More China-Bashing Currency Proposals from US

♠ Posted by Emmanuel in , at 5/14/2009 05:50:00 PM
There is another bill being contemplated in the US Congress targeting trade evildoers who undervalue their currencies (read: China). We've been here before with Schumer-Graham, Baucus-Grassley-Schumer-Graham, Ryan-Hunter...I'm sure that I've missed some as these proposals pop up more often that Michael Jackson at kiddie parties.

There isn't much for me to add other than that representation from virtually every sunset industry in America appears to have signed on, going by the list on the "Fair Currency" website. And, quite frankly, I doubt whether appreciating others' currencies will solve the basic problem of many American manufacturers selling stuff buyers don't want. Chrysler and GM, anyone? In the final analysis, US manufacturing's wounds are largely self-inflicted. You couldn't give away many of their hulking gas guzzlers if you tried. Apparently, Debbie Stabenow (D-Michigan) is still of the opinion that Japanese is unfairly manipulating its currency despite the yen being at a historically strong 95 to the dollar. When she started complaining about unfair currency, the yen was near ¥120/$1. You get the feeling these people wouldn't be satisfied even at ¥70/1.

Anyway, from the folks over at the American Manufacturing Trade Action Coalition:
The Fair Currency Coalition (FCC), an alliance of industry, agriculture, and worker organizations whose mission is to support U.S. manufacturing and production, thanked U.S. Senators Debbie Stabenow (D-MI) and Jim Bunning (R-KY) and Congressmen Tim Ryan (D-OH) and Tim Murphy (R-PA) for introducing the Currency Reform for Fair Trade Act of 2009 (CRFTA).

Including Congressmen Ryan and Murphy, a bipartisan group of 40 Members, 23 Democrats and 17 Republicans, have sponsored the House bill, H.R. 2378. U.S. Senators Sherrod Brown (D-OH) and Olympia Snowe (R-ME) have also sponsored the Senate bill (no bill number yet available).

CRFTA makes the unfair trade practice of prolonged currency misalignment actionable under U.S. countervailing duty (CVD) and anti-dumping law. Prolonged currency misalignment occurs when a foreign country aligns its currency to the U.S. dollar for a prolonged period at a below market rate. This acts both as a trade barrier and as an illegal export subsidy by making goods from the offending country artificially less expensive compared to products made in the United States.

AFL-CIO Secretary-Treasurer and FCC Co-Chair Richard L. Trumka said, “Job creation is the number one issue on the minds of the AFL-CIO’s 10 million members right now. While enacting the stimulus has provided critical short-term relief, the United States will not see sustained employment growth until our government stops China, Japan and others from using their undervalued currencies to steal American jobs. That is why Congress must pass the Ryan-Murphy CRFTA as quickly as possible."
Once more, I find these sorts of proposals utterly self-defeating in that an essentially insolvent country like the US will fare worse than its creditors if push comes to shove. Things should get interesting if and when China gets fed up with subsidizing Americas variegated deficits. So, I am holding my nose (and my disbelief at how economically illiterate these representatives of the people are) in once again calling for these brain dead measures to be passed ASAP [also see 1, 2]. Not only will the aftermath conclusively demonstrate that the American emperor has no clothes. but it will also free up capital wasted on Treasuries for more productive investments.

Again, it's a function of how bad things get Stateside how viable this sort of legislation becomes. C'mon, Uncle Sam. Punish these trade evildoers, it will make you feel good. With "China Currency Coalition" Obama and his Treasury Secretary Geithner predictably wimping out on labeling China a currency manipulator, someone needs to take immediate action. As I've said, it's high time they cut the crap and just fight each other over currency matters.