Posts Tagged ‘U.S. Treasury’

U.S. Treasury Declines to Label China a Currency Manipulator

October 18, 2017

Nation remains on formal Monitoring List, along with Japan, South Korea, Germany and Switzerland

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The U.S. Treasury again declined to label China a currency manipulator, though it continued to criticize Beijing for its large trade surplus and restrictions on foreign investors.

“Treasury remains concerned by the lack of progress made in reducing the bilateral trade surplus with the United States,” the department said of China in its semiannual report on international exchange rates. “China should take concrete steps to level the playing field for American workers and firms.”

The Treasury Department’s report, released Tuesday, is the document in which Washington could formally criticize Beijing for manipulating the yuan lower in an effort to boost its exports. As a candidate, President Donald Trump said he would label China as a currency manipulator, but this is now the second of the semiannual reports in which his administration has declined to make the designation, a label that may have led to a deepening trade confrontation. The U.S. also is trying to encourage China to work with it in cracking down on trade and finance flows to North Korea.

The U.S. gave China credit for allowing the yuan to rise this year and noted that China’s trade surplus has been narrowing.

The report kept China on the Treasury’s formal Monitoring List, which is what the U.S. uses to place countries on notice that the government considers their currency and other economic policies to be putting the U.S. at unfair disadvantage.


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Since the spring, the Treasury has removed Taiwan from its monitoring list. It has continued to keep Japan, South Korea, Germany and Switzerland on it.

In removing Taiwa n from the watch list, Treasury cited the progress Taiwan has made in reducing the scale of its foreign-exchange interventions.

Placement on the list can trigger sanctions if the countries satisfy three criteria: persistently intervening in currency markets, running a significant trade surplus with the U.S. and running a large current account surplus overall. None of the countries met all three criteria.

The five countries remaining on the watchlist—China, Japan, South Korea, Germany and Switzerland—all trigger some of the criteria.

In blaming China for currency manipulation during his presidential campaign, Donald Trump may have been fighting the last battle: China’s visions are far more potent and complex. Photo: Getty

The report faulted China for running the largest bilateral surplus with the U.S., and faulted Germany, Japan and South Korea for its U.S. surpluses and overall surpluses. Germany now runs the world’s largest current account surplus. Switzerland has a large current account balance and intervened heavily in its exchange markets, but runs a relatively small trade surplus with the U.S.

“The administration remains deeply concerned by the significant imbalances in the global economy,” the report said. “More broadly, current account surpluses in several major trading partners have not only been large but unusually persistent over the last decade.”

The report also added criticism of India, saying that there has been “a notable increase in the scale and persistence of India’s net foreign exchange purchases.”

Although it didn’t formally add India to its monitoring list, it said “Treasury will be closely monitoring India’s foreign exchange and macroeconomic policies.”

Write to Josh Zumbrun at


China is stumbling hard at acquiring the high-tech chip companies it wants so badly

September 16, 2017

September 14, 2017

US president Donald Trump yesterday (Sept. 13) vetoed a Chinese private-equity firm’s proposed $1.3 billion purchase of Lattice Semiconductor, an Oregon-based chip manufacturer.

The deal’s failure marks the latest instance where foreign governments have pushed back against China’s efforts to acquire technology assets in their country, as China invests heavily in hardware and software companies at home and abroad.

The semiconductor industry in particular has been a focus of China’s ambitions, as chips are the brains of nearly every electronic device. But as of 2014, China still imported 90% of its semiconductors. As a result, the country has gone on a spending spree, buying up semiconductor companies all over the world.

Many of these deals have fallen through, however, due to pressure from the Committee on Foreign Investment in the United States (CFIUS), an inter-agency branch of the Treasury that examines foreign purchases of domestic companies and assesses their potential impact on national security. While CFIUS does not “block” deals outright, it can make “recommendations” to both parties involved that the deal ought to be terminated. If necessary, CFIUS will refer cases to the president, who then holds the power to veto the deals—which is what happened with Lattice.

Lattice marks the seventh such major deal that has collapsed since mid-2015, and it’s the second to be vetoed by the US president within that period. This list shows just how badly China is failing at acquiring foreign semiconductor technology.


