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130 Congressmen Join Paul Krugman's Campaign To Rid The World Of Chinese CNY Manipulation Once And For All, Consequences Be Damned

Tyler Durden's picture




 

By now everyone has undoubtedly been reading reams of primary and secondary opinions based on Krugman's discussion that it is time to play hardball with China on the FX "manipulation" issue. Retaliatory implications aside (and we are confident China will be full of these) it was ironic that one commentator on CNBC today pointed out that since the CNY is pegged to the USD, shouldn't America be looking at itself first when it comes to currency manipulation, before blaming others. In essence, China is merely taking advantage of the exploding US balance sheet, and adding on top of it its own fiat printing largesse, yet offset by its positive trading surplus. Certainly, Bernanke should have thought of that before it set off on the greatest experiment of failed Keynesianism ever. But now that China has served its purpose and was the economic rebound leader for the past year, it may no longer be as needed. Rhetoric aside, consider this well thought-out response to Krugman, appearing earlier in The Economist, which is a deft rebuke to Krugman's call to arms:

Mr Krugman seems entirely uninterested in the domestic political
constraints facing China's leaders. He doesn't consider for a second
the possibility that a bullying strategy on America's part might make
China less likely to do what the administration wants.
Why on
earth would a nationalistic nation anxious to establish itself as great
power want to come off to all observers as a weakling in the face of
American bluster? Mr Krugman would paint China into a corner, forcing
them to take steps detrimental to all involved.

No matter the logic though. The people have spoken and they want CNY blood (or the inverse as the case may be -what is that: lymph?). And not just the people. We have just received a copy of a letter signed by 130 Congressmen, and sent to Tim Geithner and Gary Locke, urging the Treasury to immediately address the "growing problems associated with China's continued currency manipulation" and in essence serving as a springboard to the latent protectionism brewing between China and the US, but never really escalating into all out trade war.

March 15, 2010

Dear Secretary Geithner and Secretary Locke:

We write to express our serious concerns about China's continued manipulation of its currency. By pegging the renminbi (RMB) to the U.S. dollar at a fixed exchange rate, China unfairly subsidizes its exports and disadvantages foreign imports. As we work to promote a robust U.S. economic recovery, it is imperative that we address this paramount trade issue with all available resources. We urge your agencies to respond to China's currency manipulation with the actions outlined in this letter. Doing so will allow American companies and workers to compete fairly against their Chinese counterparts and will boost U.S. economic recovery and growth.

The impact of China's currency manipulation on the U.S. economy cannot be overstated. Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors. U.S. exports to the country cannot compete with the low-priced Chinese equivalents, and domestic American producers are similarly disadvantaged in the face of subsidized Chinese imports.  The devaluation of the RMB also exacerbates the already severe U.S-China trade deficit. Statistics show that between January 2000 and May 2009, China's share of the U.S. trade deficit for non-oil goods grew from 26% to 83% -- an untenable pattern for American manufacturers. And finally, China's exchange-rate misalignment threatens the stability of the global financial system by contributing to rampant Chinese inflation and accumulation of foreign reserves.  For these compelling reasons, we ask your agencies to pursue the course of action below.

First, we urge the Department of Commerce to apply the U.S. countervailing duty law in defense of American companies who have suffered as a result of the currency manipulation. The U.S. is permitted to respond to subsidized imports where the elements of a subsidy are met under the countervailing duty law.  The countervailing duty law outlines a three-part test to identify the presence of a countervailable subsidy:  1) that it involves a financial contribution from the government; 2) that it confers a benefit; and 3) that is specific to an industry or a group of industries.  China's exchange rate misalignment meets all three parts of this test and therefore merits the WTO-permitted application of countervailing duties.

Second, we ask the Department of Treasury to include China in its bi-annual agency report on currency manipulation. Since 1994 Treasury has not identified China as a country that manipulates its currency under the terms of the Omnibus Trade and Competitiveness Act of 1988 ("Trade Act of 1988"), but Secretary's Geithner testimony to the Senate acknowledging that fact surely justifies the inclusion of China in the report. After labeling the country as a currency manipulator, Treasury should enter into negotiations with China regarding its foreign exchange regime. These combined actions will signal the government's willingness to take decisive action against China's currency manipulation, including
the potential filing of a formal complaint with the World Trade Organization.

The recommendations identified above must be done in concert with intense diplomatic efforts, not only with China but also with the IMF and multi-laterally with other countries. Through a combined strategy of legal action and international pressure, it is possible China will revisit its undervaluation of the RMB. If these efforts are not successful, we ask the Administration to consider all the tools at its disposal, including the application of a tariff on Chinese imports, to respond to China's currency manipulation. The economic impact of the RMB undervaluation on American businesses and workers is too great for the Administration not to pursue a comprehensive effort. 

This economic downturn has underscored the pressing need to promote policies that protect U.S. jobs and U.S. businesses. Addressing China's manipulation of its currency must be a critical part of our strategy to rebuild our economy and establish safeguards against future financial crises. The Administration has the legal ability and resources to protect American businesses in the face of China's RMB devaluation, and we urge you to exercise this authority expeditiously.

