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Crisis deepens in Japan and China as Asian exports plunge - 12/23/2008 8:14:50 AM

celticlord2112

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Crisis deepens in Japan and China as Asian exports plunge

There seems a perverse symmetry to this global economic crisis. The same countries whose export-oriented economies helped fuel the tremendous debt creation phenomenon in the US and in Europe now seem headed for the deepest (and perhaps longest lasting) declines.

The greatest irony is that Asian banks are experiencing trouble obtaining dollars to fund shipping transactions--when China holds $2Trillion in currency reserves.

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RE: Crisis deepens in Japan and China as Asian exports ... - 12/23/2008 8:24:52 AM

SilverMark

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As read such things...I wonder how long China will keep the yuan pegged to the dollar....

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RE: Crisis deepens in Japan and China as Asian exports ... - 12/23/2008 8:26:44 AM

Termyn8or

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Don't even need the link CL. I know exactly what it means. When your customers have no money guess what happens. At work, we might have upwards of ten grand worth of completed work sitting there because people are having cash flow problems. Even selling it off doesn't work without people with money to buy it.

T

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RE: Crisis deepens in Japan and China as Asian exports ... - 12/23/2008 8:46:33 AM

celticlord2112

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quote:

ORIGINAL: SilverMark

As read such things...I wonder how long China will keep the yuan pegged to the dollar....

I wonder if floating the yuan would make a difference.

China is in a damned-if-you-do, damned-if-you-don't position on currency valuation: Pegging the yuan to the dollar perpetuates a begger-thy-neighbor style of recession response and results in a race to the bottom. Allowing the yuan to float punctures China's price advantage that has fueled their export engine, which would trigger massive internal economic dislocations.

I suspect the question isn't if China's economy will crash, but rather how, and who gets dragged along for the ride.

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RE: Crisis deepens in Japan and China as Asian exports ... - 12/23/2008 8:51:16 AM

Termyn8or

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Good point Mark, I think I read about a couple years ago Bush wanted China to unpeg the yuan, but they refused. I wonder what their attitude is now.

We could be in for a hell of a ride just trying to understand how all this comes about, I mean even in the end. Maybe now is a good time to get that big plasma TV, before they go up to ten grand.

No matter what anyone says about these bailouts, the net effect is dumping currency, our currency thus devaluing it. That is like a natural law or something, and this time around they simply can't afford to prop it up. Will China let the yuan go down with us and put themselves in an unadvantageous position with the rest of the world ? I think not. I think China is reluctant to unpeg now because of their massive investments here, but there is always a possibility that in the future it might be in their best interest to leave a sinking ship behind.

T

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