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Yes right now massive money printing has fewer downsides and more upsides than usual. We are in a highly unusual situation right now though, even if it is exactly the same situation Japan has been stuck in for 20 years. Ben Bernanke did a really insightful paper on Japan's economy back in 1999, with emphasis on what the Japanese central bank was (and still is, sadly) doing wrong. So far the Western world seems eager to follow the same path.

Well, I would pick a couple of other words:

Economic Protectionism.

Lenovo is not the first case. See P&O and Unocal. I am sure Dell and other competing suppliers to the government have nothing to do with it, though. They wouldn't...

This all the more senseless considering what another WSJ article says about the Bush Administration's latest national-security strategy report:

" Much of the 2006 document is devoted to the administration's desire to spread free trade, assist overseas development, promote effective governments and combat protectionism. The fear of protectionism is a new theme in this year's strategy, reflecting increased concerns within the administration that growing jitters over international trade and investment could imperil the
growth of the world economy. " (italics mine)

There is only so much the Fed can do. If things go well they can comfortably and easily soften the blow, if things go badly there is basically nothing they can do about it. There are a lot of factors lining up here: Continuing large budget deficits (over which the Fed has no actual influence), a nation with a culture of living beyond it's means (over which the Fed has zero influence), an only barely floated (and effectively still pegged) yuan (over which the Fed has no influence), a housing bubble from the very low interest rates of the last 3 years (which puts limits on how fast and how high the Fed can push interest rates), and an increasing unwillingness on the part of China and Japan (the two biggest foreign holder of US debt) to continue buying debt (over which the Fed has little influence).

Please read this paper (I linked to it in one of my other comments as well). It provides an excellent and balanced analysis of issues with the current account deficit. Yes things could go well and the Fed can cushion things nicely. No that does not mean things will go well and no, there's not necessarily anything the Fed can do about it. Is there reason for panic? No. Is there reason to be concerned? Yes, and any sensible economist is actually somewhat concerned and watching the current account closely.

Jedidiah.

No, any competent economist (as opposed to editorial writers for the New York Times) understands that trade deficits are completely irrelevant

We can presume then that Paul Volcker (Greenspan's predecessor as Chairman of the Federal Reserve, and former head of research at the World Bank) and the current head of the IMF, to pick two random examples, are not competent economists.

Yes, a current account deficit is not necessarily a bad thing, and a strong economy can easily carry one. The US current account deficit is, however, getting rather too large, and, more importantly, it is only continuing to grow, with no sign of levelling of or decreasing. That is bad no matter how you slice it.

If you want a nice detailed account of the US current account deficit, how it can be viewed, why it has been successfully carried in the past but may not work out so well now, try this paper which lays things out fairly well. It's old (2002), but covers the main points well.

Jedidiah.

China is really big and really powerful. They're so big and powerful they can tell MS to shove it. And they can tell the US to shove it. If or when China changes, it will be because Chinese people do it. No one is going to push them into doing anything they don't want to do.

And would they go to such great lengths to suppress the concepts of things like "freedom" and "democracy" if those in power didn't fear that a sizable amount of their people wanted to decide what was best for China? I hate to sound like the old codger, but some of us still remember Tiananmen Square.

And if you think that foreign corporations can't have any influence on wealthy nations that chose to subjugate their people history disagrees.

Part of the reason the US has been able to carry such a large current account deficit for so long without any noticeable depreciation in the Dollar is the fact that Japan, and recently also China, have been buying large amounts of US bonds and securities, propping up the value of the Dollar. There are other reasons - for instance the budget surpluses during the Clinton years, and the worldwide view of the US as an economic powerhouse (so they are a little more forgiving of the imbalance). A good discussion of the current account deficit, and why it was carried in the past is here. A discussion of why this careful balance may be tipping toward instability can be found in my journal. feel free to follow the link in my sig if you're interested.

Jedidiah.

While it is true that employment in these industries has declined dramatically, it's not really true that the industries themselves are in trouble. American steel output, for instance, has been stable or generally increasing in the last thirty years. What's really happened is that technological improvements have made the production of steel much more efficient; for instance, a steel worker in 1987 could make 472 tons of steel a year, while in 1997 the same worker could make 947 tons of steel a year. Modern steel mini-mills are actually thriving; it is the old steel firms who have to deal with the leacy of massive pension costs from the days when they had to hire many times more workers than they need to today who are in trouble. The situation is much the same for autos and textiles; it is the transition from low productivity technology to high productivity technology, not so much competiton from imports, which is causing the bulk of the dislocation.

You're right, some things get cheaper with truly open markets. So far those things seem to mostly be plastic trinkets at WalMart. The cost of education continues to outpace inflation, healthcare costs are spiralling out of control and the housing and real estate markets are heavily overvalued, at least in my part of the country. Bargain-basement cars may be marginally cheaper, and of course electronics always get less expensive, but those are the only two durable goods I can think of that have become significantly less expensive.

Strangely enough, health care, education, and real estate are the components of our economy which are NOT generally outsourced overseas. Connect the dots yourself...

Terry

Trade sanctions of one sort or another are traditionally used to bring human rights abuses (and other political goals). It doesn't seem much of a stretch to apply that idea to the trade of information.