IS THE DOLLAR FALLING BEHIND ?

Published in El Nuevo Herald on January 13, 2012

The Peterson Institute for International Economics recently estimated at 24% devaluation of the yuan against the dollar. Because in recent months was recovered by 4%, on December 27, 2011, the Treasury secretary, Timothy Geithner, has decided not to designate China a "currency manipulator". Instead it has decided to keep the pressure on China in international forums as the Group of 20 leading nations and the International Monetary Fund. As a campaign platform, Republican Mitt Romney says it will bring this case before the World Trade Organization.

China, meanwhile, and perhaps as a reaction to this pressure, recently made a pact with Japan and Thailand for trade without the presence of the U.S. dollar. Clearly, China is trying to start promoting the yuan in the Association of Southeast Asian Nations (ASEAN), thus establishing free trade zones. The exchange between China and Japan was $ 340.000 million last year, so that an agreement of this magnitude makes it the largest ever made. However, this figure languishes before the three domestic financial aid packages awarded by the U.S. government for more than $ 700.000 million each. This comparison allows us to appreciate the gigantism of the great American Union.

This important agreement without the intervention of the dollar, has yet to be implemented. In particular, banks have to open their build process of Credit Letters with yuan designation to be used in international trade. Up until now, the transactions in Yuans have been made in Hong Kong mainly. The U.S. trade deficit with China was $ 273.000 million last year. When this deal, China-Japan-Thailand is in full swing, you can expect a revaluation of the Yuan, which was far away from the financial turmoil caused by the crisis since 2008. If so, will trigger the interest rates and with it the prices of all Chinese products.
Major U.S. brands dominate the Chinese market, 350 Walmart stores, 400 McDonalds, hospital equipment are primarily GE and Boeing commands the civil aviation. Is estimated at over $ 100.000 million annual profit accruing to U.S. corporations in China, but the biggest problem facing America is the lack of jobs caused precisely by the absence of these and other businesses on U.S. soil. 

Large financial capitals are managed primarily in New York, London and Frankfurt-Munich axis Berlin. This enormous treated China-Japan-Thailand, it create a new world economic order? Will it leave the dollar to exercise its hegemonic role in international trade? Major changes can be made in the medium run. What is a disturbing reality is that the U.S. must urgently take steps to safeguard our system. And these measures can be unrewarding for many.

BENJAMIN F DeYURRE
Miami