Hi Mish, I agree 100% that the US wants a lower USD, and the US will have it, against all currencies and against resources, but the US may not be in a hurry in the case of the RMB, having to satisfy itself with clear China movement toward economic/exchange rate reform as opposed to overnight shock-change within the context of 'not ready', have a blow up, and debris all over US Treasury as well as generalized Asian instability. Besides, China simply will not take the risk of internal instability by growing too fast or too slow, with a currency that is too high or too low.
The Chinese manufacturing labour cost is around 2.5% (across all China vs across all US) of US rate, and so no exchange rate adjustment will fix US-China trade issue.
China has in fact become the 51st state of the US (congratulations :0) in so far as manufacturing and sourcing is concerned.
My guess is that protectionist heat will (or should) shift from China to India as US lawyers, accountants, X-ray technicians and such begin to lose out to white collar outsourcing deluge, and see J6P requiring inexpensive Chinese manufactured goods more than ever before to miantain standard of living.
My guess is that Japan will get a bit of US attention the minute November is over and done with. Ford/GM can compete against Japanese Toyota, and Ford/GM is not in competition with Chinese-made cars (they serve fundamentally different markets). Ford/GM can compete better against Toyota by sourcing some parts from Chinese automotive part suppliers.
The basis for my pondering: Partner vs adversary. The distinction must be identified, realized, and worked with.
Chugs, Jay |
