The real problem is that the Chinese currency is too low. It must be allowed to float freely so that similar standards of living in the West and in China cost the same. Otherwise Western industry is down the plug.
Dollar index just broke 75.Right now, 74.985.No support now until 72-ish.Interesting times.
Budgie.Western industry is down the plug anyway, once cap 'n trade, and carbon taxes, and windmills etc come, and power stations are mothballed.The man who saved the world is just aching to destroy this country.
Budgie - the fact is that Chinese workers are grateful to work harder and better for a lower standard of living, no human rights, no factory conditions. It's nothing to do with exchange rates.
Bit of a bounce today after a 9-0 vote against more QE.
I don't think it would stop me jetting off for a bout of binge drinking in the Canaries.I just priced up a long weekend's winter pike fishing in Scotland, staying in a B&B with a bar/restaurant - £350 per head for 3 nights including spending money.Last time I went to Tenerife (last time the £ was this low as it happens) £700 for 7 nights including spending money.
If we had retained some of our gold reserves, would it be quite as bad? The banks have now got it so good, I wouldn't put it past them to funding mineral extraction from Mars (nice long payback period). However, the rest of us will have to stay at home.
Elect Kev.The Yuan is pegged to the $.It has everything to do with exchange rates.
electro-kevin ...I have talked to UK people who have visited Chinese factories - they could see no better unit labour productivity, if anything it was worse, and the quality of the products was poor. The standard of living is lower than the UK, as you say, and of course prisoners work for nothing in some factories.I have personal experience in India where a man I met had a similar standard of living to me yet was on far "lower" pay.So some of the enormous difference in the cost of manufactured items from China/India is down to lower standards of living, but a lot more is due to the Chinese/Indian currencies being too low. Reset the currencies fairly (by freely floating) and UK industry will be able to compete much more effectively.
Budgie - I second that. The quality in China is crap (India is better, interestingly). The philosophy (in so far as they have one in China) isn't "continuous improvement", it is "continuous cost down". This leads to cheating & corner cutting. E-K clearly has never been in a Chinese factory. Where we have one guy doing a task, they have 6 or 7, usually doing it wrong.
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