Archive for October 23, 2009

Saint Paul loses it…

October 23, 2009 1 comment

gnomePaul Krugman had a little fascist temper tantrum today in the New York Times.

The object of his inflamed state is China, who, Paul tells us, is depreciating the yuan to gain an unfair advantage over its competitors.

How is it engaged in this unfair competition?

It is linking its currency to the dollar, and as the United States lets the dollar depreciate against its competitors, China is profiting from this unfair advantage-seeking by the US.

It is all so unfair.

China has always done linked the yuan to the dollar, and it is completely understandable, since, as Paul admits:

There’s nothing necessarily wrong with such a policy, especially in a still poor country whose financial system might all too easily be destabilized by volatile flows of hot money. In fact, the system served China well during the Asian financial crisis of the late 1990s. The crucial question, however, is whether the target value of the yuan is reasonable.

Saint Paul is being disingenuous: It was okay for China to accumulate reserves of US dollars back in 1997 when one nation after another was going belly up for lack of dollars, but its continuing accumulation at this point is somehow wrong today.

And, pray tell us, Mr. Krugman, what was the result of the financial meltdown? Was it not that numerous countries were starved of dollars again, and needed to be bailed out by Washington? Was it not that China, and a handful of other countries, having accumulated dollars well in addition to what was seen as reasonable, were able to stabilize their national economies in the midst of this crisis by drawing down on those accumulated reserves?

Of course it was.

Was China supposed to stand by and hope that, as the US bailed out not only it biggest banks and it preferred partners, it would also get around to bailing out China’s swollen export sector – an export sector which had spent the last few years providing consumer goods to the US free of charge?

If, as the dollar lost value, China exports cut through Euro-zone capacity like a hot knife through butter, who’s fault was this – China, who was seeking only to insulate its industry from vagaries of US monetary policy, or the US, who was using dollar devaluation to impose an imperial tax on its trade partners?

According to Krugman:

If supply and demand had been allowed to prevail, the value of China’s currency would have risen sharply. But Chinese authorities didn’t let it rise. They kept it down by selling vast quantities of the currency, acquiring in return an enormous hoard of foreign assets, mostly in dollars, currently worth about $2.1 trillion.

Now this is coming from an economist who has called on the US to further flood global economy with dollars above the $2.8 trillion already spent to bail out Goldman Sachs, the auto industry, and state governments. Note the amount: $2.8 trillion – which is provided by CNN – spent so far on the crisis. In other words, in less than two years, the US has pumped more dollars into the global economy than entire accumulated reserves of China, and this (unlike China) without producing a single new object that could be eaten, worn, or occupied by a human being!!!

A flood of worthless paper greater than the accumulated wealth of the largest single holder of American fiat in roughly 18 months!!!


Again from Paul:

Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now.

This is typical of the American Fascist argument: The US floods the world with worthless fiat dollars, but it is China that is responsible for the American housing bubble.

How the fuck did that happen?

Who the fuck in Compton or Saddleback went to China and financed their sub-prime home purchase with dollars earned by China through the sale of tainted sheet-rock?

Let’s find that mother-fucker and string him up.

And, let’s also find and beat the asshole who called for a housing bubble to replace the collapsed internet bubble.