Thank you for your consideration of this letter.  We look forward to your response.

We are confident Wen Jiabao will be ecstatic about this development.

In the meantime, just in case someone missed Krugman's trade war rhetoric, here is a 12 minute clip from Bloomberg TV in which the NYT op-ed author summarizes his latest view on why the latest satanic speculator is none other than the Chinese government itself.

 

 

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Mon, 03/15/2010 - 17:45 | 266328 Caviar Emptor
Caviar Emptor's picture

In today's Alarming News:

"Net foreign purchases of long-term securities totaled $19.1 billion in January, as net purchases of private corporate bonds fell by $24.8 billion, the biggest drop on record."

The focus has been on Treasuries, this kind of got lost in the shuffle, but signals a potential credit market inflection point.

Mon, 03/15/2010 - 17:47 | 266332 cougar_w
cougar_w's picture

[lymph?] Eww. For some reason that is way TMI.

China is going to rattle their sabers but there's not much they can do, being bound as they are to the global economy. And the Taiwan reaction just makes them look like hayseeds living in the past; guys, either put it behind you or it's still 1965 and you got Mao and mass graves. Now choose. Hint: WalMart doesn't have an aisle full of Mao bobble-head dolls. Word.

Gonna be a fun summer for China. Oh yeah.

Mon, 03/15/2010 - 17:58 | 266346 BlackBeard
BlackBeard's picture

yeah you tell an authoritarian regime what to do Krugman! you tell em! ooohh naivite....

 

Short Economic Nobel prize winners.

Mon, 03/15/2010 - 18:30 | 266421 monmick
monmick's picture

Like my father used to say to me; too much education, not enough common sense (usually followed by a slap upside the head)...

Mon, 03/15/2010 - 17:55 | 266347 lsbumblebee
lsbumblebee's picture

I thought Krugman was some sort of liberal. He sounds like a "America can do no wrong love it or leave it" Republican to me.

Mon, 03/15/2010 - 17:59 | 266357 docj
docj's picture

There's a liberal Democrat in the White House.  So in Paulie WallNutz eyes America can indeed do no wrong.

Mon, 03/15/2010 - 18:02 | 266365 lsbumblebee
lsbumblebee's picture

Further blurring of the lines I guess.

Tue, 03/16/2010 - 01:03 | 266861 AnonymousAnarchist
AnonymousAnarchist's picture

Paul is a statist, plain and simple. Sometimes it's hard to tell which team a statist plays for but they're all pretty much the same.

Bill Anderson has a blog dedicated to PK called Krugman in Wonderland.

Mon, 03/15/2010 - 17:59 | 266356 Ragnarok
Ragnarok's picture

Let the pissing contest begin in earnest.

 

China should just sell a couple treasuries and purchase some gold on the open market, that ought to shut'em up for a while.

Mon, 03/15/2010 - 18:01 | 266360 faustian bargain
faustian bargain's picture

I wonder if they'll skip right to the main event. Maybe it won't happen, but I imagine it would be a spectacle.

Mon, 03/15/2010 - 18:06 | 266372 Ragnarok
Ragnarok's picture

China's not ready yet, but the game of chicken has already started.

Mon, 03/15/2010 - 18:19 | 266392 tmosley
tmosley's picture

I wonder if the Chinese have an equivalent proverb to "Give them enough rope, and let them hang themselves".

If they cut the peg, the US will collapse.  The length of time that it takes will be measured not in years or months, but hours or days (possibly even minutes).

Mon, 03/15/2010 - 23:49 | 266802 Absinthe Minded
Absinthe Minded's picture

It's really sad, us blaming them for our failure to rein in our debt crisis. I love my country but it just keeps getting further and further away from what our founding fathers vision of our country was supposed to be. We are really in trouble but nobody sees it. This Healthcare reform is just a ludacrious vision of Obama and Pelosi. If it passes things will change for the worse. Look at Mass. they are living it now, companies can't handle the price of reform. I have a really good plan where I work, I'm lucky and I realize it, but what will happen under this reform? Will they say," Screw it let's just pay the $3000 penalty and hand the coverage to the government?" Here we are on the brink of losing our AAA rating and they want to take out another trillion dollar mortgage for HC. Oh yeah, I suppose if they bribe S&P and Moody's well enough we'll keep our rating. How long before countries realize the ratings are a farce? First sign of SHTF I am cashing out my 401K for gold, silver, ammo and seeds. God help us all.

Tue, 03/16/2010 - 01:24 | 266873 tomdub_1024
tomdub_1024's picture

I already done cashed...just sayin'...:) Sucks to miss out on the bouncing mortified feline, though...meh...I lost that attachment long ago.

Tue, 03/16/2010 - 09:30 | 267019 Hulk
Hulk's picture

Problem is, Absinthe Minded, by the time we realize that its time to cash in the 401k's or buy gold, it will be too late.

