Today's Stories

January 26, 2009

Deepak Tripathi
The BBC's Day of Shame

January 23 / 25, 2009

Alexander Cockburn
The Ghosts at Obama's Side

P. Sainath
The Freefalling Economy

Patrick Cockburn
In Israel, Detachment From Reality is the Norm

Saul Landau
Reasons for War?

Sasan Fayazmanesh
Our Current Economic Crisis: the Monks' Cure

Alan Farago
The Problem with the Stimulus

Christopher Brauchli
When Due Diligence is a One-Way Street

Andy Worthington
Return to Law?

Ron Jacobs
Obama's Pentagon: Bowing to the Masters of War?

Lawrence Velvel
Investing with Madoff: My Experience (Part Four)

Henry A. Giroux
The Audacity of Educated Hope

David Yearsley
The Music That Wasn't There: Chamber Music for Obama's Masses

Raymond F. Gustavson
Here We Go Again: General Shinseki and Veterans

Dave Lindorff
The Way Forward

Roberto Rodriguez
Fighting for Migrant Justice in the Desert

Dina Jadallah-Taschler
The Struggle of an Un-People

Fidel Castro
Meeting Cristina

J. Michael Cole
Can Obama's Shift on Terror Succeed?

Bob Fitrakis /
Harvey Wasserman
It's Time to Free Leonard Peltier

Ramzy Baroud
Breaking Gaza's Will

Mohammad Ali Shabani
The Aftermath of the War on Gaza

Richard Rhames
Panning for Pyrite on a Cold Day at the Mall

Stephen Martin
Voices in the Mirror

Lorenzo Wolff
Jurassic Radio

Kim Nicolini
Katrina's Endless Loop

Poets' Basement
Fleming, Henson, First, Jaramillo and Glendinning

Website of the Weekend
Cartoon Love

January 22, 2009

Paul Craig Roberts
Another Real Estate Crisis is About to Hit

Kathy Kelly
Worse Than an Earthquake

Allan Nairn
US Intel Nominee Lied About Church Murders

Lawrence Velvel
Investing with Madoff: My Experience (Part Three)

Andy Worthington
Halting the Gitmo Trials

Peter Morici
How to Fix the Banks

Joseph G. Davis
The First MBA Presidency and the Business Academy: a Damage Assessment

Adriana Kojeve
The Democrats on Israel: a Brief Oral History

Benjamin Dangl
Bolivia Poised for Historic Vote

Website of the Day
Support the Gaza Community Mental Health Program

January 21, 2009

Gabriel Kolko
Understanding Gaza

Harry Browne
Obama's Work Ethic

Michael Colby
Ready. Aim. Organize.

Lawrence R. Velvel
Investing with Madoff: My Experience

Audrey Stewart
Starting Over in Gaza

Wajahat Ali
Obama and the Muslims

Binoy Kampmark
The Marketing of Hope

David Kεr Thomson
Abolition

John Ross
In My Own Bones

Allan Nairn
Killer in Chief: Will This President Murder Civilians?

