China, the fastest growing economy and population country on the face of the first planet to be dominated by humans seems to be overplaying their cards against the USA straight flush.
As I sit here watching Cramer give his apology to us suckers that sometimes listen to every word as legal advice from a personal financial advisor something hit me, China is on cocky mode. But being a person that screams bloody murder about how much we should be concerned with the developing economic giant, it seems as though my paranoia may have surpassed education if not for a mere moment.
Numbers aside lets put things into perspective. China loans us money so we can buy goods from them so we can ask for more loans to purchase more goods. What would happen (debt aside) if we were to use another vendor such as Vietnam for our exports? China would lose a substantial amount of business.
A large issue at play currently is the currency manipulation by China. The yuan is being held artificially low by the Chinese “government” (also known as a communist regime). The value of this undervalued currency is being held low by the regime for a reason. It might not be undervalued that much after all. With the developing scenario of Google and GoDaddy pulling out China the bigger picture begins to show itself.
China has their currency based largely on the holdings of US Treasuries and other Bonds and such that they are known to hold in excess of 1 billion dollars of which they have reinvested in the form of the good ole buck. Until they pull the assets out in physical form, they are forced to not bankrupt their investments and 30 years worth of economic warfare.
Being the manufacturing plant of the world, China has the upper hand, but that hand is NOT that good. US consumers love cheap goods and will continue to love them, losing China as an exporter will not substantially raise prices as there are other countries willing to step up to the plate.
To hell with China, lets play hardball and call all in and either make them show their cards or have them fold and revert to cyber attacking our companies and our government. Until then, lets cut back on the health care spending spree and further expand our defence budget and get with the times and expand our cyber security to the point where we can follow Sun Tzu and “When your enemy has the high ground do not ascend to attack them” but follow the thoughts of the great General Jackson and stick it to them before they make you feel how it would feel.
