Here Comes Protectionism: House To Vote On Legislation Pressuring China To Revalue Currency

Tyler Durden's picture

And now the idiot politicians are finally really involved: Reuters reports that the House will vote this coming Friday to pressure China into revaluing its currency (uh... what?). While it is unclear just what passage of this law will do (send letters full of harsh language signed "Love Schumer", or pretend Americans will no longer buy iPads and Kindles, or better yet, offer to pay a refund to the $840 billion in US bonds held by the Chinese), this will merely accelerate the collapse of world trade into all out protectionism. As we presented a week ago, Goldman's Alec Phillips was right. His conclusion offers some hope that traditional trade relations won't collapse for at least a few more months: "We think that the risk that such legislation is enacted this year is still fairly low. There is little time left on the legislative calendar, and not yet a clear legislative strategy. That said, we also don’t expect this issue to disappear after the election, given that the current political reaction is driven by the weak economy and labor market as much as it is by the political cycle." Yet with the Democrats calling this vote, it is inevitable that it will pass. What happens next is really anyone's guess.

More from Reuters.

A key panel in the House of Representatives has scheduled a business meeting on Friday to vote on legislation pressuring China to revalue its currency, according to a committee notice.

The House Ways and Means Committee will meet Friday morning to consider an amendment crafted by House Ways and Means Committee Chairman Sander Levin, the notice said.

"The bill, as considered by the Ways and Means Committee, will modify the original legislation introduced by Representatives Tim Ryan (D-OH) and Tim Murphy (R-PA) to make it fully consistent with World Trade Organization (WTO) rules," Levin said in a statement.

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VK's picture

The US gets 10pc unemployment and China gets 10pc growth. I think Niall Ferguson said that, it won't go down well with the public.

DonnieD's picture

Don't forget lead painted baby toys and chinese drywall. I mean, who wouldn't mind trading their job for that?

Quinvarius's picture

Those lead painted toys do taste pretty good though.

iDealMeat's picture

But the Drywall smells ohhh soo goood..

long Cu

Dont Taze Me Bro's picture

An all out trade war will save this republic!

Globalization has bankrupted America. Its time to put a stop to this madness.


Bananamerican's picture


Tyler a LOT of us don't agree with you on Globalization.

(Don't believe me? Stick a poll up...)

Maybe it's because we're, you know, AMERICANS and carry these quaint notions of national sovereignty and love of country around in our cabezas while you hail from somewhere south of these borders and so, don't really give a shit!

Fuck China! It's about time we had a trade war, tariffs, sanctions against Co's that offshore operations (seeking that next great slave labor pool) and removal of tax breaks and subsidies that encourage same.

Screw your "globe" Tyler AND your pliant 3rd world workforce


VWbug's picture

trade war, great idea! say goodbye to Boeing, Cat, GM, Ford, Chrysler etc etc.

Maybe americans should become competitive again, now there's an idea.

Maybe stop listening to idiot economists who say consumption is the key to growth.

Americans are giving chinese worthless pieces of paper for real goods, you should be thrilled the chinese have accepted them for so long.



Spitzer's picture

Revaluation of the Yuan equals higher interest rates in the US.

Is anyone in congress aware of that ?

Now that everyone in the US has refinanced their house at lower rates, the spread that the banks make their living on is smaller. Higher rates will bankrupt the banks again.

Its wierd that Denninger doesn't get this either. He will probably "write a ticker" in favour of the idea. Denninger actually mentioned gold yesterday.

An "in your face" statement that The Federal Reserve will attempt to create inflation - intentionally - is tantamount to a declaration of willful and intentional violation of the law.

The market reacted to this, as you would expect it to - it looked beyond the black letter of the statement to the implications, and reminded itself that the last time The Fed went "rogue" was in the 1970s, and the result was double-digit price inflation.

The reaction in the dollar and gold was immediate and violent - and with good reason, given history.

metastar's picture

Whoa! Higher rates?

We have the FED. They'll buy anything!

Kayman's picture

Hey Spitz

That cold air in Admonton is freezing yur brain.

These political prostitutes are trying to close the barn door after the barn has burned down and they have lost the title to the property.

Confrontation with China is inevitable; they have been given a 20 year free ride on the backs of the American Middle Class worker.

Unless American politicians recover employment in manufacturing in the U.S. the country is finished.