Sheldon Richman
The Peaceful Transfer of Violent Power

Website of the Day
Globistan

January 20, 2009

Chuck Spinney
Hosing Obama Israeli Style

Kathy Kelly
The Strongest Weapon of All

Raymond Deane
The EU, Gaza and the Lisbon Treaty

Ralph Nader
State Terrorism Against Gaza

Audrey Stewart
Why I am in Gaza

Jonathan Cook
Israel's Doctrine of Destruction

Harvey Wasserman
A Ten-Point Solar Agenda for Obama

Christopher Ketcham
Inauguration Ad Nauseam

Robert Jensen
A Citizen's Oath of Office

Dave Lindorff
Commie Chorus on the Mall: This Land Really is Made for You and Me

David Macaray
SAG Watches It All Slip Away

January 19, 2009

Kevin Alexander Gray
Time for an New Divestment Campaign

Uri Avnery
The Boss Has Gone Mad

Kathy Kelly
Respite in Gaza

Mike Whitney
What Obama Left Out of His Economic Recovery Plan

Lawrence R. Velvel
Investing with Bernie Madoff

Mats Svensson
For Fatima in Gaza

Harry Browne
Obama's Bard: Springsteen's Working on a Dream

Norman Solomon
The Return of Triangulation

Jeffrey Sommers
The Baltic Riots: Really Existing Thatcherism

Kenneth Libby
Manipulating MLK Day

Peter Ewart
Robbie Burns, Mackenzie and Gaza

Bob Sommer
"The Fierce Urgency of Now"

Website of the Day
Death of a Whaler

January 16-18, 2009

Alexander Cockburn
Hail to the Chief

Caoimhe Butterly
Terribly Bloodied, Still Breathing

Audrey Stewart /
Kathy Kelly
Suddenly Bombs Started Falling: Report from Gaza

Jeffrey St. Clair
High Plains Grifter: Geo. W. Bush, a Concise Biography

Ellen Cantarow
I Could Not Save a Single Child

Neve Gordon
How to Sell "Ethical" Warfare

Vijay Prashad
An African-American in Gaza

Jonathan Cook
Israeli Attack Injures 1.5 Million Gazans

Rannie Amiri
The UN in Israel's Crosshairs

Andy Worthington
Guantánamo's Forgotten Child

Joshua Frank
Forecasting Obama

Dave Lindorff
Prosecuting Bush and Cheney

Brian Cloughley
Who Runs America?

Belén Fernández
Changing the Equation

Missy Beattie
Peace and Justice Denied

Fred Gardner
Growing Pot for Research

George Ciccariello-Maher
"Oakland is Closed!"

John V. Whitbeck
Democracy Not Partition

Stephen Fleischman
Card Check

Mischa Gaus
Medicare for All! Tackling Union Opposition to Single-Payer

Saul Landau
The End of the Affair

Norm Kent
Perils of the Grow House

Alejandro López
Give Bush the Shoe! (and Send Us the Photo)

David Yearsley
The Glory That Was Dresden

James McEnteer
Doin' the Time Warp Again

Lorenzo Wolff
An Album That Lives Up to Its Cover

Kim Nicolini
Patti Smith's Dream of Life

Poets' Basement
Three Financial Poems by Brian J. Foley

Website of the Day
Lancet: Medical Conditions in Gaza

January 15, 2009

Pam Martens
Wall Street Powerhouses Invested Alongside Madoff

Karl Grossman
Obama and the Military - Industrial - Scientific Complex

M. Shahid Alam
Gaza's Shattered Mirror

Jules Rabin
Gaza Besieged, Gaza Mauled

Alan Farago
The Nail-Gun Bailout

Ron Jacobs
The State of Black America: From Oscar Grant to Barack Obama

Timothy Seidel
Just Violence in Gaza? The Calculus of Proportionality

George Ochenski
Why No Montana Wilderness?

Todd Chretien
Taking a Stand for Justice in Oakland

Bob Fitrakis /
Harvey Wasserman
Obama's Marijuana Prohibition Acid Test

Website of the Day
Uranium Watch

January 14, 2009

Henry A. Giroux
Killing Children With Impunity

Kathy Kelly
Cease Fire, Cease Siege

Franklin Lamb
A Second Front? Hezbollah Militants Chafe as Gaza Burns

Mike Whitney
The Big Contraction: Why the Stimulus Alone Won't Work

Paul Craig Roberts
The Humiliation of America

Glen Ford
Sullying Dr. King's Legacy: the Congressional Black Caucus and Israel

Aditya Chakrabortty
The End of Property Porn

Dave Lindorff
Fattening the Rats: Feeding at the Bailout Trough

Jonathan Cook
Israel Bars Arab Parties From Elections

David Swanson
Conyers Explains Why He Didn't Push Impeachment

Martha Rosenberg
Fragile: Handle with Risperdal

Website of the Day
Report of a Red Cross Worker in Gaza

January 13, 2009

Norman Finkelstein
The Facts About Hamas and the War on Gaza

Jonathan Cook
Is Israel Using Experimental Weapons in Gaza?

