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Senate "Poised To Follow" Through In China Currency Legislation
It appears that the next round of the trade war is imminent: per Reuters, Senate Finance chair Baucus has said that the Senate is "poised to follow" the House in passing China currency legislation. Expectations were that this law would not pass for a while and certainly not before the mid-terms. It appears the Senate, in its own attempt to generate some populist Brownie points, and unable to grasp that the whole point with the weak CNY is an even weaker USD. What this is certain to do is escalate an already tenuous situation, and lead to even more jawboning in US-Sino relations. We are confident that the decreasing indirect participation in the recent 3 and 10 year auctions is a direct consequence of what China's retaliation will ultimately look like.
And for more information, Market News noted the following on just how close to approval of the currency legislation by the Senate we currently are.
The Chinese government was receptive to a message delivered by Senator Max Baucus about the severity of the threat posed by a proposed Senate currency bill aimed at punishing China for its exchange rate policy, the Senate Finance Committee chairman told reporters here Wednesday.
Baucus (D-Mont) said that there is a "very real possibility" that the currency bill could pass, and said government officials that he met here -- who included Vice-Premier Wang Qishan -- took the message on board.
"My main point was that (the bill) is very serious and they understood it. They took it constructively and soberly. The goal is that both countries resolve this issue. A lot of people in the Senate think that an undervalued (yuan) costs jobs and I conveyed that to the leadership," he said.
He was speaking just hours after the Chinese government announced that the politically charged trade surplus fell to a five-month low on record imports.
But the People's Bank of China later reported that the country's foreign exchange reserves surged a record $194 billion during the third quarter to $2.65 trillion.
Reserve growth is the direct result of the central bank's daily interventions in the onshore currency market.
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Deja vu, bitchez!
Protectionist fools.
Yep. Throw in some tax increases and you've got them walking off the cliff again, ala 1930's, even though the path is clearly marked with warning signs saying "DANGER! DEPRESSION AHEAD IF YOU GO ANY FURTHER"
This does not have anything with 10 year getting hit last few does it ?
AUD, sheilaz!!!!!
better late than never.
Look, if this situation isn't addressed, there aren't gonna be any JOBS left here.
Our debt and consumption picture, you know that one that all you guys rail about daily, is directly driven by this.
Had we addressed the necessary adjustments 30 years ago, we'd be in a better place right now. YES, the reorientation will be painful, but it is inevitable. Time to stand up to fucking China. Let them ponzi someone else's currency.
I'm surprised at you Trav!
You're really with the whole 'China is to blame' gang?
Hunh.
What a bunch of hypocrites. The Fed crashes the dollar and Congress is pissed the Chinese won't play ball.
Whah bitchez!
WHAAAAA China how dare you unfairly manipulate your currency like we do! We're signing a bill, dammit! That oughta learn ya!
'A Geopolitical Event Coming Soon to a Country Near You'
Watch China simply impose a 20% export tax on goods going to the USA. They don't need to increase the value of their currency. All they need to do is make shit more expensive for Americans. Then, someone in some other country with Free Trade with the USA will simply re-package Chinese stuff that did not get taxed to the USA, acting as an arbitrageur.
Funny how our politicians are NEVER smart enough to figure out even the most obvious unintended consequences. The blinders are on tight.
Clowngress, the only thing they know how to do is sign bills. How do they even IMAGINE a bill passed has any effect at all on China? WTF are these people all on dope?
Signed Mr. Hand.
They sign only when they can gain political advantage, otherwise its voice votes.
They know what they're doing. We have to war with those slanty eyed savages before they get too powerful. It gets our economy going, exports potential civil unrest from our country to a much more focused "bad guy", lowers world population(slows resource depletion), and should we win, we have free reign over all the necessary commodities. At least until we get suitcase nuked.
LOL, thats coming soon for sure.
That's a loser for China. They hardly import anything from America, but we import tonnes from China.
Based on just goods, China will lose this trade. Based on monetary flows, America will lose this trade war.
Wont happen. They will wait for mid-terms. There will be a lame duck session. A new, more pressing emergency will be at hand (TRAP II). Besides, the master of puppets still has a few strings controlled.
TRAP II, yes.
I was proof reading my statement when I came across TRAP and realized it was not really a typo...so I left it as is.
Step 1.) currency war
Step 2.) trade war
Step 3.) military war
WARNING: Be careful what you step in.
Step 1.1) Q.E. 2.0 = Gold $2,500
Step 2.1) Q.E. 3.0 = Gold $ 5,000
Step 3.1) Q.E. 4.0 = Gold $10,000
Carry On !
Step 4.0) Sell Gold North of $15,000
Step 4.1) Wire transfer all of it offshore
Step 4.2) MOVE, er I mean go abroad to research capitalistic opportunities in Belize.... quickly and quietly
So you think debasement is going to end, eh?
Better to buy a nice oceangoing vessel and smuggle the gold out. The boats will be dirt cheap, and the gold easy to hide. Just watch out for pirates (seriously, get high powered weapons including RPGs if possible).
I figure by the time we get to that point, you should be able to get the boat and guns for 10oz of gold or less, with most of it going to the guns.