Chinese manufacturing is rising along with its foreign currency reserves, creating a large creditor nation.  The U.S. is losing most of its manufacturing base, is running hundreds of billions of dollars in trade and current account deficits and is now the world's largest debtor nation. I guess to you, that is a mere coincidence.

Without manufacturing the U.S. cannot exist. Selling shit U.S. paper by the New York criminals didn't seem to catch on with their customers.

And don't give me the rising consumer prices BS argument. Isn't that what our Man Benny is looking for ? Inflation, the expectation of rising consumer prices ?

Oh, yeah, the selling of Boeing planes to China thing ?  The only reason China buys anything is so they can copy the technology and bankrupt their former suppliers. 

Good luck on that taking in each other's laundry thing.

The U.S. will have to deal with the consequences of this ONE-WAY trade relationship with China before it is too late.  Perhaps it is too late.


vote_libertarian_party's picture

A non-binding nothingburger?

Wow, that'll teach them a lesson.

Saxxon's picture

That is exactly what it is.  China is a sacred cow and nearly all the ratfucking dogs in Congress are paid off.

Kayman's picture


Paid off by Who(m) ?

Well, of course, the payer and the payee will disclose the sums paid and the numbered accounts on form 117(b)....

NumberNone's picture

All said with fingers crossed and after a pre-emptive phone call to China letting them know 'We're only kidding!!!  Please keep buying our debt!!!!"



Nihilarian's picture

Trying to outsmart Chinamen in math is a bad idea. Next thing you know, they're going to be peeing on your rug and demanding money.

knukles's picture

And you'll still be hungry 15 minutes after finishing.

zhandax's picture

How about a little reality for you cliche mongers.....China is not buying our debt.  You are if you are in the social security pool.  That's who owns the biggest chunk of US debt.  That's why they can default in the end....the cock goes up the ass of the poor sucker who expects a return of that money he had confiscated all his working life....

NOTW777's picture

maybe they will vote that the US has no debt and the summer of recovery is here and everything is wonderful

hedgeless_horseman's picture

On a long enough legislative agenda the IQ for everyone drops to zero.

Ragnarok's picture

I really feel like Cassandra today.....

spartan117's picture

I hope this bill passes.  Once it passes, it will die a quick death in obscurity.  I doubt Congress has the balls to actually levy tariffs on Chinese goods.  Now that would lead straight to hyperstagflation, as domestic producers ramp up prices on everything that competes with the Chinese.  Get ready for $300 for a pair of running shoes at Walmart if that ever happens. 

"Made in America, but you can't afford it!"

linrom's picture

You have the antidote for US economic virus and the best you can do with it is to call it a placebo?

spartan117's picture

Tariffs only benefit the government.  What domestic producers gain in pricing power, they lose in overall sales, because no one can afford anything!  You call that an antidote? 

The people of America will lose out.  The REAL antidote to this entire mess is to accept that living standards will decline here in the US.  You cannot spend more than you create indefinitely and expect it to continue.  We've been on borrowed time for too long, now it's time to pay the piper.  Let the value of the dollar drop, stop all deficit spending, repeal federal and state minimum wage laws, get rid of the unions, and let the cost of labor, like any other commodity, find market value equilibrium.  Because if you let the government continue to mark wages to model, you will NEVER have at or full employment.  NEVER.  And the rest of the world will continue to advance at a much faster pace as capital finds the most efficient use for itself.  Socialist can't seem to understand it.  You can't force me to invest in America if you create artificial floors for my costs.

Sam Clemons's picture

++++  so many people don't get this.  I take it you've read some Henry Hazlitt or have thought about things for more than a few seconds.

Kayman's picture

Uhhh... Spartan old boy,

Why not move to that laissez faire country- China.  Get a nice piece of government land, have the government build you a factory and send over some free slave labor in exchange for all the technology you can steal from your home country.

Why is the only argument about reducing U.S. wages. And NEVER about socialism in the banking and corporate welfare bum class.

American unions (especially public sector) are overpaid but relative to the easy socialist money  generated by the stealing from the public Criminal Bankster monopoly, the unions are a distant second.

So please, please don't invest in America. Move to China as soon as possible.

spartan117's picture

Why is the only argument about reducing U.S. wages. And NEVER about socialism in the banking and corporate welfare bum class.

