During President Obama's high profile visit to China this week, the most frequently discussed, yet least understood, topic was how currency valuations are affecting the economic relationship between the United States and China. The focal problem is the Chinese government's policy of fixing the value of the renminbi against the U.S. dollar. While many correctly perceive that this 'peg' has contributed greatly to the current global imbalances, few fully comprehend the ramifications should that peg be discarded. While the peg certainly is responsible for much of the world's problems, its abandonment would cause severe hardship in the United States. In fact, for the U.S., de-pegging would cause the economic equivalent of cardiac arrest. Our economy is currently on life support provided by an endless flow of debt financing from China. These purchases are the means by which China maintains the relative value of its currency against the dollar. As the dollar comes under even more downward pressure, China's purchases must increase to keep the renminbi from rising. By maintaining the peg, China enables our politicians and citizens to continue spending more than they have and avoiding the hard choices necessary to restore our long-term economic health.

Indeed, the Chinese are treating the energy technology competition if it were an arms race. China is spending as much or more on greentech as it does on its military, hundreds of billions of dollars annually on renewable energy and grid infrastructure improvements. Those investments, if not vigorously countered, will effectively erode America's greentech industry leadership and secure China's dominance. China's economic stimulus package, targeted 38% of spending on greentech, as compared to a miserly 12% of the U.S. stimulus program. By 2013, greentech will account for 15 percent of the Chinese GDP. While the United States is projected to roughly triple its wind generation by 2020, China will increase its capacity twelvefold to a wind generating capability more than twice that of America's. And, while the United States is projected to increase its installed solar generation a modest 33% by 2020, China's solar generation is projected to increase 20,000%.

US President Barack Obama once again threatens Iran over its nuclear program, while his Chinese counterpart stresses the need to find a diplomatic solution. "Iran has an opportunity to present and demonstrate its peaceful intentions but if it fails to take advantage of this opportunity it will face consequences," said Obama in a joint press conference with Hu Jintao in Beijing on Tuesday. "We agreed that the Islamic Republic of Iran must provide assurance to the international community that its nuclear program is peaceful and transparent," he added. Hu Jintao stressed, however, that the dispute over Iran and North Koreas' nuclear programs must be resolved through dialogue, according to Xinhua News Agency. "Both of us remain committed to resolving the nuclear issue on the Korean Peninsula through dialogue and consultation," Hu said after the meeting Obama.---

Political cartoon by laughnmatter on Obama's China trip.

It appears that besides being two of the most selfish of the greediest and least patriotic among us Mitch McConnell and Rush Limbaugh have a lot in common. They both share the same hypocritical, lying talking points. They both hate working Americans and try to brainwash them into opposing their own interests and in some cases succeed. They both seek to insure that the American economy is ripped apart, as long as their greedy enablers get to pick it clean and get bailed out while the average American suffers. They both seek to blame Democrats for the huge mess they are cleaning up that was made by Republicans.

President Obama says he wants to "rebalance" the economic relationship between China and the U.S. as part of his plan to restart the American jobs machine. "We cannot go back," he said in September, "to an era where the Chinese . . . just are selling everything to us, we're taking out a bunch of credit-card debt or home equity loans, but we're not selling anything to them." He hopes that hundreds of millions of Chinese consumers will make up for the inability of American consumers to return to debt-binge spending. This is wishful thinking. True, the Chinese market is huge and growing fast. By 2009, China was second only to the U.S. in computer sales, with a larger proportion of first-time buyers. It already had more cell-phone users. And excluding SUVs, last year Chinese consumers bought as many cars as Americans (as recently as 2006, Americans bought twice as many). Even as the U.S. government was bailing out General Motors and Chrysler, the two firms' sales in China were soaring; GM's sales there are almost 50% higher this year than last. Proctor & Gamble is so well-established in China that many Chinese think its products (such as green-tea-flavored Crest toothpaste) are Chinese brands.

During Obama’s visit, China quietly sets a trial for Tiananmen Square student leader Zhou Yongjun. Communists, dictators, tyrants and thugs have slated more such persecution to be coming up this week — one day after U.S. President Barack Obama leaves China.

When US President Barack Obama visits China this weekend, he will encounter a rival that sees the financial crisis as more of an opportunity than a threat. America, on the other hand, has been fundamentally weakened by the global crunch -- and is more dependent on the goodwill of the rising superpower than ever. The scientists at the National University of Defense Technology in Changsha, China, had plenty to celebrate: They had developed a supercomputer that could perform more than a quadrillion calculations per second. The announcement, released just in time for US President Barack Obama's visit to China this weekend, had symbolic value: With their new computer, dubbed "Tianhe" ("Milky Way"), the Chinese claim they will be the first country to become a direct rival to the superpower.

