China's Get-Out-Of-Jail Card Vexes Geithner

[dipsydoodle]

Source: Bloomberg

The U.S. Treasury secretary has worked 24/7 for 20 months prodding China to revalue the yuan. Even scant progress is vital as November’s congressional elections approach. Geithner can forget it after Japan’s intervention.

It’s a little-appreciated side effect of Japan’s first yen sales in six years. Any calls for China to boost the yuan will now be met with a blunt retort: Yeah, why don’t you call Tokyo first? Japan’s per-capita income is more than 10 times ours and you’re giving us grief about exchange rates?

It’s smiles all around in Beijing. China is growing 10 percent a year, Premier Wen Jiabao says efforts to avoid overheating are in “good shape” and investment is still pouring in. The glue holding it together is a cheap currency. Japan just gave China a green light to keep it that way.

Adding insult to injury, Japan’s intervention was confirmed on Wednesday, the day U.S. lawmakers began a two-day meeting to address China’s currency. And largely for nothing: Japan’s chances of driving down the yen in the long run are virtually nil. Not with the dollar and euro falling for very logical economic reasons.

Read more: http://www.bloomberg.com/news/2010-09-16/china-get-out-of-jail-free-card-vexes-geithner-william-pesek.html

[jtuck004]

1. Vexed? Wonder what he would be if he was homeless, or

maybe with no food for a day or so. Hungry or cold?

[RandomThoughts]

2. That part explains it.

investment is still pouring in

Japan’s per-capita income is more than 10 times ours


Race to the bottom


Guess where much of that money from the American rich is going also, and where there 'tax cut' would go also.

it is race to the bottom for profit.

[pampango]

4. You realize that Japan's per-capita income is 10 times China's not ours?

"Any calls for China to boost the yuan will now be met with a blunt retort: Yeah, why don’t you call Tokyo first? Japan’s per-capita income is more than 10 times ours and you’re giving us grief about exchange rates?" - China's hypothetical (probably actual) response to any call to raise the value of the yuan.

China's per-capita income: $3,677
Japan: $39,573
US: $46,442

Japan's advantage over the US is that it has one of the most equitable distributions of income in the world while ours if the most inequitable of all developed countries.

[RandomThoughts]

5. My point is this.

China has cheaper operating cost, and fewer economic and safety standards, according to media reports.

They also do not have organized labor, due to governmental rules.

So they make things cheaper and that gets people to invest in their companies.

The outcome is the country with the worst working environment, gets the most capital.

Race to the bottom.



If production was below demand, then workers could leverage there skill or a need for them to do a job to compensate for to much labor, one of the reasons capitalism without regulation had some better effects back in Renaissance Europe where a merchant class arose out of open markets.

If you got paid less, you could go to somewhere someone needed labor, giving a counter to race to the bottom.

With production above demand, capitalism goes all screwy trying to make demand, creating huge sectors that do nothing but pretend to do things while skimming money.

I have posted this before the short version, planned obsolescence, scarcity, and consumerism all get created to try and create demand, and they all hurt society.

[Kolesar]

3. You have to have a business degree to understand this editorial column

What is an "intervention"? What did Japan do? Or was it Japan's banks? :shrug: