the other war the bushgang is waging with the dollar

[donsu]

http://www.atimes.com/atimes/Global_Economy/FK17Dj01.html


-snip-

European finance ministers are in agreement the US dollar is too weak and threatening their respective countries export growth. In response, the best they can get from US Treasury Secretary Snow is the mantra of we have a “strong dollar policy.” Blah…blah…blah… And in the next breath said Secretary endorses government spending plans that would make a drunken sailor blush. So what’s the signal sent to the average hedge fund manager master of the universe—the US doesn’t give a rat’s rear about the dollar. In fact, they couldn’t care less about “old Europe’s” complaints. The real action is in Asia.

With that attitude, a plausible scenario, one could see as being hatched by your average Ivy League omnipotent yuppie international finance guru who has never held a real job, working in the bowels of the US administration—where all the best and brightest operate, we are told—would be this: Drive a wedge between Europe and Asia. Let “old Europe” do the heavy lifting of trade sanctions, while we continue to spend, spend, spend…What better wedge than the dollar. A weak dollar policy pressures Europe from both ends—Asian exports that are basically dollar pegged and US exports. The euro currency by process of elimination becomes the pressure valve for the implicit weak dollar policy.

Of course the US in only being altruistic, it’s a shame “old Europe” can’t recognize that. After all, the good ole US is only “helping” Europe by forcing them to restructure their domestic economies. I always find that to be an interesting argument, as if massive consumer spending, soaring household debt, and a job market on life support, as in the US, is any way to structure an economy.

But of course the non-altruistic part of this strategy is the use of Europe to help hammer China, which is by no means an innocent bystander in this little game. As pressure grows from an over valued euro, European politicos, as least in theory, will eventually threaten trade sanctions on China if they do not revalue their currency. The US will of course sympathize with this and add its full-voice to the choir—supporting its friends in “old Europe.”

Because after all, a yuan revaluation is the magic bullet that will put the US financial house in order—one quick big-fix and all problems go away. Otherwise it would require real action in the form of monetary and fiscal responsibility. We can’t have that when our country’s consumers expect massive and constant stimulation from material goods and services on demand. Saving? Investing? Oh no! That would require a “strong dollar policy.”
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the other day at the grocery a small bottle of pure vanilla was over $4.00

artificial vanilla is way cheaper - who is it now that makes artificial vanilla???

you say: what does this have to do with the dollar, Euro and yuan?

everything.