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Wednesday, September 29, 2010

Is This the Start of a Trade War with China?

Our friends at ZeroHedge posted that the House passed legislation to somehow revalue the Chinese Yuan. It allows the commerce department to impose duties on imports from countries with undervalued currencies.  This passed the House by a vote of 348 to 70.  I agree that the currency manipulation has to stop and we need to level the playing field so the US can become a bigger player, but honestly is this the right time to start this?  We have a consumer that is about to get hit with higher taxes and fees in 2011 (cause they most likely aren't extending those cuts, if they do it won't be long and fees will most likely take their place in the interim), so now we are going to strap the US consumer with higher food prices because it is mostly imported from countries that manipulate currency.  These days that is everybody.  Ouch, maybe we should have created a better plan of re-invigorating food production and manufacturing for US consumer staples in our country (you know Agriculture and production) before we floated this beauty.  Another thing, who is going to fund QE?  As it was pointed out China may deem QE as currency manipulation and decide not to fund us.

I think something needed to be done, but maybe our timing was slightly off (by a long shot).  Lets become producers again (you know create jobs in our country and become self sustainable) and then take more strategic action.  [ Read more ... ]

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