Michael Neumann
Hamas and Gaza: Slave Revolts and Passionate Evasions

Coleen Rowley /
William John Cox
No Victors in the War on Dissent

Robert Sandels
Cuba and the Obama Administration: Subversion Through Trade?

Saul Landau
The Changeling: an Obama Nightmare

David Swanson
What to Ask Eric Holder

Wajahat Ali
Waltzing with War Crimes

Sam Bahour
No Other Option? A View From the West Bank

Stanley Heller
Why It's Useless to Lobby Congress on Gaza

Robert Jensen
Beyond Grief and Rage

Robin Mittenthal
Eating Away at the Land That Feeds Us

Website of the Day
The 50 Most Loathsome People in America

January 12, 2009

Uri Avnery
The Blood-Stained Monster Enters Gaza

Paul Craig Roberts
Our Collapsing Economy

Mike Whitney
Israel's Moral and Political Insanity

Ewa Jasiewicz
Oh, Quiet Night: Only Six Homes Were Bombed

Bill Quigley
A Day in Gaza

Dave Lindorff
From Vietnam to Gaza

Bill and Kathleen Christison
Blowback From a Tragic Error: a Message to Barack Obama

Jonathan Cook
Israel Ponders the Third Stage

Andy Worthington
Seven Years of Guantánamo

Kara N. Tina
Oakland on Fire

Brenda Norrell
Palestinians and American Indians: Russell Means Breaks the Silence on Obama

Nour Kharma
A Plea From a Teen in Gaza: "Will I Die, Too?"

Website of the Day
The Villages Group: an Antiwar Alliance in Sderot

January 9/11, 2009

Alexander Cockburn
Israel's Onslaught on Gaza: Criminal, for Sure; But Also Stupid

Kathy Kelly
Tunnel Vision: Report from Arish, Egypt

Bill Quigley
Report From Rafah: Doctors Stopped at the Border

George Ciccariello-Maher
Oakland's Not for Burning?

Elaine C. Hagopian
Gaza: History Matters

Mike Roselle
Drowning in a Toxic River: What Can be Done to Save Appalachia?

Steve Hendricks
The Torturer-Elect?

Gary Leupp
Revisiting the Tale of Samson

Jonathan Cook
Outcry Over Israel's War Crimes

Karim Makdisi
The Ceasefire Plan: the UN Finally Acts, But Does It Mean Anything?

Rannie Amiri
Livni's Big Lie

Peter Morici
In the Jaws of a Depression

Peter Montague
Can Chemicals be Regulated?

Ralph Nader
Move Fast to Restore the Rule of Law

Andy Worthington
The Dying Days of the Guantánamo Trials

Nadia Hijab
A Music School Silenced in Gaza

Dan Bacher
Unholy Alliance: Nature Conservancy Backs Schwarzenegger's Big Ditch

Catherine Fenton
The American Peace Movement and Israel

David Macaray
Wal-Mart Caught Stealing

Valia Kaimaki
Why Greek Youths Took to the Streets

Richard Morse
Haiti's Gas Gang

David Yearsley
To Gotham City with Dexter Gordon

Charles R. Larson
The Horror, the Horror

Richard Rhames
Gaza and the Goon Squad Meet the Wizard

Stephen Martin
Meltdown Memo to Come?

