Posted on 11/15/2009 11:46:13 AM PST by blam
China Currency Manipulation About To Trigger Protectionism Crisis
Currencies / China Currency Yuan
Nov 15, 2009 - 06:38 AM
By: Bryan_Rich
Ive written several times here in Money and Markets about the geopolitical time bomb surrounding Chinas currency manipulation. The most recent was in my October 31 column.
I expect this issue to grow in intensity and become a major point of contention for the global economy in the coming year. In recent days the chatter about China and its artificially weak yuan has been picking up.
The Europeans have become more vocal about the problems a weak yuan is causing for their exports. The euro has gained 20 percent against the yuan in the past eight months, putting its exports at a disadvantage.
And this week European industry leaders called for the EU to step up its pressure on China to start letting the yuan appreciate again.
The IMF explicitly included commentary on currencies in its recent report to call out Chinas currency as significantly undervalued.
And with President Obama making his first trip to China next week, the pressure for the U.S. to start taking a harder stance on Chinas unfair currency policies are elevating.
Since Obama has taken office, the Chinese have virtually returned their currency to a peg against the dollar.
And since March, with the resurgence in global risk appetite and the subsequent bounce in global currencies against the dollar, the Chinese have enjoyed a de facto devaluation against other major trading competitors around the world.
Will President Obama be able to persuade the Chinese to strengthen the yuan?
Most importantly, China has kept its exchange rate constant against the recently declining U.S. dollar, the currency of its main trading partner.
[snip]
strengthen chinese currency so they can buy up factories in the west?
Pressure from whom? Like the tire companies, the American producers have already moved their plants to China. If anything the pressure will be to keep the $10 toasters flowing, - who cares about a manufacturing base anymore?
Utter nonsense. The problem is entirely that of the unstable and ever-shifting currency exchange rates caused by the games our government plays with deficit spending and Federal Reserve manipulations.
That America imports more than it exports is an interesting but meaningless statistic. And the first person who says that China is funding our buying goes and sits in the corner. They're not -- they are, however funding much of our government's predilection for spending more than it has.
That's the problem -- it's the spending, stupid.
Watch the banksters and their congressional puppets scream bloody murder then.
Weak Yuan = good for consumers.
Strong Yuan = good for unions.
Unfair trade = American jobs stolen
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