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China: Don't mess with the iron house

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Paul Mason | 10:34 UK time, Friday, 15 October 2010

It's been a bad week to be inside the Zhongnanhai, the walled compound in Beijing that is Communist Party HQ.

Amid the Ming-era landscape of lakes and pagodas the ruling elite have been forced to watch jailed dissident Liu Xiaobo awarded the Nobel prize; then a letter signed by 23 party elders was released to the press, calling for an end to censorship, the end of internet spying and a no-taboos discussion of party history.

Then the Chinese basketball team staged a mass brawl with the Brazilians, live on TV, getting themselves a month's suspension.

And later on Friday it could get a little bit worse than that. The US Treasury is set to release its twice yearly report on exchange rates, and there is a chance it will finally get around to formally accusing China of currency manipulation. If it does that, it will give the US the right to invoke bi-lateral trade sanctions against China.

While traditionally the US Treasury avoids using the term, this is election year and while in the US I heard nothing but spleen vented against China, from sources as diverse as the Tea Party movement and the United Steelworkers union.

Euro rise

Whether the formal move happens today or not, China is in the sights of US policymakers, and currency war is - in any case - already at the mobilisation stage.

The US has finally managed to do what the Bank of England did for two years - talk down the dollar. The graph on the front page of today's Financial Times shows its progress, slicing 10 points off a trade weighted index since January.

Meanwhile Japan is busy trying to devalue the Yen. And poor old Europe, which thought it could offset the impact of fiscal austerity with Euro devaluation, has seen the Euro soar instead, with Goldman Sachs predicting a further 4.7% fall of the dollar this year and a 4% rise in the value of the Euro.

Just to be clear - if the value of your currency rises in a situation like this, it is bad, because it means your exports get dearer. With the public sector in retreat across Europe, and calls for the private and export sectors to take the strain, a rising currency makes this impossible.

Conversely if you can talk, trade or bully your currency in a downwards direction, you can effectively export unemployment somewhere else.

This is the great lesson Ben Bernanke taught the world about the Great Depression - the Hoover administration's attachment to the dollar-gold peg undermined all its domestic stimulus efforts. Those who devalued first recovered first.

Feeling beleaguered

Today the US needs to devalue against China above all - but cannot because China maintains a currency peg to the dollar, allowing for only mild appreciation over time.

So where next? Well World Trade Organisation Director-General Pascal Lamy in Friday's Guardian warns of actual trade war; and we find the Germans circulating a document accusing China of dumping practices in Eastern Europe, where its companies are winning lucrative contracts.

What we are seeing is the metaphorical rolling stock being assembled and the military bands polishing their instruments.

China feels beleaguered. America feels beleaguered. Both have political dysfunctions in that the US population believes it is state intervention that is causing the crisis and will resist any further stimulus, Meanwhile China cannot allow either a free labour market, free trade, free currency exchange nor free speech because each of these threatens the ability of its communist elite to spend their days in quiet contemplation by the central lake inside the Zhongnanhai.

How beleaguered they feel can be read in the subtext of this article from the People's Daily today (The Endless Ideological Wars Against China):

"The West will continue to target China in its ideological war. It seems the Western way has to be the only way and people around the globe should adopt the Western attitudes. In the minds of some Westerners, even if China grows and develops to an advanced level, it still needs to surrender to Western ideologically."

"China has adopted much Western wisdom since its opening-up. But it refuses to be westernized. The rejuvenation of the Chinese civilization is its dream. The more China learns from the West, the more confident it becomes in its own culture."

The article draws a clear line between China's determination to avoid democracy and to defend its economic place in the world.

The iron house

In 1915, at a time China seemed trapped, culturally, amid the wreckage of the Qing Dynasty and equally determined not to become westernised, the great Chinese novelist Lu Xun warned the young idealists who would go on to form the Communist Party:

"Imagine an iron house without windows, absolutely indestructible, with many people fast asleep inside who will soon die of suffocation. But you know since they will die in their sleep, they will not feel the pain of death. Now if you cry aloud to wake a few of the lighter sleepers, making those unfortunate few suffer the agony of irrevocable death, do you think you are doing them a good turn?"

