CURRENCY WAR: Will Obama be forced to have a full blown currency war with China?

It appears that China has been manipulating it's Yuan to gain trade advantages and all the rest of the world, not the least of which is the United States, are calling foul. Now, even the US House of Representatives have signed a bill that would give President Obama the power to impose stiff tariffs on US imports from any country that has an unfairly undervalued currency.

This move by China causes the jobs situation in the US to deteriorate even more, while, at the same time, it creates more jobs in China. It's very simple: If China's Yuan is cheaper, then other countries can increase their imports from China. That means China has greater demand for its products. That means more Chinese are working and increasing their standard of living.

But the reverse is not true in the U.S. American exports would not be as attractive to China and other countries because it's currency is more expensive and so trading with a country with higher value to its currency would not be as attractive as trading with China. So Americans will be put out of work even more and this would be bad not just for the American economy, but the global economy as well - only China would benefit from it's trade and currency manipulations in other words. But the Chinese don't see it that way. They say they will manipulate it gradually, and not in a "shock and awe" manner.

Yea. Okay.

But would Obama's placing of tariffs on Chinese imports violate the WTO rules? And would doing nothing force other countries to manipulate their own currencies? If so, at what cost to the global economic climate? Already, nearly sixty million people have been forced into poverty as direct consequence of the global recession.So, is a full blown currency war inevitable? Will countries be forced to "protect" themselves by lowering their own currencies to compete with China?

The president's treasury secretary Tim Geithner does not think a war is smart and the head of the World Bank President Robert Zoellick seems to agree. As does the head of the IMF Dominique Strauss-Kahn.

What should Obama do? Seems he has no choice but to get international support from other G20 countries to put pressure on China to stop the manipulations. Everyone seems to concur that a trade/currency war is the last thing the world needs right now. And that protectionism is not the answer. So the only other thing is cooperation. Isn't it?