CPA, through today's Issues Forum, is releasing two new reports on currency misalignment. Collectively, the reports answer these questions:
1. How do you measure currency misalignment?
2. What difference does it make?
The first, Estimation of the Fundamental Misalignment of the Chinese Renminbi
by the China Currency Coalition, describes the most reliable way to
calculate Asian currency misalignment today. Using the same methods
adopted by the International Monetary Fund, the report finds that the
Chinese Renminbi is undervalued by 35%.
"While remnimbi has been allowed to appreciate modestly since 2005,
that revaluation has been grossly inadequate," Charles Blum, CPA board
member, said. "This undervaluation poses real risks to the world
economic system."
The following article by Paul Craig Roberts, Watching Greed Murder the Economy, appeared here on July 10,2008:
The collapse of world socialism, the rise of the high speed Internet, a bought-and-paid-for US government, and a million dollar cap on executive pay that is not performance related are permitting greedy and disloyal corporate executives, Wall Street, and large retailers to dismantle the ladders of upward mobility that made America an “opportunity society.” In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses, bartenders, government workers, hospital orderlies, and retail clerks. (Nontradable services are “hands on” services that cannot be sold as exports, such as haircuts, waiting a table, fixing a drink.)
Corporations can boost their bottom lines, shareholder returns, and executive performance bonuses by arbitraging labor across national boundaries. High value- added jobs in manufacturing and in tradable services can be relocated from developed countries to developing countries where wages and salaries are much lower. In the United States, the high value-added jobs that remain are increasingly filled by lower paid foreigners brought in on work visas.
The debate about China. People are uncomfortable with the focus on China.
Get over your discomfort. Clear away the philosophical cobwebs. Look at the math and look at the intent.
China is the single biggest source of our trade deficit, and our outsourcing. If it was some other country, I would talk about that country. But it is not another country. It is China. So says the math. People here lose jobs. People you know. People I know.
As to intent. The Chinese spying is hitting the front page. It is not the third tier papers from China. It is not a few whistleblowers hastily shut up.
[Joel F. Brenner, the top U.S. counterintellingence official] described China’s information-gathering efforts as “a full-court press and relentless.” As a result, he said, few professional analysts “really think that what’s going on is anything other than an orchestrated, deeply thought-out, strategic campaign.”
The U.S. is working on a Security and Prosperity Partnership with Canada and Mexico. I have written about it here, citing the August Review. Congresswoman Marcy Kaptur does not like the program much, as this video shows.
