I have said it before and I will say it again, Congress is a rotten, stinking corpse. It is no wonder that it currently has the lowest approval rating of all time. This week more ridiculous legislation was introduced in that body that will only make our lives worse. The bipartisan bill that was introduced would punish any country that practices currency manipulation as an unfair trade subsidy. It would give President Obama the ability to impose retaliatory protectionist measures to level the playing field. Of course, the impetus for the legislation is China’s alleged undervaluing of its currency, the yuan, in order to support Chinese exports to other countries.
Now, it’s funny, how the legislation comes in an election year when there is a very strong anti-incumbent mood amongst the electorate. Many Americans who have lost their jobs in this depression are naturally fixated on statements from Washington dealing with job creation. So as not to disappoint, Democratic Senator Charles Schumer was quoted as saying, “"There is no bigger step that we can take to promote job creation here in the US than to confront Chinese currency manipulation." This sounds logical on the surface, but upon closer analysis the senator as usual has it all wrong.
In the first place, to even threaten protectionist measures in such a fragile economic environment is dangerous. The Smoot-Hawley Tariff was passed in 1930 and placed protective tariffs on thousands of imports coming into the United States from abroad. At the time, during the Great Depression, its purpose was to protect American jobs. Sound familiar? Instead, the tariff caused our trading partners to retaliate with tariffs of their own thereby exacerbating an already horrendous employment situation. What makes our politicians believe that China would not retaliate with protective measures of its own or worst yet cause the collapse of our currency by flooding the world markets with hundreds of billions of dollars it keeps in reserve?
But secondly, and much more importantly to our situation, we need inexpensive Chinese products otherwise our inflation rate would be through the roof and unemployment would be right there with it. Here is the vicious cycle of events that is American/Chinese trade relations. China’s products are cheaper because the cost of doing business there is less than in the U.S. Thus, we purchase Chinese goods with dollars and treasury notes. China holds these dollars and interest-bearing bonds in reserve and then prints yuan to pay off the Chinese suppliers of our purchases. When the smoke clears, we get cheap Chinese goods to buy, the Chinese manufacturer makes a profit, and the Chinese government acquires more units of the world’s reserve currency. Everybody wins, right?
Article comments
— go to most recent comments1 - jeannie danna
Kenn,
Why do you blame Congress, when every piece of legislation they send to the Senate, lays on the floor until it dies? It is the Senate that needs resuscitation.
If the Obama Administration ends this cycle by imposing protective tariffs on Chinese goods coming into the United States, not only will the Chinese government reciprocate with retaliatory measures of its own, the prices of goods in the U.S. will rise sharply.
It should impose heavy tariffs on the toxic Chinese goods flooding this country. We used to manufacture our own goods, this was large part of our economy and it is why we once had a strong middle class and healthy work force.
Do you live here in the States? If you do then you can surely see that the sharp decline in our standard of living has already happened.
Although I am commenting directly to you. I do not expect an answer, as you never do anyway.
Have a nice day, Kenn
2 - Mark
Clear presentation of the conundrum, Kenn. Other than gold and troy scales, what's a poor boy to do? Gotta plan?
jeannie, if history is an indicator, your plan would likely lead us one step closer to world war.
3 - Ruvy
Kenn,
You only partially state the conundrum in this article. You rant and rave about Congress - but you fail to mention who owns Congress - or Obama, for that matter.
The owners are the same corporate thugs and bankers who moved all those American jobs overseas in the first place, the oil companies who tripled the price of oil in 1973 and started the serious cash drain on the American economy. Now that the owners are going broke themselves, they are making Congress fix the rules so they won't be broke.
Make it didn't happen, mommy!
You scream at "mommy" but you ignore the "mean widdle kid" who made "mommy" do all those awful things.
4 - jeannie danna
Mark,
I wish that I had more time today to answer you. I will bookmark this article and return later with an explanation.
In addition, I have noticed the lack of links to fully support this article, and I would like to offer some to Kenn.
:)I'll be back...and I don't think we need another war, one is too many, let alone three.
5 - Kenn Jacobine
Jeannie,
It is emotional thinking like ours that has gotten us into this mess. Americans have gotten use to bemoaning every bad thing that happens to them. Some person's child is killed by an electric garage door and because that parent was/is an idiot we all need Congress to pass legislation to protect youngsters against garage doors. We need government warnings on cigarette packs because we are too stupid to realize that smoking causes cancer. Now we need to clamp down on China because we have become totally dependent on their cheap/toxic goods for our survival. Wake up and start using your head and not your heart to think.