Lorenzo Wolff
What They Sing About When They Sing About Love

Poets' Basement
Anderson, Beatty and Valentine

Website of the Weekend
Gaza Protest

January 8, 2009

Jean Bricmont /
Diana Johnstone
Gaza Seen From Paris

Franklin Lamb
How Dershowitz Misstates, Misrepresents and Misapplies the Law

Paul Craig Roberts
The Difficulty of Being an Informed American

Kevin Alexander Gray
Give Burris His Seat

Chris Floyd
The Enduring Priorities in Obama's Time of Change

Ewa Jasiewicz
Riding on Fire in Gaza

Steve Conn
Sanjay Gupta and Obama

Harvey Wasserman
Kill the Nuclear Stimulus!

Wayne S. Smith
An Opening to Cuba?

Linda Mamoun
Re-settling Gaza: the Real Goal of the Israeli Invasion?

Adam Turl
Unions and Young Workers

Chris Papaleonardos
Mourning Maria Dimitriadi

Website of the Day
On the Wing

January 7, 2009

Saree Makdisi
What Kind of Security Will This Barbarism Bring Israel?

Franklin Lamb
Bend Over Professor Dershowitz, It's Time for Your Check Up

William Blum
America's Other Glorious War

Belén Fernández
The Trauma Vortex: Israel's Monopoly on Psychological Suffering

Lawrence Davidson
What is New About Gaza?

Allan Nairn
Adm. Dennis Blair and the Church Killings in East Timor

Jonathan Cook
What is Israel's Objective?

Muhammad Idrees Ahmad
Watching the War on BBC

Deepak Tripathi
Bush, as He Leaves

Cal Winslow
Now is the Hour to Defend Democracy in the Labor Movement!

Manuel Garcia, Jr.
To Students Planning Careers: Be Mindful

Dr. Hannah Safran
No More Recycled Military Solutions

Website of the Day
CNN: Israel Broke the Ceasefire First

January 6, 2009

Pam Martens
It's All One Big Lie

Victoria Buch
Real Estate War in Gaza: the History and "Morals" of Ethnic Cleansing

Neve Gordon
Israel's New War Ethic

Tami Sarfatti /
Yonatan Mendel
What Silence Says: Gaza is Still Waiting on Obama

Mike Whitney
The Gaza Bloodbath

Alan Farago
After the Fall

Gary Leupp
A Hamas Coup d'Etat in 2007?

Larry Everest
Silent Partner: the US-Backed War on Gaza

Ron Jacobs
The New Iraqi Sovereignty

David Macaray
Union-Busting is Alive and Well

Stephanie Basile
Where's Anna's Money?

Stacey Warde
An Uncle's Unrest

Website of the Day
Israeli Refusenik on Gaza

January 5, 2009

Paul Craig Roberts
Will There be a Recovery?

Sousan Hammad
Phoning Home to Gaza

Wajahat Ali
Flying While Brown

Mats Svensson
Longing in Gaza

Jen Marlowe
Abeer's Baby

Muhammad Ali Khalidi
Gaza Phone Tag

Brian Cloughley
Israel is Immune From Criticism

Faheem Hussain
Gaza and India: a View From Pakistan

William Cook
Consider the Realities of Gaza

Dr. Trudy Bond
The Madness Among Us

Christopher Ketcham
The Revenge of the Blogger at the National Press Club: a Rotten Washington Interlude

Steve Early
Who Rules SEIU?

Dave Lindorff
When It Comes to Terrorism and POW Cases, Equal Justice Under Law is a Joke

Website of the Day
The Endangered Fish of the Colorado River Basin

January 2 - 4, 2009

Alexander Cockburn
Diary of 2008: an Incredible, Hope-Filled Year

Uri Avnery
Molten Lead in Gaza

Jonathan Cook
The Real Goal of the Gaza Assault

Paul Craig Roberts
Whatever Happened to Western Morality?

