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Outsourcing Unemployment To China

Economics / China Economy Sep 16, 2009 - 11:27 AM GMT

By: Mike_Shedlock

Economics

As goes the US consumer so goes Chinese manufacturing. Here is a long but educational video produced by Vanguard on several Chinese manufacturing cities and what the economic downturn has meant for them. It's well worth a play.





That video is more confirmation of the Chinese manufacturing and unemployment woes outlined in How Will China Handle The Yuan? and over a year ago in Is China's Growth Story Coming Unglued?

Yet the myth of Chinese decoupling still persists.

Some day China will be far less dependent on the US but that day is not in the immediate foreseeable future. The videos are proof enough. Moreover, a strong case can be made that Obama Risks Global Trade War With Misguided Tariffs.

For now, stock are rising along with the biggest global reflation in the history of the world, by central bankers in nearly every country in the world, including China.

However, such stimulus is not infinite and is not without cost. Nor can temporary increases in demand caused by massive give-away programs be cause for permanent celebration. At best, stimulus programs shift demand forward stretching out the recovery period.

At worst, such programs add to malinvestments in housing, commercial real estate, and other areas. Government programs seldom, if ever, allocate resources effectively. The wildly popular cash-for-clunkers program actually destroyed productive assets, a repeat on a small scale of misguided efforts by FDR in the great depression to drive up prices of goods.

Yet for all these efforts unemployment is still rising, and even Fed officials admit the outlook for employment and consumer spending is far from rosy. Please see The Problem with Janet Yellen's Recovery Outlook for details.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

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