"Why Are We Picking A Fight With China? This Is Engaging In A Dangerous Sport"

[Better Believe It]

Geithner, Obama and China
by David Kotok, Chairman & Chief Investment Officer
Cumberland Advisors
January 24, 2009

Following Treasury Secretary designee Tim Geithner’s public confirmation hearing, an extensive Q & A occurred in writing. We have posted a copy of the US Senate Finance Committee’s 100-page text on our website. See: http://www.cumber.com/special/geithnerquestions2009.pdf. In this text you will find what is on the minds of the Senators, and you will gain insight into the policies that will be forthcoming from the Obama administration.

One telling example is found in the following quote that has already created international consternation. Geithner twice answered questions about currency and China. In so doing he has placed the Obama administration squarely in the middle of the tension between the United States and the largest international buyer and holder of US debt: China. This happened as the same Obama administration is unveiling a package that will add to the TARP financing needs and the cyclical deficit financing needs and cause the United States to borrow about $2 trillion this year. Two trillion dollars of newly issued Treasury debt – and this is how the question was answered. Not once but twice.

Geithner (on page 81 and again on page 95) answered: “President Obama – backed by the conclusions of a broad range of economists – believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices.” “Manipulation?” “Aggressively?“ This is strong language. Geithner did not do this on his own authority. These are prepared answers. He is citing the new President, not once but twice.

China’s response was fast and direct. China’s commerce ministry said in Beijing that China “has never used so-called currency manipulation to gain benefits in its international trade. Directing unsubstantiated criticism at China on the exchange-rate issue will only help US protectionism and will not help towards a real solution to the issue.” Are we seeing the world’s largest and third largest economies calling each other names in the middle of a global economic and financial meltdown?

The world is in recession. The economic growth rates in the major and mature economies are now negative numbers. In China the growth rate is at least 4 and maybe as much as 8 points below last year. All the governments of the world that are running deficits are enlarging them in order to finance stimulus packages. Their central banks are bringing the policy interest rates toward zero. Trillions will need to be borrowed by those governments. Either they will be financed by the outright massive printing of money through the central bank mechanism, or they will be financed by those in the world who have savings. China is the largest single holder of financial savings in the world. Japan is next.

Why are we picking a fight with China? The implied question is why are we alluding to one with Japan, whose currency is currently the strongest of the G4 majors? In a world where global finance is mostly in US dollars, British pounds, euros, and yen, this is engaging in a dangerous sport.

Please read the complete article at:

http://www.cumber.com/commentary.aspx?file=012409.asp&n=l_mc

[musette_sf]

1. um.

i'm not real sophisticated, when it comes to reading and evaluating justifications of trade practices that are authored by money management firms who are "free trade" advocates, and who specialize in high net worth individuals.

but i'm just sayin' that advice from such persons would tend to be geared towards "free trade" advocates and high net worth individuals. of which i am neither.

[Better Believe It]

2. I agree. But the last thing in the world we need is a "trade war" and scapegoating China

The crisis started in the United States.

[musette_sf]

7. do you think there is something wrong

with the idea of US protectionism? because the firm you posted the article from seems to be vigorously anti-protectionism.

i'm a Thom Hartmann listener and devout fan. like Thom, i'm a protectionist.

my uneducated, non-economics-major, opinion is that the investment company responsible for the article you quoted is very, very afraid of US protectionism. therefore their opinion on the statement presumably backed by the Obama administration of "China is manipulating its currency" would be ZOMG TEH SKYS IS FALLING!

and if they believe China's response as stated in their article, they should go talk to the parents of the children killed or harmed by tainted milk, for a reading on that believability factor.

[DJ13]

3. In order to bring back jobs here Obama needs foreign currencies to reset

China is keeping their currency low relative to the dollar to remain attractive to international (read US) corporations to locate manufacturing there.

Obama needs the Yuan to increase in value in order to bring manufacturing back here to the US.