The middle class is vanishing and our standard of living is going down not because businesses are greedy and are moving off-shore but because government policies and the Fed's money policies has made it too expensive to operate in the U.S. You think it is bad now tell me what you think Obamacare will do to jobs and companies moving overseas. They will leave in droves.
By the way, businesses are not the only one's that move overseas to make a better living. That is a big reason I live overseas. I don't pay one thin dime for the welfare/warfare state and I am not required to pay into the Ponzi scheme that is Social Security.
6 - Kenn Jacobine
Ruvy,
The price of oil rose in 1973 because the OPEC nations cut supply to the West because of their support for Israel in the war. Sorry, but again, the politicians (Congress and the president) support Israel at our peril.
As to who owns Congress, unless I missed the story about corporations and big bankers fixing all the elections in the U.S. I thought the American people owned Congress. And there is the problem. The Average American voter is a mushhead. She/he watches TV and listens to the skewed views of the nightly anchors and is socialized to believe that only Democrats and Republicans can govern. Only big government can solve our problems. We need security over freedom. And you know what, this is what has brought down the country. In November, the Democrats will lose a lot of seats in the Congress but the problem is they will lose them to the other party that is responsible for the mess. We go back and forth expecting a different outcome. That is insanity my friend.
7 - jeannie danna
Kenn,
Welfare State? and you don't even live here? so...you give absoulutly nothing to this scociety?
Millions of people are tired of watching the corporate welfare queens holding their hands out for the taxpayers money.
BTW, who pays your salary, at the American School? I was under the impression that it was funded by taxpayer money, is this correct? not meaning to be nosey, just curious.
:) Now,I really am leaving, but I will be be back again later...oh I can't wait to finish this conversation with you.
8 - Ruvy
The price of oil rose in 1973 because the OPEC nations cut supply to the West because of their support for Israel in the war. Sorry, but again, the politicians (Congress and the president) support Israel at our peril.
I can't blame you for believing that particular lie. Until I was told otherwise by the economist who first dealt with the issue, I believed likewise.
A man in his late forties or early fifties was a senior economist at a major American institution when he was called in by his boss in the spring of 1973 to write a paper explaining why tripling the world's oil prices would benefit the world's economy, particularly the American economy. So, he sat down with his calculator and began crunching numbers. Some days later, toward the end of the week, he returned to his boss and told him there was no way he could make the numbers work.
His boss gave him the "do you like your job?" treatment. He told him, "John, we don't pay you to think around here. Have that report on my desk Monday morning or I'll find someone else who can work up the numbers at your desk."
John decided that he had too much honor to openly lie, and went to friends at the Wall Street Journal or the NYT and told them about this. He got fired from his job and a big flap ensued for a couple of days, and then, like most matters on the financial page, it got forgotten.
But it was not forgotten. The attack on Israel by the Arabs was used as the smokescreen to triple the price of oil in October, 1973.
John Hulley, the senior economist at the World Bank, told me this himself. It had happened to him. Go read the book "A Century of War" by Engdahl. It relates some of this and is the only book of which Sheikh Yamani, the now exiled energy minister for the ibn-Sauds, said described what had happened accurately.
By the way, Engdahl has no use for Israel.
As for the congressmaggots, the big money boys who contribute to their campaigns own them - nobody else. That is a fact of American life, and has been for decades if not longer.
9 - Dave Nalle
I wonder if they can apply retroactive punishments, since this kind of manipulation of the currency is exactly what was done under the Bush administration with the dollar.
Dave
10 - roger nowosielski
#2,
I doubt that, Mark.
11 - Mark
Rog, #10, ok, but I'm as entitled to use hyperbole as the next guy.
12 - roger nowosielski
Touche!
13 - Silas Kain
I have to say this piece sums it up where this Congress is concerned. Both bodies in CONGRESS - the House and the Senate are playing games. The American public is oblivious to the real problem - the way power is dispensed. Under the current House Rules (and Senate) the member with the most seniority wins. While I'm hopeful that virtually every new member of the House enters Washington with good intentions, I'm convinced that the atmosphere has reached a level of toxicity which is on the verge of being insurmountable.
The far Right has a penchant for demonizing Barack Obama as the antithesis to the American "way of life". And, like it or not, part of the fuel for that fire lies in the fact that he is part Negro. We have yet to get past it. Members of Congress know it and they're using the unspoken truth to their own advantage. They are feverishly applying all the woes of the nation upon the Obama Administration. The same thing happened in the Bush years. We're all too quick to place the blame on one person - the President. We're as monopolitical as we are monotheistic in America. We are saps, idiots, aw heck, we're just too stupid. We don't deserve the freedoms which have been secured for us.
