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Chinese American Relationship - a Painful Withdrawal Ahead
Consumer toys, electronics, clothing and goods of all sorts have fueled the “shop until you drop” mindset in America that has prevailed for over twenty years here.  After the economic downturn of the early 80’s, Pres. Reagan instilled a sense of confidence in Americans that not even reports of jobs slipping to Mexico and west to China could dampen.

In the early 90's, Ross Perot’s warnings fell on deaf ears as the country elected another optimist in Bill Clinton in 1992. The dot.com crash seemed to affect only California youngsters who had their whole lives ahead of them. It was a time of companies going public and buying and selling each other in a flea market atmosphere where everything was worth something. The market soared and there was talk of the Dow hitting 20,000.
 
After September, 11, 2001, President Bush told the country that the way to beat the terrorists was to go shopping. And we did. At one point, each American had on average of eight credit cards in his wallet. The question posed by barbarians on a credit card commercial of “What’s in your wallet?” was an invitation to add another piece of plastic and spend like tomorrow would never come. Other commercials in print, online, on the tube, crooned that homes worth half a million dollars could be purchased with no money down and payments of under a thousand a month.  We believed and we bought.
 
The party is over and the lights are on. The old place looks pretty shabby. We didn’t do the research and stand up to the ridiculous notion that spending could go on forever without the bills catching up. We Americans saw the dream of a bigger house, a vacation home, another car, a better school for the kids and we went for it.
 
The Chinese, who funded so much of our excess, are, not so much pulling the plug as squeezing it shut. The Chinese are putting their money back into their economy. Chinese economists and the government owned banks are predicting exports will slow to half in 2009. Reserves are shrinking. They are going to need capital to survive their own slowdown and they know it. (How could we forget how long the Chinese have been businesspeople?)
 
Purchasing almost anything in America without it being “Made in China” is almost impossible task. Consumers like the prices and buy while bemoaning the fact that manufacturing and big business went offshore and deserted the American worker. It did not penetrate the consumer that his/her shopping habits had anything to do with the plight of American factory workers.  Was it our fault that the shoes at WalMart were once made in Clinton? Or that the Mattel toys for our nieces and nephews came at the price of lead poisoning someone's niece or nephew in Shanghai? Ignorance was pure bliss and we have been sublimely blissful people.

In this new, post Wall Street collapse day and despite the moans from Main to Wall Streets, we are still being told to buy Chinese.  As recently as this morning, a pundit recommended that unemployed workers with a yen to create a new product “go online and find a Chinese manufacturer to create a prototype.”  Then, show it to your friends and if they like it, well, you are on your way to being your own boss. Just get the product made in China and market it here in the good ole USA.

Economists advise that another stimulus package should not be given to taxpayers in a lump sum check. Dole it out to us in dribs and drabs by cutting our withholding taxes a bit each month. That way we won't waste the money foolishly like we did the last time. When the Bush tax incentive went out, we consumers failed in our duty to consume. Vast numbers of us saved the money or used it to pay bills. The desired effect to get the economy moving with more consumerism failed because of our sudden attack of thrift. 
 
The Chinese pull back may be the first step in the loosening of a relationship that is becoming less symbiotic and more parasitic all the time. And it is getting progressively more difficult to tell who is sucking the lifeblood out of who.  We need their goods, but we can’t afford to buy them. They need to sell us their goods, but they no longer can afford to fund our habit.

Whatever the long range outcome of Chinese American relations, it is clear that in the short run, both sides are going to suffer the pains of withdrawal.
 
 

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