Just buy online from the European retailers - like what we already do for components.

So many things you don't understand...

The best economy and by far the greatest rise in living standards occurred when we made nearly everything in the US. Living standards have been virtually flat since the late 70s when the government actively began supporting trade deficits (under the guise of "free" trade), and filling the hole with escalating debt. In other words we took a 50% paycut to save 5% on cheap imports. But hey, profits are way up!

Trade isn't a problem but perpetual trade deficits are. And the great majority of it is with China.

BTW, I'm sure as hell not a Trump supporter...

Perpetual trade deficits are not a problem. If they were the US would have been in deep trouble a long time ago. To paraphrase Milton Friedman, we send (digitized) pieces of paper in the form of US currency to China and they send us bicycles in return. Who is getting the better deal? As long as the US dollar is the global reserve currency there can never be a shortage of dollars and the US can never default. We can just keep on printing dollars and the Chinese will keep sending us bicycles. Tariffs, in the other hand, are a tax on consumers and contrary to Trump's idiotic statements, China does not pay - we pay.

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Andrew Inkpen

We *are* in deep shit, relatively. Median real income has been flat for 40 years. Actually it went up about 10%, but in the prior 38 years it climbed >200%.

Digitized pieces of paper... BS. They are claims on real assets. The Chinese can use those $$$ to buy US land, buildings, and businesses. You need to look at the actual effects; depressed wages and escalating debt. Friedman is famous because he was an apologist for big business. "The US" can get away with a lot of things because they are by far the largest developed country in the world, with half the world's military budget. But the things that they are getting away with are not in the interests of 99+% of the population.

yes China could have bought assets yes but no they bough US debt and this has no asset backing whatsoever... I think the worst thing that is happening before our very eyes it the beginning of replacement if US as the main reserve currency ... and that will be when US starts having really big problems.

And what currency can replace the US$? Certainly not China's - a country that does not allow its own citizens to invest outside China and that censors financial news. The Euro? Not a chance. The US$ will be the reserve currency for a long time.

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Andrew Inkpen

you will see RMB will first rise as a transactional currency and will become more of a reserve one...
thats what the new One Belt One Road project is about they will entice nations to start trading in RMB.

nations do realise that USD give US too much power - like for example with IRAN - despite the fact the european countries would want to keep the deal the fact that all the corporates settle in USD makes it easy to enforce US policy on non US domiciled companies. ANd with what Trum is doing reduces the trust and makes other nations eager to have some alternatives.

They buy our debt so we can maintain a trade deficit (without tanking the currency), and they can keep increasing production and selling it to us. It's pretty obvious who this is good for! Look at the US economy and profit vs wage growth over the last 20 years vs China.

If the US$ was no longer the reserve currency, the exchange value of the $ would decline, and production, exports, and wages would increase. The trade deficit would disappear. Hardly a disaster for people who work for a living.

So you don't like M. Friedman. How about W. Buffett - "For 240 years it's been a terrible mistake to bet against America, and now is no time to start."

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Andrew Inkpen

I am not saying that China didnt benefit - but it also means that US could have kept inflation low and focus on more value added industries ande develop them; it provided products to masses for fraction of the cost but I am also saying that China holding so much of US debt allowed US to increase its deficit to 22 tn USD.

and aside of the note about production - many people dont realise that during this time China's society is much more technologically advanced than most of the developed markets.

Good for domestic brands like Guerrilla Gravity which has, supposedly, figured out a way to partially automate the labor intensive layup process.

I largely agree with this though there is a caveat: domestic employment is the core of the Chinese economic model. If you don't play ball with the Communist Party's goals... you might die mysteriously or outright get executed without a trial. Crazy stat: between 2003 and 2011 a Chinese Billionaire died every 40 days.


So, yes, right now certain Chinese companies are setting up manufacturing operations in foreign countries but, IMO, there's a limit to this from the perspective of China's political system. For the time being it's acceptable because China is facing a dollar funding crunch so whatever mechanism gets dollars into the country is acceptable (the on-shore dollar denominated funding market is $900 billion, China's liquid dollar denominated FX reserves are ~$1trillion so you can see that the buffer is discomfortingly small especially given how... ahem... "loose" lending standards are in China.) However, once China eventually devalues the Renminbi the impetus to bring in dollars will become secondary to employment considerations again.

