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[RedKing]

China's economy being important makes much more sense, they make a lot of stuff.

The U.S.'s economy is kind of a big deal. We buy a lot of stuff.

The way I see it:

USA Defaults> PRC Collapses Economically> USA Collapses Economically> Global Depression> EU Collapses Economically> Global Economic Collapse> World War III> Global Thermonuclear War> End of Humanity.

Of course, that's just my hypothesis.

Actually, China has half a year's worth of GDP in government reserves. Their industrial complexes would go down the crapper, but they actually would probably be better off than most simply because they could give the entire country a 6 month government paid vacation and still come out debt free.

Edit: although by the looks of it, about 40% of their reserves are in the form of the US bonds; but still, that leaves them with over 25% of their GDP's worth in cash reserves. So I guess it would only be a 3 month paid vacation for everyone in China at their current wages.

Or, if the dollar's gonna tank anyways and they're going to take a bath on their bonds....they might just say, "Okay...you know how you've been wanting us to float the yuan? Merry Christmas, bitches." Beijing unpegs the yuan from the dollar, China's cash reserves balloon in purchasing power and the dollar plummets even further. Really, the one thing that's kept the Chinese from using their bond reserves as an economic weapon is the knowledge that it would be a Pyrrhic weapon -- if they do a massive sell-off of their bonds or call in that debt, the dollar plummets and takes the value of their investment with it.

[Lord Shonus]

Economics is much more complex than that. To put it succinctly, it runs more on image than anything else. The US is the biggest importer of Chinese goods. If the Chinese dumped their US bonds, which would require them to sell for pennies on the dollar, because nobody dumps something they think is valuable, so nobody would want it, they would take one hell of  abeating to their cash reserves, and would wreck the US economy even more so. Outside investors would look at the situation and read it as "China's only got three months unitl they run out of cash, and their main market just tanked" even if the Eurasian market could take up the slack. The result is that the yuan would plummet in value and probably kill the Chinese economy, unless they were able to couple it to another strong currency quickly, which I doubt they would be able to do.

[Aklyon]

So economics isn't based on economics, its based on what people think economics looks like instead?

[Lord Shonus]

That's actually a fair explanation. There was, for example, no sound reason for the 1929 stock market crash to have effects as bad as it did. The panic over it cost probably ten times as much damage as the crash itself did.

[MetalSlimeHunt]

So if we were all constantly optimistic about economics....the market would explode with productivity?

[Aklyon]

So if we were all constantly optimistic about economics....the market would explode with productivity?

Are you saying we should throw a ton of optimists into the news to make people more happy about the economics?

[RedKing]

So if we were all constantly optimistic about economics....the market would explode with productivity?

To some extent, that's what the tech bubble of the late 90's was all about. "Wow! Everything with computers and webs and Intertubes is teh future! Online retailers can't fail! It's a whole new paradigm!"

That's what led to people sinking billions into sites like these. Admittedly, it took a couple of years for Amazon to show a profit, and now they're....well, Amazon. But for the most part the phrase "irrational exuberance" perfectly defines what drove the economy into the stratosphere and then off the cliff.

[Lord Shonus]

Optimism would help a good deal. People wouldn't be quite so reluctant to spend money (most people i know are saving every dime that they don't need for food, gas,and bills) if they were more confident that they would still have a job in the morning. That (if it happened on a national scale) would increase the revenue of the companies that got that money, which would help them do better, which would lead to moe jobs. It's not a cure-all by any means, there are real problems keeping the economy down. But it would help.

[RedKing]

That (if it happened on a national scale) would increase the revenue of the companies that got that money, which would help them do better, which would lead to moe jobs.

That last part is what I'm slowly realizing is the fallacious part of the argument. From my experience, if companies get more revenue, they don't automatically use that to hire more workers. They don't even necessarily use it to upgrade equipment and facilities, which would at least indirectly generate jobs. Instead, more often than not they seem to sink it into a tax haven offshore, or they pass it along to the shareholders.

Companies have realized that they don't need to ramp up staffing to get more productive. They can squeeze existing staff by making them scared shitless to lose their jobs. People have a surprising tendency to start "giving that 110%" when they're trying to avoid the axe.

This is especially true in non-manufacturing jobs, where it's not a matter of "X workers can create Y product in Z amount of time". In a classic equation, if you want to increase your output in the same time constraint, adding workers was the only real option. But in an information-based economy, it's "How many projects can you handle simultaneously?". Used to be, you might have one or two things on your plate at one time, and you could devote your attention to them. Now, everyone is expected to be a multitasking fiend who puts in 80 hours a week on salary, because you need 90 to really do the job right. Americans are literally working themselves to death and/or burnout.


Case in point: HP has had multiple consecutive quarters (as in, a few years now) where the quarterly profit has been over a billion dollars. HP Employees have had a salary freeze in place for about three years now. We're not even getting COLA. And most units have either a total hiring freeze or at least strong corporate resistance towards increasing payrolls.

[MetalSlimeHunt]

Americans are literally working themselves to death and/or burnout.

I don't know, it could certainly be a lot worse, like with Japan's workforce. Apparently death by overwork isn't uncommon there.

[RedKing]

Americans are literally working themselves to death and/or burnout.

I don't know, it could certainly be a lot worse, like with Japan's workforce. Apparently death by overwork isn't uncommon there.

Ditto China. (see: Foxconn)

But my concern is that the corporatists' line is "Wow, we're becoming uncompetitive. We need to be MORE like China and Japan."

[UltraValican]

Americans are literally working themselves to death and/or burnout.

I don't know, it could certainly be a lot worse, like with Japan's workforce. Apparently death by overwork isn't uncommon there.

At least japan tries to get workers healthy....china just makes you sign contracts saying you won't kill yourself.

[alway]

But in an information-based economy, it's "How many projects can you handle simultaneously?". Used to be, you might have one or two things on your plate at one time, and you could devote your attention to them. Now, everyone is expected to be a multitasking fiend who puts in 80 hours a week on salary, because you need 90 to really do the job right. Americans are literally working themselves to death and/or burnout.

Only 80? Lazy employees; real info workers work 100+ hours!

http://www.gamingangels.com/2011/06/igda-to-investigate-crunch-time-activities-at-team-bondi/
http://forums.demigodthegame.com/355093

[Bauglir]

Exhaustion that everybody's too exhausted to do anything about isn't a problem, apparently.

[RedKing]

Sadly, that's not that unusual in game design. I have a couple of friends who work at different studios here in the Triangle, and they put in crazy hours. And wear a lot of different hats because of lack of personnel.