Chimarica's death now has a ticker.
Thanks to EconPop for this
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The good news is that America will either regain a lot of manufacturing jobs and/or stop consuming as much. The bad news is that the longer we try to sustain Chimerica the uglier its death will be. This is because Chimerica is fundamentally a bubble - the granddaddy of all bubbles in fact.
Sure I know plenty of people think without bubbles America wouldn't have the tech or all these houses built. This is just not true. Having companies pursue the same software or hardware at a ratio of 25:1 instead of just a few didn't make anything go faster. And the houses we need would have been built anyway without building so many we don't need.
Instead of bubbles we need a, (please read) national industrial policy. But most progressives are not any more keen on America having a self-serving national policy then corporations are...
From Forex
"China, the largest holder of U.S. Treasury securities, increased its holdings of government bonds further in March to $767.9 billion. In February, it held $744.2 billion. Japan’s Treasury holdings stood at $686.7 billion in March, compared with $661.9 billion in the prior month."
Further pushing the global debt relationship America has established over the last 30 years means first and foremost increasing our foreign obligations. Now you might be thinking well anyone stupid enough to accept USD at this point deserves what they get. But what is at risk for us is an Argentinian or Russian style meltdown. Mitigating that possibility is the fact that, with the world's largest military, it would be very difficult for any country to collect on America's debt.
Another possible down side of pushing the bubble is that instead of gradual weaning from imports, America could face a abrupt and complete stop of foreign goods. And the big import to worry about there is oil.
This is where an American national industrial policy comes in - one that puts Americans to work building plug-in cars (some think trains) and manufactering whatever else we need to survive. First, everyone in the political spectrum from open border, endless construction, free trade bleeding heart liberals to open border, endless construction, free trade corporatists must become comfortable with an America looks out for its citizens as number one. Its in the interests of bleeding heart liberals because the technology to get America off of oil can be shared with other nations and helps global warming. Its in the interests of corporatists because the technology to get America off of oil is a brand new market and giving jobs to Americans to develop that technology means keeping open the world's largest market. Although none of these globalists, bleeding heart liberals not admitting nations exist or corporatists not admitting nations exist, like nationalism they have to realize that nothing will be accomplished globally unless it can be started locally.
Now you might be saying what about health care, education and solving the financial crisis? But I say these issues are by products of the trade deficit. As all of America's real jobs left for overseas the cost of remaining, un-outsourcable, services became higher and higher. Plus America began inventing whole fantasy financial worlds to make up for the real investments leaving.
So why is it so easy for progressives to get behind global warming or health care or even open immigration but so hard for us to have a real plan for oil independence or re-capturing manufactering jobs in general? Well to some extent nobody is willing to allow self-interest as a goal at all. If it turns out that plug-in cars are too expensive for the rest of the world then there is a sense of winners and losers - although even then the price of oil and greenhouse emissions would go down since America uses 25% of world supply.
Another problem is that Americans have trouble prioritizing issues. Even while we are at war in preparation for peak oil and close to depression over the lack of home grown manufactering, our Daily Kos blogs are full of mostly off topic issues. Predictably Irrational describes experiments that show humans will uncontrollably fight to have all options open even at the cost of losing the entire game.
But the biggest problem is that progressives, including President Obama, find economics boring.
"If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits — and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world." — Jan. 10, in his weekly radio address.
Now I'm sorry but everything the President is warning us about there has already happened. The risks are far, far greater than he or most progressives realize. Take Krugman for instance
According to Mr. Krugman, the largest risk lies in dollar depreciation against a basket of currencies (that China hopes to buy). China’s loss from its US investment, he says, won’t reach 80%, but could well be 20% to 30%.
"Some say the US will see malicious inflation, and I believe this would be the worst result, but I don’t think it’s is going to happen. To my mind, it has not been wise to accumulate so many dollar assets. This is far from a disastrous strategy, but it may be a waste of money."
In what universe is there any bound on China's loss in its dollar investment? How is it a non-progressive (British empire good because protected people from even badder guys - white man's burden nonsense) like Niall Ferguson has a so much easier time imagining calamity? Essentially the intersection of those wanting to believe in progress and those willing to admit the possibility of failure of progress or the necessity of self serving non-military policy is very small.
Strangely it seems the UN took the took the blinders off. For the Democratic Party this is their Katrina. Heck of a job Dems!