Here's an interesting article on a new bill before congress.
From the link:
It will be introduced hopefully tomorrow or in the coming days and would require China to abide by international trade agreements and stop manipulating the value of its currency," said Klein, speaking on behalf of New York Democrat Senator Charles Schumer, who is spearheading the proposed legislation.
This statement tends to support my statements in previous articles that there is nothing "fair" about the fair trade pact we have with China.
I'm not a gambling kind a guy but if I had to wager, I'd place my bet on the bill mentioned in the linked article never seeing the light of day, not because it might make sense, and not because it might even be the right thing to do but simply because the politicians of this country have demonstrated for way too long that they simply don't have the intestinal fortitude to make the tough choices.
And here are some snippets from the commentary on the article linked above:
Now we come to the third point, the big one. As is usual in situations like the one facing the US and global financial system at present, this one is political - it is geo-political in fact. To see the background, here is a link from Yahoo news dated February 2 and titled US Senate to mull deadline for China to revalue yuan.
Yep, it's political alright. Not even economists are that stupid.
According to the report, a dozen Senators, from both parties, agreed to "co-sponsor" a bill which gives China "a window of 180 days" to stop fixing its currency to the US Dollar and "revalue" it. If China does not comply, the bill states that all Chinese manufactured goods exported to the US will face a tariff barrier of 27.5%!! Breathtaking, isn't it?
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There is NOTHING that we can think of - and we are fairly knowledgeable and have well functioning imaginations - which could better illustrate the true nature of the fiscal and financial dilemma now facing Washington than this bill. There is NO WAY that the US government can be ignorant of the potential effects on their own economy of slapping a 27.5% tariff on Chinese manufactured goods. In addition, there is no way that the US government can be ignorant of the fact that by setting a deadline on a LARGE Chinese currency revaluation, they are setting a deadline on China realising a HUGE loss on the mountain of $US based assets they now own - or are expected to acquire in the future to go on offsetting the effects of the US trade/budget deficits.
No matter, as this link from the "Carolina Channel" titled: Graham Wants Big Tariffs On Chinese Products illustrates. The bill imposing the 180 day deadline for the Chinese revaluation and the 27.5% tariffs if they do not revalue was introduced on February 3. The introduction of legislation does not automatically mean that it will be passed, but this bill has bi-partisan support and is expected to pass, according to its two sponsors Senator (R-SC) Lindsey Graham and Senator (D-NY) Charles Schumer.
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China is present at this weekend's G-7 meeting in London on an "observer" basis. The Chinese government has already made known its "displeasure" with the introduction of this bill on the floor of the US Senate. Financially, the passage of this bill would not be a case of the US government shooting the US economy in the foot, the bullet would go straight between the eyes. To threaten the nation which stands between you and financial apocalypse with tariff retaliation if it does not revalue its currency, thereby taking HUGE losses on its purchases of your debt paper and almost guaranteeing it will not only stop buying more but start selling what it has, is an act of political lunacy.
And THIS is the situation in which the US Dollar price of Gold is going down. Truly, the Gold "reverse barometer" has never worked this well. The true state of the US financial system has never been so starkly, if unintentionally, brought to light. Only those who see financial calamity straight ahead would propose a measure which guarantees financial calamity - in six months time.
Things are starting to heat up. Stay tuned for further developments.
