As the U.S. economy falls farther and farther into the red, China has found success in the east. Even though the dollar is still worth more at face value then the Yuan, China is proposing to reset the value of the Yuan to reflect their powerful new economy. This will have a drastic effect on Wall Street as money from foreign investors is changed from U.S. to Chinese markets. China also has bought bonds of billions of dollars to try and keep the U.S. government afloat because the U.S. is China's #1 importer and is one of the main reasons that the Chinese economy is becoming so potent. Because China basically decides the fate of the U.S. economy, does China have the U.S. on a leash?

I dont know...ask Taiwan.

If they had us on a leash, they would own Taiwan right now. That answers your question.

What does Taiwan have to do with anything? Taiwan does not have economic problems, and they can generate their own money without depending on trade with China. The U.S. trade depends almost completely on China for everything that could probably be produced right in the U.S. China produces everything because their people work for $0.05 a day. If the U.S. decided to reinstate child labor and cut everybody's wages, we could probably be in competition with China.

Why would China want to crash the dollar? That will simply make Chinese exports more expensive and U.S. exports cheaper. It'll hurt China badly.

Fact is, the U.S. has been pushing China to let its currency float freely, instead of keeping it pegged at an artificially low value. China has resisted, precisely because letting it float would hurt Chinese exports.

A "weak" dollar does not mean a weak U.S., just like a "strong" dollar does not mean a strong U.S. There are advantages and disadvantages to both "weak" and "strong" currencies.

And until China fully embraces the rule of law and transparency, investors aren't going to flee U.S. financial markets for China. Once China does that, however, they might.

__________________
Man up.

The PRC has been threatening an invasion for many years now. They consider Taiwan a renegade province. The US considers them an unofficial ally...we even have a law in place that allows us to assist them in the event of an invasion (The Taiwan Relations Act).

The PRC throws a periodic hissy fit over this ever year or so...it pisses them off to no end that the US is selling them weapons. Those weapons...and the threat of US retaliation...are the ONLY things keeping the PRC from invading Taiwan.

It's a long story, but the short of it is this: The PRC believes it owns Taiwan even though it has never actually occupied it before.

It isnt about money.

So if we had to, we'd move our business to South America or Mexico where the workers work for $0.07 per day...BFD. Yeah, it would be a big impact on our economy (at least in the short term) but it would hardly cripple us. It would hurt China a lot more than it would hurt us. Their economic growth is dependent on us...if anything that gives us a leash on them.

For us it's a matter of convenience. For them it's a matter of survival.

I dont know if you knew this or not, but manufacturing labor in the world is hardly in short supply. Thats why it's called cheap labor. There are lots and lots of poor nations that would love our business.

China's currency vis a vis the dollar is a VERY complicated issue. So complicated, in fact, that although I have a Master's Degree in Econ I cannot work through all the issues. The main issue is this, however: The effect will depend upon how much China's currency goes up. They will likely keep it relatively low because the Chinese economy depends so heavily on a weak Yuan. As to which party would suffer more, in the final analysis it would likely be us, although both parties would suffer. China's accumulation of dollars has massive affects on our economy, even keeping mortgage rates down! Folks don't know that, but it's true nonetheless. So, you are right to say they sort of have us over a barrel, but we have them over one, too. They need us. We need them. Both sides know that. That's why you are not likely to see any sort of major conflict, economic or otherwise. By sending our economy into a tailspin they would doing to same to theirs.

__________________
I wasn't born with enough middle fingers.

The only reason that jobs are being exported out of the U.S. is because the U.S. has policies that maintain the well-being of families in America. Thats what pensions and social security are for. China, and other countries don't have to worry about paying their workers at least 6$ an hour. They can pay their workers whatever they want, because their workers are simply trying to survive. The U.S. has gotten a taste of what its like to be able to afford to do whatever they want, and we are never going to turn a away from that. Simply for that reason, we will never be able to compete with China in production and trade, it just costs to much money to make people happy.

The economic consequences would be far shorter term for us than for them. We already had great growth even before they came into the picture.

It just depends on how you define "short". We would be screwed. Things would eventually get better. Same applies to them. But tell that to all the unemployed folks. I'm sure they'll thank you.

Ever been to China? That view is tad outdated. It's certainly true in the rural areas and in some parts of the large cities (sort of like it is here, BTW), but modern China is not all like old China. The economy is booming and along with it there is a very large middle class growing right along with it. They have a ways to go before they are fully modernized thoughout the country, but the big cities are pretty much the same as the ones here. Except cleaner. Everything I can get in Atlanta can be had in Beijing without any hassle at all. From designer clothes (and knock-offs) to Budweiser. Well, pizza is tougher to get and Mexican food is pretty much unheard of, but that's more cultural than anything else.

Keep in mind that making $8,000 a year there is the equivalent of making over $50,000 here. Lunch costs less than $1.00. True, they have few labor laws, but it's not like 1.3 billion people are struggling to eat. Folks seemed to get along just fine.

__________________
I wasn't born with enough middle fingers.

A falling dollar is not necessarily a bad thing, additionally there are differing schools of thought as to how this will affect the economy. Besides the fact that the US has been pressuring China to do this, so at least from their standpoint it is a good thing.

I don't think it will put us in a tailspin, although it might hurt interest rates and the real estate market in the near term. However, it will also make Chinese goods more expensive and should have a positive impact on US jobs. The amount of that impact is debatable as well.

__________________
All you need to know about the energy crisis:
ANWR Exploration Republicans: 91% Supported. Democrats: 86% Opposed.
Coal-to-liquid R's: 90% YES. D's: 78% NO.
Oil Shale Exploration R's: 90% YES. D's: 86% NO.
Outer Continental Shelf Exploration R's: 81% YES. D's: 83% NO.
Increased Refinery Capacity R's: 97% YES. D's: 96% NO

SUMMARY: 91% of House Republicans have historically voted to increase the production of America’s own oil and gas. 86% of House Democrats have historically voted against.