Brian Eno
Stealing Gaza: an Experiment in Provocation

Ralph Nader
America Must Stop Shirking Its Responsibility on Gaza

Omar Barghouti
UN Complicity in Israel's Massacre in Gaza

Graham Usher
Where Pakistan's Generals and the ISI Draw Their Lines

P. Sainath
The Economy is Worse Than It Appears

Belén Fernández
Pardon Our Dust: Israel's PR Campaign for Gaza

Deb Reich
Shiv'a in Gaza, December 2008

Gary Leupp
Defacing Mr. Jefferson's Wall: Preachers and the Inauguration

Michael Yates
Top Chef or Top Wage Thief? Tom Colicchio and the Economics of Restaurants

Joanne Mariner
How to Close Guantánamo

Seth Sandronsky
Funding the Israeli Military: the US Pipeline

Cynthia McKinney
We Lived to Tell the Story

Sonja Karkar
Israel's Dogs of War

Deepak Tripathi
Gaza in Perspective

Robert Fantina
Obama, Afghanistan and Israel

John Ross
The Year No One Can Remember

Norm Kent
The Heat on Duval Street: Why Head Shop Raids are Unfair and Unjust

Larry Portis
Syria and the Arab Barbie Doll--Before the Deluge

Richard Rhames
Is Conscience Dead?

Dee C. Lubell
We Come From the Sun: Zora Neale Hurston and Richard Wright

David Yearsley
A Gay German at the Courts of the Medici and Hanover, and of Course the BBC

Lorenzo Wolff
Joe Ely, the Fighting Rooster of Rock

Marc Catone
Looting Lennon's Legacy

Poets' Basement
Five Poems by Grzegorz Wróblewski

Website of the Weekend
Earth in High Rez

January 1, 2008

Jennifer Loewenstein
If Hamas Did Not Exist

Oren Ben-Dor
The Self-Defense of Suicide

Wajahat Ali
The U.S. Response to the Gaza Crisis: Unfair and Unbalanced

Saul Landau
In Cuba No One Man Could Steal $50 Billion From Other People

David Michael Green
What to Expect While We're Expecting

Website of the Day
Morbid Anatomy

December 31, 2008

Pam Martens
Wall Street's Collapse and the Ownership Society

Neve Gordon /
Jeff Halper
Where's the Academic Outrage Over the Bombing of a University in Gaza?

Ted Honderich
The First Casualty of Israel's War

Brian Cloughley
Five Little Girls on a Sofa: Gaza's One-Sided Images

Ron Jacobs
What is Hamas, Really?

Vijay Prashad
Hot Rod and His Sikh Warrior: Blago's Indian Connections

Franklin Lamb
Mr. Mubarak, Tear Down That Wall!

Mike Whitney
My Brilliant Career

David Macaray
What Really Killed the Auto Bailout

Richard Thieme
The Betrayal of the Commons

Mary Lynn Cramer
Who Wins What in Gaza?

Stephen Lendman
The Troubling Case of the Fort Dix Five

Worthy Group of the Day
Western Shoshone Defense Project

December 30, 2008

Paul Craig Roberts
May We No Longer Be Silent

Tariq Ali
The Gaza Ghetto and Western Cant

Robert Bryce
The $775,000-a-Year GI

Jonathan Cook
Electioneering with Bombs

Gary Leupp
The Fishbarrel War

Dave Lindorff
Tough Guys Don't Walk: Will Cheney Seek a Pardon?

Brian McKenna
Ted Downing and Troublemaker Anthropology

John Walsh
The End of the Green Party

Ramzy Baroud
Gaza and the World

Bob Sommer
The Education of David Frost

Worthy Activist of the Day
Support Marie Mason

December 29, 2008

Jennifer Loewenstein
Israel's Attempted Endgame in Gaza

Neve Gordon
What, Exactly, is Israel's Mission?