Congress has systematically broken the Executive Branch since Watergate. Ironically, the majority of this destruction was performed by Democrats. The way I see it, the Democrat Party has to go -- fast. The tragedy is the GOP has become a mirror image of the Jackass party. So what are we to do? My friends, Barack Obama is not the problem. Neither was George W. Bush. We arrived at this place because of a political upheaval in the early 70's. And if you took five minutes to look at the length of time many of the members of Congress have spent "serving" us, you would come to the same conclusion. The faces change in the Oval Office - they remain quite the same in Congress. I now defer to a quote from President Richard M. Nixon:
Any change is resisted because bureaucrats have a vested interest in the chaos in which they exist.
If there is one person from recent history who we could use right now, it is Richard Milhous Nixon.
14 - Roger B
It looks to me like we missed a golden opportunity, a couple years ago, to fix some of this mess when we chose to rescue the (incompetent) financial operators instead of nationalizing them, letting the bondholders take the hit for their poor decision making, and then breaking up the "too big to..." corps and selling off smaller pieces to new investors as the opportunity presented.
Anyway, it's quite stupid to funnel special privileges, tax breaks, and taxpayer dollars at US companies since they've demonstrated such willingness to export jobs overseas, and also to use money to bailout foreign banks.
Congress is weighted down and doomed by the Senate, which commits crimes of misrepresentation every day while bowing and scraping to each other as if they were honorable people, which they are not. Only a few rubes and hicks in Wyoming and Alaska are fooled.
15 - roger nowosielski
". . . when we chose to rescue the (incompetent) financial operators instead of nationalizing them . . ."
It's going to come to that sooner or later. If "socialized medicine," or whatever, is a dirty word now, let's wait a decade or two, and it will sound like music to one's ears.
16 - Kenn Jacobine
Jeannie,
"Welfare State? and you don't even live here? so...you give absoulutly nothing to this scociety?"
I beg your parden. I give plenty to the society. I am self-supporting and when I am there I obey the laws which is more than I can say about Congress. Your remark is a perfect example of what I was saying. You liberals always make it personal. I don't pay "my fair share" so I am somehow not "giving" back to society. A few weeks back I didn't want Uncle Scam to rebuild Haiti so therefore I was a racist. I read a great line in the book Freakonomics last night: : "morality is how we would like to think the world should be. Economics explains how the world really is." In other words, keep emotion out of it and learn what the laws of nature are so they can be used instead of abused.
I teach at a private school financed mostly by the companies of the parents. I must say as well financed rather lavishly - better than any public (government) school I have ever been to . So I guess that makes me a puppet of corporate interests? You know those evil, greedy oil and gas companies. Instead I believe that it shows the free market works because these companies have to give their employees great benefits, including education for their kids, to lure them here and keep them here.
By the way, I have time and again denounced corporate welfare as much as individual welfare.
17 - jeannie danna
Kenn,
Before you go off on a rant here, allow me to say that I was reading YOUR comment back to YOU.
YOU said, "That is a big reason I live overseas. I don't pay one thin dime for the welfare/warfare state and I am not required to pay into the Ponzi scheme that is Social Security."
?
You want to cry that you need freedom from any government and then insult anyone that is free enough not to agree with you?
I don't owe you or anyone else here for being a Liberal, get that straight.
Yes, I like my government right now! It's a hell of a lot better than it was three years ago, as far as I'm concerned.
Oh, I thought you were with that military school of the America's, that's why I posted a link about it in one of your other threads. SORRY.
And...good YOU are also against CORPORATE WELFARE. see? we aren't that different and I like educators too, I happen to be married to one.
:0 so do you want me to leave your thread?
18 - Kenn Jacobine
Believe me I could never work at a military school - would be fired in 24 hours.
One of the things I enjoy most in life is a good political discussion. It's boring only talking to folks that agree with you. Keep the challenges coming - it is a good way to stay honest.
19 - Silas Kain
Politicians are like diapers. They get dirty and need to be changed often. Stop pampering politicians. Throw the babies out with their stinky, putrid bath water - regardless of race, creed, sex, or political affiliation. Imagine Barney Frank, Eric Cantor, Nancy Pelosi and Mitch McConnell applying for unemployment benefits. It's too delicious for words.
20 - Jordan Richardson
Kenn,
Your brand of emotionless thinking is fine for objective raw sciences, but it leaves a lot to be desired when it comes to solving real world dilemmas.
You use the line from Freakanomics, which is a great little book, but again that line only addresses half of these issues and knowingly discards morality.
You can't treat the two - morality and economics - as though they are mutually exclusive any more than you can expect life to continue on an emotionless, rational path. And you can't expect the economy to do so either because (surprise!) the economic matters of our day and of any day are couched in very human problems and situations.