$401k's will either be decimated or locked down by Uncle Sam

and Gold\Silver will not be available.

The time to make the cash out and buy decisions is now

Mon, 03/15/2010 - 18:04 | 266367 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

DAMN YOU KRUGMAN!!!!!!!!!!!!!!!!!!!!!!!

Mon, 03/15/2010 - 18:04 | 266369 Ragnarok
Ragnarok's picture

The only feathers this gov't hasn't ruffled lately is unions and Palestinians.  Why can't we get and ideologue who's sole passion is shrinking gov't.

Mon, 03/15/2010 - 18:07 | 266375 Postal
Postal's picture

Wait, I'm confused (I'm confused a lot now that I've found ZH). Didn't China just sell a barge full of Treasuries because we pissed them off with the whole Taiwan arms deal thing? Why are we continuing to poke them with a stick?

Mon, 03/15/2010 - 18:19 | 266393 faustian bargain
faustian bargain's picture

Maybe the PTB are looking for a distraction/scapegoat, anywhere and everywhere but here in the US.

"It's Not Our Fault!!!"

Mon, 03/15/2010 - 18:07 | 266376 Millivanilli
Millivanilli's picture

Krugman is a dingleberry.

Mon, 03/15/2010 - 18:09 | 266382 THE DORK OF CORK
THE DORK OF CORK's picture

Every time I zero hedge a article about China I get these Chinese women want love advertisements - I beginning to think that there is a Chinese covert operation to love bomb zero hedgers with honey traps so that they can spread their Manchurian candidates amongst the ether of cyberspace.

Mon, 03/15/2010 - 18:16 | 266387 faustian bargain
faustian bargain's picture

...spread their Manchurian candidates...that sounds naughty.

Mon, 03/15/2010 - 22:21 | 266723 THE DORK OF CORK
THE DORK OF CORK's picture

Another thought has entered my little brain but I won't go there now since I know this is a family show

Mon, 03/15/2010 - 18:13 | 266385 Leo Kolivakis
Leo Kolivakis's picture

Krugman is an excellent economist but on this issue, he is patently wrong. I  wrote about The Chinese Disconnect back in October and took issue with his position then. He still carries the same silly views on China. Oh well, after Peddling Prosperity and Pop Economics, he hasn't really produced anything interesting, and is starting to repeat himself ad nauseum.

Mon, 03/15/2010 - 18:21 | 266397 tmosley
tmosley's picture

Krugman is a lot of things, but an excellent economist isn't one of them.

Mon, 03/15/2010 - 18:26 | 266405 Leo Kolivakis
Leo Kolivakis's picture

C'mon, he did get the Nobel Prize, even if it is in the fake, charlatan, pseudo science of economics. Après le Prix Nobel, le déluge!

Mon, 03/15/2010 - 19:07 | 266420 THE DORK OF CORK
THE DORK OF CORK's picture

 Leo he just said that 2005 was a normal economic environment - I know the only sane people in this crazy world are mad people but but I still think he should start taking his medication again.

Then again I agree with him for once - parhaps I need to increase my dosage

Mon, 03/15/2010 - 21:02 | 266627 suteibu
suteibu's picture

Yeah, and so did Obama.  The irony is, Krugman is advocating for Peace Prize winner Obama to start an open trade war with China.  That is sure to hurt Japan and S Korea.

 

Krugman is the same guy who said the reason the Keynesian solution didn't work in Japan in the 90s is because they didn't print more money. 

He recommends passing a law requiring the central bank to pursue at least 4 percent inflation rates for 15 years (Krugman 1998)“  http://mises.org/story/1099

Mon, 03/15/2010 - 21:36 | 266660 Vol Addict
Vol Addict's picture

Does anyone, including celeb economists, wonder whether pissing off the guy that loans you all the money is a good idea. BTW, for me, when Al Gore won a Nobel Prize it became the "Participation Ribbon" from Meet The Fockers.

Mon, 03/15/2010 - 19:23 | 266487 zezorro
zezorro's picture

He's not wrong. He's doing his job: propaganda. Not to mix with science, other department.

Mon, 03/15/2010 - 20:05 | 266542 Overpowered By Funk
Overpowered By Funk's picture

Leo, you are one funny SOB.

Mon, 03/15/2010 - 18:29 | 266416 buzzsaw99
buzzsaw99's picture

Earth to Krugman: The trade war's over, the usa lost. Epic fail.

Mon, 03/15/2010 - 18:39 | 266431 Racer
Racer's picture

Chinese manipulation... pot meet kettle

 

ROFLMAO, rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

 

no, the pain from laughing.... oh this is soooo painful..

rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

rofl, rofl, rofl, sorry big stitch in my side, can't stop....rofl, rofl, rofl......rofl....lol, lol,,,,,, lol lol, argh my sides hurt..... rofl, rofl, rofl

 

 

 

 

Mon, 03/15/2010 - 22:08 | 266704 Master Bates
Master Bates's picture

You probably could have put that once or twice and had the same message.