Joshua Frank
Obama and the "Special Relationship"

George Salzman /
Manuel Garcia, Jr.
The War Against Palestine: Exception From Humanity

Norman Solomon
A Hundred Eyes for an Eye

Ewa Jasiewicz
Gaza Today: "This is Just the Beginning"

Rob Larson
The Banks Laugh All the Way to the Bank

Kenneth Libby
Arne Duncan's Dark Years in Chicago

Robert Weissman
The 10 Worst Corporations of 2008

Elsa Johnson
High Noon at Black Mesa: Bush's Farewell Gift to Peabody Coal

Nicola Nasser
Resolution 1850: Bush's Parting Gift

Belén Fernández
Hanukkah Games

Worthy Group of the Day
Nuclear Information and Resource Service

December 26-28, 2008

Alexander Cockburn
The Medusa's Head

Dr Eyad Al Serraj
The Boming of Gaza: "An Earthquake on Top of Your Head"

Jeffrey St. Clair
Cancerous Air

Bradley Simpson
Obama's New Intel Chief, Dennis Blair, Ran Interference for Indonesia's Butchers

Ralph Nader
Government Without Laws

Gary Leupp
Obama and the Graveyard of Empires

Ellen Cantarow
Richard Falk, Israel and the NYT

Matt Landon
The Great Coal Ash Flood: a Report From Swan Pond Road

David Macaray
SAG's Terrible Dilemma

Patrick Bond
End of Neoliberalism? Sorry, Not Yet

Norm Kent
Invoking Bigotry: Obama and Rick Warren

Brian T. Ketcham
Fuel Efficiency is Easy--Just Don't Let Detroit Tell You How to Do It

Rannie Amiri
War Clouds Over Gaza

Larry Portis
Changing the Ethnic Vocabulary

Richard Rhames
Welcome to Soup Kitchen America

Stephen Lendman
29 Red Flags: Early Suspicions About Bernard Madoff

James L. Secor
Unheralded Coup

Ramzy Baroud
Iraq, the Plot Thickens

Harold Pinter
Art, Truth and Politics: the Nobel Lecture

Cpt. Paul Watson
Tracking the Cetacean Death Star

Howard Lisnoff
Nixon's Cambodian Shock Treatment

Michael Dee
The Bill of Rights, Killed in Action by the War on Drugs

Steve Conn
Eight Predictions for 2009

Poets' Basement
Valentine, Kaung, Moser and Graham

Worthy Group of the Weekend
United Mountain Defense

December 25, 2008

Judy Gumbo Albert
What Were Those 1960s Terrorists Thinking, Anyway?

Rev. William E. Alberts
The Sole of Christmas

Hannah Mermelstein
Caution: Settlers Ahead

Worthy Group of the Day
Citizens' Coal Council

December 24, 2008

Bill Quigley
Five Bailout Lessons From Katrina

Saul Landau
Then and Now: Venezuela and Cuba, 1960-2008

Sam Smith
Evangelism and Politics

Brian Cloughley
Torture, Slaughter and Lies

John Ross
Where's al-Zaidi's Pulitzer?

Eric Walberg
Cold War Shivers

Norm Kent
What Will Obama Do About Marijuana?

Stephen Martin
Reasons for Cheerfulness

Worthy Group of the Day
Collateral Repair Project

December 23, 2008

Michael Hudson
The Ponzi Paradigm

Michael Yates
The Tombstone Economy

Chuck Spinney
The New York Times Flames Out in Defense Dogfight

Vijay Prashad
India's Reckless Road to Washington, Through Tel Aviv

Brian Horejsi
Interior Decorating: Obama, Salazar and the Future of America's Public Lands

David Macaray
Obama's Best Pick?

Neil Watkins /
Sarah Anderson
Ecuador's Conscientious Default

David Michael Green
Hey, Reagan Democrats! Now Do You Get It?

Worthy Group of the Day
Focus on the Corporation

January 26, 2009

The Brave New World of the RMB Valuation Debate

Geithner's Pop Gun Volley at China

By PETER LEE

As China settles in for the New Year holiday, its leaders can chew over Treasury Secretary-designate Timothy Geithner’s declaration, made in a written statement to the Senate Finance Committee as it reviewed his nomination, that President Obama, “backed by the conclusions of a broad range of economists”, believes that China is manipulating its currency.

