Wednesday, October 13, 2010

Analysis:Key Senator Warns Beijing As China FX Reserves Surge

Analysis:Key Senator Warns Beijing As China FX Reserves Surge;

It was pure coincidence that one of the key players in the U.S. legislative debate over China's currency policy was in town just as the Chinese government announced that its foreign exchange reserves -- a product of massive interventions to control the currency's value -- posted their largest quarterly increase ever.

The presence in Beijing of Senate Finance Committee chairman Max Baucus (D-MT) on the day that the central bank said that foreign exchange reserves rose a record $194 billion in the third quarter, brought China's exchange rate policy into even sharper relief.

Talk of a currency war has been muted here, with most commentary attempting to portray China as a victim of a global "race to the bottom," with countries seeking to offset the U.S. Federal Reserve's deliberate debasement of the dollar by attempting to weaken their currencies.

If nothing else, Chinese government economists and officials expressed surprise and disappointment at the perceived ingratitude shown by the U.S. and Europe in recent weeks over their criticism of Beijing's exchange rate policy.

China has been scooping up U.S. Treasury bonds, ensuring an engine of growth for the world economy and openly encouraging Greek sovereign debt purchases, and all Beijing is getting in response are threats over its exchange rate policy, they say.

At the end of the article...

Senate Finance Committee Chairman Baucus -- whose panel's jurisdiction includes trade -- said that there is a "very real possibility" that the bill will pass, and that he delivered this message to the leadership here.

"My main point was that (the bill) is very serious and they understood it.... A lot of people in the Senate think that an undervalued (yuan) costs jobs and I conveyed that to the leadership," he said.

The question then becomes whether increasingly embattled President Barack Obama chooses to veto a unified House and Senate China currency bill if and when it hits his desk.

Baucus said that his warning message was received "constructively and soberly."

But he gave no indication that the Chinese government is prepared to act on it.

Read the entire article here.

Comment: Are the Chinese really causing our economic problems, or could it be the high taxes, over the top government regulations, government manipulation of the US markets and business sector, the closing off of natural resources to US manufactures, a group of global central banks manipulating the world currencies, an unelected non-government Federal Reserve that prints money like it's going out of style, and a nine year war, which is consuming a huge amount of unaccountable government tax revenue?

Gee I don't know Senator Baucus, I think you're right, it's those nasty Red Communists in China because it could never be our Congress who's to blame.

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