Japan has become the latest scapegoat for protectionist rhetoric in Washington, as Congress urges Treasury Secretary Hank Paulson to use this week's meeting of G7 finance ministers to accuse Tokyo of fixing the exchange rate of the yen.
With the Democrats keen to make their mark on Capitol Hill after their victory in November's elections, Michigan Congressman John Dingell sent the President a letter last week - publicised on his website under the title, 'Dingell to Bush: You Just Don't Get It' - urging the White House to prosecute Japan for currency manipulation.
The yen has sunk to four-year lows against the dollar, and the 'big three' US carmakers, Ford, GM and Chrysler, have argued that Tokyo is 'manipulating' the currency markets by talking down the yen, making imported Japanese cars unfairly cheap.
Asian governments have been subsidizing their exports with a cheap currency for some time now. How else do you think the Chinese have amassed about $1 trillion in US dollars. At the same time, the US has provided various subsidies to various industries over the same time (just look at all of the special interest tax deductions in the US tax code).
I don't have an exact answer for this situation -- Asian government's intervention. But, expect more along these lines for now.
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