President Obama, in his visit to China, held a “town meeting” with Chinese students in which he praised openness and lectured them on the value of freedom of information, saying that he is a “supporter of non-censorship” and that open access to information was a “source of strength.” And yet America is hardly free of censorship. Heck, the president himself has gone to court to prevent the release of photographs of US troops torturing captives in Iraq, Afghanistan and at Guantanamo. Talk about censorship! But it goes way beyond just such crude, totalitarian style control over information.---Let’s just take the issue of depleted uranium weapons, over 1000 tons of which have been expended in the US invasion of Iraq, most of it in populated areas where millions remain exposed to the radioactive dust of the burned material. There is almost no reporting on this topic in the US media. The Pentagon has for years lied about and hidden the effects of this deadly substance, used in shells, bombs and bullets because of its unique ability to penetrate hard steel armor and concrete bunker walls. It has refused to disclose where the weapons were fired, and has denied US troops the tests that would show if they have been contaminated.---Is that censorship? Of course it is.

International travel by world leaders is mainly about making symbolic gestures. But let’s hope that when the cameras aren’t rolling Mr. Obama and his hosts engage in some frank talk about currency policy. For the problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways. Despite huge trade surpluses and the desire of many investors to buy into this fast-growing economy, Chinese authorities have kept that currency persistently weak. China’s weak-currency policy exacerbates the problem [of the depressed state of the world economy], in effect siphoning much-needed demand away from the rest of the world into the pockets of artificially competitive Chinese exporters. This problem is about to get much worse. Because for the past year the true scale of the China problem has been masked by temporary factors. Looking forward, we can expect to see both China’s trade surplus and America’s trade deficit surge. Unfortunately, the Chinese don’t seem to get it: rather than face up to the need to change their currency policy, they’ve taken to telling us to raise interest rates and curb fiscal deficits. And I’m not sure the Obama administration gets it, either. The administration’s statements on Chinese currency policy seem pro forma, lacking any sense of urgency. That needs to change. I don’t begrudge Mr. Obama the banquets and the photo ops; they’re part of his job. But behind the scenes he better be warning the Chinese that they’re playing a dangerous game.

The move could buy the Treasury Department time before it hits the so-called debt ceiling, which limits the amount of money the U.S. can borrow. Already, some members of Congress have said they won't approve an increase in the $12.1 trillion debt cap unless efforts to reduce the deficit are included. Senate Budget Committee Chairman Kent Conrad, the North Dakota Democrat who is proposing a bipartisan commission, along with Sen. Judd Gregg (R., N.H.), to examine taxes, said he won't vote for raising the debt limit unless Congress and the administration start talking about cutting spending and increasing taxes.

China offered African governments a multibillion-dollar package of financial and technical assistance on Sunday, stepping up a courtship that already has gained Beijing wide access to oil and minerals across perhaps the most resource-rich continent in the world.Prime Minister Wen Jiabao pledged to grant African countries $10 billion in low- interest development loans over the next three years, to establish a $1 billion loan program for small and medium-size businesses, and to forgive the remaining debt on certain interest-free loans that China previously granted less-developed African nations.Mr. Wen told officials of the 49 African nations in attendance that this year’s session “represents a new stage of development in relations with Africa.”Besides the financial assistance, Mr. Wen also promised to form a partnership to address climate change in Africa, including the building of 100 clean-energy projects across the continent. Beijing will also remove tariffs on most exports to China from the least-developed African nations that do not have diplomatic relations with Taiwan, and sponsor an array of other programs in health, education, culture and agriculture.

A decision by the Reserve Bank of India to buy 200 tonnes of gold from the IMF for $6.7 billion does not reflect a preference for the How to invest in gold metal over the dollar, the finance minister said Tuesday. The International Monetary Fund kicked off its planned sale of more than 400 tonnes of gold with an announcement Monday that it had sold almost half to India, the world's biggest gold consumer, at near-record prices. The purchase "doesn't mean we don't prefer the dollar any more or like gold any better," Finance Minister Pranab Mukherjee told reporters in New Delhi. Some analysts expect central banks around the world to diversify their holdings and purchase more gold as a shield against a weakening dollar. [Note: It will be real interesting to see what other countries start buying up gold.]

The head of Taiwan's National Security Bureau told parliament construction of the carrier had begun, Lin Yu-fang, a legislator of the ruling Kuomintang party, told AFP.However, the security chief, Tsai Teh-sheng said the carrier's construction "has not been smooth" and that the Chinese navy may struggle to put it into service by 2012 unless it makes a manufacturing breakthrough soon."This is the result of an evaluation not only from (Taiwan's) National Security Bureau...but also from the Chinese communists," Tsai said, according to Lin.Taiwanese military experts expect the People's Liberation Army to take at least 10 years to have its first operating carrier group complete with carrier-based fighters and other warships."Once they complete the ambitious project, it will have a serious and far-fetched military impact on the region," said Wung Ming-hsien, professor at Taipei's Tamkang University."And by that time, the United States, Japan, and Taiwan will need to overhaul their military strategies."