Shaking things up could only do harm, was the message. But Lu concluded:

"In spite of my own conviction, I could not blot out hope, for hope lies in the future."

China's leaders are issuing, in these recent comment articles, the same warning as Lu Xun: don't shake things up because our rule is as permanent as Lu Xun's iron house. Waking the sleepers can only cause unnecessary suffering. It is a warning directed at the West, at dissidents like Liu Xiabo, and at the 23 party veterans.

If a currency war breaks out for real, it will shake up a lot more than the forex market.

Comments

  • Comment number 1.

    " Meanwhile China cannot allow either a free labour market, free trade, free currency exchange nor free speech because each of these threatens the ability of its communist elite to spend their days in quiet contemplation by the central lake inside the Zhongnanhai."

    Don't you mean their Constitution? Wouldn't they have to have another Libertarian revolution in order not to do as they are doing?

    "The article draws a clear line between China's determination to avoid democracy and to defend its economic place in the world."

    Don't you mean liberal-democracy? They are a democracy - they're just not a liberal-democracy. Their leadership is democratically elected in much the same way that the Labour Party's is here is it not?

    They learned that from the Fabian Labour Party (which is as popular as lice here of course).

    Beware of ethnocentricism anbd revisionism, it's misleading and confusing and bad for the economy. That's what the People's Daily is referring to ;-)

    Just remember, this was a Trotskyite/anarchistic/Libertarian swipe at Old Labour's Fabianism. 1984 was the 100th birthday of the Fabian Society.

  • Comment number 2.

    So lets see, you operate a Dollar peg but your NOT a currency manipulator! A classic contradiction of terms if there ever was.

    Oh and just to make it even less obvious you price all your goods, not in that of your own currency, but in the currency that you are pegged to; but not a manipulator of!

  • Comment number 3.

    Hmmm.

    Trade sanctions in some form are probably inevitable now, judging by the balance of responses from the USA on your last post there is still a lot of denial out there in the US about the position they are in economically as a nation and the knock on effect that has in terms of geopolitical leverage, which is constantly and actively being eroded now as the rest of the world progressively extracts itself from the dollar. In the modern world military might does not get you as much bang for your buck as it used to, which also leaves the US exposed in terms of the influence it can exert.

    The USA popular denial is likely to manifest itself in the form of national pride and a belief that things will get better if they start to 'stand up for their traditional values again', that in turn will, via democracy, turn into political pressure / sanctions/ economic cold war.

    It is hard to see how that can be avoided now, so lets focus on what will happen.

    The best outcome is likely to be if that process is gradual and carefully managed by Chinas ruling engineers (they hold most of the cards and have the biggests stack of chips on the table I would say now so can use that to control the 'game').

    Sure there will be rhetoric and cross words, but below the facade, if they can buy enough time such that the world can ween itself off the dollar and USA consumption the whole power shift process could be bumpy but not catastrophic.

    The trouble is the USA may know that too and may choose to force the pace by taking the gloves off before its remaining leverage is eroded to the point of being manageable.... at which point it will find out how many friends it has in the world.


    Dont get me wrong, there is a great deal of good in the States, I just wish they could see that if they re-focussed their substantial energy, positivism and resources towards a more sustainable global model this would be a tremendous gift to the world.

    Alternatively if they all get their shoulders fully behind begger thy neighbour and begger thy planet free market capitalism dominated by corporations, banks and thier lobbyists it could get very very nasty and at the end of the day and instead of being a positive force in the world they will become increasingly isolated and looking more like what they profess to hate than the constitution they profess to love.


    I just wish they could see what a golden opportunity is before them, but to realise it, it needs bit of humility and acceptance that what they have been doing is flawed, just as USSR style communism was flawed.

