Peter Morici: Free Trade is Failing America
Howard Richman, 1/10/2010
U. of Maryland economist had another excellent commentary on trade that was published January 5 by Seeking Alpha. He now estimates the amount that the Chinese RMB is overvalued at 25%:
Currency manipulation creates a 25 percent subsidy on China’s exports, and other Asian countries are impelled to follow similar policies, lest their exports lose competitiveness to Chinese products.
And he ties in our trade policy with our current economic woes and our need for stimulus after stimulus just to keep our economy growing:
Consequently, to keep the U.S. economy going, Americans must both borrow from foreigners and spend too much, as they did through 2008, or their government must amass huge budget deficits by borrowing from abroad, as it is now does thanks to stimulus spending and the TARP....
And he has harsh words for the Obama administration:
Campaigning for the Presidency, Barack Obama promised to do something about Chinese currency manipulation. Instead, like a good supplicant, he now thanks Chinese officials for buying U.S. Treasury securities....
It will be impossible for the United States to create the 9 million jobs needed to bring unemployment down to pre-recession levels without taking on China’s currency manipulation and other unfair trade practices.
For that Americans may need to wait for a better president—one with the courage to stand up to China.
The entire commentary is worth reading. You can find it at: http://seekingalpha.com/article/180911-why-free-trade-is-failing-america