WASHINGTON, D.C. – With the presidential election less than a month away, 28% of Americans are satisfied with the way things are going in the U.S. This continues the low satisfaction levels that started near the end of the George W. Bush administration and have persisted under President Barack Obama. Satisfaction remains significantly below the historical average of 37% since Gallup began measuring it in 1979.
Sad to see really. I can think of a couple reasons why satisfaction in America would be so low for so many.
I’ve largely stayed out of the political debates. I could say nice things about both candidates. I can say bad about both also.
One item that Mr. Trump has brought up and I have historically thought could play into a concern many Americans have is manufacturing jobs leaving American shores. Jobs have gone to China. That is in large part due to China’s currency manipulation.
This concern with China isn’t new. The Chinese have even been talked to in the past about currency manipulation. They responded with two measures, saying they would allow their currency to rise in value, and the second to promote domestic consumption within China.
Those agreements with China appear to have come to an end. I’ve been reading of late that China is resuming her currency manipulation. She is working to lower the value of the Yuan. That makes Chinese good cheap. The emphasis on Chinese domestic consumption seems to have gone to the wayside.
Who ever wins the election, it will be interesting to see if this issue is addressed, or not. Of course some say manufacturing in China is preferred to manufacturing in America. It depends on how one looks at it. From a satisfaction stand point though I suspect Chinese manipulation and where manufacturing takes place plays a roll in satisfaction.
some information on that:
We’ve talked quite a bit about China in this daily note. China’s currency is a factor in markets again today.
China began allowing its currency to strengthen in value back in 2005, to begin making progress to a more fairly valued currency.
But they made just the minimal concession to keep U.S. Congress at bay, warding off threats of a big 27% tariff.
Over the course of eight years, they allowed appreciation of about 3% per annum. It was only within the context, though, of a rapidly growing economy. Therefore, growth dwarfed the consessions made on currency. Which means they continued to operate with a highly suppressed currency, maintaining unfair advantages on trade partners and trade competitors.
Manipulating a weak currency is what enabled China’s rapid economic ascent in the world. And though they’ve talked big in recent years about transforming the economy, encouraging consumption and open markets, when times are tough, we should expect them to go back to their knitting–leaning on currency manipulation to fuel exports, to solve problems.
And that’s what they’ve done, quietly, since 2013.
The problem: A return to these policies would mean very bad news for the global economy. It was China’s currency manipulation that created the global credit bubble (China recycling our dollars into Treasurys, keeping rates low, fueling more borrowing, more consumption … and the cycle continued). A continuation of that would lead to a cycle of booms and busts.
With that, today, the Chinese government set the yuan rate at the lowest level since 2010. They’ve been steadily weakening the yuan all month.
Here’s a look at the chart (the falling line is the dollar weakening, the yuan strengthening, and vice versa)…
So you can see where China left the peg in 2005. And when the global economy was in the throes of crisis, they went back to it. And when the Chinese economy started to grind slower, they have since gone back to weakening the yuan.
There is a lot of truth in what you say. But don’t forget China is also financing about 5% of U.S. debt. Other countries are financing our debt as well. Investing in a lot of US corporate stocks as well.
So it’s not as one-sided as some politicians will tell you.