16th October 2010, 07:02 PM
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| Admin - Owner Palm & Tree Services in Brisbane
Join Date: Jan 2007 Location: Brisbane
Posts: 12,993
|  $A = $US | Australian dollar equal American Dollar
American (like Germany @ 1920) has been printing money like no tomorrow to bail it's ass out of the global mess it created. One-for-one: Australian dollar hits parity with the greenback Quote:
Another cause for concern is that the radical experiment in financial management now being considered by the US Fed is hardly a vote of confidence in the health of the US economy - in fact, it's the reverse.
The Fed's aim of printing money - so-called quantitative easing - is one of the last arrows in the US quiver as authorities struggle to find new ways to generate growth. The expectation is that those extra US dollars will find their way into other markets, sending stocks to five-month highs and gold to record levels approaching $US1400 an ounce in recent days.
A cheaper greenback may make US goods cheaper abroad - the euro is up about 10 per cent and the yen about 8 per cent against the greenback in the past three months - but it has also prompted accusations that the US has declared a ''currency war''.
Whether that battle erupts into a trade war depends on what if any steps other nations take in response to the greenback's slide, analysts say.
| Things happen for a reason, and China will not devalue it's currency so it plays well for USA to print money, lower the value of their dollar making imports more expensive and exports more attractive.... it's called Currency Wars. U.S. backs off in currency dispute with China | Reuters Quote:
Sat Oct 16, 2010
(Reuters) - The Obama administration backed away on Friday from a showdown with Beijing over the value of China's currency that would have caused new frictions between the world's only superpower and its largest creditor.
The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the U.S. congressional elections on November 2 and a Group of 20 leaders summit in South Korea on November 11.
Washington and the European Union accuse China -- set to become the world's second-largest economy after the United States this year -- of keeping the yuan artificially low to boost exports, undermining jobs and competitiveness in Western economies.
Fears are growing of a global "currency war" as major trading powers, such as the United States and Japan, seek to weaken their currencies while emerging economies such as Brazil and South Korea raise or threaten tougher controls to limit capital flows.
The decision to delay the Treasury's semi-annual currency report reflects a desire by the Obama administration to pursue diplomacy to resolve the dispute with China rather than provoke a confrontation that could potentially lead to a trade war and affect long-term interest rates.
In July, China held $847 billion in U.S. government debt.
In its statement, the Treasury seemed to be encouraged by China's recent action to allow its currency to rise by roughly 3 percent against the dollar since June 19.
"Since September 2, 2010, the pace of appreciation has accelerated to a rate of more than 1 percent per month," it said. "If sustained over time, this would help correct what the IMF (International Monetary Fund) has concluded is a significantly undervalued currency."
China argues that moving too quickly with currency reforms could devastate its export-driven economy.
It blames the United States for sluggish growth, high debts and an easy monetary policy that has flooded the market with newly printed dollars, weakening the U.S. currency and putting pressure on emerging countries to keep their currencies low.
But Washington argues that Beijing could relieve that pressure by letting the yuan strengthen.
"YUAN SHOULD NOT BE A SCAPEGOAT"
The Treasury said the G20 gathering in Seoul would give world leaders an opportunity to look at how best to rebalance the global economy. This was not just the responsibility of China and the United States, it stressed.
In another important summit, leaders of the Asia Pacific Economic Cooperation forum will meet on November 13-14.
"The Treasury will delay the publication of the report on international economic and exchange rate policies in order to take advantage of the opportunity provided by these important meetings," it said.
China left little doubt about the rancor that would ensue if it is branded as a currency manipulator -- a largely symbolic move by the United States that would mandate more consultations with Beijing but no immediate penalties.
"The Chinese yuan should not be a scapegoat for the United States' domestic economic problems," Commerce Ministry spokesman Yao Jian said on Friday.
The decision to delay the Treasury report appears to have been taken at the last minute. Industry sources had been primed to expect it by 1 p.m. EDT (1700 GMT) on Friday.
The Obama administration, seeming to anticipate criticism from U.S. lawmakers who are pushing for stronger action against China, brought forward an announcement of an investigation into whether Chinese support for its clean energy sector violates international trade rules.
But that was not enough to appease Democratic Senator Charles Schumer, who has sponsored legislation to get tough with China over its currency practices.
"The Obama administration is treating the symptom but not the disease," he said. "An investigation into China's illegal subsidies for its clean energy industry is overdue but it's no substitute for dealing with China's currency manipulation."
CONGRESS EYES DUTIES ON CHINA
The Treasury's decision may raise pressure on the Senate to approve a bill passed by the House of Representatives that would allow the United States to slap duties on imports from countries with fundamentally undervalued currencies.
"Democrats and Republicans alike in Congress are prepared to move legislation confronting China's currency manipulation this year," Schumer said. "We hope to have the administration's support but will go forward without it if necessary."
There had been speculation Obama might be tempted to label China as a currency manipulator for the first time in 16 years to look tough before the elections in which his Democrats risk big losses over discontent with his handling of the economy.
But there are concerns about angering China, whose support is needed on issues such as rebalancing the global economy, climate change and the nuclear programs of Iran and North Korea.
In an article published on Friday, Chinese central bank governor Zhou Xiaochuan pledged a continuation of yuan reform but only on Beijing's gradual terms.
"The yuan exchange rate will be basically stable at a reasonable and balanced level," he wrote in China Finance, a magazine published by the central bank.
The Treasury Department is mandated by law to issue a report every six months on whether any country is manipulating its currency for an unfair trade advantage.
But the last time any administration -- Republican or Democrat -- has cited a country under the 1988 currency law was in July 1994, when China was put in the spotlight.
| But America is registering record trade debt with China .... BBC News - US trade gap widens on increased Chinese imports Quote:
US Commerce Department figures showed the gap between imported and exported goods grew by 8.8% to $46.4bn (£29bn).
Imports from China grew 6.1% in August to a record $35.3bn. The US trade deficit with China also set a new record of $28.0bn.
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