Yes, pointing fingers at escape goats to protect one's backside must be the favorite  past time for all Amerikan politicians.  Just consider their recent passing of a new law in the Senate accusing China of currency manipulation and to force China to revalue it's currency.

Before I discuss this topic in more detail, first let us consider the following comments by Khun Alien in one of the recent blogs here by Khun Piset:

" . . . Dal - the U. S. has a huge "rare-earth" mine in California it shut down only because China was undercutting them in price. i saw a story years ago that warned that it needed to be reopened so China couldn't dictate the market and the pricing. Probably no one paid attention . . . "

There seems to be a widespread notion that when Amerikan businesses become uncompetitive, it is always the fault of their competitors, like Khun Alien writing about the rare earth mine in California being undercut by Chinese producers.  I would like to raise several questions here on this matter:

(1)  Why is the California mining company not competitive?

(2)  What could they have done to become more competitive?

(3)  Why are they blaming others for their uncompetitiveness?

In the real world of business, only the fittest survives.  If you know that you are uncompetitive, then you must change the way you do business in order to become more competitive.  God gave the California mining company the resources in the location(s) that they own and operate in Amerika free of charge, just as He gave Chinese mining companies the resources in the location(s) that they own and operate in China.  Every other elements in the cost equation and factors of production at both locations are man-made, which can be changed, if necessary.  It is up to management to instigate changes for the benefit of the company in terms of lowering production and marketing costs to drive profitability.

Let's turn the table around for a moment and pretend that it was a Chinese mining company that has become uncompetitive because they were being undercut by Amerikan producers of rare earth minerals.  Should the Chinese Government enact laws and regulations to force Amerika to revalue the U.S. Dollar so that the Chinese producer can become competitive?  How would the Amerikan Government react to such actions by the PRC People's Congress?

To my simple mind, the whole concept of accusing other countries of currency manipulation is totally silly and unfounded.  Why doesn't the American mining company reduce it's production and other costs by cutting labor costs, mining costs related to exploration, ore extraction, ore transportation, ore smelting,  finish product sales and marketing, etc. so as to bring these down to such a level as to be competitive with Chinese producers? 

Why can't the Amerikan Government reduces their taxation and other legislative burdens on the California mining company so as to equalize the company's government-related costs to that in China?  These are the things that are fully under the Amerikan's control.  What happens within China is none of their bloody business and not under their control, just as they will not allow China to meddle with their business activities and government affairs.

But then, of course, it is far easier to point fingers accusing others for causing problems that the Amerikan Government created for themselves in the first place, isn't it?

Going back to the main topic of this blog, I would like to direct your attention to an excellent article by Mr. Ashish Advani at the MoneyNews.com web site.

http://www.moneynews.com/Advani/Trade-Wars-Asia-Inflation/2011/10/19/id/415002

Among other things, Ashish wrote ". . . and to add fuel to a simmering fire is the hair-brained logic of our Congressional members. For them, the fault almost always lies with China.

"Every time they are faced with crisis at home, they love to point fingers to the outside and blame others. For several years now, they have wanted to label China as a currency manipulator.

"As per the U.S. Congress: The deficit problems in the United States are the fault of China. The fact we overspend is China’s fault. The fact we bought McMansions, Hummers, yachts, overspent on almost all aspects of our lives are all faults of China.

"And so the U.S. lawmakers would like to punish China by imposing levies and taxes on China.

"Obviously, China is not taking this new round of attacks lightly. Chinese officials have appealed to the World Trade Organization (WTO) and in turn are accusing the United States of the same fault of currency manipulations. Their claim is that the U.S. dollar is falling due to the irresponsible behavior and relentless printing of money that the Federal Reserve has unleashed on the world.

"One must not bite the hand that feeds it. Or at least if you must bite it, make sure that you have a fall-back measure that will sustain you. And by challenging China, the United States will turn away the largest holder of its debt and the continual buyer of U.S. debt. Annoy China too much and the consequences can become even more stifling. In an environment where the growth has stalled at best, is this the wisest way of spending your political capital?

"Even with growth in Asia slowing, they still have between 6–9 percent growth rates. Here in America it is 1-2 percent and in Europe it is 0.5 percent to 1 percent. As the U.S. dollar decline begins again, we will see capital go back to Asia where it earns a decent return."

Food for thought.

--  Dalmasian