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Obama’s Great Chinese Bank Snobbery (President foolishly disses America’s Chinese bankers)
National Review ^ | 9/25/2009 | Deroy Murdock

Posted on 09/25/2009 7:04:36 AM PDT by SeekAndFind

In one of today’s richest ironies, America’s fiscal health — such as it is — hinges on the generosity of the Chinese Communist party. Annoying Beijing’s mandarins could prompt them to skip our Treasury auctions. If China stops lending the Treasury money to underwrite Uncle Sam’s spendaholism, the Federal Reserve will need to print even more dollars to nudge the day of reckoning back over the horizon.

The Chinese have urged Washington to stop spending and printing so much money, lest inflation turn China’s $800.5 billion in Treasuries into a giant misfortune cookie. Chinese officials have grown increasingly vocal — and decreasingly diplomatic — in asking the U.S. government to start practicing fiscal discipline.

“If they [the Fed] keep printing money to buy bonds, it will lead to inflation, and after a year or two the dollar will fall hard,” predicts Chen Siwei, former vice chairman of the Standing Committee of the Chinese National People’s Congress and now its green-energy guru. “Most of our foreign reserves are in U.S. bonds, and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.” Ambrose Evans-Pritchard of London’s Daily Telegraph reported September 6 on Siwei’s remarks at the European House-Ambrosetti’s economic forum in Cernobbio, on Italy’s breathtaking Lake Como.

“Gold is definitely an alternative, but when we buy, the price goes up,” Siwei continued. “We have to do it carefully so as not to stimulate the markets.”

In other words, like a panda bear in a jewelry shop, China is tiptoeing away from the dollar and into gold, and doing so quietly enough not to rattle commodity and currency traders. This month, China also bought $50 billion in Special Drawing Rights, the International Monetary Fund’s brand-new Esperanto currency that blends euros, pounds, yen, and dollars.

“The U.S. spends tomorrow’s money today,” Siwei’s bluntly added. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

Siwei is absolutely right. The Bush-Obama administration’s fiscal incontinence is staggering, unprecedented, and potentially lethal. Fiscal year 2010’s budget deficit likely will reach $1.4 trillion. Far worse, the Heritage Foundation’s Brian Riedl estimates, President Obama will generate $13 trillion in fresh deficits by 2019, swelling publicly held national debt to $20 trillion, or 99 percent of gross domestic product.

Obama should shift into reverse. He should use his formidable persuasive skills to secure an immediate spending moratorium, slash the budget across the board by, say, 20 percent, and set future expenditures at or below inflation. If he cannot do this, America will have little choice but to keep the Chinese Communists cheerful and eager to buy U.S. bonds.

But rather than pursue the fiscal conservatism counseled by Siwei and other sober Chinese — or just keep Beijing calm and cooperative — Obama did something supremely idiotic: On September 11, he launched a trade war with Beijing.

For the next three years, Chinese tires will face a 35 percent import duty. This is like slashing your banker’s steel radials just before handing him your home-mortgage application. Fiscal recklessness aside, this is dreadful trade policy.

First, no surprise, the target of protectionism retaliated. China immediately commenced anti-dumping actions against U.S. chickens and auto parts. Americans in those industries soon will suffer.

So, too, Cooper Tire and Goodyear. These U.S. companies manufacture tires in China and now will pay a 35 percent tariff on each one they ship home.

Finally, poor Americans will lose as low-cost Chinese tires, some 17 percent of the U.S. market, suddenly dwindle. “I think within the next 60 days, you’ll see some pretty significant price increases,” Del-Nat Tire Corporation president Jim Mayfield predicted in September 14’s Wall Street Journal. He believes “entry level” tire costs will zoom 20 to 30 percent.

In yet another irony, Obama promised to be the multilateral, consensus-building antidote to the venomous George W. Bush and his allegedly go-it-alone, my-way-or-the-highway diplomacy. Today, Barack Obama looks like quite the unilateralist.

— Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution at Stanford University.


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: banks; china; debt; obama
Obama Budget Deficits Reach 99 Percent of GDP




1 posted on 09/25/2009 7:04:36 AM PDT by SeekAndFind
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To: SeekAndFind

I thought our Treasury auctions were mostly unattended by anyone forcing the Fed to buy its own bonds.

Anyway, is this another example of King 0s get intelligence the press keeps trumpeting? They keep saying he’s so smart but Ive yet to see much that would confirm it. In fact most of what he’s done shows incompetent and arrogance.


