The China currency mess

The China currency mess

Bernanke china tradewar

If China wants to subsidize our purchases of their goods, that is fine with me. Where China is getting its wealth is from stealing our intellectual property, not from selling us their products at below cost. The Obama administration isn't doing what is right and oppose the new law being debated this week in the Senate. Unfortunately, the initial vote yesterday only had 16 Republicans and 3 Democrats opposing penalties on China for a low exchange rate. From the Financial Times:

The chairman of the US Federal Reserve has accused China of damaging prospects for a global economic recovery through its deliberate intervention in the currency market to hold down the value of the renminbi.
Speaking just hours after the Chinese government sharply criticised a US congressional bill that would punish Beijing for alleged currency manipulation, Ben Bernanke told a congressional committee that an undervalued renminbi was preventing the rebalancing of global demand towards emerging market economies.
“Right now, our concern is that the Chinese currency policy is blocking what might be a more normal recovery process in the global economy,” he said. “It is to some extent hurting the recovery”.
The US Senate voted overwhelmingly on Monday to open debate on a bill, clearly aimed at China, that would impose tariffs on imports from countries with undervalued currencies. On Tuesday, the Chinese government blasted the bill in three statements released simultaneously by the foreign ministry, the central bank and the ministry of commerce, saying the legislation could spark a “trade war”. . . .

Consequences of "Buy American" provisions

Consequences of "Buy American" provisions

ObamaAdministration tradewar

Obama is succeeding in making both the US and Canada poorer. Great job.

WASHINGTON -- On paper, Tom Pokorsky would seem to be a clear beneficiary of the government's $787 billion economic-stimulus package.

Mr. Pokorsky runs Aquarius Technologies Inc., a company in Port Washington, Wis., that makes equipment to treat sewage. The stimulus plan earmarks some $6 billion for municipal wastewater projects that are right in his company's sweet spot.

But the bill's Buy American provisions -- meant to give U.S. companies a leg up on foreign competition -- are causing Aquarius and other U.S. companies a lot of grief with both suppliers and clients in Canada.

Now that grief has boiled over into a major diplomatic row with the largest U.S. trading partner. Canadian communities angered by perceived American chauvinism have started a Buy Canadian campaign to exclude U.S. bidders from municipal contracts.

"If that sticks, well, there goes 25% of my business," said Mr. Pokorsky. "To me, Ontario may as well be Indiana."

Halton Hills, a town of 50,000 people about 25 miles west of Toronto, is one of about a dozen Canadian communities forging ahead with plans to amend their procurement policies to freeze out American companies. "We won't be taking any products from any country that is discriminating against us," said Mayor Rick Bonnette.

Officials in Washington and Ottawa are scrambling to avoid an all-out trade war. Even so, Buy American guidelines are complicating life for American companies, muddling municipal bidding procedures and blunting the overall effect of the stimulus. . . .