Currency Valuation Rhetoric

China had an interesting reaction to Obama's new treasury secretary nominee's criticism of its currency's value.

From Bloomberg:

Jan. 28 (Bloomberg) -- China took Barack Obama’s views on the yuan seriously. So seriously that it is doing the exact opposite of what the U.S. president would like.

China let the yuan fall the most in a month on Jan. 23, right after Timothy Geithner, Obama’s pick for Treasury secretary, relayed Obama’s campaign position that China was “manipulating” its currency. The reaction was China’s way of telling the new U.S. leader what he can do with his foreign-exchange views.

What should currency traders do now? Is a trade war brewing between the world’s No. 1 and No. 3 economies? Is the yuan about to strengthen? Will Obama risk the ire of the most populous nation to make good on his protectionist campaign-trail rhetoric? Perhaps the answer is for everyone to relax.

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Obama can't serious think that China would revalue its currency to accommodate America's wishes. No, China has its own problems to be worrying about.

Obama's rhetoric surely is in preparation for the protectionism he's about to implement.

I can't quite comprehend why he, or any American consumer, has problems with China's manufacturing. I understand that a young Chinese boy or girl is assembling the products instead of an American man or woman. But America doesn't want to pay a lot of money for cheap goods. Americans thoroughly enjoy Walmart's shelves being full of cheap products made by the Chinese.

America cannot have it both ways. I'm going to get a kick out of the sky-rocketing prices that Obama is going to try to fight after he enacts his protectionist policies.

I suppose in the long run that getting cheap crap to be more expensive will help ween America off its addiction to consumption. That would be a good thing.

But I can't imagine the coming protectionism fulfilling its intended purpose: creating more American manufacturing jobs.