[FrenchieCat]

4. Who is David Kotok, Cumberland Advisors, Chairman and Chief Investment Officer

do we know?

[musette_sf]

8. here's a little contribution from the 2004 election

that was made by Mr. Kotok. telling, i think:

KOTOK, DAVID R MR.
VINELAND, NJ
08361 CUMBERLAND ADVISORS INC./C.I.O. $2,000 06/30/2003 P BUSH-CHENEY '04 (PRIMARY) INC - Republican

[FrenchieCat]

9. Here he is on CNBC talking stuff back in August of 2008.....

http://www.blinkx.com/video/david-kotok-cumberland-advisors-chairman-and-chief-investment-officer/oHsL8zHA9zAPa1ECuRTKiw

[On the Road]

5. While I Bear No Grudge Against China

everyone knows they've been manipulating their currency for many years. It has to be part of the discussion between the two countries. Republicans (and a few Democrats) have essentially been playing both ends by enjoying the effectly

A lot depends on the tone -- I can't judge it from the article, but Obama does not seem the type to whip up unecessary disputes.

[Thrill]

6. No one is picking a fight with anyone.

This is a Q&A for the Senators. And he answered a question.

[FrenchieCat]

10. Better Believe It's MO is quite clear.......to anyone paying attention!

[musette_sf]

11. oh yeah... i think i know what you are talking about....

see my PM

[Better Believe It]

12. I'm Paying Attention!

I don't know anything about the writer but I certainly do disagree with Mr. Geithner's China comments. I disagree with the new Secretary of the Treasury who simply isn't familiar with tax laws but now will be enforcing those laws.

Geithner played a major role in the deregulation of banking and financial services which was the fundamental cause of this economic crash. Just the person I want in charge now!

And you find this post objectionable? I find Mr. Geithner's record and comments objectionable.

Perhaps Mr. Geithner was merely playing to the right-wing China bashers. I would find that equally objectionable.

[musette_sf]

13. "right-wing China bashers"???

like Poppy Bu$h, for example?

i find the person whose article you quoted to be objectionable.

[Better Believe It]

14. Yes

http://rightweb.irc-online.org/pdf/0612chinasyndrome.pdf

But, not all are right-wingers.

-----------------------



China Shouldn’t Be Inscrutable
To say that this new China is the same as the old is to be utterly ignorant or ideological—perhaps both.
by Fareed Zakaria
Newsweek
August 11, 2008 Issue

With the Beijing Olympics starting at the end of this week, you might think this would be an occasion for serious analysis and reflection about China—how to understand the country and its changing society, how to handle the regime. Instead, we've mostly heard a familiar recitation of clichés. Conservatives rail against a "rising autocracy" and exaggerate China's military strength. Republican Sen. Sam Brownback went to Beijing and discovered—surprise!—that the Chinese government engaged in espionage. He fumed to CNN that the authorities could "listen to anybody and everybody and their communications and their recordings." One month earlier the senator had enthusiastically voted for the FISA Amendments Act, which allows the U.S. government to do pretty much the same thing.

China bashing is not just a right-wing phenomenon. The New Republic, mostly left of center, ran a cover story last month with the headline, MEET THE NEW CHINA (SAME AS THE OLD). Inside, the magazine thundered that "our ultimate solidarity" should lie not with the "odious government" in Beijing but "the billion long-suffering men and women of the world's largest dictatorship."

Except that Chinese people (who, by the way, number 1.3 billion, not 1 billion) seem to disagree. About the same time as The New Republic hit the stands, the Pew Research Center released the findings of its 2008 Global Attitudes Survey. Of the 24 countries surveyed, the Chinese people expressed the highest level of support for the direction in which their country was heading, 86 percent. Nearly two out of three said that the Beijing government was doing a good job on issues that mattered to them. The survey questioned more than 3,212 Chinese, face to face, in 16 dialects across the country. And while Chinese might not always speak freely to pollsters, several indications suggest that these numbers express something real. Such polls have been done for years and the numbers approving of the Chinese government have risen as the economy has grown (which should be expected). Those polled did complain about corruption, environmental degradation and inflation. And these attitudes—general approval of the country's direction coupled with many specific criticisms—are also the ones reported by most scholars and journalists who have traveled in China.