Before the U.S. recession hit, China might have had more reason to worry that a new Democratic administration might settle in for some serious China bashing to placate its base. Formal designation of China as a currency manipulator would have been the first of a series of big stick measures meant to improve the position of American exporters and labor vis a vis their Chinese competitors.

Geithner’s response is, of course, a long way from the official formal designation by the U.S. Treasury Department of China as an intentional currency manipulator for the purpose of gaining an unfair trade advantage under the Omnibus Trade and Competitiveness Act of 1988 that would trigger the sanctions process.

I’m not expecting aggressive moves by the Obama administration to sanction China into adopting a floating exchange rate, at least at this moment.

The Obama administration is pushing a $850 billion stimulus package through Congress and an amount of U.S. Treasury securities conservatively estimated to be “oodles” will have to be sold to China to finance it.

The need to market U.S. government debt to Beijing is perhaps the most important headache in America's China policy. But the financial crisis has also undermined America's prestige as the world's financial arbiter, provoked fresh displays of Chinese assertiveness, and limited the credible diplomatic options available to the Obama administration.

Concerning the bond market fallout, The New York Times tells us: “Prices of Treasury debt fell modestly after news of Mr. Geithner’s comments, reflecting worry among investors that China might be less willing to buy United States debt if the new administration pushed the country to further revalue its currency. The yield on the 30-year bond, which moves in the opposite direction from its price, climbed to 3.247 percent from 3.159 percent on Wednesday afternoon.”

So, ixnay on the trade war, I would say.

The main Chinese media outlet, Xinhua, reported on Geithner’s statement in detail.

The Chinese pundits were eager to fit President Obama with the robes of Herbert Hoover, significantly reframing the RMB issue as part of the Democratic Party’s protectionist agenda instead of accepting it as an orthodox free market nostrum for rationalizing exchange rate regimes and ameliorating trade imbalances. Mdme. Zuo Xiaolei , Chief Economist of the Milky Way Securities Company, dismissed U.S. remarks on the undervalued RMB as “the same old song”, and warned darkly, “ Obama made no statements opposing protectionism, either on the campaign trail or in his inaugural address…add to that the inclination of the Democratic Party, and American protectionism has already become the greatest concern of the international community.”

American protectionism is the biggest concern of the international community? Bigger than, say, the Western financial system going over the cliff?

In another piece of interesting framing, the article talks of the “China-U.S. economic relationship” as “by far the most important economic entity in the world”, one that accounted for 20 per cent of global economic growth in the last year.

It is, of course, noteworthy that the United States, instead of being feted in its traditional role as “the engine of the world economy”, is now presented as an economically and ideologically shaky co-partner in the joint Sino-American free market economic enterprise. Welcome to the 21st century.

Unfortunately, America’s forensic disadvantage in the U.S.-China RMB valuation debate go beyond the obvious difficulty that we are flat on our ass and in a poor position to give marching orders to China.

The RMB exchange rate issue has always included a back story of opening up China’s financial markets to wider participation by foreign companies. It goes back to 1997, during the Asian financial crisis. The dominant Western version, that the East Asian tigers fully deserved their forex asskicking by George Soros for struggling to sustain improperly valued dollar pegs — endured some difficulty dealing with the awkward fact that since then China kept its undervalued RMB to USD peg (with a modest, managed float after 2005), refused to open up its financial markets to significant global capital flows, declined, in short, to let the invisible hand rummage around in its wallet, and has yet to suffer the dire consequences ordained for countries with misvalued currencies. In fact, it's done rather well.

Western economists assumed their position would eventually be vindicated as the large capital inflows associated with an undervalued currency fueled a growth in the domestic money supply that the Chinese government would be finally unable to sterilize through bond sales, inflation would rear its head, and the government would be forced to float the RMB to protect the economy and manage the value of the RMB through monetary and interest rate policies.

