Currency Exchange Rate Oversight Act

Discussion in 'Politics' started by Wiseacre, Oct 4, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Most of the information I present here is from an op-ed in today's WSJ. It says the Senate may vote as early as this week on this legislation, which essentially is protectionism. It would allow US companies to request relief in the form of tariffs on a foreign competitor if the exchange rate is being unfairly manipulated. The Smoot-Hawley bill in the 1930s was an across the board increase in tariffs, this one is more selective. It sounds great to protect American jobs against currency manipulation, but there are unintended consequences to such actions. And this legislation allows for more picking of winners and losers for political rather than economic reasons, which opens the door to corruption.

    Primarily this bill is aimed at the Chinese, who are no doubt going to retaliate if we take protectionist actions against them. Protectionism has a way of spreading, to the detriment of everyone involved. If you wanted to increase the chances for a world-wide recession/depression, this is an excellent way to do it.

    Much has been made of China's efforts to hold down the value of their currency (yuan), but in fact the yuan has appreciated almost 30% since the middle of 2005. There are other economic forces at work besides the exchange rate, since our trade deficit with them is still high. And wages are rising there and in other developing countries, as are shipping costs to bring products here. Things are beginning to even out a little bit, and we should avoid getting the gov't involved in making such decisions unless there are clear cases of unfair practices from foreign competitors and countries.

    This bill is a bad idea. But the democrats in the Senate are pushing it to appease the unions in return for voting for the free trade agreements with Columbia, Panama, and South Korea that Obama finally sent to the Congress. They are afraid of losing the Senate to the GOP, ditto the WH, who so far hasn't spoken out against the bill. And the repubs in the Senate won't block it either because Mitt Romney (the current frontrunner) has called for unilateral trade duties against China, in an effort to get himself elected. No telling what the GOP-controlled House will do, but I think they'll pass it too if they get the free trade agreements through as part of a deal. Protectionism is the populist thing to do in an eletion year, don't be surprised if this thing is enacted.
     
  2. Jarhead
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    Jarhead Gold Member

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    if this is enacted, we will not revoer for years.
    China will undoubtedly retaliate...and we most certainly can not afford any type of financial war right now.

    Why do our politicans feel it is appropriate to market their initiatives by only touting the positives?

    Why cant they present the pros and cons and let the people offer their opinion?

    The right will argue this initiative and the left will spin it by saying that the right only cares about the large corporatioins that conduct business with the Chinese...and it will ultimately pass and when it pans out for the worse, we will hear something like:

    Dont blame us. The Chinese refused to cooperate.
     
  3. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    China: US currency bill would have repercussions - Yahoo! News


    This is from the AP, by way of Yahoo. I know there are many who believe we need to protect American jobs and industries, very understandable. But policies that preclude free trade between counteies are always losing propositions for everybody. At a time like this when the global economy is not exactly robust, such actions could be particularly deletorious.

    People have got to understand that when you take action to protect one industry or group, there are always negative effects somewhere else, usually worse than what was gained.
     
  4. Claudette
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    Claudette Gold Member

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    Your so right.

    Of course they will be happy to pass this bill.

    Wonder how happy they will be when the "unintended consequences" come home to roost??
     
  5. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    FYI - last night the Senate passed this bill 79-19. Apparently there are at least 60 repubs and 158 dems in the House who have signed on to sponsor the bill, which should mean it would pass through the House easily. Boehner has HINTED that he might not allow the bill to reach the House floor for a vote, saying how dangerous this legislation could be and that this is "well beyond what Congress should be doing".

    Not sure he could or would stand up against this bill for very long, it's very populist and no doubt a great many of his repub colleagues don't want to give their dem opponents something like this to beat them up with. So, politics trumps good economic policy, and both sides are responsible.
     
  6. waltky
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    waltky Wise ol' monkey Supporting Member

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    Granny says, "Well, thank ye - we appreciate dat...
    :tongue:
    Yuan has appreciated, more needs be done -White House
    Wed Oct 5, 2011 WASHINGTON (Reuters) - The White House on Wednesday voiced concern that legislation the US Senate is expected to approve this week designed to press China to let its currency rise could violate international trade rules.
     
  7. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    We did just fine with Tariffs and no Federal Reserve from 1789 - 1913.
     
  8. WatertheTree
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    WatertheTree Senior Member

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    I think you both are underestimating the situation. The United States is China's customer. When we choose to start shopping elsewhere they will do what a business does with competition, they will either lower prices, or they will go bankrupt.

    The worst thing they can do to us is make us pay our bills, which isnt such a bad thing.

    What a way to isolate us out of 'fear of the chinaman'.
     
  9. waltky
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    waltky Wise ol' monkey Supporting Member

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    China not gonna be happy...
    :eusa_eh:
    Senate Passes China Currency Bill
    October 11th, 2011 : The Senate has passed a bill that could bring sanctions against China or any country found to be deliberately manipulating the value of its currency.
     
  10. waltky
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    waltky Wise ol' monkey Supporting Member

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    China not happy...
    :confused:
    China to US on currency bill: I wouldn't do that if I were you
    October 12, 2011 - The US Senate passed a currency bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate. China called such a law a 'lose-lose' for both sides.
     

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