|Mish, excellent blog!|
The issues at hand and your writings prompted me to reflect and here are some of the thoughts that came to mind.
The reality of the senate bill and even the toned down approach of Snow is: China you have to revalue the Yuan UPWARDS. Snow puts it as “float the currency” but he really just put it into more diplomatic language. We all know what he means.
This is pure and simple economic blackmail!
In fact, it puts self determination of any nation that presents an economic challenge into question. It is the threat of unilateral action on the economic front.
Under the pretext of free markets, threats of this nature tell the world that if you become too competitive with us, we will find a way, any way, to take your competitive edge away. This is not competition but plan economics where the bigger economic benefit has to be on the U.S. side otherwise the U.S. will change the rules.
It is a perfect illustration of why the world thinks that the U.S. does not respect international institutions like the U.N., the World Court, WTO and even agreements like Kyoto. These institutions or agreements serve their purpose as long as the decided advantage goes to the U.S. However, as soon as that is not the case and they become a hindrance and then the rules need to be changed. Either the agreement is simply abolished or the institutional rules are simply ignored. I wonder how long it will take until the first WTO verdict will be ignored because congress does not like the ruling.
We are moving inevitably into a time of protectionism that might have increasingly militaristic overtones. It is moves of this sort that WILL upset that tender balance between the Asian lender and the American consumer.