It was possible that the Chinese banking system, undercapitalized, saddled with non-performing loans, over-regulated, and driven by government demands instead of market forces, would be ill-equipped to raise and allocate capital and distribute government debt efficiently enough under this sophisticated new regime to protect the economy from an arbitrage-driven meltdown, domestically driven but otherwise similar to the one that happened in Asia in 1997.

In 2003, Treasury Secretary Snow called on China to grasp the nettle, deregulate, and allow foreign capital to romp through its financial markets, so that the value of the RMB would be determined transparently by the free-market interaction between overseas demand and domestic policy: “Market-determined floating currencies are really the key to a well-functioning international financial system. For the world’s major traders, only freely floating currencies bring the accuracy and the efficiency necessary for the proper pricing account settlement in capital flows. That’s really our central point, that floating rates, market-based, flexible exchanges create the signals for a well-functioning flow of resources on a global basis. There’s ultimately no substitute for that.”

In 2007, then Treasury Secretary Paulson, in a speech to the Shanghai Stock Exchange that perhaps marked the high-water mark of Bush administration free-market evangelism vis a vis China, painted the orthodox picture as he pushed China to open its financial markets to foreign companies: "Time is of the essence," for China to develop a strong capital market, Paulson said. "The longer China waits, the more difficult it will be to create robust capital markets."…."China's underdeveloped financial markets place the nation in a challenging position, trying to balance between a centrally administered and a market-driven economy," Paulson said.

But when the reckoning came, Western, not Chinese financial houses were on the losing side.

The international financial community, instead of playing sugar daddy to mismanaged Chinese banks, is begging sovereign wealth funds from Beijing to Dubai for injections of capital.

Ironically, the U.S. and British banking systems now look a lot like the Chinese system—stuffed with bad loans they can’t digest and propped up by public money because, apparently, the firms are too big to fail and free market forces no longer apply.

More importantly, the fact that the big international banks led the world economy and entire countries like Iceland off a cliff in pursuit of easy profits from an perfect storm of reckless lending has discredited the West’s financial wizards. It’s fueled the suspicion that Wall Street is not on an eternal search for maximum global economic efficiency — it’s on a neverending quest for the next greater fool. In September 2008, Bloomberg commented acridly on the current state of affairs:

“Eighteen months ago, U.S. Treasury Secretary Henry Paulson told an audience at the Shanghai Futures Exchange that China risked trillions of dollars in lost economic potential unless it freed up its capital markets. ‘An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,’ Paulson said. That advice rings hollow in China as Paulson plans a $700 billion rescue for U.S. financial institutions and the Securities and Exchange Commission bans short sales of insurers, banks and securities firms. Regulators in the fastest-growing major economy say they may ditch plans to introduce derivatives, and some company bosses are rethinking U.S. business models.

‘The U.S. financial system was regarded as a model, and we tried our best to copy whatever we could,’ said Yu Yongding, a former adviser to China's central bank. ‘Suddenly we find our teacher is not that excellent, so the next time when we're designing our financial system we will use our own mind more.’

‘Globally, banks have written down more than $520 billion as the credit crisis led to the demise or makeover of Wall Street's five biggest investment banks…It's ironic Paulson has become the manager of many large financial institutions,’ said Wang Jun, a finance specialist at the World Bank in Beijing. ``He will have to ask the Chinese leaders about their experience of managing state-owned assets.’”

So much for the United States holding the moral and intellectual high ground in the RMB debate. So the Chinese government, unwilling to revalue and exacerbate the pain of its exporters during its recession, finds itself holding quite a few effective rhetorical cards in the debate with the United States. And the Obama administration finds itself, at least for now, with few persuasive tools to compel an RMB revaluation.

Peter Lee is a business man who has spent thirty years observing, analyzing, and writing on Asian affairs. Lee can be reached at peterrlee-2000@yahoo.

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