    You could view the collapse of the USSR as a precursor to the collapse of the USA, the most effective governance, you could argue is a compromise position between those 2 extremes.. chinas (Deng Xiaping's) 'caged bird' concept of capitalism.

    You could also argue that this is what the Uk currently has with the coalition government, a seemingly unlikely marriage between left and right, which much to most pundit's surprise is proving quite popular thus far.

    The USA does not seem to have that option on the table despite (theoretically) being ademocracy.

    Interesting...



  • Comment number 4.

    Great piece Paul, absolutely relevant, brilliant.

    In case you missed it on the earlier thread....

    UK steel exports to Germany soar!!!

    http://www.bbc.co.uk/news/world-europe-11547964

  • Comment number 5.

    Great article.

    A weaker dollar was a good thing in the past when we manufactured machine tools, clothes, toys, consumer electronics, and just about everything else. Now machine tools are made in Germany and China; clothes are made everywhere except the USA; toys are mostly made in China; and consumer electronics are made in China and India. As I wrote in my blog post "Boehner gives himself a b*ner" (replace '*' with 'o' before searching), the top five exports to China for the USA are:
    1) oilseeds and grains
    2) waste and scrap
    3) semiconductors and electronic components
    4) aircraft and parts
    5) resins, synthetic rubber, and fibers

    1, 2, and 5 are not responsible for a huge number of jobs. Intel and a few companies are largely responsible for 3, but I'd bet a large number of yuans that these corporations will build all new factories outside the USA. And 4 will soon be a non-issue, after China releases its C919 airliner in 2016 [Unsuitable/Broken URL removed by Moderator]

    In other words, a weaker dollar is only useful if US factories actually manufacture products.

    Mason mentioned that the Germans are worried about Chinese dumping in Eastern Europe. A much more serious concern is Chinese industrial espionage. As I wrote in my blog (search for "Der Spiegel" to find the German stories), China has stolen railway technology and other industrial secrets. China started manufacturing its own high-speed and maglev trains after a combination of espionage and requirements for railway companies to share trade secrets.

    Another thing that Mason could have mentioned, but an article can only contain so much, is China's entry into the WTO in 2001. China knew darn well what it was doing; it wanted access to foreign markets, yet it never intended to open its markets to the outside world. Now almost ten years later, the world is fed-up with China's behavior, but it is almost too late to do anything about it, as China has stolen enough trade secrets to manufacture just about anything on its own. And now we are going to let Russia, the world's #2 country for intellectual property theft, into the WTO.

    On a related note, I just published the second of my television satire blog posts, "CNN Newsroom with Kyra Phillips for November 1, 2010."

    http://saucymugwump.blogspot.com/

  • Comment number 6.

    Can the Chinese Communist Party hold on to power as the yuan appreciates & exports suffer?

    Will the economic battle between the US & China remain economic?

    Just what is the Chinese plan?

    Clearly, the Chinese Communists know that the defeat of capitalism is largely an economic matter.
    That by undercutting production costs in the West, the productive capability of the West has been seriously damaged.
    (They should understand 'productive' in the sense of labour adding value in the circuit of capital - finance adds no value but is a circulation cost).
    But with China producing so much, how can the West carrying on buying it all?
    This has required the lending of the trade surpluses back to the West in the form of purchases of Western governement debt - mainly US.
    This form of fictitious capital has enabled the Ponzi scheme to continue for a long time now - the US government runs a budget deficit, fuelling demand & so a trade deficit, the Chinese purchase the US government debt & so it continues - eventually all those US dollars & US governemnt paper become worthless.
    The West, & the US inparticular, is trapped.
    How can they brake out?

    By forcing the dollar down they just worsen the terms of trade.
    The ordinary folk in the US will not benefit quite so much from cheap Chinese labour - the $25 pair of jeans will become $50.
    Similarly, if the Chinese don't buy the US government debt, then US interest rates increase - how many in the West are surving, just, on credit?
    The ordinary US worker will be hit hardest.
    And the Chinese will get a weaker US, economically.
    It the longer run this will mean a weaker US militarily.
    But can the Chinese Communist Party ensure the weakening of the US happens over a long enough time period?
    Maybe the US will decline too dramatically & become policically unstable & even more aggressive.
    And the Chinese workers too may becoming increasing unhappy with their lot & threaten the Communist Party.
    Either way you have to give credit to Deng Xiaoping - its a cunning plan.

