am i really going crazy listening to this

DERICKOO

If We're China Bashing Again There Must Be An Election Coming

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OUR POLITIC ANS CAN'T KEEP SCAPEGOATING CHINA.....HERE'S THE REAL SOLUTION TO RESOLVING OUR PROBLEMS WITH THE MIDDLE KINGDOM
The equity markets and economy remain in irons. The S&P 500 is basically flat on the year...bonds have performed better on a relative basis but returns there are still muted unless you've been willing to make a big risky duration bet. Plain and simple investors are being held hostage by Washington policy makers inability to get the economy back on a positive growth track. QE and ZIRP have remained the primary policy tools of the Fed, and after yesterday's Fed meeting it looks like that will not change...indeed it appears that they will ramp up QE even more. For the Democrat controlled Administration and Congress record, "pot hole filling" stimulus remains the favored solution. Unfortunately, following two years and trillions of dollars of easing, intervention and spending we don't have a lot to show for it. In fact the economic recovery remains tenuous as the deleveraging consumer continues to be buffeted by deflationary forces in real estate and stagnating incomes.
So now what? What's a Washington policy maker to do? Cut taxes?. Probably not in a meaningful way as that is not in POTUS's ideological play book. Spending cuts? No...neither is that. Initiate meaningful tax reform? No...too difficult and "commonsensical". How about go all in and introduce Greek like austerity programs in entitlement spending? Are you kidding? They don't call the it third rail of politics for nothing.
No...how about this?... rolling out the old favorite scapegoat....declare China as a "currency manipulator"! Yes...that's the ticket. It's worked in the past to deflect voters attention away from the real issues of the day that legislators can't deal with. When the economic going gets tough...blame China! I grow weary with this blatant vote getting and short sighted political strategy that has nothing to do with resolving the growing trade imbalances between the G2 countries. Whipping up the electorate against China is counterproductive to recognizing and solving the real problems that exist between us.
So what are the problems that exist between Peking and Washington policymakers? Simply put...policies here in the US continue to encourage spending and in China, saving. The fact remains that the US economy is 70% geared to the consumer where in China that number is more than halved at around 34%. China creates surplus's as they recirculate consumer savings into more export capacity and the US creates deficits buying their stuff. China does not have a social safety net and with the social restrictions of the one child policy the savings rate is distorted to the upside even more. China also continues to keep their capital account closed to the outside world which in my mind is the real crux of the problem. Instead of using economic jingoism and la belling China a currency manipulator every election cycle and antagonizing Peking with this kick the can down the road strategy...policy makers here in the US should take a more proactive approach to helping China emerge as a true global player that can compete on a level playing field using a constructive, multilateral, global approach.




So...where do you start? Well...how about this? It took a hard nosed Republican.. Richard Nixon...to take the initiative (and political risk) and open diplomatic relations with China. He made history (and a legacy for himself) as China subsequently opened up their economy to "capitalism with Chinese characteristics". Much of the economic success we see going on in China today can be traced back to this gutsy diplomatic move. For China it catalyzed a huge step in their liberalization process. We need another gutsy political move from our current President.
Mr. Obama, the liberal, needs to swallow his ideology like Nixon did, get on Air Force One, fly to Peking with cabinet members like Geithner and Clinton and begin the long process of negotiating a free trade deal with the Chinese. It is time. There is much to discuss and this trade deal, like the NAFTA negotiations, will take years...Nafta talks originally began in 1986 and the final deal was struck in 1994...moving through three administrations. Ironically in that case it was Republican President Reagan who initiated the process and Democrat President Bill Clinton who finally signed it. There is much a stake....and this President has been known to follow the strategy of never letting a good crisis go to waste. There is much to offer for both sides...China could get access to what is currently the largest and richest consumer market in the world and the US gains access to emerging Chinese consumer. There of course would have to be a quid pro quo in that China speeds up the process of liberalizing their capital account and at the same time takes their huge surplus's and invests them in their people to encourage further spending instead of investing them in Treasuries. The global growth that would emerge would be more than enough to help cure the surplus/deficit imbalances in the trade accounts that exist between us.
So...instead of starting trade wars with the Chinese over tires, steel and bras.....lets get down to business and deal with these imbalances once and for all. Enough with perpetuating the protectionist, politically expedient myth of currency manipulation. The time for tough, but fair, free trade negotiation is now. It took a hard line conservative Republican to open diplomatic relations with the Chinese...it will take a hard line liberal Democrat to open free trade doors with them. To quote a great American member of the working class...."Get'r done!!"
Peter Stock
Stock Investment Management
Manchester Vermont