However the USD is still the world’s reserve currency and the whole notion of letting all currencies float was supposed to be underwritten by the stable USD. But the old greenback is being abused by Wall Street bankers to maintain their 144 billion dollars in bonuses in ways that you would only expect from a banana republic. Singapore surprised the markets by allowing its currency to rise against the dollar. Other countries from India and Russia to Israel and Switzerland are all unhappy about the unstable dollar as it undermines their exports and their USD reserves.
Friday is the semi-annual deadline for the Treasury Department to name currency manipulators and you can expect that China will get a pass again. It seems that failing to get any cooperation on the Yuan, the Obama Administration is simply going to play chicken with a full blown currency war.
We could have a manufacturing and trade policy as we had from 1790 until 1980 but that would cut into the cash flow of billionaires. As they continue to sell off our manufacturing base and our economy spirals down it is very likely that 2011 will be the year that the US falls to second place for the first time since the 19th century. Practice this phrase to use with your grand children, hái jìdé nèitiān, it means “I remember when…” in standard Chinese. www.prairie2.com
2 comments:
Are we suicidal, insane or both.
It is well known that we have abandoned our manufacturing base to China.
To the hefty trade debt thus generated add the several trillions borrowed from China to fight wars meant only to keep China away from Iraq/Iran oil.
But now we allow China to purchase Texas oil fields providing not only the valuable commodity but also "knowledge of drilling technology that they find even more valuable"?
John Puma
Of course we have to give China knowledge of drilling technology-they will be our landlords-we need to stay on their good side and give them all we can as sufferers of "stockholm syndrome." often do.
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