So much for all the talk from Geithner, Bernanke, and the President about a "strong dollar". Alan Greesnpan today on an article he wrote for the FT: Nice timing, just ahead of the G20 meeting!
"America is also pursuing a policy of currency weakening. The suppression of the renminbi and the recent weakening of the dollar are, of necessity, producing firming exchange rates in the rest of the world to, as they see it, the rest of the world’s competitive disadvantage. Something has to give in this arena of zero-consolidated current account balances".As if anyone did not know that!
He sends some China's way too:
"China has become a major global economic force in recent years. But it has not yet chosen to take on the shared global obligations that its economic status requires. Chinese policymakers still believe, incorrectly in my view, that if they cannot keep their currency suppressed and exports booming, their country faces economic contraction and dreaded political instability. But China also realises it needs the global market to prosper, and should widespread protectionism take hold, its prosperity would likely be one of its large casualties. China seems to be seeking a balance in which the renminbi appreciates against the dollar, but only modestly."Trouble with this is, if China succumbs to U.S. pressure, it will do the same that Japan did in the 80s (revalue the Yen). We know how Japan ended up, decades and decades of stagnation. China will not let this happen.
Read the whole thing on the Financial Times..