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To: James Hutton who wrote (240957)	3/15/2010 2:08:50 PM
From: GST	Read Replies (2) \| Respond to of 306849

The term 'labor rates' is too broad to be meaningful. We will never be competitive at the lower end of the scale -- and we should all pray that it never comes to that for us. The real global competition is not for dirt poor labor rates -- the real competition is for well educated people and highly productive people. No amount of playing with currency rates is going to turn a drug dependent dufus into a well educated, highly productive skilled worker. Devalued currencies do not create highly valued human resources -- they just discount the pay scale for people with no real bargaining power in a global market. Education, skill, innovation and entrepreneurial initiative is where the rubber hits the road. Unfortunately, this is also where there are huge tire tracks up and down our backs and across our national face. We are simply being run over in a world where everybody figured out that the road to being well-to-do is to develop high quality people, and not to have low wages. It is more than ironic that the nation that holds itself as the world's 'leader' in wealth, education and productivity is now demanding to be a low wage economy.

To: James Hutton who wrote (240957)	3/15/2010 2:33:43 PM
From: patron_anejo_por_favor	Respond to of 306849

>> Not that it won't happen, but we seem to be talking either a really long time, or a really precipitous, off-the-cliff drop that would have negative consequences well beyond making our exports more competitive.<< The Chinese will see to it that it takes a very long time, so as to deincentivize us from rebuilding our manufacturing base. Boiled frog and all that......

To: James Hutton who wrote (240957)	3/16/2010 1:03:26 AM
From: Perspective	Read Replies (1) \| Respond to of 306849

Krugman was misquoted slightly: "It's true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States' financial elites, since it would make our goods more competitive, boost asset prices, and reduce our trade deficit. On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings.In short, right now America has China over a barrel, not the other way around."