Tuesday, February 24, 2009

Who to help us out of our mess?

Japan or China?

Both?

America's New Rescuer: Japan was written by David M. Smick for The Washington Post:
"Washington can do nothing here. Financial markets will conclude that the Federal Reserve will eventually monetize, or devalue, the debt by letting inflation soar. Such an expectation of future inflation will produce, in the near term, further increases in market interest rates -- again, smothering recovery.
From The Washington Post also came Harold Meyerson's China and the United States - the Dysfunctional Duo:
"Devising a successful economic strategy for the United States is a good deal trickier. When our economic elites offshored much of our manufacturing sector to East Asia and other cheap-labor lands, and took arms against union labor here at home, they ensured that most of the American jobs created over the past quarter-century would come in retail and service sectors that paid less than manufacturing. Every year for the past couple of decades, we've added lots more sales-clerk, cashier and fast-food jobs than we've created in high technology or energy. Yet Americans have been able to maintain middle-class living standards -- not through rising income but through rising debt, available to us because China has funneled the immense revenue it amassed selling us goods back to us in the form of loans that we can no longer repay."

Which probably explains The New York Times' Clinton Paints China Policy With a Green Hue :
"Human rights groups have criticized Mrs. Clinton for soft-pedaling Tibet and other issues during her first visit as secretary of state. She said she did not want these disputes to interfere with critical challenges like climate change, the global economic crisis and security concerns."

***

On the global economic crisis, the two governments said they would work together to chart a recovery. Mrs. Clinton said she expected to see changes in the economic relationship between China, with its high savings rate, and the United States, with its heavy borrowing.

During their meeting, she said, Mr. Yang told her that Chinese people were spending more on home appliances. “It would also be fair to say that that many Americans have now come to terms with the fact that saving might be a good habit to acquire,” Mrs. Clinton said.

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