The greatest failure of Western foreign policy since the cold war ended has been a sin of omission. We have not pursued a foreign policy toward the world's newly rising powers that aims to create new and enduring relations with them, integrate them into existing structures of power and lay out new rules of the road to secure peace and prosperity. If the emerging countries grow strong outside the old order, they will freelance and be unwilling to help build a new one. The new world might well be the same as the old—the 19th-century world, that is, marked by economic globalization, political nationalism and war.


http://www.newsweek.com/id/150460?from=rss

[musette_sf]

21. no

and your twisting of the truth about the right-wingers, and specifically GHW Bu$h and those in his sphere, is disingenuous.

http://www.chinabusinessreview.com/public/0303/bush.html

http://www.chinadaily.com.cn/english/doc/2005-11/14/content_494528.htm

http://www.theeagle.com/columnists/China-shaped-Bush-41-s-policies

http://www.reuters.com/article/pressRelease/idUS36963+08-Aug-2008+BW20080808

http://www.china.org.cn/international/photos/2008-03/08/content_11945425.htm

http://au.china-embassy.org/eng/xw/t283524.htm

http://beijing.usembassy-china.org.cn/080808photos.html

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x475583

http://www.atimes.com/atimes/China/FE21Ad01.html

http://www.upi.com/Top_News/2008/08/07/Bush_dad_Chinas_too_important_to_us/UPI-23691218126543/

[Better Believe It]

31. Yes

So you are claiming that only people who are liberal or left-wing are guilty of China bashing xenophobia and scapegoating the Chinese for the economic collapse?

Perhaps some counterfeit liberals or left-wingers engage in China bashing but not authentic ones.

[musette_sf]

33. wow, way to project!!!!

i can't even see how you would read that into my comments and links since they were about right wing support of Chinese economic and manufacturing policies driven by GHW Bu$h on down.

you are a known pot-stirrer here who is anti-Obama and pro-PRC. i notice you didn't comment on my post about the benefits of US protectionism and the fact that PRC officials are not known for truth.

any more OPs like this one will get the ALERT they so richly deserve since your views are in no way progressive.

[musette_sf]

36. and PS

you can't seem to decide whether the right-wing, or the progressives, are the so-called "China bashers". here you claim right-wing, later below you claim left-wing. you're just a pot stirrer and you have been alerted on.

[Zynx]

15. China does manipulate its currency. This is a fact.

By the way, I want some evidence you, yes you personally, have ever posted anything that has ever been critical of China or supportive of some position Obama has taken. I will be waiting.

[Better Believe It]

17. Don't be lazy

You expect me to do your work for you???!!!!

If you're serious, check my posts and you will find those I have written in defense of Obama and my posts critical of Chinese government policies.

You clearly have only read a tiny fraction of my posts .... the ones that fit your political notions and bias.

Read all of them if you really want to understand my politics, not just a handful.

However, I do readily admit that you will not find any nationalist right-wing posts written by me bashing China or the Chinese people. Have you written such posts?

I take it you make no distinction between China and the government currently running China, so China bashing is all right with you.

[Occam Bandage]

51. I personally don't recall reading anything by you critical of Beijing. nt

[FrenchieCat]

18. Good Luck!

I'm thinking you'll see, if anything, nothing supportive about Obama, or something ambivilant about Obama; but something negative about Obama, You betcha!

[musette_sf]

22. i think you are correct

on all counts.

[backscatter712]

16. Who says Obama's picking a fight?

Just by the way Obama's been working the Congressional Republicans, we see how he works.

Disagreeing with China doesn't necessarily mean going into a full-blown pissing contest, but Obama is going to at least privately call out China on their currency manipulation. He's also going to call them out on their lax product and food safety standards, their human rights abuses, and so on, but having diplomats negotiate fairer terms with China isn't "picking a fight."

