Smells Like Smoot (Wizbang)

Congress and the Obama administration are tickling the economic equivalent of the dragon's tail as they lecture the Chinese about manipulating the Yuan and increasing government spending:

Jan. 23 (Bloomberg) -- Timothy Geithner's warning that President Barack Obama believes China is "manipulating" its currency may trigger renewed tensions between two of the world's three biggest economies.
Geithner, Obama's nominee for Treasury secretary, also told senators the administration will press China to "adopt a more aggressive stimulus package" to boost its domestic economy. The remarks on manipulation were a shift from President George W. Bush's team, which stopped short of using the term in criticizing China's exchange-rate management."

The US economy faces considerable hurdles as it struggles to regain stability. Suggesting an international trade war with the Chinese is unwise but Representative Charles Rangel seems to think he has the upper hand:

"What they can't work out diplomatically we can work out legislatively," said Representative Charles Rangel of New York, who chairs the House Ways and Means Committee, which has jurisdiction over trade issues, in an interview. "The committee has been saying for years" that China has manipulated the Yuan's value, he said."

It doesn't help that President Obama gave his blessing to such legislation last May that would allow U S companies to petition for higher tariffs:

"In May, Obama signed on as a co-sponsor of legislation aimed at China that would give U.S. companies the ability to petition for import duties to compensate for the effect of a weak currency."

China may have in fact manipulated the Yuan. But inviting foreign trade retaliation by suggesting that "the problem" can be worked out "legislatively" instead of diplomatically is insane. The manipulation of currency markets by foreign entities is not a new phenomena and President Obama and his Democrat Congress know this.

Combined with the unprecedented federal bail out of GM and Chrysler, which is effectively a massive tariff on foreign owned domestic auto manufacturers, what is the Obama administration doing to encourage foreign investment in the US economy? The answer is nothing. Having already given domestic steel manufacturers preferred status in the massive stimulus package proposed by PelosiCo & Reid (while simultaneously lecturing the Chinese on their stimulus plan) Congress is trespassing on territory that is fraught with protectionism. History has informed all that protectionism and massive deficit spending in a period of economic decline (recession) is a recipe for disaster. The Hope and Change administration, and its Congress, show no signs of good judgment in the imminent train wreck they are orchestrating.

Comments (9)

"Combined with the unpreced... (Below threshold)

1. Posted by jpm100 | January 22, 2009 11:34 PM | Score: 1 (1 votes cast)

jpm100:

"Combined with the unprecedented federal bail out of GM and Chrysler, which is effectively a massive tariff on foreign owned domestic auto manufacturers"

Nice. Even the Japanese know the difference between a tariff and saving an industrial sector they and myriad of other industries also depend on.

Why Toyota wants GM to be saved

In fact, they are likely aghast at the reckless handling of our own industrial sector and the risking of their investments.

Posted on January 22, 2009 23:34

I think you mean "dragon's ... (Below threshold)

2. Posted by Al | January 22, 2009 11:49 PM | Score: 0 (0 votes cast)

Al:

I think you mean "dragon's tail".

Posted on January 22, 2009 23:49

I care not whether the poli... (Below threshold)

3. Posted by Morrissimo | January 23, 2009 12:48 AM | Score: 4 (4 votes cast)

Morrissimo:

I care not whether the politician has a D or an R after their name: with very few exceptions, they will sell off the long term to "look good" and "do something" in the short term. And we the sheeple reward their stagecraft by ...forgetting, and re-electing them. Rinse and repeat.

"A republic - if you can keep it."

Keep a sharp eye to the financial horizon, as the next big waves to come ashore in this depression may be arriving sooner than expected. President Obama's much-ballyhooed "hope and change" is quickly showing its true colors: neo-Keynesianism.

"Those who do not learn from history are doomed to repeat it."

Posted on January 23, 2009 00:48

I rather lean toward tariff... (Below threshold)

4. Posted by bryanD | January 23, 2009 1:35 AM | Score: 1 (1 votes cast)

bryanD:

I rather lean toward tariffs (beats income taxes) as a tributary to re-industrialization in the US. The lack of domestic commerce in US capital goods magnifies China's power over fat and happy American corporate boards which would rather surrender to a ledger book pen than interrupt the chairman's nap or risk consumers' squat-based "confidence".

"Keep a sharp eye to the financial horizon, as the next big waves to come ashore in this depression may be arriving sooner than expected"-m

Commercial real estate crash dead ahead.

Posted on January 23, 2009 01:35

Perhaps the Democrats in D.... (Below threshold)

5. Posted by Dodo David | January 23, 2009 6:55 AM | Score: -1 (1 votes cast)

Dodo David:

Perhaps the Democrats in D.C. have a yen for trouble with China.

Posted on January 23, 2009 06:55

Let's see...China is a sign... (Below threshold)

6. Posted by hermie | January 23, 2009 7:55 AM | Score: 1 (3 votes cast)

hermie:

Let's see...China is a significant and growing overseas buyer of GM cars.

GM is getting how many billions from the US Treasury to prop it up?

Rangel wants to piss off China.

China will stop buying GM cars.

GM will ask for more money.

Rangel will vote for additional bailout money for GM because they can't sell enough cars in China.

Hopeandchange...Hopeandchange

Posted on January 23, 2009 07:55

Great. The bankrupt Consum... (Below threshold)

7. Posted by kevino | January 23, 2009 8:41 AM | Score: 1 (1 votes cast)

kevino:

Great. The bankrupt Consumer nation that is debasing its paper currency decides to lecture the Producer nation.

Posted on January 23, 2009 08:41

When Bush imposed tariffs o... (Below threshold)

8. Posted by Corky Boyd | January 23, 2009 10:48 AM | Score: 1 (1 votes cast)

Corky Boyd:

When Bush imposed tariffs on foreign steel to fulfill a campaign promise, the afffected countries filed challenges under GATT. They won, as they will if we do the same thing again.

The challenging nations were given the right to impose retaliatory tariffs. Rather than a shotgun approach, they worked together and did one the slickest moves ever devised. They targeted industries in each of the congressional districts of the Ways and Means committee. And because they were allotted a specific dollar amount, they put destructive retaliatory tarriffs on a small number of them. Calfornia wines were among them.

Well there were howls of protest from affected districts and an instant desire of Committee members to repeal the steel tariffs, which was done.

You would think Charlie Rangel would remember this. But he seems to have memory problems lately, especially when it comes to his own taxes.

Posted on January 23, 2009 10:48

It looks like fuffalo count... (Below threshold)

9. Posted by Spurwing Plover | January 24, 2009 12:14 AM | Score: 0 (0 votes cast)

Spurwing Plover:

It looks like fuffalo country,feels like buffalo country,smells like buffalo country IT IS BUFFALO COUNTRY

Posted on January 24, 2009 00:14