2 posted on 09/25/2009 7:10:20 AM PDT by 556x45
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To: SeekAndFind
"“The U.S. spends tomorrow’s money today,” Siwei’s bluntly added. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

Why is it RATS have so much trouble understanding this?

3 posted on 09/25/2009 7:16:51 AM PDT by Nathan Zachary
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To: SeekAndFind

Ironic, that our dollar is as crappy as the cheap plastic Chinese trash that you find in the dollar stores. Very fitting.


4 posted on 09/25/2009 7:20:40 AM PDT by TexasRepublic (Obama = Jim Jones coercing us into suicide on a national scale)
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To: SeekAndFind
The Chinese have urged Washington to stop spending and printing so much money, lest inflation turn China’s $800.5 billion in Treasuries into a giant misfortune cookie. Chinese officials have grown increasingly vocal — and decreasingly diplomatic — in asking the U.S. government to start practicing fiscal discipline.

In other words, obama is too much of a big government liberal for the Chinese Communist leaders to tolerate. I knew he was further to the left than any socialist in history, but I didn't expect others to realize that so soon.

5 posted on 09/25/2009 7:22:53 AM PDT by TurtleUp ([...Insert today's quote from Community-Organizer-in-Chief...] - Obama, YOU LIE!)
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To: 556x45

i think there is another thread calling obama an academic but it think he is no where close...he just knows what others tell him.most likely hates reading of any kind so never really has facts.


6 posted on 09/25/2009 7:24:32 AM PDT by dalebert
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To: SeekAndFind
A devalued dollar is the most insidious tax..
Women cannot understand this.. (most democrats are women)..

The prices go UP and they cannot understand WHY..

7 posted on 09/25/2009 7:25:24 AM PDT by hosepipe (This propaganda has been edited to include some fully orbed hyperbole....)
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To: TexasRepublic
Ironic, that our dollar is as crappy as the cheap plastic Chinese trash that you find in the dollar stores. Very fitting.

If you think our 76 cent dollar is crappy now, just wait a few months. Dollar stores will be charging $2 or maybe even a lot more for that cheap plastic crap.

8 posted on 09/25/2009 7:31:03 AM PDT by Nathan Zachary
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To: dalebert
Obama is an effective ‘front man’. No more than that. He called it his ‘gift’ (his oratory skills).

and he loves himself so much ... what you see is everything. MO!

9 posted on 09/25/2009 7:40:09 AM PDT by geologist (The only answer to the troubles of this life is Jesus. A decision we all must make.)
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To: dalebert

LOL, so are you saying he’s just a useful idiot? LOL!!!


10 posted on 09/25/2009 8:39:13 AM PDT by 556x45
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To: SeekAndFind

Geeez, further to the Left than a Chinese Communist!!!!!

Wow.


11 posted on 09/25/2009 8:48:44 AM PDT by DontTreadOnMe2009 (So stop treading on me already!)
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To: hosepipe
Same reason Jimmie Kimmel and his pal got ladies to sign his petition to end womans suffrage on the Man Show .

Look it up on youtube, it's hilarious and on point.

12 posted on 09/25/2009 1:11:29 PM PDT by norraad ("What light!">Blues Brothers)
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To: 556x45

NObama only likes the person he sees in the mirror.

Everybody else is not in his picture.


13 posted on 09/25/2009 3:57:13 PM PDT by ridesthemiles
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To: TurtleUp
In other words, obama is too much of a big government liberal for the Chinese Communist leaders to tolerate.

FDR was too liberal for the Chinese government of today. The Chinese government does not have any equivalents for the following Federal Government programs: Medicaid, Medicare, SSI, welfare payments, Section 8 housing or food stamps. In today's China, if you want to eat, have a roof over your head or get medical care, you need to find a job on your own that pays enough to cover every penny of those expenses.

14 posted on 09/25/2009 4:27:39 PM PDT by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always)
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To: 556x45
I thought our Treasury auctions were mostly unattended by anyone forcing the Fed to buy its own bonds.

The Fed doesn't buy its own bonds, since these are issued by the Department of the Treasury. However, the Fed has in fact bought ~$300b in Treasury bonds so far this year (2009). It has also bought $1.2T in mortgage securities to force mortgage rates down.

15 posted on 09/25/2009 4:31:41 PM PDT by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always)
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To: SeekAndFind

BTTT


16 posted on 09/26/2009 12:28:19 AM PDT by neverdem (Xin loi minh oi)
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