Saturday, April 17, 2010

The Art of (currency) Wars

I had a feeling the Chinese wouldn't just roll over due to allegations by Geithner, Obama, and Congress of currency manipulation . My take is that they don't want a weaker dollar because they own trillions of our US Treasuries. Duh.

Add to the fact a weaker yuan stimulates their huge export industries. Millions of Chinese jobs are at stake. How plausible is it to think the Chinese government will sacrifice their own workers because of some threats from a debtor nation?

Sure, they'll let the yuan appreciate slowly--but on their terms, not ours.

How ironic that Chinese central bank adviser Li Daokui has a PhD in Economics from Harvard University.

We cannot enter into alliances until we are acquainted with the designs of our neighbors.

- Sun Tzu, The Art of War

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