China's transgressions need to be dealt with. Certainly start with the velvet-glove approach and ask nicely at first for China to clean up its act. If they won't straighten up, bring in stronger measures.

[Better Believe It]

19. Would you endorse this deal to end the "currency manipulations"?

Well, China could withdraw their 500 plus billion dollar investment in the United States and decline to purchase another 1 or 2 trillion dollars in U.S. Treasury securities. In return, the Chinese goverment might than agree to end their terrible "trangressions" and "currency manipulations". After all, China could spend that trillion or two at home to create jobs rather than try to save American capitalism.

Would such a "deal" be acceptable to you and do you think Obama ought to propose it?

The financial manipulations of leading American banks and financial institutions are responsible for the world-wide economic depression and you're moaning about currency speculation in China!!

Come now. Let's get serious!

[DFLforever]

20. We owe them so much money, they scarcely dare quarrel

with us.}(

[musette_sf]

23. booga booga booga!

fear-monger much?

so what's your solution - for us to warm up the Vaseline?

[backscatter712]

25. You really think China's gonna pull a stunt like that?

That'd hurt them at least as much as it would hurt us. The fact is that they need us to buy their stuff.

We need them because they're lending us money.

Try to think of this from a Barack Obama standpoint rather than a George W. Bush perspective. In other words, understand that both countries are adults, and can do things like airing grievances with each other and negotiating to resolve them.

We don't have to go cowboy on China to ask that they quit gaming the system at our expense, and ask that the goods they sell us don't kill us.

[dionysus]

32. reading this thread, you just might want to move to your beloved, polluted cesspool called china

since you like them so much
:eyes:

[musette_sf]

24. good points

agreed :fistbump:

[Doctor_J]

26. "Picking a fight" with the country that's been raping us for years?

the answer seems obvious to me

[Better Believe It]

28. Do I detect just a hint of right-wing super-nationalistic bull shit here?

You want to find economic rapists?

The enemy you seek is at home.

You'll find them on Wall Street.

But, that's OK. Leave them off the hook and blame the Chinese capitalists for the bad deeds and rape of American workers and middle class by American capitalists! The "Chinese" are convenient scapegoats. Will you be using the term "yellow peril" anytime soon?

[Doctor_J]

29. Yeah. I am pissed about poison dog food, lead paint on toys and cribs,

and being unable to buy sneakers that weren't made in sweat shops by kids and sold at a 95% profit margin. That makes me a right-winger.

:crazy:

[musette_sf]

34. stop projecting your pro-PRC world view

on progressives who know the real story of the right wing love for PRC.

[Better Believe It]

37. So you think we ought to impose economic sanctions on China because unlike American capitalists the

Chinese capitalists are evil and exploit people?

It appears you will you now begin red-baiting alleged "commies" who do not subscribe to your Chinese bashing and nationalistic xenophobia.

The enemy is at home.

Not in China.

I know it's easy to do and popular among politically backward elements, please stop scapegoating the Chinese and go after the real criminals in "da homeland".

[musette_sf]

39. i heard some idiot televangelist last night

saying that the bible says to not speak ill of the rich and powerful.

what a perfect scheme to prevent the masses from speaking out about abuses of power.

your posts sound similar to me.

sick of your race baiting, your condescending attitude, your wilful ignorance of facts, and your wild accusations to anyone who disagrees with your pro-PRC propaganda. you're on ignore now. i have better things to do than to argue with a propagandist.

[Every Man A King]

42. You do realize

that Nelson Mandela isn't a neo-liberal tool right?

[Better Believe It]

43. Thanks for that nugget of wisdom. Do you think you're bringing us news?

I don't recall anyone mentioning Nelson Mandela, Fidel Castro, Hugo Chavez, etc., in this string.

So what's your point?

I hope you're not going to claim that Mandela is guilty of China bashing, xenophobia or racist attitudes toward Oriental people.