Are you referring to GM and Chrysler?  Two of the largest union-employed "corporate welfare" firms that received tax-payer money last year?  How about the USPS?  They get taxpayer money every year to cover their annual deficits.  It's also union-run.  They're about to get a $75 billion bailout from the Democrats. 

American unions (especially public sector) are overpaid but relative to the easy socialist money  generated by the stealing from the public Criminal Bankster monopoly, the unions are a distant second.

Tell me again how many jobs have been created by Unions?  I don't think I've ever purchased a good or service from a Union before.  I might have purchased a good/service from a company employing union workers, but never from a union itself.  That's because Unions create nothing.

American unions (especially public sector) are overpaid but relative to the easy socialist money  generated by the stealing from the public Criminal Bankster monopoly, the unions are a distant second.

Bullshit.  Stanford estimates that in California alone, public pensions are underfunded by $425 billion.  That means taxpayers, like myself, will be taxed accordingly so that public sector employees will get to retire.  Unions are stealing directly from me.

So please, please don't invest in America. Move to China as soon as possible.

Invest in America?  Invest in China?  I have nothing left to invest after I'm directly and indirectly taxed so union (public and private) can retire in comfort. 

I wish you and your kind would move to China.  They don't treat unions too kindly there.  It'd be a win-win for all of us who'd like to restart America based on a real work ethic.

NOTW777's picture

china is smiling - why even bother building up its military

Commander Cody's picture

Don't fool yourself into thinking that China does not see itself as the next world dominator, replacing the good ol' US of A.  They are building up their military, setting up commodity pipelines, and arranging strategic alliances.  We are the target.  Riling up a trade war will lead to military engagement.  War is believed to cure economic ills.  That is the end game for this debt problem, IMHO.

1100-TACTICAL-12's picture

The pieces are all being put into to place. U.S. sells f-35's to Saudi Arabia, Russia sells missiles to Syria, so forth so on. Kinda like goin in a bar on Friday  night & talkin shit, someone is going to get their ass kicked.

Montgomery Burns's picture

Just print up an 840 billion dollar bill and present it to them. Presto.... Now, whose picture do we put on it?

NotApplicable's picture

Now that would just be mean.

They should at least break it up into 8 hundred billion dollar bills, plus 2 twenty billion dollar bills.

spartan117's picture

I hope you were being facetious, because that act would destroy the value of the dollar overnight.  We would give ourselves (USA) more problems than the payment would solve.

DarkAgeAhead's picture

"Easy Smithers, this sponge has corners you know!"

I like this idea even if it assures our overnight destruction.  Depends on whether you want to take the hit now or later. 

Sleepy Weasal's picture

It appears to me that the USofA intends to default on it's external debts by debasement, but what do I know.   I thought the hoff would make it to week two.  

FranSix's picture

The Chinese low wage worker on Wall St. merely prints up the counterfeit commie cominterm and pays for U.S. sovereigns printed up by Timmy.

Its all just jawboning to attempt a lower dollar valuation.  That's it.  They sure are hammering away at it, though.  Its as if they were banging pots to scare away a bear.

williambanzai7's picture

We will eventually reach a point when the population says who cares if we owe China money. This point will be reached when we realize that there really is no hope for economic advancement as long as we are hurried under Chinese debt.

That time will come.

NotApplicable's picture

I'd say the point will be reached when we divide up again into Axis and Allies.

There is no repudiation like the Jubilee known as war.

And just like the new cars that disable themselves when payments aren't made, I bet we suddenly find out that China has embedded quite a few self-destruct algorithms into various systems.

DarkAgeAhead's picture

Absolutely on the self-destruct algorithms.

Dollar Bill Hiccup's picture

Dont' forget, every American has about 3 Chinese peasants working directly for them. Have you hugged your Chinese peasants lately?

From the FT, Hu Jintao on why a reval is not good : "“The conditions for a major appreciation of the renminbi do not exist,” he said. If the renminbi were suddenly to rise by a large degree against the dollar, “we cannot imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs, and how many migrant workers will return to the countryside... China would suffer major social upheaval”.

zaknick's picture

make it fully consistent with WTO


sounds like a loophole


trade war against your biggest creditor? In the words of the drug trafficker Dubya, "bring it on!"


Gold, bitchez!

Restcase's picture

Once you decide to buy your own debt, you don't need that bond customer over yonder and can start jerking his chain. This piece of posturing tells export industries (and their unions) the politicos care. As the bond dumping risk goes down, politically profitable posturing will increase.