The largest attempted Chinese takeover of a US semiconductor maker began in July 2015, when media revealed that Tsinghua Unigroup, a state-affiliated Chinese chipmaker with ties to with Tsinghua University in Beijing, wanted to buy Idaho-based Micron. Tsinghua Unigroup reportedly had put up $23 billion (paywall) to purchase the company.

Micron made it clear it was cold on the deal from the get-go. Just days after Tsinghua Unigroup’s bid hit news outlets, a source at Micron told Reuters the deal was likely not possible as CFIUS would probably recommend against it. In August that year, senator Chuck Schumer, a frequent critic of China, directly called on CFIUS to formally investigatethe potential acquisition.

But the deal didn’t even get that far. Despite reports that Tsinghua’s chairman travelled to the US to talk to Micron, no further details about a deal emerged until November 2016, when Tsinghua confirmed it was not in any talks with the Idaho company.

Had both sides reached an agreement, the deal would have carried historic implications for the US tech industry. Micron to this day remains the last major US-based manufacturer of DRAM flash memory, a critical component in nearly all consumer electronic devices. Its American rivals all ceded ground to competitors in Japan, Korea, and Taiwan.

Fairchild Semiconductor

In December 2015, state-affiliated conglomerate China Resources Holdings made an unsolicited offer to purchase Fairchild Semiconductor, one of the oldest companies in Silicon Valley. The Chinese investors proposed paying $2.5 billion for the company, equivalent to $21.70 per share, a premium over what rival bidder, US-based On Semiconductor, had offered earlier. The Chinese suitors also offered a $108 million reverse termination fee in the event that CFIUS recommended against the purchase.

Despite the markup and the guarantee, Fairchild refused the offer in February 2016, stating that the deal presented an “unacceptable level of risk” of failing should it ever reach CFIUS. It ended up being sold to On Semiconductor in September 2016.


In March 2015, Dutch electronics giant Philips, which is also listed in the US, announced it intended to sell an 80% stake in Lumiled, a subsidiary that manufactures LEDs (light-emitting diodes), a semiconductor, to a Chinese consortium known as GO Scale Capital for $3.3 billion. In October, however, the company stated in its latest earnings report that CFIUS had “expressed certain unforeseen concerns” towards the deal, which could ultimately kill it.

The bid was dead by January 2016. “I am very disappointed about this outcome as this was a very good deal for both Lumileds and the GO Scale Capital-led consortium,” said Philips CEO Frans van Houten. While LEDs are generally associated with lighting, according to the New York Times, CFIUS held concerns that the gallium nitride used to make the components could also be used by China’s military (paywall). Philips eventually agreed to sell Lumiled to US-based private-equity firm Apollo Global Management in December 2016, at a discounted price of $2 billion.

Western Digital

In September 2015 Tsinghua Unisplendour, owned by the same parent as Tsinghua Unigroup, announced it intended to pay $3.78 billion for a 15% stake in Western Digital, the semiconductor maker best known for its hard-disk drive business. The company told investors it did not expect the deal to be subject to a CFIUS review because the stake was non-controlling. But in February 2016 Tsinghua backed out of the deal(paywall) once it became clear that a probe was indeed forthcoming. The two companies’ relationship didn’t end there, however. In September 2016 Western Digital and Tsinghua Unisplendour announced they had formed a China-based joint venture with Tsinghua as the majority shareholder.


In March 2016, California-based, Taiwan-listed semiconductor maker GCS announced it was in talks to be purchased by Sanan Optoelectronics, a Chinese maker of LED wafers and solar cells, for $226 million. In August, GCS confirmed that the deal had fallen through due to pressure from CFIUS. The body did not state its specific objections, but they likely stemmed from GCS’s contracts with the US military. Like Western Digital, GCS opted to form a joint venture with its Chinese suitor as an alternative.


In May 2016 China’s Fujian Grand Chip announced it had agreed to buy Germany’s Aixtron, a maker of semiconductor manufacturing equipment, for $752 million. In November, