TJ (Roach on China)
well, he's actually addressing the tarriff issue
Yes, the tariffs being an attempt to level the playing field.
the peg has been there for years, so what's so special about now?
It's a situation that has been getting gradually more and more out of whack. Since it's gradual, someone can always argue that today is not so much worse than yesterday that action is warranted. Trouble is, when ten years' worth of gradual changes pile up, sooner or later something has to be done.
if they abandon the peg, then what? is this a cure and is it the cure we want?
Abandoning the peg would certainly be a short-term negative for China, possibly a severe one. Rather than asking if this is "the cure we want", why not ask if we want to continue subsidizing the industrialization of China to the tune of tens of billions of dollars per year? Maybe the answer is "yes", but I think the question should be framed that way, because that is what is happening.
does it really help if imports from china decrease and from japan and malaysia increase?
Sure, it will help some because, by definition, the countries that are higher-cost (than China) producers right now will sell less to the U.S. and hurt our trade balance less.
or, to come back to the message that's a constant through all of his recent analyses: this isn't attacking the problem, its attacking a symptom (and its consequences probably aren't what we want, if we learn the lesson from history). the problem is the current account deficit and no savings in the u.s.
WADR, that's simplistic. There is not just one problem. I've admitted that the worst problem is our behavior, but that's not to say that we should not try to fix other aspects of the situation as well. I would only fault the Congressmen for advocating a tarriff if they were at the same time refusing to admit that we are responsible, too.
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