[Odin2005]

27. Free Trade Fundamentalist idiots.

We need to state very clearly to China that if they don't quit manipulating thier currency we slap tariffs on them. That simple.

[Better Believe It]

30. Protectionist idiots deepened the economic crisis after the 1929 stock market crash

And you want to repeat that with "tariff slapping"! That's the ticket. That'll put people back to work. Higher tariffs on China. Where do you find such economic nonsense to post on DU?

So why are you silent about the policies of "free market" American capitalists which caused this economic crisis while calling for really tough actions against China which is not responsible for this economic collapse?

The Chinese sure make convenient scapegoats! Save your phony outrage for those backward elements that might buy in to xenophobia and racist bull shit.

Will you also be warning us soon about the "yellow peril"? I wouldn't be surprised if you also blame immigrants for "stealing" all of those good jobs and causing the rise in unemployment.

[Name removed]

35. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Every Man A King]

41. China isn't responsible

but "Free Trade" policies have destroyed our manufactuing base and now our entire economy. If you disagree thats fine but don't call me racist because im not for "Free Trade". We call it Most Favored Nation status for a reason. Its a giveaway.

[w4rma]

44. Are you sure that was the cause? Or was it just transitional?

I support tariffs in general. Before all this 'free' trade fundamentalism BS got started, that was the normal way nations traded with one another. Call me an economic conservative if you want, but I like the old way of trading with nations.

[Occam Bandage]

50. .

你 怎么 这么 爱 中国？ 很 奇怪。

[Barack_America]

38. China does manipulate currency.

If China doesn't like the truth, that's their own problem because we've got a new administration that's going to tell it, for a change.

[Better Believe It]

40. Nouriel Roubini Comments On China

Nouriel Roubini, RGE Monitor
January 28, 2009

The transmission mechanism oiling the wheels of the banking system is broken, he said, adding that "banks are getting the money and they are hoarding it, they're not lending it," because they expect higher losses.

Falling stock prices and very low bond yields are signaling depression, while credit spreads are still very wide, indicating fear of defaults, according to Roubini. And even the fast-growing Asian economies aren't spared.

"If you look at the data in emerging markets and around Asia, East Asia, there is a hard landing," he said. "All the numbers out of China suggest… the manufacturing sector is already in a recession."

Protectionism is the next danger, as history shows that it prolonged the 1930s depression, he said, regarding remarks by U.S. Treasury Secretary Timothy Geithner that China was "manipulating" its currency to help its exports.

"Certainly starting a war with China on the issue of the currency is very, very dangerous," he said. "The US is relying on the kindness of strangers -- Russia, China, the Gulf States … to finance a huge, and growing, twin current account and fiscal deficit," Roubini said.

"If China were to pull the plug on financing the US dollar, then we'd have a freefall of the dollar," he added.

Please read the entire statement at:

http://www.rgemonitor.com/roubini-monitor/255328/davos_coverage_latest_roubini_interviews_on_cnbc

[Better Believe It]

45. China's Premier Has Tough Words for U.S. Role in Financial Crisis

Link:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4935073

[Every Man A King]

46. OMG the dictator has spoken n/t

[Better Believe It]

47. He's right! And you're not!

You don't have to agree with his politics to understand his economic points are absolutely correct.

Why do you insist on giving the Wall Street tycoons and corporate crooks a free pass while blaming those "funny looking" Orientals for the economic crisis?

Super nationalism and xenophobia are the traits exhibited by genuine bigots who try to cover their racism by claiming they just don't like "dictators".

Now, if you're not a bigot, please explain what you disagree with in the Chinese leaders statement.

Can you do that?

[Occam Bandage]

49. His points as regards America are correct. They are also deeply hypocritical. nt

[Occam Bandage]

48. China has indeed been keeping its currency artificially low, and damaging American manufacturing

in the process. It is not unsubstantiated. It is very real. And you will not find a greater Sinophile on this board.