Sovereign Debt Crisis: How to Respond - Politics Forum.org | PoFo

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Sovereign Debt Crisis: How should your government respond?

A form of money supply devaluation (inflation)
No votes
0%
A form of austerity
2
25%
A form of default
1
13%
Other
5
63%
#15045157
Rancid wrote:Others, have China bail these countries out.

Perhaps we can have them bail out the whole world, and we can all become subsidiaries of China.

I for one welcome our new Chinese overlords. :up:
#15045181
A nation whose debt is denominated in its own currency, and whose currency is not pegged to another currency or commodity cannot be forced into insolvency. Therefore, you will have to specify the exact nature of the debt crisis you envisage.
#15045623
Rancid wrote:Others, have China bail these countries out.

Perhaps we can have them bail out the whole world, and we can all become subsidiaries of China.

Those countries are already being bailed out by other countries. I suppose the other option would be to giving national assets as collateral to foreign creditors, which should have been added as an option.
#15045624
quetzalcoatl wrote:A nation whose debt is denominated in its own currency, and whose currency is not pegged to another currency or commodity cannot be forced into insolvency. Therefore, you will have to specify the exact nature of the debt crisis you envisage.

Such nations cannot be forced into insolvency because they have the option of either austerity or currency devaluation.
#15045691
This is about the dollar being the reserve currency, at least, that seems to be what he's saying.

Countries accept a currency as reserve because they are trusted allies. It also has to do with the strength of the currency, and stability of economy.

Trump is killing our alliances, and undermining the economy.

If the next president can't repair our alliances, and our economic arrangements, expect change.

When the Brits lost reserve status, their economy took a nasty hit.

One of the presidential candidates used to teach economics. Want to guess which candidate I support?
#15045692
late wrote:Trump is killing our alliances, and undermining the economy.


I agree with the first part, and disagree with the second. Presidents and government don't have as much control over the economy as they think. Trump's only real economic mistake is pulling out of TPP. The trade war, is a mix bagged, there will be winners, and losers. Ultimately, trying to force China to feel a little economic pain (which they have) isn't a terrible idea overall. It's also not a terrible idea for the rest of the world to decouple their supply chains from China (doing business with an authoritarian regime that can more easily hold companies and supply chains hostage is risky. This is a good wake up call for companies).

Ultimately, Trump's effect on the economy will be mostly negligible, except for TPP.
Last edited by Rancid on 31 Oct 2019 13:54, edited 1 time in total.
#15045693
Spend to your means or deal with the consequences in the future.

Default means no borrowing or high interest borrowing (if lucky) and printing means reduced living standards via inflation if over executed. It's a short term fix not a continued policy.
#15045730
Rancid wrote:

The trade war, is a mix bagged



Trade wars are for losers. As someone that lost about a billion before he became president, Trump fits that category better than almost anyone on the planet.
#15045853
late wrote:One of the presidential candidates used to teach economics. Want to guess which candidate I support?

You mean Elizabeth Warren? She actually taught law, though she did write several books on economic issues like student loan debt (from a legal perspective).
#15045858
Rancid wrote:I agree with the first part, and disagree with the second. Presidents and government don't have as much control over the economy as they think. Trump's only real economic mistake is pulling out of TPP. The trade war, is a mix bagged, there will be winners, and losers. Ultimately, trying to force China to feel a little economic pain (which they have) isn't a terrible idea overall. It's also not a terrible idea for the rest of the world to decouple their supply chains from China (doing business with an authoritarian regime that can more easily hold companies and supply chains hostage is risky. This is a good wake up call for companies).


No idea what makes you think the rest of the world has "decoupled their supply chains from China".

That little economic pain will do nothing to China in the long term, it just makes the US look shit on the propaganda front.
#15045859
Rugoz wrote:No idea what makes you think the rest of the world has "decoupled their supply chains from China".


It's already happen with many companies..... Many companies are actively shifting from china. not 100% but to any degree that they can.

India, vietnam, etc. are gaining if you haven't been paying attention to business news....
#15045862
Rancid wrote:It's already happen with many companies..... Many companies are actively shifting from china. not 100% but to any degree that they can.

India, vietnam, etc. are gaining if you haven't been paying attention to business news....


I suppose you have actual numbers that show that, or is it just a bunch of anecdotes?
#15045863
Rugoz wrote:I suppose you have actual numbers that show that, or is it just a bunch of anecdotes?


I don't have time to do your homework (it's your problem if you don't want to believe it), but many articles in the business new sites have talk about how companies are shifting manufacturing away from China. Again, it's not this massive thing that's going to ruin China or anything, but it's clear that the trade war has nudged companies to not be so reliant on China.

The most recent article I recall reading was how the Toy company Mattel has announced they've managed to shift 50% of their manufacturing away from China, and hav plans to be 100% out of China manufacturing in like the next 10 years. Another is Google accelerating their chip deisgn operations in India. India is starting to open up fabs for chips, etc.etc.

I doubt most companies would completely shift out of China. My point is, more and more companies are asking themselves about the risks of being to reliant on China. Some will accept the risk, others will try to mitigate it. This has been clear in the business news cycles.

There is a shift happening, it's not massive, but companies have been nudged away from China. It makes sense, it's a risk to do business with a country that has a tight control over business.

Edit: All it takes for you business to be screwed by China is for the the government to say "don't buy product X" and it happens. See NBA, see Apple. You think a European or American Government has the same amount of influence on people's buying habits? I'd imagine the same is true for India or Vietnam. the heavy government influence on businesses like that is what makes doing business in China a risk. Why invest in business in China, when they can tank it on a whim?

Again, the point is, more companies are now aware that they really have to thing about that kind of stuff when their risk calculations. Business news articles and company quarterly reports have made this clear.
#15045865
Rancid wrote:I don't have time to do your homework (it's your problem if you don't want to believe it), but many articles in the business new sites have talk about how companies are shifting manufacturing away from China.


I believe that you read it, that's not the point.

With "rest of the world" I don't mean American companies. Your examples are American companies obviously directly affected by the trade spat.

Also, manufacturing has been moving out of China for a while now, because it's getting too expensive. Ultimately some causality and numbers have to come along with such claims. That's your homework, not mine.
#15045866
Rugoz wrote:With "rest of the world" I don't mean American companies. Your examples are American companies obviously directly affected by the trade spat.


European companies have said similar.

The thing about reality, is that it's true no matter what you believe.
#15045867
Rancid wrote:European companies have said similar.

The thing about reality, is that it's true no matter what you believe.


What's up with this passive aggressive nonsense? How hard can it be to provide a source?

In 2018, US exports to China have decreased by 7.4% compared to 2017. Meanwhile, US imports from China have increased by 6.7%.
https://ustr.gov/countries-regions/chin ... blic-china

For the EU, both exports to China and imports from China have increased in 2018 vs. 2017.
https://ec.europa.eu/eurostat/statistic ... statistics

That's not exactly what we're looking for, but gives us a hint at "who's winning".
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