Sesit's Latest
Michael Sesit writes on Bloomberg about the changing nature of the economic relationship between China (and Asia) and the United States:
For years, Americans have reveled in
the bargains they got buying underwear, plastic toys, video
recorders -- you name it -- all made in China. The purchases
kept China’s factories humming and its masses employed. In
return, China financed the buying spree by lending America the
money, investing in Treasuries and other U.S. assets.
It’s a trade that’s unsustainable, isn’t beneficial to either country in the long run and, unless it is managed in another direction, will -- as in all unbalanced relationships -- unravel with consequences neither country likes.
Such is the sorry state of the world economy. The surplus countries can’t afford to live off the debtor nations any longer, and the debtors can’t afford their debts anymore.
And, as he states at the end, the last thing the world needs right now are trade wars.
Simple and hardhitting, is how I'd describe that
Posted by: Varun | January 09, 2009 at 01:36 AM