Click on WORD or PDF for full content
In Euro Pacific Capital, Peter Schiff builds an explanation of the Chinese pegging the yuan to the US dollar, and what will happen when the Chinese stop this practice.
During President Obama’s high profile visit to China this week, the most frequently discussed, yet least understood, topic was how currency valuations are affecting the economic relationship between the United States and China. The focal problem is the Chinese government’s policy of fixing the value of the renminbi against the U.S. dollar. While many correctly perceive that this ‘peg’ has contributed greatly to the current global imbalances, few fully comprehend the ramifications should that peg be discarded.
The common understanding is both incomplete and naive. Most analysts simply see the peg as China’s principal weapon in an economic struggle for global ascendancy. The peg, they argue, offers China a competitive advantage by making its products cheaper in U.S. markets, thus allowing Chinese firms to gobble up market share and steal jobs from U.S. manufacturers. The thought is that were China to allow its currency to rise, American manufactures would regain their lost edge, and both manufacturing firms and the jobs formerly associated with them would return. In this narrative, the struggle centers on the United States’ diminishing leverage in persuading the Chinese to lay down their unfair weaponry. It’s a sympathetic picture, but it tells the wrong story.
While the peg certainly is responsible for much of the world’s problems, its abandonment would cause severe hardship in the United States. In fact, for the U.S., de-pegging would cause the economic equivalent of cardiac arrest. Our economy is currently on life support provided by an endless flow of debt financing from China. These purchases are the means by which China maintains the relative value of its currency against the dollar. As the dollar comes under even more downward pressure, China’s purchases must increase to keep the renminbi from rising. By maintaining the peg, China enables our politicians and citizens to continue spending more than they have and avoiding the hard choices necessary to restore our long-term economic health. …
In WaPo, Robert Samuelson comments on Obamacare’s transfer of wealth from the young to the old.
One of our long-running political stories is the economic assault on the young by the old. We have become a society that invests in its past and disfavors the future. This makes no sense for the nation, but as politics it makes complete sense. The elderly and near elderly are better organized, focus obsessively on their government benefits and seem deserving. Grandmas and Grandpas command sympathy.
Everyone knows that the resulting “entitlements” dominate government spending and squeeze education, research, defense and almost everything else. In fiscal 2008 — the last “normal” year before the economic crisis — Social Security, Medicare and Medicaid (programs wholly or primarily dedicated to the elderly) totaled $1.3 trillion, 43 percent of federal spending and more than twice military spending. Because workers, not retirees, are the primary taxpayers, this spending involves huge transfers to the old.
Now comes the House-passed health-care “reform” bill that, amazingly, would extract more subsidies from the young. It mandates that health insurance premiums for older Americans be no more than twice the level of that for younger Americans. That’s much less than the actual health spending gap between young and old. Spending for those age 60 to 64 is four to five times greater than those 18 to 24. So, the young would overpay for insurance that — under the House bill — people must buy: Twenty- and thirtysomethings would subsidize premiums for fifty-and sixtysomethings. (Those 65 and over receive Medicare.) …
In Der Spiegel, Gabor Steingart assesses Obama’s Asian trip, and reviews Obama’s foreign policy paradigm.
…The mood in Obama’s foreign policy team is tense following an extended Asia trip that produced no palpable results. The “first Pacific president,” as Obama called himself, came as a friend and returned as a stranger. The Asians smiled but made no concessions.
Upon taking office, Obama said that he wanted to listen to the world, promising respect instead of arrogance. But Obama’s currency isn’t as strong as he had believed. Everyone wants respect, but hardly anyone is willing to pay for it. Interests, not emotions, dominate the world of realpolitik. The Asia trip revealed the limits of Washington’s new foreign policy: Although Obama did not lose face in China and Japan, he did appear to have lost some of his initial stature.
In Tokyo, the new center-left government even pulled out of its participation in a mission which saw the Japanese navy refueling US warships in the Indian Ocean as part of the Afghanistan campaign. In Beijing, Obama failed to achieve any important concessions whatsoever. There will be no binding commitments from China to reduce greenhouse gas emissions. A revaluation of the Chinese currency, which is kept artificially weak, has been postponed. Sanctions against Iran? Not a chance. Nuclear disarmament? Not an issue for the Chinese.
The White House did not even stand up for itself when it came to the question of human rights in China. The president, who had said only a few days earlier that freedom of expression is a universal right, was coerced into attending a joint press conference with Chinese President Hu Jintao, at which questions were forbidden. Former US President George W. Bush had always managed to avoid such press conferences. …
We hear from another disillusioned liberal. In Politico, Elizabeth Drew discusses Greg Craig’s departure.
…While he (Obama) was abroad, there was a palpable sense at home of something gone wrong. A critical mass of influential people who once held big hopes for his presidency began to wonder whether they had misjudged the man. Most significant, these doubters now find themselves with a new reluctance to defend Obama at a phase of his presidency when he needs defenders more urgently than ever.