Your desire to discard the human element and work on cold hard facts alone might make dear ol' Milton proud, but it can and will only lead you so far in the end.
And again you argue for the "laws of nature," but it seems to me you've chosen a certain path wherein a code of "laws" works in your favour. Unfortunately the "laws of nature" you speak of are, too, subjective and emotional matters because there's so much room for variation.
To you, trumpeting the "natural law" of economics is your religion and the free market is your god. It can do no wrong because it is a callous, inhuman machine that will work itself out if we just leave it the hell alone.
Unfortunately, history doesn't bear that out and neither does human nature. Your worldview asks the impossible; it asks people to stop being people.
21 - jeannie danna
Kenn,
it is emotional thinking like ours that has gotten us into this mess.
Unemotional thinking allows governments and people to turn blind cold eyes away from the suffering and injustices that plague this world.
You sit here and classify all social programs as welfare for the unwashed, uneducated, and undeserving. I am very emotional and vocal about this subject, this is WRONG!
"Good social programs are needed in America, and these simple benefits would make the nation better for everyone. They’d reduce
crime, help all families equally, create safer streets, reduce
depression, and allow more economic growth for everyone.
Now, instead of thousands of different social programs designed for different
people, a small number of simple programs, which cover everyone.
This idea is very radical, Kenn. Especially when compared to the bill we are freaking out about right now. I would prefer the middle ground between what we have now and what could be if we had intelligent social justice in America.
"Yes, this bill will allow people to buy health insurance from an insurance company." -Bill Maher
Some person's child is killed by an electric garage door and because that parent was/is an idiot we all need Congress to pass legislation to protect youngsters against garage doors. We need government warnings on cigarette packs because we are too stupid to realize that smoking causes cancer. Now we need to clamp down on China because we have become totally dependent on their cheap/toxic goods for our survival.
Deregulation allows companies to market unsafe goods and services. I thank Congress and lawmakers for looking out for my family and loved ones. My niece broke her arm when the garage door would not stop because of a faulty eye and considering that my sister-in-law is a systems analyst for a large energy company, so I don’t think this happened to her because she had stupid-lazy parents.
What would your point of view be if you lost a child to a faulty garage door that had a defective safety device incorporated into it, and then found out that the manufacturer not only knew about this problem , but left on their own they did nothing to correct it? Dare I say the word, Toyota?
We had better clamp down on China! I won’t walk through the doors of Wal-Mart, and this use to upset my daughter, however, now that she’s graduating from college, she knows why.
The middle class is vanishing and our standard of living is going down not because businesses are greedy and are moving off-shore but because government policies and the Fed's money policies has made it too expensive to operate in the U.S. You think it is bad now tell me what you think Obamacare will do to jobs and companies moving overseas. They will leave in droves.
The middle class IS vanishing and it is because of the EXCESS GREED in this nation!
The American companies now pander to the stockholders, because in this country, the bottom-line has more power than the workers do. The unions have finally given the people living wages, and instead of accepting this fact, the companies have left the country to crank out toxic crap made by poor people in other countries that have little to no regulation standards for , wages, living conditions and environment.
The Ponzi scheme that is Social Security.
A ponzi scheme is what it would have become if we had let Bush and Cheney get hold of it during their reign.
Social Security and Medicare have kept seniors from buying pet food in-order to eat, afforded them health care, and a monthly wage that they earned.
:)Thanks for debating, and I'll look back later for a response.
22 - jeannie danna
Kenn,
I am trying to post a link for my comment, the first one is the link that I used this morning, and I hope it goes through the filters so that you can see them.
Here are some links
:)
23 - Boeke
A sure way to reveal your financial naivete is to say "The Ponzi scheme that is Social Security.".
SS is no more a Ponzi scheme than any other investment, loan, or insurance policy.
Do you own a Life Insurance policy? Do you believe that the insurance company has enough cash on hand to pay off ALL it's insurance policies? No, it doesn't. The net of ALL it's issued policies is an Unfunded Liability. They only have enough to payoff actuarial requirements. They cannot cover their "Unfunded Liability" with cash on hand.
In fact, SS has much better reserve coverage of its unfunded liabilities than most insurance companies.
24 - roger nowosielski
It would be interesting to hear Kenn's response were he for some reason, God forbid, hit with a debilitating stroke or simply fall flat on his face, all his savings depleted and no job prospects of any kind - SS being his only source of income.
Again, one wonders whether any such change of circumstance would make him rethink his position on SS as just another Ponzi scheme.
25 - Kenn Jacobine
Wow, there is a lot here to refute. Rest assured I will be back this evening to do so, but right now I need to work so I can make money to eat and have shelter and earn the health insurance that will be there for me if I get sick or have an accident.