Should President Obama use the International Economic Powers Act to deal with China?

Should President Obama invoke the International Emergency Economic Powers Act against China?

The International Emergency Economic Powers Act (IEEPA), Title II of Pub.L. 95-223, 91 Stat. 1626, enacted October 28, 1977, is a United States federal law authorizing the U.S. Presidents to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has a foreign source.

Arguably, the situation in China rises to the level of an unusual and extraordinary threat to the economic stability and durability of the United States. The International Emergency Economic Powers Act ("IEEPA") is often used in conjunction with the Trading with the Enemy Act to impose sanctions against countries, individuals, and financial entities that do business with countries the United States deems an "enemy." Just this past summer, British heavy weight bank, Barclays, was hit with a major lawsuit by the Justice Department for trading with the enemies (Sudan, Cuba, Iran, Sudan, Libya and Burma) and was made to pay nearly $300 million in fines.

The only trouble is, making China an "enemy" seems fraught with economic peril not just for the United States, but for the rest of the world. Thus, President Obama should think twice before he invokes this weapon against this "enemy."

Well, actually, China is not an enemy of the United States, is it? China is more like a frenemy of the United States. Whatever the status, though, President Obama must proceed with caution on this one.

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?

Obama pushes out Gen. James Jones in favor of Thomas E. Donilon

James Jones out. Thomas E. Donilon in. White House officials are speaking on anonymity to the media regarding the "accelerated" resignation of National Security Adviser James Jones. Mr. Jones was due to resign in January after a two year stint with the Obama Administration, but he was apparently pushed out on the heels of the Rahm Emanuel resignation a last week, all under the guise of shaking up the White House and rejuvenating the sagging spirits of the electorate who voted for Change but don't see much in the way of making their lives any better than it was with Bush. This is a problem that the Obama Administration needs to work on fast.

True, the Electorate seems less concerned with President Obama's foreign policy than with his domestic policy at the moment. The high unemployment rate and dearth of jobs dominates political discourse. But there is no question that at the back of many people's minds is the nagging question that America is spending way too much on its defense programs and its wars (trillions!) and not enough on creating jobs for out of work Americans who are losing their homes and the clothes off their backs.

Donilon's appointment as the new National Security Adviser is a good next move for the Administration. First of all, he is in favor of the president's decision to have troops begin to withdraw from Afghanistan next summer, and is against the notion of an "endless war."

The New York Times:

"As deputy national security adviser, Mr. Donilon has urged what he calls a “rebalancing” of American foreign policy to rapidly disengage American forces in Iraq and to focus more on China, Iran and other emerging challenges. In the Afghanistan-Pakistan review, he argued that the United States could not engage in what he termed “endless war,” and has strongly defended Mr. Obama’s decision to withdraw American troops from Afghanistan next summer."

Bravo. Now we have someone who is making some sense on these issues in the White House. Time to get out of these ridiculous wars and focus on more important challenges. China, for one, is flying under the radar and unchecked in too many ways. Iran is a nightmare waiting to happen. Plus, as noted above, the domestic situation really needs the president's focus. What the heck are we doing in Afghanistan and Pakistan? Wasting money, time and lives. That's what. Thank God Donilon is on board. He sounds like he'll start to give the president some much needed sane, sound and sage advice. It's about time.

NEW DEAL PROJECT: The One Million People Hired Initiative

President Obama should announce a new Initiative pilot program called: The One Million New Hires initiative.

This should be a part of his Millennium New Deal Project that is funded by the tax payers. This proposal should be studied first by smart advisers to the president to see how it can be executed. Some of these jobs can be just above minimum wage paid to student interns who are going to be the new Calvary against terrorism. They are going to study things like Arabic, Cyberterrorism, and even, Islamic religions and culture. They will also study Chinese languages, Chinese culture and other subjects involving energy, green technology, and the Environment. The government wants only the best and the brightest, obviously, so competition will be fierce among students to have the best grades possible. During their study, they will extern at various companies and agencies that will help to develop their skill sets that will be used to further America's war against Terrorism, Competition with China, and Saving the global environment from the clear and present danger of human extinction.

Not every one of the million jobs will be going to students, necessarily. Some will go to small businesses. Not only existing businesses, but also businesses that have not yet been created. It's about giving people the incentive to create and innovate.

What do you think about this idea?