Quote:
Originally posted by hytem
You're right, I think, on the 2nd part. A lot of the Chinese profits from all that "made in China" are turned into American securities.
As far as those junky Chinese-made goods go, many of those goods are made in China by American or European-managed companies to Western specs. The Chinese contribute the labor, and are very good workers. The quality these days is very good for the price, i.e., good value...
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That is on the money.
The other thing most people don't realize is because China has kept the Yuan artificially low, they have essentially given US consumers a discount from the real floating value of their exports. Makes their goods more competitive overseas, sure, but they don't make as much money as they could and we get good products at a cut rate price.
So in that sense a cheap Yuan is good for the US so thank the Chinese.
Regarding a Strong Dollar: Keep in mind that the Fed has just raised rates for over 2 years straight. That IS a VERY strong currency policy.
The main issue is that the is a GLOBAL SAVINGS GLUT, even though in the US we don't save jack. And all those savers are looking for someone to loan to...US! So there is lots of liquidity coming into the system even without Bernanke lowering rates. Quite frankly I think he could have kept going to 6% and still seen no ill effects. Historically speaking 6% is still in the basement.
Bernanke has no control over funds coming from overseas.
Regarding real estate investors getting back into the stock market:Don't bet on it. Their money is all tied up in non-liquid assets: Real Estate!!! If they happen to be invested in REITs and there is a run out of those...well, the real estate market really will crash.