OK, here we go again, in all likelihood, with another big blast of hot air from Barack Obama.
Reuters, like the AP, doesn’t appreciate quoting from their articles. So, for details follow the link from 11/10/2009:
Let’s summarize. Former Bush Adminstration biggie Robert Zoellick who has moved on to become President of the World Bank thinks the dollar as a reserve currency is “relatively secure” but the Chinese yuan is going to become an alternative to the greenback. Zoellick muses that it might take 10-15 years and that we shouldn’t be “complacent” about the dollar.
As if anybody these days is complacent??? And, don’t you think that these comments just confirm the actions of Ben Bernanke and the Fed that are allowing the dollar fall?
Ah, but according to the Telegraph (U.K):
President Obama, who, since taking office in January, has resisted branding the Chinese government as currency manipulators, promised to discuss the thorny issue of the yuan, and whether it is undervalued, as part of a visit to Shanghai and Beijing.
“Currency, along with a host of other issues, will come up, and I’m confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries, that allows ongoing economic growth,” said Mr Obama.
But Mr Obama will have to tread carefully as the Chinese government owns almost $800bn (£477bn) of US Treasuries, its largest foreign creditor.
Earlier in the day, the Chinese premier, Wen Jiabao, urged the US to “effectively discharge its responsibilities” and “maintain an appropriate size” to its budget deficit.
A couple of days ago on CNBC, PIMCO’s Bill Gross made this point (see minute 4:30 on the video titled America Still Number 1?:)
Gross notes that over the last year alone the depreciating dollar means that every single Treasury purchased by China, Japan etc with a 1 to 2 % yield has essentially generated a negative 13 to 14% return. Yes, NEGATIVE 13 to 14% return.
Yeah, I guess Obama will HAVE to tread carefully. China owns us and is not happy, especially about that negative return…
If you read our previous post Globalization/U.S. Decline Right on Schedule Courtesy Obama Backdown…Summer 2010 Projected Completion of Integration of NAFTA with EU to Counter BRIC/ASEAN Bloc, you’ll see an example of Obama’s big talk and big backdown type of leadership.
And, on this currency issue, Obama supporters are urging The Chosen One to live up to his campaign promise:
At the time, Obama said that he would “”insist that China stop manipulating its currency because it’s not fair to American manufacturers, it’s not fair to you and we are going to change it when I am president of the United States of America.”
I can’t wait to see this unfold over the next few days as the Obama crowd hits Beijing…I’ll be looking for the “insisting” part of the trip…
Filed under: Current Politics, World News | Tagged: Barack Obama, Ben Bernanke, Bill Gross, China, Chinese premier Wen Jiaboa, Chinese yuan, Federal Reserve, Japan, PIMCO, reserve currency, Robert Zoellick, Telegraph (U.K.), U.S. budget deficit, U.S. dollar, World Bank | 3 Comments »