Ten is just annoying, buddy.

Mon, 03/15/2010 - 18:44 | 266432 AR15AU
AR15AU's picture

If China made cars (for export), you know there would be some government goon flooring the accelerator down I-5 for a photo op right now.

Grab your popcorn...  Should be a fun night on CNBC.

Tue, 03/16/2010 - 01:55 | 266888 Big Red
Big Red's picture

thanks, I needed that.

(Also, if not gov't goon, someone in a lot of debt, a union-related goon, a publicity-seeker, a dumb-ass driver (which also includes many who just can't do anything manual, anything), or some combo of the aforementioned...)

Mon, 03/15/2010 - 18:55 | 266449 bc0203
bc0203's picture

Can't WAIT to see this one play out, if Geithner is actually stupid enough to act upon it.

Mon, 03/15/2010 - 19:12 | 266475 Howard_Beale
Howard_Beale's picture

Timmay is a eunoch. Nothing will happen.

Mon, 03/15/2010 - 19:29 | 266496 deadhead
deadhead's picture

Howard...while "eunoch" is clearly an accurate description, I would respectfully request that you join me in using "phucknut" as the universally accepted descriptor of the current U.S. Treasury Secretary.

 

In the event that your favorite bank's guy ever gets the Treasury job, I will have to come up with a new and improved version of "phucknut"....I am confident that I could be successful.

 

 

 

Mon, 03/15/2010 - 20:54 | 266616 Howard_Beale
Howard_Beale's picture

Yes, phucknut from now on! I've used it several times today, although hyphenated. Thanks for the clarification and as Miles called it, a new ZH lexicon!

Mon, 03/15/2010 - 18:55 | 266450 RSDallas
RSDallas's picture

We have known forever the potential consequences of our economic decisions.  It seems we are now learning and living what it means by "to much government involvement".  China didn't become the WORLDS manufacturing facility overnight or on their own.  There is nothing new here.  Economist like Krugman have always been wong about the economic decisions we, as a Nation have pursued.  Now that the chickens have come home to roost, (and they are not interested in going back home this time) Krugman and others cry "FOUL PLAY".  It's always "somebody else's" fault within the Socialist American Economic society that Krugman and others live in and in the US Government. 

Did China get the US in this mess or the decisions from our government on our trade policies?  Is China playing the game by all of the rules?  Probably not.  Does anybody play by all of the rules?  No, No, No.  Folks, every Nation has its own agenda. 

It's funny that you never heard a peep from these fools during the time we were outsourcing everything we stand for out of this country and rolling in the money.   I'm just thankful that this financial meltdown has awoken at least some of our society.  Let's just hope enough people wake up to actually make a change in this great Nation. 

Well Kramer just went negative on the residential real estate bail out and preached that it would be better for some to just go broke.  Maybe he just woke up.  Maybe there is hope.

Mon, 03/15/2010 - 19:14 | 266477 Howard_Beale
Howard_Beale's picture

"Economist like Krugman have always been wong"...

A little Keynesian slip there in your typo?

Mon, 03/15/2010 - 19:47 | 266513 RSDallas
RSDallas's picture

Ha Ha.  I thought I saw a puddy cat.

Mon, 03/15/2010 - 18:58 | 266455 svendthrift
svendthrift's picture

I support the movement to bring the cost of Chinese goods (and others) in line with American costs. I support an industrial plan.

Have any of you been in America lately? Here, I speak of non-financial centers like Ohio, Penn etc. Or any city in the South. Economic carnage. Under/unemployed peasants limping around Walmart, sucking on meth pipes and generally accomplishing sweet frak all with their lives. There is no opportunity. There is no path of social advancement. There is a vast underclass with no hope for the future. What we're doing simply isn't working. We can not have a society of burger flippers and "account representatives" at Citi. It isn't working.

America needs to reindustrialize. Part of this is slitting Keynes's throat once and for all. Another is recognizing that the theory of comparative advantage is not relevant given present monetary and trade arrangements.

 

 

Mon, 03/15/2010 - 19:00 | 266461 Catullus
Catullus's picture

Goddamnit.  It's even bad Keynesianism.  The guy is a just a mercantilist loser. 

Hey Dr. Krugman, somewhere Richard Nixon just got a hard-on for your article.  That's right, Richard Nixon.  Read it.  Love it.  You're nothing more than a Nixonian Republican. 

Mon, 03/15/2010 - 19:11 | 266470 Howard_Beale
Howard_Beale's picture

From Jeff Dunham's puppet Achmed the Dead Terrorist to Krugman's ear:

SILENCE!!!!!!!

I Kill You!

...Phuck-nut!

Mon, 03/15/2010 - 19:22 | 266484 carbonmutant
carbonmutant's picture

"We have just received a copy of a letter signed by 130 Congressmen, and sent to Tim Geithner and Gary Locke, urging the Treasury to immediately address the "growing problems associated with China's continued currency manipulation"

I'm not sure the Chinese take Mr. Geithner seriously.

