"To announce that there must be no criticism of the president, or that we are to stand by the president, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt

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Wednesday, March 25, 2009

China Calling for "Super-Currency" Amid Concerns for Devaluing Dollar

Check out this article from Bloomberg.com by Li Yanping.

From the article: "Central bank Governor Zhou Xiaochuan this week urged the International Monetary Fund to expand the use of so-called Special Drawing Rights and move toward a 'super-sovereign reserve currency.' The dollar weakened after the Federal Reserve said that it would buy Treasuries and the U.S. government outlined plans to buy illiquid bank assets.

"'China is concerned about the potential for a slide in the dollar as the U.S. attempts to stimulate its economy,' said Mark Williams, a London-based economist at Capital Economics Ltd. The 'rare' sight of a Chinese official attempting to reframe an international debate may be 'a sign of China becoming more engaged,' he said."

And later an Obama adviser responds: "'The Chinese are a little disingenuous in saying that it’s so bad that we own all these dollars,' former Fed Chairman Paul Volcker, an adviser to Obama, said at the Wall Street Journal’s 'Future of Finance' conference in Washington. 'They own all the dollars because they chose to buy the dollars and they didn’t want to sell the dollars.'"

So what do you think? A political ploy by a cagey China, or a sincere sign of its fading confidence in their stockpile of $740 billion worth of American debt?

Well the Treasury Department is about to print up a trillion dollars worth of currency and stuff into the economy. Sen Gregg (nominated by Obama to be commerce secretary-- he withdrew) has said Obama's budget plan creates of "a public debt of about 80 percent of GDP, which basically is the type of debt ratio you see in banana republics." (my thanks to The Commissioner at The Political Huddle for both this info and link).

The Chinese are never ones to let a good crisis go to waste either. I think the answer is a little of both. They see Obama flailing, lost and refusing to give up his ideological budget, and now sense a chance to insert themselves more prominently into the international scene.

But that's right, Obama... Just keep focusing on the domestic-- infrastructure, and schools, and health care, and what-not. Don't realize that our economy is of international importance and open to and under international influence.

Hey... but Obama's friends with Oprah and Ashton Kucher and sometimes has a halo in his pictures. Won't that count for anything with the Chinese?

Plus Clinton said the US wouldn't pursue the Chinese on human rights violations. Isn't that worth a trillion dollars?

UPDATE: The Wall Street Journal has a more detailed article on this issue, which has turned into the hugely hyped story of the day.

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