Tuesday, May 17, 2005

Bush Decides to Play Hard Ball With Our Creditors


The Chinese sent really obvious warnings. Evidently, this failed.
The Bush administration warned China today that its currency policies were "highly distortionary" to world trade and implicitly threatened to retaliate if Chinese leaders did not change course within the next year.

In language far harsher than any it has used before, the Treasury Department declared that China's fixed exchange rate between its yuan and the dollar posed a risk to itself as well as to global growth.

But the administration stopped just short of accusing China of outright currency manipulation, a move that would have immediately started a process of direct negotiations with Chinese leaders and the possibility of retaliation if those talks failed.

Typical for a coward. Slap around making loud noises but don't hit for real. This is called "bluster" and the Chinese, unlike the Americans, read things carefully and closely. Guess who came to dinner today in China?

The Fortune 500 as well as the head of the Chamber of Commerce, all begging for Chinese labor, Chinese money, Chinese business. Surrounded with these eager men clamouring for a ride on the Chinese Economic Iron Rooster, the Chinese will spit on this latest attempt at stampeding them into currency change.
The administration warned that if Chinese practices continued without "substantial alteration," they would likely qualify as "manipulation" under American law and prompt more direct demands by the United States.

The harsh language marked at least a partial abandonment of the Bush administration's two-year attempt to cajole China with "financial diplomacy."

Please, stop driving me into lunatical laughter. If manipulating currency is so evil, why aren't we attacking Japan? And of course, derivative players in the currency markets not to mention...Greenspan, Mr. Monetarism is the Way to Go. Nope. It just isn't nice for the Chinese to play this game too.
Left to normal market forces, currency analysts say, the value of the yuan would have climbed against the dollar. But China and other Asian governments have kept the value constant by buying hundreds of billions of dollars in United States Treasury securities.

This is all about the Great Gravy Train, the Mill that grinds Gold, the Golden Goose laying gold eggs: this is where the magic lies that is making our homes amazingly valuable even as they just sit there, inert. This is our entire economy. This is why we are not paying taxes. This is why we can spend like fiends on wars in Iraq and money for hurricane "victims" who weren't hit by any hurricanes and money for Churches. This vast tidal wave of money comes courtesy of Japan and China manipulating the currency so they can have an advantage in trade.

And we are addicted to this money. The noise Congress is making is all fake. It is to rock the workers to sleep thinking someone gives a hoot. Not one Congressman will call for the head of any head of a Fortune 500 company. No one is going to balance the budget or completely cut the money spent in Iraq or anything. Greenspan won't raise interest rates to a realistic level.

Everyone will continue to push the Chinese to keep grinding out the gold. The Giants grumbles as they grind. Some day awfully soon, they will pause and curse us and start grinding salt.

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