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