was made somewhere else-like the rest of us. Not an opinion here, but rather econ 101. If it only were "free trade" then there would be no reason to quibble. But the primary reason these hobby products are not made in Mexico, India, Indonesia, or any number of other low wage countries that have a relatively high degree of industrial sophistication is that those countries have freely floating, exchangeable currencies.

Welcome to the new cold war. The US is by no means the only country damaged by the Chinese currency ploy. I could go on, as we clearly live in "interesting times."

I'm not going to begrudge anybody cheap outrunners and lipos. But you and I are talking big picture. It can't go forever so, I say, stock up while you can. I noticed that they recently proposed a new world wide currency. Think about that for a second. There's not country in the world, OPEC included that's going to fall for that! It's just a ploy to exchange their IOU's collected from the world's nations into something that actually has an exchange value, without ever having to suffer the consequences raising their currency to a equilibrium level. Big stuff comin', I say, and it probably ain't good.
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Last edited by TMO; Mar 26, 2009 at 07:43 AM.
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