China Subsidizes Food

[thunderdownunder]

http://finance.yahoo.com/news/China-...&asset=&ccode=

From Capitalist to Socialists in 29 years - Thats one rocket economy (said with tongue in cheek). "to be rich is Glorious" to be poor is Par for the course.
Damn if its not on Eric's time line.
Cotton on yet?????

other great statements are
Reform is China's second revolution.
Seek truth from facts.
The minority yields to the majority!

All Deng Xiaoping pong

[GRG55]

Re: China Subsidizes Food

Apparently China doesn't have any great statements about Deflation???

Neither does the UN...but I did notice that they scrupulously avoided any reference to QE.

Food prices may rise by up to 20%, warns UN

Poor harvests put global food reserves under pressure, with African and Asian countries likely to be worst hit

Wednesday 17 November 2010 11.06 GMT

The UN today warned that food prices could rise by 10%-20% next year after poor harvests and an expected rundown of global reserves. More than 70 African and Asian countries will be the worst hit, said the Food and Agricultural Organisation in its monthly report.

In its gloomiest forecast since the 2007/08 food crisis, which saw food riots in more than 25 countries and 100 million extra hungry people, the report's authors urged states to prepare for hardship.

"Countries must remain vigilant against supply shocks," the report warned. "Consumers may have little choice but to pay higher prices for their food. The size of next year's harvest becomes increasingly critical. For stocks to be replenished and prices to return to more normal levels, large production expansions are needed in 2011."

Prices of wheat, maize and many other foods traded internationally have risen by up to 40% in just a few months. Sugar, butter and cassava prices are at 30-year highs, and meat and fish are both significantly more expensive than last year...

[thunderdownunder]

Re: China Subsidizes Food

How about $30 tee shirts?
It is time to stop this before it explodes. The reserve currency has NO RIGHT to export inflation to the rest of the World. NO RIGHT.
QE has effects and it will be a most "unexpected" outcome - I swear it will be.
I thank God I am passive and accepting of Fools. But may not be for much longer!

[GRG55]

Re: China Subsidizes Food

How about $30 tee shirts?
It is time to stop this before it explodes. The reserve currency has NO RIGHT to export inflation to the rest of the World. NO RIGHT.
QE has effects and it will be a most "unexpected" outcome - I swear it will be.
I thank God I am passive and accepting of Fools. But may not be for much longer!

The USA has no responsibility for the external exchange value of the Dollar. I wasn't aware that reserve currencies had, or did not have, "rights".

How to chart a course out of the Sino-American storm

By Martin Wolf

Published: November 16 2010 22:25 | Last updated: November 16 2010 22:25

They came; they saw; they lost. That is the reaction to what emerged on global rebalancing at the summit meeting of the Group of 20 leading countries in Seoul last week. Publicly, surplus countries persist in calling on those in deficit to deflate themselves into economic health. The consequences of this folly are now evident in the eurozone. At the world level, the US will never accept it...

...In public, of course, debate has focused on the sins of quantitative easing by the Federal Reserve, with China and Germany voluble in condemnation. Why such modest monetary easing, in the context of a weak US economy and stagnant monetary growth, has caused such hysteria is hard to understand.

The core of China’s condemnation is that the US is exporting its troubles, by deliberately driving down its currency. It is easy to see three objections to this attack: first, it is untrue; second, exchange rate adjustment is necessary; and, third, this is a good description of Chinese exchange rate policy, instead...

...Yet, unlike the US, China is indeed “printing money”, in order to buy foreign currency and protect external competitiveness. By September 2010, China had accumulated $2,648bn in foreign currency reserves (close to half of gross domestic product). In his remarks in Seoul, Hu Jintao, China’s president, called on the leaders to be committed to “the effort of opposing all forms of protectionism and removing existing trade protectionist measures”. Yet his own country’s currency policy surely comes under the category of “all forms of protectionism”. As the proverb goes, people who live in glasshouses should not throw stones...

...Changing this picture is not just in the interest of deficit countries. If the latter are unable to put their economies on a sustainable footing, there is a good chance that they will adopt more brutal methods to halt the drain in demand. This means protection, which would harm everybody, in the long run. It is far better to engage in a serious discussion of the path to adjustment than end up with such a battle for markets in a world of excess supply.

None of this will be easy. In monetary policy, for example, the possibility of a temporary stalemate between the US and China exists: the former can create dollars without limit, while the latter can respond by creating renminbi without limit, with which to buy the dollars. The “victor” in this struggle might be the one afflicted second by inflation...

[Sharky]

Re: China Subsidizes Food

From Capitalist to Socialists in 29 years

China was never capitalist. They are still communist at the core, only with a mixed economy in special economic zones -- and even there, people are readily denied property rights and are subject to the whims of party officials.

