China in Their Own Words

If the yuan isn’t stable, it will bring disaster to China and the world. If we increase the yuan by 20 percent-40 percent as some people are calling for, many of our factories will shut down and society will be in turmoil. If China’s economy goes down, it’s not good for the world economy.

This is China Premier Wen Jiabao, as quoted by Bloomberg News.

Get that? The United States should continue to export jobs to China as some sort of global social program. We should continue to give the Chinese people our jobs so they won't raise hell and revolt. We should allow China to continue to manipulate it's currency, capturing global manufacturing capabilities to keep the Chinese government in power. Wow. Maybe we should import Chinese potential social unrest, for the United States policies are stiffing the U.S. worker and the cries from the Populist are a muted whimper.

Jiabao also chastised the EU for joining the United States in demanding China re-evaluate their currency and blamed the United States for currency fluctuations. Businessweek:

Europe shouldn’t join the choir to press China to allow more yuan appreciation. The euro had a big fluctuation recently. It’s not because of yuan but the dollars. We shouldn’t be blamed for it; if there’s someone to be questioned, it should be the U.S.

Meanwhile the ineffectual austerity loving IMF is deemed global currency cop. U.S. Treasury Secretary Geithner, at least is pushing harder for China to float their currency, although these actions are due to severe pressure from U.S. manufacturers, trade unions and Congress.

The best video report on the latest from the currency wars front is the below Wall Street Journal piece. Bear in mind you'll hear the same ole' platitudes of protectionism, but notice how the IMF basically wants to do nothing, more delays, and also notice how money, investments are flowing into emerging economies at the expense of nations like the United States, and more importantly the citizens, labor force of the United States.

 

IMF Criticizes Currency Fights

 

There is an international monetary system, called Brenton Woods II. Over a year ago, the demise of Brenton Woods II was predicted.

Tim Duy's FedWatch believes the end of Brenton Woods II will be declared November 3, 2010.

The inability of global leaders to address global current account imbalances now truly threatens global financial stability. Perhaps this was inevitable - the dollar has not depreciated to a degree commensurate with the financial crisis. Moreover, as the global economy stabilized the old imbalances made a comeback, sucking stimulus from the US economy and leaving US labor markets crippled. The latter prompts the US Federal Reserve to initiate a policy stance that will undoubtedly resonate throughout the globe. As a result we could now be standing witness to the final end of Bretton Woods 2. And a bloody end it may be.

Currency manipulation is simply the opening salvo for a host of policy and incentive changes needed in the United States to turn it's economy around. Notice how the United States is declared a consumer economy, while China is declared a production one. Not good when all America is perceived globally to be a nation of shoppers, instead of workers.

Meanwhile Bloomberg reports economists are expecting a blow out trade export report from China, to be released tomorrow.

See China's currency manipulation makes America See Red for more background.

Meta: 

Comments

They are scared of the U.S.

They are scared of the U.S. bankers and this item ( http://michael-hudson.com/2010/10/why-the-imf-meetings-failed/ ) explains why the Chinese, among others, is so afraid. Basically, they don't trust the U.S. bankers. And why should they?

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Why can't we just

devalue our own currency by printing a shit ton of money and spending it on jobs to rebuild our infrastructure and create a green energy economy? I mean aside from the slight problem that our rulers in the oil industry and on Wall St won't let it happen?

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because the Yuan is pegged to the Dollar

Devalue the dollar the yuan ratio stays the same. The key is to get the ratio higher.

The Fed already has printed money and devalued the dollar and is about to again via QE2.

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case against China trade on green/alternative energies

This just was announced the U.S. will take the case against China on alternative energy, green technologies for illegal trade. This is a huge win for U.S. manufacturing, for unfortunately to get any action on illegal tariffs, subsidies, dumping and so on, you have to go through the executive branch, but the Obama administration just announced they are taking it on.

From the AAM:

The Section 301 trade petition was filed on September 9, 2010, by the United Steelworkers documenting China's multiple illegal trade practices on clean energy and other green technologies. The 5,800 page petition details the more than 80 Chinese laws, regulations and practices that violate international trade agreements and are designed to crush U.S. clean energy manufacturing and green technology.

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Obama to take action on a Trade Petition?

Very doubtful he will do anything at all re: this. He's been the perfect corporatist tool so far. Why would he change? The Dems may very well squeak by in the off-year election and if they do O'Blather will declare victory for his 'policies' and get to work on destroying SS and other wet dreams of the Upper Tenth.

Things are going to get worse before the voters finally tumble to the scam. Obama has been and education for the 'progressive' movement and no messin'.

I think China has some internal problems, their banking 'system' is held together with spit and duct tape, which are going to bite it big time in the very near future. They are not immune to the sort of 'shock and awe' we've seen lately in emerging markets. Of course it helps having their currency grossly undervalued but as I said earlier the like of O'Blather will do nothing about that.

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'When you see a rattlesnake poised to strike, you do not wait until he has struck to crush him.'

speaking of corporate tools

It seems this corporate machine riding on a wave of public dissatisfaction is targeting the very Democrats who are not corrupt...

eek.

Well, Bush even did a few trade challenges via the representative and WTO. But I hear ya. Team Obama has no one to blame but themselves and their corporate corruption for being in this current state. They had it all and blew it.

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The Yuan-Dollar is a Paper Tiger

If the Yuan-dollar exchange rate is that damned important, it shouuld be important enough to China to give a little. Otherwise, maybe we should let the Middle Kingdom experience the dislocations of rural populations moving to the cities to buy good things (apologies to Dick York -- Route 66 fans will understand). If we are all in this together, let's see a little reciprocity -- what is wrong with the CCP undertaking public works, farm to market roads, highways, and free travel for their citizens? If the infrastructure in Shanghai will not support a doubling of population, maybe development projects and transport infrastructure in the hinterlands will "keep 'em down on the farm." Do a little consuming internally and you might not be so export-dependent.
Otherwise, I smell protectionism lurking in the shadows. Maybe a little cultural revolution of a different kind.

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Frank T.

U.S. Backs Off China Currency Dispute

In true form, after the headline buzz is gone, we have this:

The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the U.S. congressional elections on November 2 and a Group of 20 leaders summit in South Korea on November 11.

This administration has to be politically brain dead. The entire country wants China confronted on trade and this is a great opener.

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