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Global joke Obama admin. now blames German economic success for rest of world being poor

October 31, 2013

Contrary to Obama admin. claims of insufficient domestic activity, German “GDP in the second quarter of 2013 was driven up by demand from both consumers and businesses.”

10/30/13, “US says German exports harming eurozone economy,” UK Telegraph

“The US has reprimanded Germany, saying its exporting prowess is hampering economic stability in Europe and also hurting the global economy.

It came as the US Treasury said the Chinese yuan remains undervalued despite its significant appreciation this year and called on Beijing to disclose more about its market intervention.

For years, America’s semi-annual currency report has been an occasion for the US government to publicly criticise China’s foreign exchange practices, but this time Germany appeared to eclipse the Asian giant in terms of prominence within the document.

The Treasury Department said Germany should focus more on boosting domestic growth in order to make the European economy more stable.

Germany’s anaemic pace of domestic demand growth and dependence on exports have hampered rebalancing [of the eurozone economy],” the Treasury said in the report.

“The net result has been a deflationary bias for the euro area, as well as for the world economy,” it said in the report.

Deflation is one of the most worrisome forces in economics and refers to persistent drops in wages and prices.

The Treasury noted, for example, that Germany’s net exports of goods, services and capital exceeded those of China in 2012. The policy recommendations for Germany also topped the list of actions Washington feels are necessary to make the global economy more stable.

Turning to China, the Treasury stopped short of officially labeling the country a currency manipulator, a designation that could spark US trade sanctions. The yuan, or renminbi (RMB), “is appreciating, but not as fast or by as much as is needed”, the Treasury said.

“In line with the practice of most other G20 nations, China should disclose foreign exchange market intervention regularly to increase the credibility of its monetary framework and to promote exchange rate and financial market transparency,” it said.

The Treasury also singled out Japan and South Korea for undervalued currencies.

But it acknowledged that Tokyo has not intervened in foreign exchange markets for almost two years, and that the yen’s fall came from the government’s stimulus.

As for the Korean won, it said market participants estimate Seoul had intervened in early 2013 to hold down the currency as the yen weakened, and continued to intervene through the middle of the year.

The yuan rose 6.3pc on a trade-weighted basis in the first nine months of this year, more than the other currencies covered in the Treasury report.

But the Treasury tied that to the fall of the Japanese yen against most major currencies. Meanwhile, against the US dollar, the yuan only rose 2.2pc.

It cited data from the International Monetary Fund in July saying the yuan was undervalued by 5pc to 10pc against a broad basket of currencies.

It said China’s large-scale purchases of foreign exchange this year, driving its reserves to $3.6 trillion, “is suggestive of actions that are impeding market determination and a currency that is significantly undervalued”.

As regards Japan and South Korea, the Treasury report was more measured than the previous one in April, when both were warned against weakening their currencies to gain trade advantage.

The Treasury said it will “continue to closely monitor Japan’s policies and the extent to which they support the growth of domestic demand.”

The Treasury said that the Korean won remained undervalued by 2-8 percent, according to IMF data, and noted that Seoul had amassed $326 billion in foreign exchange reserves, more than it needs.

“We will continue to encourage Korean authorities to limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions,” it said.

In addition, in line with the practice of most other G-20 countries, Korea should disclose foreign exchange market intervention shortly after it takes place.””

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10/30/13, “US criticises Germany and China policies,” BBC

Germany is eurozone’s largest economy has been one of its key drivers of growth in recent years.

Its importance to the 17-nation bloc has only increased since the development of the region’s debt crisis, which has impacted other bigger economies such as Italy and Spain.

It has been one of Europe’s stronger economic performers and its exports prowess is seen as one of its key strengths.

The country narrowly avoided recession earlier this year, but GDP in the second quarter of 2013

Analysts said that while Germany could benefit from boosting domestic demand, the criticism levied on its policies was unfair.

“I think this is a bit strange,” Tony Nash, vice president at IHS, told the BBC. “The eurozone has to get growth from somewhere and Germany is the most likely place for that to happen.”

“And it is better for eurozone to have a highly concentrated, efficient and skilled export powerhouse in Germany than not have any major engine of growth,” he added.”…

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