And now, currency wars (waged by the bushgang - it's dirty)

[donsu]

http://www.atimes.com/atimes/Global_Economy/EJ07Dj01.html

Complementing its strategic-military doctrine of preemptive action against putative constructors and proliferators of weapons of mass destruction, the administration of US President George W Bush has turned to preemption in the financial sphere to challenge unpalatable currency regimes and counteract their alleged ill effects on the US economy. China, Japan, and other Asian nations are the targeted offenders ... and, for a change of pace, victory in the war unleashed at the Group of Seven (G7) Dubai meetings is to be achieved not through overwhelming US strength, but through deliberately induced US (dollar) weakness.

The ultimate goal is the same: defense of the US homeland - first against terrorists and their would-be suppliers, now also against foreign traders and thieves of US jobs armed with the weapons of "unfairly undervalued" currencies. But the Washington cast of characters pitted against Asian central bankers and finance ministers is a strange one. You'd expect John Snow, the treasury secretary, and he has, indeed, taken the point. With his early-September Tokyo-Beijing-Phuket (Asia-Pacific Economic Cooperation finance ministers' meeting) junket, he set the stage for the Dubai declaration on "flexible exchange rates". But Texas oilman Don Evans, the commerce secretary, Sam Bodman, his deputy, formally in charge of the National Oceanic and Atmospheric Administration and the National Institute of Standards and Technology?

-snip-

Karl Rove is a nasty piece of work, a college dropout from Utah who learned his metier from the likes of Donald Segretti, a onetime Richard Nixon dirty-tricks specialist. But he is one of George W's closest buddies and has been with the Bush family ever since he advised the older Bush in his election campaigns, then young George in his campaigns for governor of Texas and, of course, in the 2000 presidential race. About international finance, Rove knows little; but China will have looked like an easy target and, by attacking the yuan peg, at least the Bush administration would look as if it was doing something in the international arena to protect and regain US jobs.

-snip-

How will this play out? Iraq's alleged weapons of mass destruction led to all-out war. Asia's alleged currency weapons of US job destruction, with any luck, will not. While in a currency war the Bush administration would enjoy the support of the Democrats, it has already run into a wall of opposition on Wall Street. Former Bill Clinton treasury secretary Robert Rubin, now speaking in the capacity of top Wall Street banker, has castigated it. The Wall Street Journal has written among its nastiest-ever editorials in opposition.

It doesn't mean the war has definitively been prevented. But were it to go off, I have a straightforward prediction: The very thing that was supposed to save Bush's electoral prospects would badly backfire, would endanger global and US economic expansion and would - more surely than any Iraq war fallout - sink Bush.
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what I have posted may seem disjointed so read the whole article to get the whole picture.

"money makes the world go round, the world go round" or not.

[inthecorneroverhere]

1. it's to devalue our dollar

The effort is to devalue the U.S. dollar. Doing so has the following effects:

1) Makes imports more expensive
2) Makes U.S. exports a bit cheaper
3) Reduces the magnitude of government debt relative to hard assets and Euro/Yen.
4) Makes foreign travel expensive

In my opinion, the potentially inflationary impact of 3) is important and dangerous.

[Brian Sweat]

6. Inflation is great if you have a lot of debt and a steady source of

income indexed to the CPI.

[masmdu]

2. War with Iraq was about currency as much as it was about oil...

http://www.pubtheo.com/page.asp?PID=1181

(snip)

There are many things driving President Bush and his administration to invade Iraq, unseat Saddam Hussein and take over the country. But the biggest one is hidden and very, very simple. It is about the currency used to trade oil and consequently, who will dominate the world economically, in the foreseeable future -- the USA or the European Union.

Iraq is a European Union beachhead in that confrontation. America had a monopoly on the oil trade, with the US dollar being the fiat currency, but Iraq broke ranks in 1999, started to trade oil in the EU's euros, and profited. If America invades Iraq and takes over, it will hurl the EU and its euro back into the sea and make America's position as the dominant economic power in the world all but impregnable.

[Capn Sunshine]

3. Yes. de facto devaluation is the KEY

They want to take a bit of the sting off the deficit by paying it back with cheaper dollars.

Fools do not realize the inflationary effects of this combined with monetization of the war debt will create a post Vietnam -like inflationary spiral.

How sensible is it to devalue against the PRIMARY holders of our DEBT? All that gets you is a spike in interest rates. This will not sit well with the REAL powers that be.

God I miss Bob Rubin

[Spazito]

4. This is the second "war" going on, imo...

The US debt is owed, primarily, to foreign interests and US businesses depend on foreign investment, both bad news for the US. Countries opposed to the US's (Bush's) militarist behavior are fighting the war that is REALLY dangerous for the US, imo, the economic one. Foreign investment has flown AWAY from the US, I have read as much as 40%, and that is an old figure.

On the currency front, the euro is soaring against the dollar and if even a few of the countries that have said they are considering the euro actually change to it, the US will be in dire straits, imo.

[MrPrax]

5. I assumed so...

I think your right...
This story/logic seems to be suggesting that the US 'devaluation' is a conscious strategy.
That is 'spin' IMHO...
"Foreign investment has flown AWAY from the US, I have read as much as 40%, and that is an old figure."
Yup, but not for all descriptive lines about WHAT is happening to the US economy and then 'spinning' it as a precscriptive 'economic policy', but for the very very simple fact that the US political is too unstable for foreign investment.

Who in their right mind would invest long-term only to find their foreign nationals labelled 'terrorists', possibly 'seized' or simple international agreements (trade or otherwise) simply ignored based solely on the 'internal' partisanship among the various players to appeal to the vote market