Obama moves toward trade war with China

President Obama’s Treasury Secretary nominee, Tim Geithner made statement today which will most certainly catch the attention of China. In a written response to questions submitted at his confirmation hearing, Geithner accused the Chinese government of currency manipulation.

“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” … {snip}
As an Illinois senator, Obama had co-sponsored legislation aimed at changing how the US government formally determines currency manipulation and authorizes new trade reprisal measures.

During the presidential campaign, he had accused China of suppressing its currency’s true strength to make its exports more competitive, echoing some US lawmakers who blamed the snowballing US trade deficit with China on the weak yuan and have sought sanctions against Beijing. AFP

This is a serious and fundamental policy shift, signaling a move against the Chinese. It is one that will have consequences, both seen and unforeseen. We can expect higher prices for imported goods, and a reduction in trade as China retaliates. We can expect fewer bond purchases by China which will drive bond prices down and boost yields – which, eventually, would cause borrowing costs for residential and some corporate customers to increase. The unforeseen consequences may actually make deflation more of a problem instead of less, as deleveraging and the unwinding of debt continues to impair corporate balance sheets.

I’ve got a bad feeling about this. I think we may have just passed a mile marker of some kind. The serious recession that we have endured for the last year may have just shifted into a 30’s style depression, fueled by bumbling politicians and an unnecessary trade war.


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8 Responses

  1. (Obammy’s nominee for Sec. of Treasury is spelled G-E-I-T-H-N-E-R.)

    Yes, sirree. A trade war with China is all we need when they hold hundreds of millions in U.S. debt. I heard someone along the way say that all of our natural resources of oil and coal won’t go untouched. China will demand them as repayment and will stand over Americans as we get it out of the ground for them. Scary stuff indeed.

  2. The Bush administration had a much more reasonable approach in dealing with China. The ChiComms view being dishonored about as favorably as a muslim male with a teenage daughter.
    No country on Earth could pay all of the debt they have, if called on it. B-HO’s administration is off to a worse start than I could have imagined, and probably will get even worse. I now revise my previous position, I will now extend even less courtesy and respect to our new President, not at least as much as the left showed W.

  3. Bush haters look like turkeys.

    Nevertheless, critics of the ex-Prez were delighted to see him gone, on account of him being such an embarrassment.

    An embarrassment to his critics, that is.

  4. thanks for the eagle eye. spelling error fixed

  5. *sigh*

    And they accused former President Bush of being stupid?

  6. Obama has killed more allies than enimies in his first week of office. Amazing record. It looks like Jimmy Carter all over again.

  7. Get ready for the change! . . . . ‘Whitey’ need not apply!

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