[touchring]

Re: China Subsidizes Food

China was never capitalist. They are still communist at the core, only with a mixed economy in special economic zones -- and even there, people are readily denied property rights and are subject to the whims of party officials.

Do you intend to mean fascist with "panda characteristics"?

[Sharky]

Re: China Subsidizes Food

Do you intend to mean fascist with "panda characteristics"?

I suppose China is blurring the line somewhat between communism and fascism.

Fascism is a marriage between corporations and government, where the corporations maintain apparent ownership of the means of production, but they're told how to use and dispose of that property by government (including government that's influenced by other corps). In communism, there is no private property; in theory the people own everything; in reality the people own nothing and the government owns everything.

China is a bit of a mix. Corps and individuals appear to be able to own stuff, but only until the gov (in the form of some party official) decides otherwise--at which time they can freely confiscate, destroy, imprison, etc. Whole cities have been leveled to make room for new industries.

[touchring]

Re: China Subsidizes Food

China is a bit of a mix. Corps and individuals appear to be able to own stuff, but only until the gov (in the form of some party official) decides otherwise--at which time they can freely confiscate, destroy, imprison, etc. Whole cities have been leveled to make room for new industries.

ic, but isn't this worst than pure fascism?

[Sharky]

Re: China Subsidizes Food

ic, but isn't this worst than pure fascism?

In both cases, there's a natural progression toward dictatorship. The closer society gets to that point, the more it denies individual rights and the more oppressive it becomes.

[touchring]

Re: China Subsidizes Food

In both cases, there's a natural progression toward dictatorship. The closer society gets to that point, the more it denies individual rights and the more oppressive it becomes.

China is no longer a dictatorship, it used to be one under Mao. I would define any nation leader who has held onto power (officially or unofficially) for more than 15-20 years as a dictator.

[KGW]

Re: China Subsidizes Food

The US of A is, de facto, a facist state. Is it capitalist? Does it matter?

[Sharky]

Re: China Subsidizes Food

China is no longer a dictatorship, it used to be one under Mao. I would define any nation leader who has held onto power (officially or unofficially) for more than 15-20 years as a dictator.

After Mao died in 1976, China was able to put a new constitution in place in 1982 and turn away from pure dictatorship; now they have the multi-person, but still unelected Politburo at the helm. However, China has never repudiated Mao or his actions and the resulting 20 to 45 million deaths. As soon as things take a turn downward -- as they always do -- or if some external event comes up as a trigger (such as war), I think there's a good chance they will end up with a pure dictatorship again.

[thunderdownunder]

Re: China Subsidizes Food

Now to get some insight into how bad it MUST be to have to resort to this.
No other comments by me would highlight how precarious this has become other than to say it may be coming to a Walmart near you.
http://www.bloomberg.com/news/2010-1...-update1-.html

[jk]

Re: China Subsidizes Food

richard nixon tried wage and price controls in the u.s. didn't work too well. that was followed by alan greenspan showing up next to jerry ford, wearing a w.i.n. ["Whip Inflation Now"] button. somehow, that didn't work either.

[FRED]

Re: China Subsidizes Food

richard nixon tried wage and price controls in the u.s. didn't work too well. that was followed by alan greenspan showing up next to jerry ford, wearing a w.i.n. ["Whip Inflation Now"] button. somehow, that didn't work either.

In the spring of 1789 the French Assemblee decreed the issuance of 400 million livres of notes, called assignats, secured by the properties which had been confiscated from the Church during the revolution. By the fall of 1789 the Assemblee approved the issuance of 800 million of noninterest-bearing notes and decreed that the limit on such notes was to be 1.2 billion livres. Despite this stated limit, nine months later another 600 million livres was approved and in September 1791 another 300 million. In April of 1791 another 300 million was approved.

Prices rose, but wages didn't keep up and in 1793 a mob plundered 200 stores in Paris. Price controls were imposed (Law of the Maximum). Output decreased and rationing had to be implemented. To force acceptance of its money the French government imposed a 20 year prison sentence on anyone selling its notes at a discount and dictated a death sentence for anyone differentiating between paper livres and gold or silver livres in setting prices.

By 1794 there were 7 billion livres (assignats) in circulation. In May 1795 this total reached 10 billion livres and by July 1795 it had gone up to 14 billion livres.

When the total reached 40 billion livres the printing plates for assignats were publically destroyed. A new type of note, called a mandat, was issued, but within two years these also lost 97 percent of their value. The printing plates for mandats were also publically destroyed. In 1797 both assignats and mandats were repudiated and a new monetary system based upon gold was instituted.

San José State University
Department of Economics