    The world is changing before our eyes.

  • Comment number 7.

    Has anyone noticed how the government will scam students if it follows Browne`s suggested “levy” to control excessive fees ?
    Every £1000 of fees above £6000 has a rake off to the government (report p.37). Browne`s suggested £7000 fee to cover the total withdrawl of government funding for the humanities already gives the government £60 per student that the student will be paying back for 30 years.
    If Oxbridge goes for fees of £12000 a year the government rake off from the student`s £36000 is over £9000. Every £1000 over £12000 the government takes £750 but it would still be worthwhile for Oxbridge to try, may be, £20,000. The student pays back £60000, the government gets £27720.
    Fees at these rates give big profits on staff costs to Oxbridge colleges, allowing them to accumulate all their endowment income. In 2008-2009 Oxford colleges had £738 million in land, £1550 million in shares and cash (www.oxford.ac.uk)- up from £1.2 billion in 2001. Cambridge has more.(THES 13/7/01)
    Browne hits teachers and the children of teachers and showers money on Oxbridge and government.

  • Comment number 8.

    @5 In other words, a weaker dollar is only useful if US factories actually manufacture products.

    This is the point Paul was making in his US articles, I believe. As somebody else noted - if the US impose tariffs on China, then the manufacturing will just go elsewhere in the emerging nations. It's no solution.

    It's also notable that the UK is in a somewhat similar position to the US.

  • Comment number 9.

    In #5, I attempted to give a BBC News URL for a business story. For whatever reason, the moderator deleted it (Unsuitable/Broken URL removed by Moderator). Search within BBC News for "China unveils its largest plane" to find the story of 8 September 2009.

  • Comment number 10.

    ..Goldman Sachs predicting a further 4.7% fall of the dollar this year and a 4% rise in the value of the Euro...

    GS predictions are seen as a standing joke and a contrarian indicator [they didn't get to where they are today by telling other people useful information]. Their fx calls would have been disastrous for anyone who traded them.

    You might want to ask Lawson about the concerted action Central Banks took against Japan [Plaza accord 1985] when it was playing the same game as China.

    ...The Japanese, struggling to deal with a sharply and suddenly higher yen, kept their monetary policy relatively loose and fostered a bubble economy that ultimately crashed....

    http://pragcap.com/no-white-flag-in-this-currency-war

  • Comment number 11.

    In #6, duvinrouge wrote: "Will the economic battle between the US & China remain economic?"

    China is covering all of its bases. As I noted in my blog series "The upcoming USA-China war" (google on "saucymugwump" and select the first URL to find my blog), China is building submarines and a base to hide them in. Mason's older post "Rare earth: The New Great Game" noted how China is cornering the rare earth market (it has gotten much worse since his post). If it comes to war, China will be prepared.

    duvinrouge wrote: "The ordinary folk in the US will not benefit quite so much from cheap Chinese labour - the $25 pair of jeans will become $50"

    I don't know how old you are, but that $25 pair of Chinese jeans is not merely $25 cheaper than the equivalent pair of jeans formally made in the USA. Just as one example, I have a Nike t-shirt I recently found in a drawer. It is probably 20 years old, but never worn. It fits me perfectly (an XL). I contrast that to today's Nike Chinese made t-shirts. These latter t-shirts are much smaller; even a size bigger (XXL) does not fit as well (the arms are much shorter). I do not know if the Chinese factory is cheating or if Nike's inspectors are too stupid to notice the lower quality.

    This is what annoys me the most. Chinese products are NOT as good as what we used to have.

  • Comment number 12.