My fantasy is a hydroplane that looks like a trawler but triples as a submarine; it runs on seagulls.
You know nothing of this if they ask you.
Regards
If the Chinese were smart, they would sell US Treasuries and buy more gold. And they are smart, it's just a matter if they want to fight back.
I'm guessing their buying a bunch of gold on the DL and will suddenly announce they have more than they thought like the Saudis did a couple months ago.
I think they are asking for collateral now.
http://www.mysanantonio.com/business/local/China_stakes_claim_to_S_Texas_oil_gas_104753969.html
We have a strategy if China decided to dump treasuries... call it an "act of war" and declare each china owned treasure void.
This is one reason why they are stuck b/c if we defaulted on the bills they would instantly have to revalue their currency... or start buying dollar again to keep its value down (not smart after having your savings voided).
So the strategy is shoot ourselves in the face? I'm not saying it won't turn heads but it would not give the desired results. After all if we just tell China to fly a kite who else other then the Fed and their PD will be buyers? Make it illegal to sell an asset and people get worried about buying more of it. It's not like we have a balanced budget, or our con-men could balance one.
Yeah! That'll teach anyone to ever lend to the government of the United States again. Then maybe we can get Krugman to shut the f*** up about how the drunken sailors in government aren't spending enough of other people's money to pay off political cronies - a.k.a "stimulus". I'm okay with sinking the U.S. government. It seems to be feeding off the corspes of the taxpayers anyway. Start over.
call it an "act of war" and declare each china owned treasure void.
This is why the US is held in such great respect around the world.
The Chinese response would be to use the "voided" treasuries to purchase the Chinese land, equipment. and holdings of GM, Intel, Microsoft, Kohler, P&G, GE, and most of the rest of the Fortune 500.
There is a reason US jobs ended up in China. US companies moved them there and did so with the assistance of US tax policies.
"Reserve growth is the direct result of the central bank's daily interventions in the onshore currency market"
gfto. Seriously
Oooooo, I'm so scared, says the Chinaman.
Will Obama even sign something like this? I don't think so.
But wait, the Yahoo!Finance headline says 'Stawks Up Triple Digits Due To 'China Data'...huh go figure!
Well on second thought, the DOW basically is all China anyway.
The Chinese are part of the dysfunction of the global imbalances. That does make them culpable.
Youre culpable, said the tiger shark to the great white.
Lifted this clip from Mish; must watch imo
http://www.youtube.com/watch?v=GPYLJoq_40Y&feature=player_embedded
Rollover 1981...a blueprint for America's future.
I just watched half of that movie last nite.
So lets recap.
Our fearless Congressional leaders are busy pissing in the wind.
China is not really buy T bills, unloading T bills and Loading up on shiny stuff.
A Yale PH Dickhead says "Oooh I know, I know, lets sell the shiny stuff"
And when China comes here to foreclose on the US, we're gona pull the, "the deed wasn't properly signed/noterized" ruse.....
Am I missing anything here....?WTF
+1 lol
No you nailed it. Kick the can. Nafta castrated Congreed to local issue's only and has no balls yet to issue SDR commodity certificates of trade on basket commodity's with Adults on the Planet. The White House Social Director has his team defect since reality is the daily routine. Free trade only exists to stabilize vunerable democracy's going left and is the same as welfare on your dime as we are bleed dry since Ms. Schwab trade secratary stated there concern is about loopholes and not balance. Susan Schwab, US trade representative, said such exemptions would defeat the object of the talks, to create trade flows. “As we went through the layers of loopholes . . . we discovered that a couple of our trading partners were more interested in loopholes than market access,” she said.
As far as I am concerned the laudable humor of the Chineses was levied when a 105 percent tariff on U.S.-produced chicken feet
http://www.publicbroadcasting.net/whqr/arts.artsmain?action=viewArticle&id=1706204&pid=1338&sid=1
if anyone missed that one. I hope for all our sakes China has a sense of humor and is patient with the emo, demo crew we elect Ad Nosieum.
Congressional pinheads!
Get ready to laugh.
Then cry.
Then start throwing furniture.
China is not so brain dead that it does not remember the impact on Japan of the Plaza Accords in 1985...
For you youngsters...it resulted in the Yen falling by 50% over the next two years. This killed off their imports & lead directly to Japan's own QE nonsenses, which created their bubble & ultimately sank them. The last thing China wants, or needs is a lot of hot/cheap dollars pouring in right now.
And seriously?, less than 2 weeks after the Fed announces QE2, the G20's are going to meet and ask China to bend over & "take one for the team"...It ain't gonna happen folks & you can quote me on that.
yeah but keep in mind
Timmah is there telling them "me love you long time"
China has consistently been bitch-slapping this admin...the MSM propaganda plays it down...but China will continue to do whatever the fuck it wants.
They are now Big Dogs & they know it...and they know there is no political resolve in this country. They just laughed in Geithner's face earlier this year.
They aren't big anything.
they NEED the system more than anyone does, otherwise their ponzi economy will collapse.
Is that the familiar sound of "The US is the only consumption game in town" I hear? Or is this a new tune that hasn't hit the charts yet?
