Obama's real message to China: "Please, allow G-Sax and JPM to open-shop in Tienanmen Square". The truth is that Obama is just carrying on the work of George W. Bush and Henry Paulson. He's trying to pry open Chinese markets to US financial services.
China sells the US cheap lead-based widgets, and then recycles the dollars into US Treasurys and dodgy financial products. What economists call "unsustainable imbalances" are praised at the big brokerage houses as "windfall profits". The total destruction of the US labor movement is just an added perk for these well-heeled, flag-waving, uber-patriots.
Just as China can set a value of its currency against the dollar, the US government can set a value of the dollar against the yuan. The Chinese government currently supports an exchange rate at which the dollar can buy 6.8 yuan. This high value of the dollar makes US goods uncompetitive relative to China's.
To make US goods more competitive, the US could adopt a policy through which it will sell dollars at a much lower price, say 4.5 yuan. Instead we hear is those rotten Chinese just won't stop pegging the yaun to the dollar, prsented as domestic theater.
The interests that dominate economic policy-making in the United States are mainly in the financial sector, as we can see by the hundreds of billions of dollars of no-strings-attached government subsidies they have gotten in this recession; and the $21 billion in executive compensation that will be paid out by Goldman-Sachs, which is particularly well represented in our government. A strong dollar is good for them because it makes anything they want to buy overseas cheaper, and of course it lowers inflation by keeping imports cheaper. The more than five million manufacturing jobs lost over the last decade are just "collateral damage" for them.
Congress is in on the fraud, too. They could end China's yuan hanky-panky in minute by applying trade sanctions. But they choose not to, because Congress is a fully-owned subsidiary of Wall Street. They dare not do anything that will offend their constituents.
Geithner and Co. see the US economy languishing in a low-grade Depression for the foreseeable future. Thus, Wall Street is planning a major shift in its base-of-operations to Asia. This is the real reason behind Obama's trip to China. There's no truth to the rumor that US policymakers give a hoot about "currency manipulation" or the ongoing trouncing of the American worker. China's "dollar-peg" essentially serves the interests of the giant multinational corporations and Wall Street speculators who own the media, the courts, the congress, the White House and most of the country.
Excerpted from Mike Whitney @ Counterpunch