    "Conversely if you can talk, trade or bully your currency in a downwards direction, you can effectively export unemployment somewhere else." Yes but will it be enough and will it be accepted by Americans who have enjoyed feeding off their cheap stuff from Asia. As an earlier contributor mentions there is a limit to what the USA is able to export and if imports are reduced in USA there will be a knock on effect on demand for goods from abroad. This is also a problem for the UK. Time to burn the economics text books and think outside the free market box.

  • Comment number 13.

    #5

    ''A much more serious concern is Chinese industrial espionage''

    Most of the time they dont need to bother with anything as elaborate or risky as espionage, all they have to do is make best use of free markert capilalisms fundamental weakness... the temptation of a quick buck over future prosperity and stability.

    I have worked on a few projects with China as the client, they simply wrote 'knowledge sharing' clauses into the contracts, on one job they paid for an engineer to go there and train thier engineers how to do it as part of the overall deal.

    You know its funny...after that job ( we made abit from it and they were very happy with us I understand) but despite that we dont seem to be getting any repeat contracts from them.

    I wonder why?


    So simple and so effective to completely pull the rug out from under free market capitalism, all you have to do is waft afew cash $$$ under its nose and it rolls over so you can tickle its tummy at will.


    So simple it is really laughable how naive (and stupid) blinded by greed and arrogance since the collapse of comunism the western democracies have become.

  • Comment number 14.

    In #8, gastrogeorge wrote: "if the US impose tariffs on China, then the manufacturing will just go elsewhere in the emerging nations. It's no solution."

    I agree. The solution is much more complex than simple tariffs.

    Multinational corporations like Apple should not be allowed to employ slaves via a subsidiary like Foxconn. Civilized countries should demand that foreign workers receive a fair wage, labor in humane working conditions, etc. This would prevent a lot of outsourcing because it wouldn't be worth it.

    In the old days, products were inspected in-country by local inspectors. Now there is little inspection being done. The recent scares over Chinese sulfur-contaminated drywall, toxic toys, and toxic leather couches in the UK are perfect examples. Corporations should be required to do one of the following: inspect products overseas in the factories using inspectors employed by the Western government, or inspect products at the port of entry using local inspectors. In the latter case, there would need to be sufficient numbers of inspectors to do the job and they would need to have the authority to refuse entire shipments.

    None of the above is possible, however, until corporations are forced to remove their claws from politicians. In the USA, our moronic Supreme Court decided in Citizens United to allow corporations to be able to give unlimited amounts of bribes to politicians. Campaign contribution for politicians should be limited to $5000 per citizen per election per candidate. Note that I wrote "citizen": corporations, groups, and non-citizens must be barred from bribing politicians.

    Term limits would also be nice. We will soon see if the elected Tea Party candidates actually try to pass term limits. I predict they will merely blend in with the corrupt landscape.

  • Comment number 15.

    11 saucymugwump

    `I do not know if the Chinese factory is cheating or if Nike's inspectors are too stupid to notice the lower quality.'

    This all comes down to quality control managed by the brand-owner. Either the brand-owner is a party to this deceit or the brand-owner has skimped on the quality control. The factory will do what it must to make a living.

    The problem a lot of brand-owners have is that they are so busy chasing price-points whilst expanding their profit margin on the high street that they are losing the plot on quality. Since it was quality that gave the brand its valued market position in the first place they are quiet simply losing the plot.

    The term is known as `shagging the brand'. There has been a lot of that and it continues. One day the consumer will wake up.

    The Chinese have invested large sums of money in their textile industry which produces some of the most technologcally advanced fabrics in the world. A trade war might put us all back into knitting our own along with growing our own and cutting down trees to keep warm.

  • Comment number 16.

    One opinion that keeps showing up here is the fear that the Tea Party will take over the USA, become Nazis, and threaten the world. I serious doubt if the first two could occur, but the third is just ignorant.

    Look at the history of the USA before WWII: isolationist.

    Look at the percentage of Americans who possess a passport: 20%. And most of that travel is to our neighbors, e.g. Mexico, Canada, and Caribbean islands.

