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Old 12-08-2008, 02:53 AM
 
Location: UK
6,901 posts, read 6,805,905 times
Reputation: 6510

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Quote:
Originally Posted by humanoid
Just out of curiosity though. Why exactly does China need a stimulus package? Aren't the Chinese buying up all the products that they aren't exporting now with all that phantom savings and purchasing power?
China needs a stimulus package because the west cannot buy the goods it has been producing and there are millions of workers out of work. As I explained before, the Chinese cannot afford to buy the same high-priced goods that they have been exporting overseas. Why do you think they have 'phantom' savings I wonder?

It is a well-known fact that the Chinese save more per capita that the US do. Some sources say that the Chinese stimulus package is not enough or will not work long-term. Apparently they tried this kind of thing before and it caused problems down the line. However, I suppose when a crisis comes, you deal with the crisis and then deal with the after effects later when you have bought yourself more time.
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Old 12-08-2008, 04:44 AM
 
Location: Los Angeles Area
3,306 posts, read 4,135,860 times
Reputation: 592
Quote:
Originally Posted by ocpaul20 View Post
China needs a stimulus package because the west cannot buy the goods it has been producing and there are millions of workers out of work. As I explained before, the Chinese cannot afford to buy the same high-priced goods that they have been exporting overseas.
Many Chinese can't afford to buy many goods period. The things produced in China are not "high-priced" its cheap crap.

Quote:
Originally Posted by ocpaul20 View Post
It is a well-known fact that the Chinese save more per capita that the US do. Some sources say that the Chinese stimulus package is not enough or will not work long-term. Apparently they tried this kind of thing before and it caused problems down the line. However, I suppose when a crisis comes, you deal with the crisis and then deal with the after effects later when you have bought yourself more time.
You can't compare their savings to savings in the US. Their high savings rate is misleading...
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Old 12-08-2008, 05:37 AM
 
12,867 posts, read 14,862,839 times
Reputation: 4459
i guess time will tell which country is in a better financial situation. china's hardball approach is evident in the announcement by its major sovereign wealth fund that it will no longer invest in the US financial sector. as well, they have reversed course and are continuing to devalue their currency. selling down their vast reserve of U.S. debt in order to spend on domestic infrastructure (or anything else for that matter) is vastly superior for them than ‘lending’ more to americans.

Last edited by floridasandy; 12-08-2008 at 06:03 AM..
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Old 12-08-2008, 10:06 AM
 
20,577 posts, read 19,239,185 times
Reputation: 8174
Quote:
Originally Posted by Lulu101 View Post
If we are having deflation, how can we have a run on the dollar at the same time?
Hi Lulu01,

You can't. That is why some people have not enjoyed my posting style which is to dare to disagree that the dollar is worthless paper. If it were, then I could stop paying taxes with it and not end up in jail. The society around you determines the currency. If someone was panning for gold in 1849 is he richer than the man with six shots of lead stealing his claim, or FDR who said give us your gold or face 10 years in prison?
Here we see gold, silver, oil, real estate all dropping. Wages are following. As of now, the only run on the dollar is those running to it. Hyper inflation is ,as of now, speculation for the future and, as I have said, it might happen if our government wants it to happen just like gold could be worthless, if they want it to be. Its simple, slap a 95% cap gains tax on gold, confiscate it, what ever. The world deals in lead currency and the Fed has quite an arsenal.
Going to a fractional reserve gold backed currency is a nightmare to the utmost as I would rather pay an inflation tax than go into foreclosure. Once gold is loaned up from its fractional fluff, the currency could never grow beyond that point and we would have endless inflation depression cycles.
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