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Will Fed Policy Stoke a Tech Trade War?

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Scott Raynovich
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Re: Trade war
Scott Raynovich   11/8/2010 5:17:50 PM
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Bolaji,

Oh yes, it has definitely started! It will be interesting to see how other national governements -- and the markets -- react to this historic decision in the next few months.

And, as you noted, there appears to be a lot more negative International reaction today.

--Scott Raynovich

Scott Raynovich
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Blogger
Re: Trade war
Scott Raynovich   11/8/2010 5:15:43 PM
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hwong,

I agreed. As usual, the Fed is not looking at unattended consequences. We drive up the prices in China, and the likely outcome is higher prices around the world. People forget how depressed labor costs in China have kept global prices of goods down.

hwong
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Supply Network Guru
Re: Trade war
hwong   11/8/2010 3:32:56 PM
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Ben B is using QE2 as the final option to reduce government debt and boost up exports since Chinese RMB is not expected to devalue soon and our domestic consumption has been idling. Well, over 90% of consumer products are made in China. Dollar devaluation will also increase manufacturing cost because of the exchange rate, plus the job reduction in China due to their lower export will also hurt their spending. This kind of negative feedback effect might not result in more corporate hiring. In terms of trade war, there is no effective means to deal with devaluing dollar and Ben B does know about that.

Ariella
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Supply Network Guru
Re: Trade war
Ariella   11/8/2010 1:18:44 PM
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While  a weak dollar does seem to offer an advantage to American industry, it also has many negative effects on the economy.  It would be short-sighted to attempted to address what is wrong with the economy with such a simplistic fix. 

Jennifer Baljko
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Blogger
Re: Trade war
Jennifer Baljko   11/8/2010 10:51:21 AM
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Hi
Great post. This knee-jerk reaction certainly will have longer-term global ramifications, stretching far beyond commercial trade. 

Of course, something needs to be done to stimulate growth, improve consumer sentiment, and lower unemployment. But, US-centric policies and deliberate currency devaluation won’t help strengthen America’s position in the world community. It’s 2010, and we’re all living in the global economy the US and the Western world enthusiastically created. Let’s update our economic policies to keep pace, in good times and bad.

Llike others on this site, I'll be interetested to hear what comes out of the G20 summit and what kind of pressure other international powerhouses can exert.
Jenn

bolaji.ojo
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Trade war
bolaji.ojo   11/8/2010 10:16:22 AM
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Scott, The "war" has probably started already. Several foreign government ministers are already complaining about the US government's action. In one report "G20 showdown likely over US Federal Reserve's quantitative easing" Angela Merkel, the German Chancellor, has indicated she will oppose the decision to devalue the dollar.



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