In Today’s Letter…

• Critics at World Economic Forum Bash “The Cheater”
• “Take That Geithner!” – Chinese Monetary Officials
• I’m Sick of the Bailouts! Gold Anyone?

By Chuck Butler A very cold and snowy Wednesday here in St. Louis. I got caught behind the line of snow plows this morning, and it took me what seemed like for-ev-er to get here! Oh well, I’m here, so let’s get going, eh?

The World Economic Forum began today in Davos, Switzerland. This is usually a huge economist boondoggle, but it has a different look to it this year.

You see, the U.S. boys and girls who normally attend are missing this year. They’re skipping it because they don’t want to look silly after they took bailout, TARP, and any other kind of government handout.

This reminds me of the Citigroup story that hit the news yesterday. In case you missed it, Citigroup was planning to go ahead and purchase a US$50 million jet plane, after taking TARP money. But once the media got wind of that story, Citigroup backed off and announced that they would NOT buy another jet plane.

If anything, maybe all these bailouts will cause a “corporate conscience.” Probably not, but we can hope, right?

Meanwhile, the economists that did show up in Davos ripped into new U.S. Treasury Secretary Geithner, a.k.a. “the cheater.” The economists ripped into Geither’s statement that China was “manipulating” their currency and that Chinese officials should allow their currency to appreciate.

Let’s listen in on some of the comments regarding “the cheater’s” first call…

“Allowing the yuan to strengthen would be ‘economic suicide’ amid an economic slump,” Stephen Roach, Morgan Stanley’s Asia Chairman, told a panel in Davos, Switzerland, today.

“I’ve never seen an economy in recession voluntarily raise their currency. It’s horrible advice.” (Remember, that the renminbi is the official name of the Chinese currency and the yuan is the slang name. It’s easier to say, and spell, so the media uses the slang name!)

“Shouting from Washington to Beijing is not going to make a difference,” said South Africa’s Finance Minister Trevor Manuel on the same panel.

So, the boys over in Davos have Geithner’s back…Not!

“Take That Geithner!” – Chinese Monetary Officials

Oh and just for the record, ever since Geithner made his call on Monday, the Chinese have basically told him what he can do with his comments. The Chinese officials have allowed the renminbi to weaken versus the dollar the last three nights! Those Chinese are wild and crazy guys!

But seriously… This is what happens when you have a house in disarray and you begin pointing the blame finger at other houses (especially houses that have been struggling to wake up after being asleep for eons). The house you blame bites back!

Of course, I prefer the Chinese forcing the renminbi to grow weaker than the alternative of selling their Treasuries!

You know what gets my goat about what Geithner said? (It’s important to remember that I believe it was Obama’s words that Geithner spoke.)

It’s that he pointed the finger at China and not every other country in the world that “fixes,” “pegs,” and manipulates their currencies. There’s a whole laundry list starting with Hong Kong, and ending with Saudi Arabia, with the likes of Japan, Singapore, and the other oil states in between…

Speaking of the new administration… They’re waiting on the next stimulus package. And the House will vote on the “new and improved” stimulus package that totals US$816 billion today…again.

I won’t beat the proverbial dead horse on this, but we don’t have the money to do this, and we’re only getting deeper into debt! By the way, gold backed off US$15 last night, and is back below US$900… Wink, wink…

You Can Expect a Nice Vague Statement Coming from the Fed Today

Well, the FOMC meeting will end today. I received two calls yesterday from writers that wanted to interview me regarding what the Fed was going to do. First, an old contact at the Wall Street Journal and then Reuters. I told them both the same thing:

“Wouldn’t it be nice if Big Ben Bernanke kept his promise to make the Fed more ‘transparent’ when he was sworn in? In doing so, wouldn’t it be great if they’d tell us what they were going to do, for how long, how much…and how they would monitor it? Of course it would! But you can expect more cloak and dagger from them!

“President Obama, backed by the conclusions of a broad range of economists, believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices.”

Okay folks, this is where the problems begin. If he’s making statements like that in his confirmation, then you can expect that Obama will push for legislature to put tariffs on Chinese goods. Protectionism. This is all going in the wrong direction!!

That’s it for today… A great big Happy Birthday to my long-time friend, colleague, and fellow writer Chris Gaffney! I have known Chris for a long time now, and the guy looks the same now as he did 20 years ago!

He has been a great support for me during these past two years of trials and tribulations… So Happy Birthday!

Okay, time to get on the road again…I hope your Wednesday is Wonderful!
Chuck