Sir Winston Leonard Spencer Churchill 1874-1965
After reading the article of The Economist posted at Oct 14th 2010 "How to stop a currency war"
The world economy has been on a war footing, and the currency is going to be the weapon, both rhetorically and in practice. There are three main wars, first is the undervalued Yuan, another is the rich world's monetary policy, the other is how developing countries respond to these capital flows. The contention is hot, either to retaliate on China's currency policy or not. If a provocation move is acted, menacing real war will on. But it is not fair to treat China as the only scapegoat, this is a multilateral problem (sotto voce, Brazil, Japan, EU.) Since the global economic debate has been recast in battlefield terms, behind all the smoke and fury, there are in fact battles, for example, tariff setting. The menace of imposing tax on foreign capital inflows, like Brazil recently doubled a tax on foreign purchases of its domestic debt, and Thailand announced a new 15% withholding tax for foreign investors in its bonds. In the article analysis, "there is no room for complacency" of the currency bill is milder than it sounds and it has yet to be passed by the Senate or signed by U.S. president. A truly draconian capital controls are dangerous. So don't be obstinate, this ware is better not to be fought.