"they aren't big anything"...
China has the world's largest population, the largest standing army, the 2nd largest economy, the 2nd largest owners of foreign resources...and they are fully nuke capable .
you sir, are a patent fool. Now go away, the adults are talking.
Wishin' and hopin' won't change anything. They need amrka like a drug dealer needs a junkie who is now so drug-fucked he can no longer steal to pay for his habit ... plenty more paying customers elsewhere.
there goes "blame Canada"..........
Time to write the Senators....I hope they do not vote on this today! It would be fitting, October 13th and all, to have a sacrificial lamb spent at the alter of finance.
It is all election year Bullshit. This might have been a serious threat 20-30 years ago, but most electronics and consumer goods are made in China. Who has who by the short hairs? I am in a computer related business and NOTHING I sell is made in the country!
Exacty what they wanted and Summers was correct in much regard many ignore still who served as President Clinton's treasury secretary during the headiest days of free-trade enthusiasm, is now having some very public second thoughts to to very long ago. Writing in the Financial Times, he noted that "[e]ven as globalisation increases inequality and insecurity, it is constantly and often legitimately invoked as an argument against the viability of progressive taxation, support for labour unions, strong regulation and substantial production of public goods that mitigate its adverse impacts." But Summers argued that such an attitude was a political non-starter, particularly as globalization "encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they are headquartered." In a subsequent column, he concluded that the "domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity.
It ain't just , "election year Bullshit" anymore... Maybe a couple of months ago yes, but the failure of the IMF meetings last weekend combined with the rash of new sovereign currency controls demonstrates this is getting serious. QE2 is a very large gun aimed at the rest of the world...and folks don't play nice when threatened.
Not many have other than the usual suspects. This all in poker aproach touches on what we have been watching a long time. Some see the issue and reality conveys to few care.
That is exactly why I think the FED will blink first. There is no way that they can afford to turn the Chinese away with the enormous present and likely on-going deficit spending. The Chinese know this so they will not blink. That is why I think all these hyperinflationists are deluding themselves. China has more power than the FED.
What folks are missing, is this is NOT just about China vs. US/EU. this is about the collapse of a decades old global order of "monetary understanding".
If China just says "fuck you", at the G20, and goes home...then the whole damn rest of the G20 has a perfect excuse to just take their dollies & tea sets & go back home and implement whatever protectionist monetary policy they decide.
If that happens, global trade is in for a very bad time. There hasn't been a new player as large as China to upset the apple cart before.
The rise of Germany in the mid-19th might be somewhat comparable. Completely messed up Western Europe's carefully-manicured balance of power it did. And look what happened there.
It's not surprising I suppose that China has taken such an interest in German history.
Hey Chinaguy, have you read currency wars 2 yet? The section on Germany is jaw-dropping.
very interesting exchange, thanks. The US these days reminds me of the Catholic Church during the abuse scandal literally failing to comprehend that they might just have to answer to someone bigger than them.
I assume they are more pragamatic to resolution. Who can fault them buying reserve materials for a rainy day. Given our LEAN process mentality it already over with our pair of seven in our hand. Just fix the balance of trade since they should anyway. Imagine Americans working in Industries with there pissy attitude.
the trade war is over, we lost, get used to it.
Agree. http://www.youtube.com/watch?v=8iyDZBAFxKE&feature=watch_response
+1
+1
These morons in congress want to raise the price of goods in a recession. Great. Well done. Getting China back by whacking their own citizens.
Of course, when you consider how many of those citizens are screaming for this beating, you have to think they deserve it.
Americans, get ready to get poorer.
Ignorance is bliss boys.
Abandoned to a quart of wheat for a days pay. Yea we know.
This is all similar to watching an accident in slow motion.
Meanwhile in the back, the Chinese military is gaining power ("insolent ingrates!")...
setting up the Day itself once Palin gets in....
For one of the best commentaries you will every read on this topic, check out the James Petras website and his article, ¨US - China ... Provoking your creditor, Hugging the Holy Man ....¨in which he argues that US policy is a deliberate attempt to provoke and disparage China. Read his analysis of US - Israel relations, too, and his essays on Latin America. Petras is the fofoa of international analysis. Period. Miss reading Petras at your own risk.
Good find. I've only glanced at one article so far (on the recemt Ecuadorian coup) and it is spot on. Thanks.
When the dust settles, I think this will be a period of time that will be looked upon with much contempt in history books. Certainly it will be a time that most educated Americans would rather forget about at all.
A time when so few were so corropted, had so much power and so little understanding of what they were doing. All at the expense of so many.
Now we really begin to understand and feel the words Eternal Vigilance. Unfortunately the general populace is dumbed down by MSM and seduced by easy money (not much left though) to understand what a con game is going on with them as participants. I think the riots will start only after the real players move out their investments and themselves form this husk of a country. By then said riots will be mean and meaningless.
And on the topic of the article: way to go fucktards! First you make everyone an addict to cheap chinese shit, courtesy of shipping jobs overseas. Then you really hammer down the nail by making this shit not so cheap anymore, without any restoration of jobs. I hope the politicos will soon find a more accomodating residence - the lampost.
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