How U.S.-China economic relationship really works (Krugman)

[diddlysquat]

How U.S.-China economic relationship really works

By PAUL KRUGMAN
SYNDICATED COLUMNIST

Stories about the new U.S. Treasury report condemning China's currency policy probably had most readers going, "Huh?" Frankly, this is an issue that confuses professional economists, too. But let me try to explain what's going on.

Over the past few years China, for its own reasons, has acted as an enabler both of U.S. fiscal irresponsibility and of a return to Nasdaq-style speculative mania, this time in the housing market. Now the U.S. government is finally admitting that there's a problem -- but it's asserting that the problem is China's, not ours.

And there's no sign that anyone in the administration has faced up to an unpleasant reality: The U.S. economy has become dependent on low-interest loans from China and other foreign governments, and it's likely to have major problems when those loans are no longer forthcoming.


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http://seattlepi.nwsource.com/opinion/225167_krugman22.html

[bahrbearian]

1. Neocons never think of the consequences.....

"But the negative effects of a change in Chinese currency policy will probably be immediate, while the positive effects may take years to materialize. And as far as I can tell, nobody in a position of power is thinking about how we'll deal with the consequences if China actually gives in to U.S. demands and lets the yuan rise"

[Cocottelle]

2. Ouch!

[pie]

3. Brilliant article! Explanation is clear and understandable