 

Tue, 03/16/2010 - 06:53 | 266973 MarketTruth
MarketTruth's picture

Geithner literally was laughed at by Chinese students. In China, your education ranking is VERY important (not just in level of education but WHERE you graduated within your class), as employers seek the best and brightest. They care more about your knowledge and personal reputation versus net worth or that made-to-measure suit you may be wearing.

And remember, China literally kills banksters while in the USA they roam free without fear of jail time or any repercussions for their massive fraud. Have personally spent time in China....

 

Tue, 03/16/2010 - 09:06 | 267001 Postal
Postal's picture

Are you suggesting that we place something of higher priority than American Idol?

Mon, 03/15/2010 - 19:29 | 266494 GlassHammer
GlassHammer's picture

Krugman is a tard 90% of the time but every now and then he makes sense.

This is not that 10% though.

Mon, 03/15/2010 - 19:44 | 266508 DavosSherman
DavosSherman's picture

131 fucking assholes - and 130 of them have to be in Congress and listen to the one who isn't.

Mon, 03/15/2010 - 19:44 | 266510 Scisco
Scisco's picture

Everyone catch the last sentence? "... the chance that the trigger of a trade war be very small but its hard to see an alternative". Am I reading too much into that?

 

Move along there is nothing to see here.

Mon, 03/15/2010 - 20:00 | 266534 MarketTruth
MarketTruth's picture

+1

 

All talk, no action. i mean, what is the USA going to do, stop allowing China to buy USA debt?

LOL LOL LOL LOL LOL LOL

Bwaaaaaahahahahahahahahaha!!!!!!!

Mon, 03/15/2010 - 22:13 | 266711 Master Bates
Master Bates's picture

Yeah, but the U.S. wouldn't need to sell so much of our debt if we didn't perpetually run trade deficits buying cheap plastic shit from China.

If our "titans of industry" actually allowed wages to go up ever, there would be no problem with paying more for American goods.

Instead wages stagnated, and now we have to buy from China to keep similar prices to what we used to pay for American goods because of the stagnant wages.

Tue, 03/16/2010 - 07:01 | 266974 MarketTruth
MarketTruth's picture

i hear you, yet USA consumers are not willing or simply right now can not pay USA-made pricing for the same basic goods. Trade wars in the USA have been tried before and they failed. Add to that, the USA can not even compete with Vietnam, which is even cheaper than China! Then there is India, etc...  So ok you eliminate China and then what will the USA do about the many other countries where goods can easily be produced far cheaper than within the USA?

Once you open the can of (trade tariff/embargo) worms you'll need to 'kill' them all. China does not need the USA anywhere near as much as the USA consumer needs the Chinese, Vietnam, India, etc cheap goods. Eve if the USA succeeded, it is not so much currency devaluation (also called inflation) as it would be higher priced goods that consumers could not afford. Thus lower sales of said products... Again, the USA has tried this tariff idea before and it was an EPIC fail.

Here is a link for you:

http://eh.net/encyclopedia/article/obrien.hawley-smoot.tariff

 

Tue, 03/16/2010 - 09:41 | 267026 Hulk
Hulk's picture

Agreed MarketTruth on the embargoes.

But at the same time, our government has allowed an uneven

playing field, having allowed american companies to compete against

foreign companies subsidized by their governments, often producing

goods at a loss in order to destroy the american company.

Our government should have never allowed this .....

and they should have ensured a level playing field instead of embargoes, which always end in disaster..

 

 

Tue, 03/16/2010 - 09:35 | 267009 nikku
nikku's picture

No no no.  It's not the titans of industry's fault, it's the idea that in America, we deserve more pay for the same labor that is available elsewhere on the planet.  My ex-father-in-law worked as a pressman for a newspaper--a job you could learn to do in a day or two--and got paid $75,000/year--and that was when he retired in 1995!  Strong union guy.  Now he's a raving Limbaugh fan (from one extreme to another!).  If we don't end minimum wage laws, we will continue to send our wealth to the poorer countries.  We need FREE MARKETS AND HONEST MONEY!

Mon, 03/15/2010 - 20:03 | 266538 monopoly
monopoly's picture

Tyler,

It is all so absurd. Why would anyone with an IQ over 50 want to upset their primary and soon to be only banker. How did these idiots ever get elected.

Lets piss off the entire planet, after all, this is America.

Oh, man when the implosian hits it will be remembered for many decades.

As always thanks for all you and the staff do...the truth must be told.

Mon, 03/15/2010 - 20:12 | 266551 THE DORK OF CORK
THE DORK OF CORK's picture

China is not the bank owner - they are merely a depositor and hold some IOUs

Mon, 03/15/2010 - 20:17 | 266559 docj
docj's picture

How did these idiots ever get elected.

