russwinter,
I don't blame Bush for not understanding but it is inexcusable for Snow, or Evans, (Treasury and Commerce) to be making totally stupid statements about the yuan.
First of all, people in their position should address the currency as Reminbi, or RMB, but not yuan, which is nothing more than the word dollar in Chinese.
Second, they should have some understanding how currency works and how are they traded. For them to just randomly suggest a country like China, or any country, can magically float the currency is scary. Scary because if they really meant what they said, they then clearly lack qualifications for their respective jobs.
Charlene Barshefsky was interviewed last week on some TV station. Too bad she is not longer our trade rep. She clearly pointed out the lack of infrastructure in China for them to consider floating the RMB right now. The best that we can hope for and may be pushed, is a repegging to the dollar at a different level, presumably higher.
Jay may remember it wasn't that long ago, in the 80s, that RMB was "nothing". Foreigners have to exchange for "foreign exchange certificates" in lieu of using RMB in China. The black markets were everywhere. The last I remember was early 90s with US$1 easily commanding 10 RMB outside major hotels in the big cities.
Is the RMB ready for a free floating system, the way that we trade euros, US$ and yen? Not remotely likely.
Yes, it is in vogue to have some wild ass opinion about the yuan. In reality, most have no clue what they are talking about.
(by the way, I am not suggesting I have a clue either) |
