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June 27, 2005
Krugman on China
This morning the Times sends out their economist to analyze China. The results are a little better than Kristof's muddled mess yesterday, but still pretty awful.
Fifteen years ago, when Japanese companies were busily buying up chunks of corporate America, I was one of those urging Americans not to panic. You might therefore expect me to offer similar soothing words now that the Chinese are doing the same thing. But the Chinese challenge - highlighted by the bids for Maytag and Unocal - looks a lot more serious than the Japanese challenge ever did.
Why more serious? Krugman never does explain, other than to note that the Japanese bought trophy properties. Of course, Krugman's goal is always to hint darkly at bad times ahead without ever explicitly saying that's what he expects, so he can maintain plausible deniability.
Check out the slanted words he uses: "...living on borrowed funds...our IOUs, etc." And his closing is hilarious:
If it were up to me, I'd block the Chinese bid for Unocal. But it would be a lot easier to take that position if the United States weren't so dependent on China right now, not just to buy our I.O.U.'s, but to help us deal with North Korea now that our military is bogged down in Iraq.
If our military weren't "bogged down" in Iraq, how exactly would we deal with the North Koreans? No differently, because the utility of the military in this instance is limited with Seoul, South Korea, only 17 miles from the North Korean border.
Posted by pat at June 27, 2005 09:20 AM
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