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What if foreign trade to the US were to slow dramatically?

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Re: What if foreign trade to the US were to slow dramaticall

Unread postby mmasters » Fri 25 May 2007, 19:34:47

$this->bbcode_second_pass_quote('Zentric', '')$this->bbcode_second_pass_quote('mmasters', '')$this->bbcode_second_pass_quote('Zentric', '.').. stagflation... then restrictive new lending standards, then interest rate drops which would allow more "too big to fail" companies to stay in business, and more adjustable-rate mortgage holders to stay in their homes, than otherwise.

What I'm thinking as well and while a temporary fix it would also result in foreign investors bailing out of the dollar, making a bad situation worse. Under these circumstances the USD could lose its dominant currency status rather fast.


But why would you expect there to be a net-bailout of dollars by foreign investors when at the same time theirown export-related businesses must also go through a "too big to fail" consolidation that would put the same kinds of stress on their own currencies?


Say they drop the rate. If US Treasury bonds pay a poor rate of interest compared to inflation who's gonna want them? If there's no foreign investment money coming into the US to fund it's massive obligations, then the fed has to create that funding out of thin air (which spells big inflation). Once the foreign investors currently sitting on Treasury bonds realize they are on a sinking ship I'd imagine they would try and head for higher ground (whatever that could be) and that would only make things worse. Would you keep your money in an investment knowing you could only get 4% when inflation is 20% ? The US becomes the rottenest apple in the world currency bag I think people will back away from it.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby Byron100 » Fri 25 May 2007, 21:04:55

$this->bbcode_second_pass_quote('jdmartin', '')$this->bbcode_second_pass_quote('Starvid', 'T')he one country on this planet
that would survive a cut off of foreign trade the best, is the US. Massive domestic market, everything is made there, access to all kinds of resorces.


Thank you.

People on this board allow their subjective hatred of America to cloud their ability to create objective posts.

The US is almost uniquely alone in the world in its temperate climate, vast array of resources, market of consumers and producers, and ability to feed itself. The only other country worldwide that shares similar circumstances on our level, and even they're not quite that high up, is Brazil. Most every other country lacks natural resources, ability to feed itself, or supply of workers & producers to withstand any kind of trade elimination.

Consider this: during WWII, the only trade going on with the US of any significance was goods (food, weapons, oil, etc) flowing out of the US to our troops and allies.

No doubt that losing all trade would create some significant economic turmoil here, but it would/could eventually be absorbed. Frankly, from a purely American point of view, turning inward and eliminating a lot of foreign trade would be much better for all of our citizens. Sure, it would suck for the average Chinese, but in a pragmatic sense that's really not my problem.

At some point, energy shortages will in fact necessitate a return to smaller economies of scale, and then it will become apparent who can and cannot do without massive foreign trade.


And a gracious thanks to both of you.

I have always firmly believed that a cutoff of China trade is what this country desperately needs...and if we imposed a total blockade upon China tomorrow, their entire economy would crash, global demand for oil would decrease, and labor unions would once again revitalize the American middle class, enabling the US government to take on multi-trillion dollar projects in nuclear, rail and new land-use projects designed to eliminate the need for private automobiles. Crashing China is the *one* thing that could give the United States that "Second Chance" that we so desperately need.

As to why people don't see the logic of cutting off trade with China is beyond me. Are people really that addicted to Wal-Mart?? We need to have people marching in the streets now, demanding that we shut off the flow of cheap *junk* (and yes, it's all JUNK) from China.

In my opinion, however much it's worth, shutting off trade with China is the one and only thing that can save America from total ruin as we descend down the back slope of Peak Oil.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby threadbear » Fri 25 May 2007, 21:34:00

$this->bbcode_second_pass_quote('Byron100', '')$this->bbcode_second_pass_quote('jdmartin', '')$this->bbcode_second_pass_quote('Starvid', 'T')he one country on this planet
that would survive a cut off of foreign trade the best, is the US. Massive domestic market, everything is made there, access to all kinds of resorces.


Thank you.

People on this board allow their subjective hatred of America to cloud their ability to create objective posts.

The US is almost uniquely alone in the world in its temperate climate, vast array of resources, market of consumers and producers, and ability to feed itself. The only other country worldwide that shares similar circumstances on our level, and even they're not quite that high up, is Brazil. Most every other country lacks natural resources, ability to feed itself, or supply of workers & producers to withstand any kind of trade elimination.

Consider this: during WWII, the only trade going on with the US of any significance was goods (food, weapons, oil, etc) flowing out of the US to our troops and allies.

No doubt that losing all trade would create some significant economic turmoil here, but it would/could eventually be absorbed. Frankly, from a purely American point of view, turning inward and eliminating a lot of foreign trade would be much better for all of our citizens. Sure, it would suck for the average Chinese, but in a pragmatic sense that's really not my problem.

At some point, energy shortages will in fact necessitate a return to smaller economies of scale, and then it will become apparent who can and cannot do without massive foreign trade.



As to why people don't see the logic of cutting off trade with China is beyond me. Are people really that addicted to Wal-Mart?? We need to have people marching in the streets now, demanding that we shut off the flow of cheap *junk* (and yes, it's all JUNK) from China.



It's not that most people wouldn't LOVE to see what you propose happening, but it wouldn't play out as you expect. The Chinese, are purchasing billions upon billions of American treasuries per year, with their proceeds from selling all of their crap into the US.