    Look at the world traveling habits of Tea Party leaders like Sarah Palin: she never left the country before running for VP. Every Tea Party member I have ever met or even read about has never left the country, nor do they want to.

    The Tea Party wants nothing to do with the rest of the world. Whether that is a good thing or a bad thing depends on your point of view, but worrying whether they will pillage the world is really paranoid.

  • Comment number 17.

    In #15, stanilic wrote: "The term is known as `shagging the brand'. There has been a lot of that and it continues. One day the consumer will wake up."

    Great post.

    However, I disagree with your contention that the consumer will wake up. Nike has been doing this for ten years and more, yet they are still a favorite of consumers. The last Nike t-shirt -- and I do mean the last t-shirt -- I bought was last year in the London Nike store on Oxford Street, hoping that only Nike t-shirts in the USA were small. Nope, I had to buy an XXL and the arms are still too short, though the fabric is better than American Nike fabric.

    Note: I have worn the same size of clothes for 20 years; if it was just me getting fat, the old Nike t-shirt I found would be too small. I still fit into XL Adidas shirts, as they have not changed much.

    Another brand that went downhill was Eddie Bauer (probably only seen in the USA). They used to have wonderful fabrics and fit. Then they were bought by Spiegel and their quality went down the toilet.

    stanilic wrote: "This all comes down to quality control managed by the brand-owner."

    Quite right. American multinational corporations only look at the bottom line, especially that of CEOs.

  • Comment number 18.

    Unbridled Capitalism, believed wrongly by many in The City and in the US, to be the bed-rock of the West and Western democracy is actually destroying the West.

    The most fervent supporters of such unbridled Capitalism are either too stupid or too greedy - I assume the latter - to realise it.

    This is all going to end up in a very nasty way for Humankind. If we are lucky, it will be 'just' 50 or a 100 years of a new Cold War.

    It is all beginning to play out like the Star Trek timeline. All we need now is some Eugenics thrown into the mix and men, a 100 years from now, can look forward to a planet populated by mini-skirt wearing females.

    Or something like that.

    Should I have mentioned something about currencies?

  • Comment number 19.

    17 saucymugwump

    Stop it! You are giving this old Cockney visions of fat Americans in Oxford Street. I don't want to go there, thank you very much!

    I think the consumer will wake up and move to quality. Sure, there will still be the down-market traders but in my view all that has happened over the last few years is that the brands have gone into competition with market stall holders and now have nowhere else to go.

    There is already some anecdotal evidence that brands which have refused to compromise on quality are finding consumers switching to them as they represent value for money.

    Value for money is going to be the consumer standard going forward as the consumer cannot keep on spending their hard-earned when they need it for food, keeping warm and putting a roof over their heads. Living standards are falling which is bad news but there won't be good news yet for quite some time. Clothes are going to need to last.

  • Comment number 20.

    He's not the messiah, he's just a very naughty boy !

    Just like the unattainable, forever deferred perfect democracy to come, we make do with a dirty imperfect simulacrum and hope. From our pure dream of money as the promise indefinately deferred and deferrable, grows the mirage of a pure frictionless messianic Capital. Only we have to make do with a dirty impure capitalism capable being inscribed in a (heretical) text.

    The US is the gatekeeper of the global reserve currency, and so is the master capable of reinscrption to suit it's own ends.

    The question is will belief in the US Capital-ism break before China is forced to stop subverting the dollar and subscribe fully to the law of the Fed ?

  • Comment number 21.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 22.

    @14 Multinational corporations like Apple should not be allowed to employ slaves via a subsidiary like Foxconn.

    We live in a new Victorian age, but it's only foreign children that climb up chimneys.

  • Comment number 23.

