As you can see in my previous post, I've been upset at China for holding the value of their currency low for the last decade. It's one of the things that upset me about Bush, because he failed to act on that, which meant our companies were less competitive.
However, here's some irony for you. Europe has been upset at the US for exactly the same thing! They feel that the US has been pursuing a weak dollar policy through our run up of debt, which means the Euro is stronger relative to the US dollar, which means European companies are at a disadvantage to US companies. So although China is pursuing a weak currency policy through pegging their currency to the dollar and not allowing China's economic strength to float their currency higher on the open markets, the US too has been driving the value of the dollar downwards through our massive accumulation of debt and never-ending budget deficits. So Europe is pissed off!
So much so, that Sarkozy of France thinks he can run on a platform of penalizing the US for our weak dollar policy. In particular, he wants the world to move away from the US as a currency reserve, so that the world markets can rely on a basket of currencies, which are inherently more stable and not reliant on the policies of any one country, especially when that country (the US) is fiscally irresponsible. Sarkozy is shrewd. As Americans, we may react negatively to his points, but if you think about it rationally, it's the US that is in the wrong. We need to clean up our own house, while continuing to pressure China to clean up theirs.
Here's an article where Sarkozy makes that case:
nytimes.com |