Any change in this system and the dollar is no longer based on much. As MMasters wrote that is when the fed starts printing, like Weimer Germany. At least when the Chinese and other internationals are buying treasuries, the dollar is based on something-- the sweat and materials they have sold into the US.

Eventually the system will change, but only if the Chinese cut the US adrift, not the other way around.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby jdmartin » Sat 26 May 2007, 00:10:14

$this->bbcode_second_pass_quote('', 'A')nd a gracious thanks to both of you.

I have always firmly believed that a cutoff of China trade is what this country desperately needs...and if we imposed a total blockade upon China tomorrow, their entire economy would crash, global demand for oil would decrease, and labor unions would once again revitalize the American middle class, enabling the US government to take on multi-trillion dollar projects in nuclear, rail and new land-use projects designed to eliminate the need for private automobiles. Crashing China is the *one* thing that could give the United States that "Second Chance" that we so desperately need.

As to why people don't see the logic of cutting off trade with China is beyond me. Are people really that addicted to Wal-Mart?? We need to have people marching in the streets now, demanding that we shut off the flow of cheap *junk* (and yes, it's all JUNK) from China.

In my opinion, however much it's worth, shutting off trade with China is the one and only thing that can save America from total ruin as we descend down the back slope of Peak Oil.


I'd love to see it but such a move would likely trigger a resource/military war against China. It would most surely have to be done in a much more subtle way, over time, and require massive buy-in from the average US consumer, which seems unlikely considering that given the choice of keeping their neighbor in a job or saving 20 cents on a Tshirt, most people will choose the 20 cent savings. Too bad, really, because one day we'll all wish we protected our neighbor's jobs...
After fueling up their cars, Twyman says they bowed their heads and asked God for cheaper gas.There was no immediate answer, but he says other motorists joined in and the service station owner didn't run them off.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby threadbear » Sat 26 May 2007, 00:21:00

$this->bbcode_second_pass_quote('jdmartin', '')$this->bbcode_second_pass_quote('', 'A')nd a gracious thanks to both of you.

I have always firmly believed that a cutoff of China trade is what this country desperately needs...and if we imposed a total blockade upon China tomorrow, their entire economy would crash, global demand for oil would decrease, and labor unions would once again revitalize the American middle class, enabling the US government to take on multi-trillion dollar projects in nuclear, rail and new land-use projects designed to eliminate the need for private automobiles. Crashing China is the *one* thing that could give the United States that "Second Chance" that we so desperately need.

As to why people don't see the logic of cutting off trade with China is beyond me. Are people really that addicted to Wal-Mart?? We need to have people marching in the streets now, demanding that we shut off the flow of cheap *junk* (and yes, it's all JUNK) from China.

In my opinion, however much it's worth, shutting off trade with China is the one and only thing that can save America from total ruin as we descend down the back slope of Peak Oil.


I'd love to see it but such a move would likely trigger a resource/military war against China. It would most surely have to be done in a much more subtle way, over time, and require massive buy-in from the average US consumer, which seems unlikely considering that given the choice of keeping their neighbor in a job or saving 20 cents on a Tshirt, most people will choose the 20 cent savings. Too bad, really, because one day we'll all wish we protected our neighbor's jobs...


Catherine Austin Fitts had a very interesting take on the present Iran situation. She said that she thought one of the main reasons for the American military buildup in the Straits of Hormuz is so they are positioned to pulverize Iran in the event that the Chinese quit buying and start dumping US treasuries. It would effectively cut China off from their oil supply. Interesting huh.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby jdmartin » Sat 26 May 2007, 00:24:10

$this->bbcode_second_pass_quote('threadbear', '
')Catherine Austin Fitts had a very interesting take on the present Iran situation. She said that she thought one of the main reasons for the American military buildup in the Straits of Hormuz is so they are positioned to pulverize Iran in the event that the Chinese quit buying and start dumping US treasuries. It would effectively cut China off from their oil supply. Interesting huh.


China's economy IS our economy - they have nothing at all to gain by contributing to economic hardship in the US. If we go down, we quit buying all their crap, plain and simple. This is why they're always tossing out bones whenever the heat gets too hot, ie decoupling currency, agreeing to foreign ownership, etc. They can't afford us to go down.
After fueling up their cars, Twyman says they bowed their heads and asked God for cheaper gas.There was no immediate answer, but he says other motorists joined in and the service station owner didn't run them off.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby Tyler_JC » Sat 26 May 2007, 00:56:36

China's GDP: $2.5 trillion

Chinese exports to the USA: $205 billion

Share of Chinese exports that go to USA: 21.4%

Exports to America as a % of GDP: 8.2%

American GDP: $13.22 trillion

American imports from China: $280 billion

Share of American imports that come from China: 15%

Chinese imports as a % of GDP: 2.1%

Conclusion: The American Consumer Market is 4x more important to China than the Chinese Manufacturing Sector is to the American Consumer Market.

The difference in the import/export numbers is the result of some quirky value-added function. But switching the numbers around, or preferably, picking a middle ground yields roughly the same result.
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Re: What if foreign trade to the US were to slow dramaticall

Unread postby Blacksmith » Sat 26 May 2007, 02:40:12

I don't really see a problem in a post globilization economy, quite simply industry will be more locallized around energy sources and transportation will be restricted to renewable sources, animals, sails, wood etc. In the 18th century Europe traded with China, and during the Roman Empire silk was imported from China. Our footprints on mother earth will be a lot smaller, which I really don't see as a necessarily bad thing.
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