This is the price Obama has paid with his complicity and most likely his active participation, in the shabbiest episode of his presidency: The firing by leaks of White House counsel Gregory Craig, a well-respected Washington veteran and influential early supporter of Obama.
The people who are most aghast by the handling of the Craig departure can’t be dismissed by the White House as Republican partisans, or still-embittered Hillary Clinton supporters. They are not naïve activists who don’t understand that the exercise of power can be a rough business and that trade-offs and personal disappointments are inevitable. Instead, they are people, either in politics or close observers, who once held an unromantically high opinion of Obama. They were important to his rise, and are likely more important to the success or failure of his presidency than Obama or his distressingly insular and small-minded West Wing team appreciate.
The Craig embarrassment gives these people a new reason – not the first or only reason – to conclude that he wasn’t the person of integrity and even classiness they had thought, and, more fundamentally, that his ability to move people and actually lead a fractured and troubled country (the reason many preferred him over Hillary Clinton) is not what had been promised in the campaign. …
In the Daily Beast, Lee Siegel looks at Obama’s governing style in light of the KSM decision.
…This illusion of national participation in his decision-making process, with the promise of a happy ending that excludes no one, has been Obama’s method almost from Day One. Call it the American Idol style of governing—except that no possibility ever gets voted out of the competition. …
…On health care, once again, Obama proclaimed his desire for an ideal solution, held himself aloof from the fray, and let the public, the media, and the politicians turn it into a World Wrestling match that made almost any sort of compromise a victory. On Afghanistan, the same process: The president might deplore the leaks that came from inside and outside his administration, but they dripped slowly, and from widely scattered places, just like the slowly dripping, all-inclusive way he appears to think.
Obama seems not so much to govern as to preside. And yet for all the prudent pragmatism of his style, he doesn’t seem merely to want to please everyone. He seems determined not to be held responsible for the displeasure he causes. In the end, Obama won’t be blamed for what will likely be the health-care bill’s substantial flaws. Instead, the transparency of the process leading up to the bill ensures that at every point where the bill seems to fail one constituency or another, a particular person or people will be blamed for thwarting Obama. …
In News Busters, Noel Sheppard has a surprising post on Chris Matthews’ opinion of Obama.
Chris Matthews appears to have lost that loving feeling for Barack Obama.
On “The Chris Matthews Show” Sunday, the once smitten MSNBCer called some of Obama’s recent mistakes “Carteresque” …
…Potentially as surprising as Matthews bringing these issues up was the Washington Post’s Anne Kornblut and David Ignatius agreeing with him
CHRIS MATTHEWS, HOST: Welcome back. The word these days is optics, visuals, signals. In the Carter presidency, the optics were not exactly robust, and Ronald Reagan rode that to a big victory in 1980. Is the Obama White House sending some Carteresque signals these days? Some see that in the deep bow to the Emperor of Japan, an unforced error say critics. Then there was, there was what happened in China: Obama got nothing in the way of concessions over there in spite of playing the polite visitor. And his effort to speak directly to the Chinese was jammed by the government. Third, that decision to try the terrorists up in that federal court in New York City. Again, nothing that had to be done, and critics say it shows that Obama, his team doesn’t understand this is a war we’re in. David, that’s the question. These optics are everything in a president. Carter used to carry that garment bag over his shoulder. This president is he making mistakes like in China like in Japan?
DAVID IGNATIUS, WASHINGTON POST : I think he is coming across as stiff. He is talking too much sometimes and communicating too little. So the opposite of what we saw during the campaign. Although the decision to try Khalid Sheikh Mohammed in New York apparently was Eric Holder’s, it strikes me that it really is a mistake. I mean, there are too many bad things that could happen. There is no reason to have to have done this. …
Sometimes you have to laugh at the ludicrous liberal politicians. Jonah Goldberg has an article in National Review that helps us do that.
…The point of that emasculating exercise was ostensibly to tell the world that Joe Biden was going to be riding herd over how the stimulus money was spent. It’s worth revisiting exactly what he said:
“That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort — because nobody messes with Joe. I have told each member of my Cabinet, as well as mayors and governors across the country, that they will be held accountable by me and the American people for every dollar they spend. I have appointed a proven and aggressive inspector general to ferret out any and all cases of waste and fraud. And we have created a new website called Recovery.gov so that every American can find out how and where their money is being spent.”
In the cold, bracing light of today’s facts, this is just plain bladder-draining hilarious. We’ve all heard the stories of vast sums of money funding a tiny number of jobs, and tiny amounts of money paying for vast numbers of jobs. Even better, the stories have for the most part been broken by such non-right-wing-decoder-ring-wearers as the AP and the Boston Globe. A story in the Fort Worth Star-Telegram reports that after spending $608.9 million, the White House got 1,458 jobs. That’s nearly half a million dollars per job. Meanwhile, Alabama’s Talladega County alone claimed that it stretched $42,000 into 5,000 jobs “saved or created.”
“Saved or created” is itself the greatest weaselly locution yet coined in the 21st century. Just for the record, I save or create 500 push-ups every morning. …
Another great T-Shirt. This from Boing Boing.net.