Has Irrational Exuberance Hit China?

[54anickel]

Does this tie in somehow with Greenspan wanting a weak dollar for a bit? Would that help China implode? Or is this just more spin?

http://www.nytimes.com/2003/12/14/business/yourmoney/14view.html?ex=1071982800&en=a67a59e861ee65cd&ei=5062&partner=GOOGLE
snip>
While China's leaders portray themselves as farsighted engineers who can manage their country's economic growth better than a democratically elected government could, their recent economic policies show a strong inclination to let the good times roll for now and to worry later about any ensuing bust.

Prodding the money supply while resisting currency appreciation shows a reluctance to let economic growth falter at all, even as Western economists put China's expansion at an annual pace of 10 percent this fall. "If you're very preoccupied about social stability and you've got a weak banking system, do you really want to appreciate your currency?" said William Belchere, chief Asia economist at J. P. Morgan Chase.

Alan Greenspan, the Federal Reserve chairman, was accused in the late 1990's of letting the money supply grow too fast to accommodate American economic growth. Economists differ on how much this expansionary monetary policy aided the Internet boom and subsequent bust.

But Mr. Greenspan's management of the American economy then seems downright stodgy compared with the conduct of China's rulers now. Indeed, Mr. Greenspan warned in a speech on Thursday of a possible overheating of China's economy, "with its potential recessionary consequences."

more in article

[kalian]

1. One tiny little problem....

China has a ton of US dollars that it could dump in a New York
nanosecond...
All those dollars would come right back here. Nobody else wants
them... IMHO, its like to idiots holding a gun to each other's
head.

[bemildred]

2. Here's a couple thoughts:

1.) If the dollar is worth half as much, then the USA
owes half as much.

2.) None of these fellows gives a tinker's damn about China,
and that's how much their opinions are worth.

3.) Chinese growth means Chinese power and Chinese competition.

[54anickel]

3. I share your first thought. Low dollar helps pay off the debt faster.

But you don't they are correct that China's economy could implode with high inflation? These fellows talking out of both sides of their mouths at the same time?

[bemildred]

4. We just went through the boom and bust cycle, eh?

Have we imploded yet? Were we all worried about it at the
time, or were we cheering it along like gangbusters? The last
time we had inflation problems was the 70s and early 80s,
stagflation, and that was when the economy was stalled, not
when it was growing fast.

Inflation is another way to dispose of unwanted debt, a low dollar
is a form of inflation, inflation is only an issue if it gets out of
control.

China has problems, big problems, but stalling their economy is
a stupid idea as a way to solve any of them, IMHO, and you won't
see any Chinese worrying about whether their economy is growing
too fast.

Yes, these fellows talk out both sides of their mouths. It's
their job to tell soothing lies and spin the other fellows
successes as failures.

[54anickel]

5. Thanks much. So much spin, it tends to get confusing at times.

[bemildred]

6. My pleasure.

Look at it this way, if the current Chinese-US$ currency
rate holds steady, then we still owe China just as much
as always. IMHO that is what the fuss is about here. We
ran this scam on the Japanese in the 80s and they still
haven't recovered. Remember all that horseshit 10-15 years
ago about how the Japanese were going to take over the World
and buy up everything in the US?