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07/22/2005 Archived Entry: "From China with love..."

From Krugmeister, connecting the dots from China to interest-only mortgages...

An end to China's dollar-buying spree would lead to a sharp rise in the value of the yuan. It would probably also lead to a sharp fall in the value of the dollar relative to other major currencies, like the yen and the euro, which the Chinese haven't been buying on the same scale. This would help U.S. manufacturers by raising their competitors' costs.

But if the Chinese stopped buying all those U.S. bonds, interest rates would rise. This would be bad news for housing - maybe very bad news, if the interest rate rise burst the bubble.

Replies: 3 comments

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Posted by game cheats @ 09/18/2005 12:04 PM PST

It is not the Guangdong skyscrapers and speculative bubble which allows China to sell us $162 billion more goods a year than we sell them. It is that China's government, by rejecting free-market fundamentalism, can easily conquer American markets where protection is now deemed passé.

Posted by Wei @ 07/23/2005 10:51 AM PST

China is kicking the USA's butt because it doesn't follow the whole "free market" orthodoxy.

http://www.gregpalast.com/printerfriendly.cfm?artid=447

Posted by Greg @ 07/23/2005 10:50 AM PST

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