Paul Krugman:Stupid China Stories
So a stock crash in China triggered a big decline around the world, while I was trying to have a personal life (and succeeding, actually). Leaving aside whether this really made sense, why should events in China matter for the rest of us?
Well, you and I might think that it’s because China is a pretty big economy — a huge buyer of commodities and a significant importer of manufactured inputs too. So when China slumps, you can and should expect knock-on effects elsewhere.
But trust the Republican field to declare that it’s all Obama’s fault. Scott Walker wants Obama to cancel a state dinner with Xi; Donald Trump says that it’s because Obama has let China “dictate the agenda” (no, I have no idea what he thinks he means). And Chris Christie says that it’s because Obama has gotten us deep into China’s debt.
Actually, let’s play a bit with that last one, OK? You could, conceivably, tell a story in which America becomes dependent on Chinese loans; then, when China gets in trouble, it demands repayment, pushing us into crisis too. But any story along those lines has a corollary: we should be seeing a spike in US interest rates as our credit line gets pulled. What you actually see is falling rates:
http://krugman.blogs.nytimes.com/2015/08/24/stupid-china-stories/?smid=tw-NytimesKrugman&seid=auto&_r=0
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I expect that when the tide shifts, the Grand Ol' Perverts will blame Demoocrats for climate change- after all, they proposed all kinds of policy that would have prevented it via the "Free Market!"