The RMB will never be a reserve currency. Not in the lifetime of anyone posting on this board. This is for a constellation of reasons with primary reasons below:

• If the Chinese made the RMB fully convertible, it would plummet and domestic inflation would skyrocket (good for stabilizing their property market, bad for commodity imports)
• If the Chinese made the RMB fully convertible capital would fly out of the country at a dizzying pace. The old troupe about Chinese millionaires trying to get their money out of the country is true.
• China's legal system is opaque to put things mildly. They don't have much of a track record when it comes to protecting property rights or upholding contract law (huge understatement)
• If you're wealthy and you don't fall in line with the goals of the Communist Party, there's a good chance they'll straight-up execute you. See my post above.

It is true that the USD will remain global reserve currency for the foreseeable future but that does not mean that there aren't consequence for intentionally gutting our own domestic production. It's incredibly naive to think otherwise. Also, anyone who's familiar with economic history knows the context as to why Friedman said what he said. Friedman thought that we could co-op China into part of the Bretton Woods system and that trade in goods would lead to trade in ideas and that, over time, China would transition to become a more open Democracy. Friedman, like most people, was "talking his book."

Starting with the framework that "real" production increases with specialization and trade, we must now decide how that increase is distributed. One of the problems with a globalized system is that Capital is mobile but Labor is not. Accordingly, the gains due to global trade primarily accrue to capital. It's not a coincidence that the rise in both wealth and income inequality in the U.S. coincided with the decline of U.S. manufacturing. It's not the only factor by any means but it is certainly a factor. It's not an exaggeration to say that we sacrificed the middle class of the U.S. to build one in Asia.

Wages and living standard. Not stock market.

its quite strange talking about loose lending standards in China .. what do you mean by that?

also i think a concept of what "middle class" differs between the countires...

Just my observation is that i dont think the standards of living are worse than in the past just that other people have much better standards of living

Correction. We sacrificed the US middle class so the top .01% could become insanely wealthy. The benefit to the Asian middle class was a side effect.

What happened in the US is not a consequence of trade. Rather it's a consequence of what happens when democracy is functionally dead, and the oligarchy manipulates policies to benefit only themselves. The propaganda works so well that hardly anyone is even aware of it...

coming back to bikes...

do we think that the tri bike developments be as fast without cheap production facilities in China?

how about wheels - i still remember the excitement when Flo wheels started - their business was built on sending production to china and providing wheels to the masses.

If the price of goods from China goes up it allows factories in other countries to raise prices and still be competitive. So prices will go up. And wages will stagnate or decrease as other industries sell less. So you'll have less money to spend on more expensive parts.

Don't be such a turd

Unless Flo changed their supplier recently, their wheels are made in Taiwan, not mainland China.

People never talk about the currency of ideas and that's the one place where I give the giant Cheeto a little leeway. Intellectual theft and fraud by China's part doesn't just flood us with cheap knockoffs, but it steals good paying innovative jobs from the US.

You don't necessarily want a bunch of minimum wage jobs back in the US assembling groupsets or frames.

You DO want good paying jobs designing and marketing bikes and parts.

The intellectual property theft hits both fronts. I'm OK with attacking them on that front.

It's similar to the drug war stuff though, it's all in who and how you go after it. There's lots of people and companies in the US making money peddling fake goods.

Toss some people in prison for peddling known fakes (you know, folks selling "Easston" and "Zippp" handlebars for like $45).

I really can't stand the big T, and tariffs suck. But I'd like to see China kicked in the shins a little bit for the rampant theft of everything from everyone they can't develop themselves.

Flo ditching their original China manufacturing partner and moving operations to Taiwan turned out to be a fantastic decision. Ultimately though, even Taiwanese exports are going to go up in price (as they source most of their raw materials from mainland China.)