Well, I cannot tell for sure because I cannot seem to find the list of these 130 elected savants anywhere (not that I've looked all that hard), but I'm guessing they come from what Charlie Cook would call "Safe Democratic Districts" - meaning that if said CongressCritter were caught red-handed with the proverbial dead-girl or live-boy, said Critter would be a sho-win for re-election so long as they had a (D) after their name.

The general mentality of these particular critters (and their electorate, it should be said) is one of entitlement - as in, they are entitled to an endless stream of other peoples' money, they are entitled to tell people that can't eat trans-fats ((they're bad for you, after all) or say nasty things about people (can't have hurt feelings, you know) - and that they are entitled to sell our financial nut-house to the Chinese at zero-percent, forever.

They're delusional, of course, but it's perfectly logical that they not only get elected in the first place, but re-elected every 2-years for as long as they continue to consume oxygen (and perhaps even a little while after they've stopped).

The "other side" has plenty of morons as well, they just tend not to have quite so many slam-dunk, guaranteed-win districts.  So the sense of entitlement is not quite as well honed - but they more than make up for it with absolute, bone-jarring idiocy.

Tue, 03/16/2010 - 21:21 | 267965 rruscio
rruscio's picture

Now hold on.

The difference between left and right wing:

Trans-fats are bad for you, and you are NOT allowed to eat them.

Trans-fats are bad for you, and it is your problem if you eat them.

And, Chuckie's a bad senator, no matter.

rr

Mon, 03/15/2010 - 22:16 | 266715 Master Bates
Master Bates's picture

Fuck em.  We need to get off the China dole eventually, and the time to start is today.

Sure it'll be painful at first, but who will it be more painful for?

We'll stop buying their goods, and start making things in America again for domestic consumption.  The only thing it'll hurt is their labor force.

Sure it'll hurt us for a couple of years, but fuck, we're already in a depression.  What's a little bit more pain?
Besides, we already grow our own food here for the most part.  The only thing that'll cost more is the cheap plastic walmart shit that's been going up in price anyway.

Mon, 03/15/2010 - 20:05 | 266543 Shameful
Shameful's picture

Unreal!  Can someone please tell these people that the only reason Americans have the illusion of a middle class is China's currency peg and them lender financing our purchases?!?!? I know these guys are detached form reality, but sweet Lord what is the color of the sky of the planet they are on?

Mon, 03/15/2010 - 20:21 | 266568 spanish inquisition
spanish inquisition's picture

The Chinese peg is one of the things that has created monetary stability for the US and been keeping us from a Soros ass pounding.

Mon, 03/15/2010 - 20:55 | 266619 MarketTruth
MarketTruth's picture

WIN!

Mon, 03/15/2010 - 22:43 | 266742 Dont Taze Me Bro
Dont Taze Me Bro's picture

The Chinese peg is one of the things that has created monetary stability for the US and been keeping us from a Soros ass pounding.

+1

Tue, 03/16/2010 - 01:53 | 266882 tomdub_1024
tomdub_1024's picture

whoa...spewed my beer at that little nugget of reality...gotta clean my monitor again.

[edit] but our monetary stability reality is like porn affectionate sensuality reality...right?

Mon, 03/15/2010 - 21:36 | 266659 sethstorm
sethstorm's picture

Well, there are some levels of survival that we may have to be prepared to accept. Let these tariffs happen and call their bluff.

If we have to take a financial hit so that China collapses, fine.  It might just be the thing that turns them away from making themselves a perpetual Third World hellhole.

 

Mon, 03/15/2010 - 22:22 | 266727 Master Bates
Master Bates's picture

I agree. 

I don't understand why everybody else on here is advocating bowing to the Chinese anyway. 
WE DON'T WANT to compete with them.  Competing with China in a trade war only hurts our economy and workers.  Let's pull the rug out, and see how they like their unemployment.

Then, people in America can all get back to making the cheap plastic shit that we've been buying from the Chinese since they've been manipulating their currency.

Getting our people back to work and stopping the dependence on China is the only way to get us out of the debt spiral that we've been on for years.

They don't respect our patents, so we can't sell our goods to them.  Why should they be able to sell their goods to us?

Cut em off, let their people starve, and lets see who has the bigger problem to contend with.
The worst thing that can happen is more U.S. jobs, and a couple of years of pain until we get there.

This free market bullshit competing with third world countries doesn't help anybody in America.  It's not a free market if people will work for three cents.

Mon, 03/15/2010 - 23:43 | 266784 Wondering
Wondering's picture

I agree.

Every choice we have has big downsides. But putting our people to work at even rudimentary jobs is the core of some level of dignity for far too many people.

Yes, we will have a land of have and have nots...I bet such a future will look a lot flater a wage discrepancy like we had in the 1950's. For that matter the standards of living and sense of local community of that time were not the worst things in the world. People fell in love, worked, went to ball games, some even tuned into strange sounds from Cleveland and heard the devils music...it is not the worst out come of the choices we have.

So we form a Americas trading zone...and build LAmerica like we helped Asia for four decades. Sooner or later Chavez will slip in the shower and the Cuban oil shelf will open up for exploration.

