Asiatic Adventurism, Part II

To follow up on the conversation we began the other day… Mr. Obama needs a short, victorious war before the election, but those are thin on the ground unless your name was Moshe Dyan or Golda Meir. Looking at the quotes I have to work with today, I think Barack’s found his war. Unfortunately, the Chinese are going to win it and the figures will come cascading down rapidly, perhaps in time to stampede whatever portion of the electorate isn’t already on the prod. China isn’t taking kindly to making its products less competitive by adding large tariffs (any more than it does to demands that it revalue its currency), and the very rapid reply to Mr. Obama’s U.N. meeting and the new house bill was to strike swiftly at major US manufacturers. We have to admire their style, none of that tough talk stuff, a simple, polite, “the Chinese government announced Sunday ( Ed. Note: a week ago) that it is launching a probe into (the) possibility of the U.S. dumping auto parts and chickens on the Chinese market.” Those in the know had no difficulty reading that as “We have Tyson Foods, Pilgrim, Goodyear, and Cooper Tire & Rubber in our crosshairs, and that’s just for starters.” Somewhere here I had a dignified retort that adjusting the exchange rate by 20% would drive many Chinese firms out of business, which certainly makes sense on the margins they’re working on. The Smoot-Hawley Tariff Act of 1930 raised import duties to record highs and was a large contributing factor in the length and depth of the Great Depression. Protectionism never works out the way proponents think it will. There are those saying “there, there, now.” “Michael Strauss, chief economist with Commonfund, a money management firm based in Wilton, Conn. said there is not going to be a repeat of the mistakes of Smoot-Hawley. Strauss said both the U.S. and Chinese are smart enough students of economic history to know that the last thing the world needs now is for arguably the two most important economic powers to turn a spat over tires and chickens into something that could derail a global rebound. ‘This is not that big of …

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Asiatic Adventurism, Part II

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