    Oh, now I get the strategy:

    "Don't look at all the fraud and manipluation going on in the US, look over there at China"

    Eliot Spitzer on Fraud:
    http://www.youtube.com/watch?v=1j2esw2B8TI&feature=player_embedded

    Randall Wray on Fraud:
    http://www.businessinsider.com/mortgage-fraud-scandal-2010-10

    Michael Hudson on China Bashing:
    http://michael-hudson.com/2010/09/america%E2%80%99s-china-bashing-a-compendium-of-junk-economics/

  • Comment number 24.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 25.

    "Neanderthal love story" !?

    Doesn't sound very Mills & Boon to me!

    I can imagine the image on the jacket cover though. Nubile blonde homo sapien female in Raquel Welch style fur bikini grappled by Neanderthal male looking like a model from the original 'Joy of Sex'.

    Other posts on this blog remind me of a well known US tech company that began to have some of its high-tech 'boxes' manufactured in China because China was cheap and would allow the tech company to make more profit. Greed, greed, greed.

    China went along happily with this for a few years, learnt all about manufacturing the boxes and then, surprise surprise, one day they set up a Chinese company making exactly the same boxes but selling them for a fraction of the price.

    Last I heard, as I soon lost interest after rolling around on the floor laughing for several hours, was that the Silicon Valley firm was trying to sue the new Chinese firm for patent violations but seemingly getting no-where.

    Oddly, everyone in that US company outside the US could see it coming but were ignored.

    At which point I feel a Star Trek quote from Seven of Nine is relevant - mainly because I have a soft spot for Seven:

    "You are erratic, conflicted, disorganized. Every decision is debated, every action questioned. Every individual entitled to their own small opinion. You lack harmony, cohesion, greatness. It will be your undoing."

    Was she referring to the differences between the Borg and the Federation or between East and West?

  • Comment number 26.

    Now you tell me!

    Not only was I wondering what on earth you were talking about... but now the Internet Police know that I have googled for and read, somewhat confused, "Neanderthal love story".

    I know this will come back to bite me when I am a celebrity.

  • Comment number 27.

    #15 stanilic wrote:

    "The problem a lot of brand-owners have is that they are so busy chasing price-points whilst expanding their profit margin on the high street that they are losing the plot on quality. Since it was quality that gave the brand its valued market position in the first place they are quiet simply losing the plot.

    The term is known as `shagging the brand'."

    ------------------------------------

    That all sounds like a metaphor to me.

    I'm sure I'm not the only one that thinks this!

    ------------------------------------

    #15 stanilic also wrote:

    "There has been a lot of that and it continues. One day the consumer will wake up."

    ------------------------------------

    We can only live in hope!


  • Comment number 28.

    In #26, tawse57 wrote: "I know this will come back to bite me when I am a celebrity."

    It would only be a problem if you were a politician. For a celebrity, it would increase your fame and fortune. Lindsay Lohan's reputation is not bothered by bad press. By the way, her next movie will have her represent Linda Lovelace. I know there's some joke I can make mixing that with Star Trek . . .

    And thanks for the suggestion to contact Mills & Boon to have my work published. That genre seems to be right up my alley.

  • Comment number 29.

    It seems to me that the prospect of a full blown currency war are exaggerated. Its more a manoeuvring for position at this stage. After all at least half of Chinese exports are produced by or for foreign multi-national corporations, including many major American ones. And retailers like Wal Mart make massive profits reselling cheap Chinese goods way above cost price.
    Most likely is that China will allow revaluation of the Yuan, currently rising by around 1% a month (and therefore devaluing China's US assets (approx $1.8tn) by around $18bn a month), the US will undertake QE2 further devaluing its debt and aim to muddle through until a reassessment mid-2011.
    Geitner has just announced he is postponing the release of the Treasury report on Chinese currency manipulation due to the Yuan's appreciation.
    But another interesting corollary is the transformation of China into a full blow financial power. In 2009 it accounted for around 10% of world FDI. In 2010 China's outward FDI has massively increased. It recently bought Ghana, with an FDI deal of $14bn - Ghana's GDP is just $16bn. And its FDI to Brazil has increased from 2009 $890mn to $20bn in the first half.

 

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