After we screw the world or they self screw sooner, a decade or two of isolation behind higher  sea and air barriers while the water fuel and food wars of Eurasia wax and wane is not a bad idea

Global trade turned out to be a boondoggle for the elites and a bad deal for the nation state. Free trade with a currency pirate is like walking drunk down the bad section of town with money falling out of your pockets at 3am. A fool and his money is soon parted.

On a separate angle this article triggers... one of the backdrops behind this and many other things we may see more of in the months ahead is an enormous shift and shrinkage of the money the political parties and politicians are getting.

Its one of the reasons behind Bayh getting out and Dodd and one of the reasons the Dems and their shills (Krugman) are drumming up cards the unions want played (dues base maybe goes up if those jobs come back?)..its all about playing the tunes the paying customers want to hear in hopes their pocketbooks open up soon...less money in the politics game these days.

 

Tue, 03/16/2010 - 09:51 | 267032 Hulk
Hulk's picture

We are not advocating bowing to the Chinese MB, we just

realize that we are beholden to them. Big difference.

We also realize that we are bargaining from an extremely weak position, which we have created for ourselves.

I agree with your points, where we diverge is that I can't see our present leaders doing anything that makes sense

We have a Leadership vacuum in this country, and that is why I feel

its going to fail . Its not the problems that will destroy us, its the lack of leadership . We have solution to all our problems, just need

proper decision making at this juncture, and they ain't coming..

(also, the level of corruption is beyond which we can expect recovery, but that goes back to leadership)

 

 

Mon, 03/15/2010 - 21:42 | 266667 dengzhi
dengzhi's picture

woohoo im now regged at zerohedge!

btw go China!

Mon, 03/15/2010 - 21:44 | 266670 Kayman
Kayman's picture

Modern day China- born from the ashes of the American Middle Class family.

Krugman (in this case) is right.  The only  hope for America is to "insource" American jobs, export American unionism, burn Wallstreet to the ground, and roll up our sleeves.

America has subsidized this Fascist Chinese Monster long enough.

Tue, 03/16/2010 - 09:13 | 267004 Postal
Postal's picture

Won't happen. What employer wants to pay to "insourse" American workers when doing so means back-filling the education gaps by the American system? He can hire the Chinese--who are fluent in English and very capable.

Mon, 03/15/2010 - 21:48 | 266674 5senses
5senses's picture

I live in China, converted all my liquid assets into Gold,

Silver and CNY.

I don't see a problem

Mon, 03/15/2010 - 21:53 | 266684 THE DORK OF CORK
THE DORK OF CORK's picture

Just remember to duck and cover.

Mon, 03/15/2010 - 21:58 | 266690 Buck Johnson
Buck Johnson's picture

This along with the 387 bunker busters being delivered to Diego Garcia.  They may be setting up the biggest feint in the world, by Attacking Iran and trying to goad China into a trade war.  They can set up a situation that these and not our banks or leadership will be the reason for the implosion of our economy and the devaluation of the dollar.  Because it doesn't make sense for what is happening unless they are picking a fight and picking a fight with someone that could start to dump treasuries by the week and scare the Treasury and muni-bond markets to give higher rates of return or they won't buy isn't smart.  Also it would make bring commodities such as gold and other precious metals much much higher seeing that paper is getting slammed, talk about Comex getting outed and people demanding their gold.

 

 

Mon, 03/15/2010 - 22:15 | 266710 Privatus
Privatus's picture

Paul Krugman, winner of the Swedish Rijksbank prize in memory of Alfred Nobel (aka King Dynamite) and New York Times columnist, urges us to do to ourselves in a time of peace what other countries do to us in a time of war. The dumbass.

Mon, 03/15/2010 - 22:26 | 266729 Master Bates
Master Bates's picture

We need pain to move forward.

We need to end this trade relationship with China today.

Currency is all subjective.  So what if the dollar falls?  If we're buying things INTERNALLY, it doesn't matter what it's value is relative to other currencies.

Do you think that the Chinese care if their Yuan is worth less?  They keep it low on purpose.  They can still buy whatever they need to with it.

They aren't fair traders, and its time to end the relationship.  Fuck China.

Let's get some jobs in our own country, and send them back to being third world pig farmers like they were before America's leaders sold us all out for a few cheap walmart trinkets.

Tue, 03/16/2010 - 05:47 | 266961 KevinB
KevinB's picture

Man, you are some kind of idiot. Buy everything internally? So, no one in America is going to buy a TV or computer for at least two years? You're going to pay $5/gal for gasoline, and accept rationing, because there's no freakin' way the US can produce all the oil it needs internally. Not going to buy any new clothes for a while, since there's hardly any US rag makers left?

Your handle says it all; it's all mental masturbation, unleavened by reality.

Moron.

Tue, 03/16/2010 - 09:37 | 267024 nikku
nikku's picture

Uh... and you think those are tough consequences?  When we're staring into the abyss of currency collapse?