The U.S. Senate has previously expressed its opposition to joining any agreement that does not include major developing countries such as China; China has insisted that Western countries take responsibility for a problem that they caused and provide assistance for developing countries in the form of finance and technology to move them toward a low-carbon pathway. Yet both countries have an unprecedented opportunity to move beyond this impasse.

Tensions have flared between both China and India militaries along their disputed 2,175 mile-long border, with both sides alleging more frequent troop incursions in recent weeks. China is upset when the Indian prime minister recently visit the disputed region. China considers an Indian-occupied piece of it’s own Tibetan Autonomous Region, has added flames to the fire. China of course already deeply resents the fact that the top Tibetan leader, and several hundred thousand exiled Tibetans, are allowed to reside in India. India’s Maoist rebels are now present in 20 states and have evolved into a potent and lethal insurgency. In the last four years, the Maoists have killed more than 900 Indian security officers. Indian leaders are now preparing to deploy nearly 70,000 paramilitary officers to hunt down the guerrillas.The Maoists, however, do not want to secede or be absorbed. Their goal is to topple the system. India’s rapid economic growth has made it an emerging global power but also deepened stark inequalities in society. Maoists accuse the government of trying to push tribal groups off their land to gain access to raw materials and have sabotaged roads, bridges and even an energy pipeline.

How big can they friggin' get? When's enough, enough?

Senior monetary officials usually talk in code. [Recently Fed chairman] Ben Bernanke didn’t specifically criticize China’s outrageous currency policy — but he didn’t have to. China’s bad behavior is posing a growing threat to the rest of the world economy. The only question now is what the world — and, in particular, the United States — will do about it. From [2001] onward, the policy of keeping the yuan-dollar rate fixed came to look increasingly bizarre. China has been keeping its currency pegged to the dollar, in effect engineering a large devaluation. And that’s a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand. So what are we going to do? U.S. officials have been extremely cautious about confronting the China problem. The thing is, right now this caution makes little sense. The point is that with the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated. Something must be done about China’s currency.

For the (Western) news cycle, what stood out from United States Secretary of State Hillary Clinton's visit to Russia this week was an "appeal for cooperation" and a "challenge" for Russia to open up its political system, embrace "diversity" and shelve Cold War thinking. Who's fooling whom? One might be forgiven to picture a torrent of laughter echoing in the Kremlin's corridors - later washed down with prime Stoli vodka - especially considering Washington's current poor standing in the world, as well as those usual suspects, "Western values"; and the fact that Russian intelligentsia has been pointing out for years that it is Washington hawks who are still in fact mired in the Cold War. Such a pity that Iran hawk Hillary did not cross paths with chess master Vladimir. Prime Minister Vladimir Putin had better things to do - he was away in Beijing for a meeting of the Shanghai Cooperation Organization (SCO). In Beijing, Putin bluntly told the US not to intimidate Iran, stressing that more sanctions were "premature"; what was needed was an "agreement". Hillary was thrown by judo expert Putin - and she did not even see it coming. Yet Hillary still had time to spin on American TV that if the "international community" approved more sanctions on Iran, Russia would follow. That's not what Putin - or Russian Foreign Minister Sergei Lavrov - said, or what the leadership in Beijing thinks.

BEIJING, October 14 (RIA Novosti) - Russia is ready to consider using the Russian and Chinese national currencies instead of the dollar in bilateral oil and gas dealings, Prime Minister Vladimir Putin said on Wednesday. The premier, currently on a visit to Beijing, said a final decision on the issue can only be made after a thorough expert analysis. "Yesterday, energy companies, in particular Gazprom, raised the question of using the national currency. We are ready to examine the possibility of selling energy resources for rubles, but our Chinese partners need rubles for that. We are also ready to sell for yuans," Putin said. He stressed that "there should be a balance here." On Tuesday, Russia and China agreed terms for Russian gas deliveries at a level of up to 70 billion cubic meters a year. China also imports oil from Russia. The Russian prime minister said the issue would be addressed among others at a meeting of Shanghai Cooperation Organization (SCO) finance ministers, who are to convene before the end of the year in Kazakhstan. Britain's Independent newspaper reported last Tuesday that Russian officials had held "secret meetings" with Arab states, China and France on ending the use of the U.S. dollar in international oil trade.