Mon, 03/15/2010 - 23:19 | 266768 Rick64
Rick64's picture

The U.S. made this problem to begin with. Who allowed unrestricted access to our markets with no floating currency. Did they take advantage ? Yes and so did the Japanese, but they had a floating currency, and also bought huge amounts of UST. Pull the rug out from under China would be like pulling the rug out under our feet. They own so much of our debt that we need them to keep buying, and they have to be careful not to disturb that market to protect their investments.

  The currency cannot be manipulated and thats their only hope against the twisted financial gimmicks. The senators can barely comprehend currency manipulation let alone understand the implications of the Chinese floating their currency which is the desired outcome for the U.S.. They are being used to apply pressure.

Mon, 03/15/2010 - 23:25 | 266775 Attitude_Check
Attitude_Check's picture

China has been playing mercantilistic economic warfare with a devalued Yuan for a long time now.  This is causes the ENTIRE WORLD economic system to become unstable.  This cannot be allowed to continue, or everyone (including China) will pay when the whole system comes to a sudden stop.

 

True the US is hardly squeaky clean in the whole economic warfare front, and Turo-timmay and his gang at from the FED, have played this VERY badly.  But fundamentally, the only path to resolution is balanced international trade, and that WILL NOT HAPPEN so long as China suppresses the Yuan (similar issues for Japan).  The world either convinces China to play fair with their currency, or we will have trade wars instead -- which would be worse.

Mon, 03/15/2010 - 23:39 | 266790 Rick64
Rick64's picture

 I disagree. If you allow a country to have an unfair advantage then who is at fault. We could have demanded that the currency be adjusted while they were increasing exports. The U.S. benefited because China was buying so much of our debt and allowing our companies to set up shop in China, also selling them machinery ect... Now the more the yuan increases in strength it will become neccessary for China to invest outside its country to remain competitive. So they will be drawn to the U.S. to set up companies much like Japan was when their currency gained against the dollar. It will benefit the U.S. tremendously.

Mon, 03/15/2010 - 23:35 | 266785 Attitude_Check
Attitude_Check's picture

A weak Yuan, that provides SHORT-TERM benefits to the US economy and consumer is destroying the US.  An overly strong $ has resulted in the continual bleeding-out of the US due to the resulting trade imbalance because outsourcing US manufacturing has become cost effective due to the overly strong $ and weak Yuan (and other large export surplus nations).

Until this gets fixed there is no realistic way to resolve this.  Yes it will cost us a lot in the short term, but failure to resolve this will cost us ALOT more in the long term.

Mon, 03/15/2010 - 23:53 | 266807 Madcow
Madcow's picture

Yes - Decouple.  

And watch the RMB collapse.

Tue, 03/16/2010 - 00:07 | 266824 Rick64
Rick64's picture

This is a way out of our current fiscal mess. Make the yuan strong and the dollar weak then China will be forced to start manufacturing in the U.S. . Chinese will start buying houses, boats, luxury items, ect.. thus creating another bubble in time. The problem for the Chinese is that being invested outside their borders would give the U.S. more control over them. The pegged currency is like having leverage over their competition. Why would you give this up. It would only complicate things for them. The U.S. has nobody to blame except themselves and their outrageous policies.

Tue, 03/16/2010 - 01:08 | 266864 carbonmutant
carbonmutant's picture

"Within a month the US Treasury must rule whether China is a "currency manipulator", triggering sanctions under US law. This has been finessed before, but we are in a new world now with America's U6 unemployment at 16.8pc."

"Is the Politiburo smoking weed?

I let others discuss the rights and wrongs of this, itself a response to the US report card on China. Clearly, Beijing is in denial about is own part in the global imbalances behind the credit crisis, specifically by running structural trade surpluses, and driving down long rates through dollar and euro bond purchases. No doubt the West has made a hash of things, but the Chinese view of events is twisted to the point of delusional."

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/744292...

 

Tue, 03/16/2010 - 11:30 | 267178 Rick64
Rick64's picture

I read the article. IMO its just more convoluting rhetoric and scare tactics. All the bubble talk and now this is just another way to scare investors in China.

 3 trillion in reserves is a weakness ? Comparing our reserve build up in the 1930's to theirs is apples and oranges.

Owner of 1.4 trillion in U.S. treasuries- he makes it sound like we did them a favor by letting China buy them. It was mutually beneficial.

 Covers up Mao mass murderous nihilism. How self righteous. We have done more damage in the world then Mao. Installing dictators when it benefited our corporations. Starting wars and insurrections in the name of democracy when nothing could be further from the truth. Only a few decades ago we allowed the hanging of blacks in the south. We are the biggest hypocritical government.

Pull the plug on China's exports. Ridiculous. This won't happen their are too many businesses reliant on China, and too many already set up there.

China intends to exact revenge. Another ridiculous statement. They are intertwined in the world economy and reliant on it. The U.S. is not their only customer. The other countries welcome Chinese investment. Where would they be if China didn't continue to buy through this recession.

 

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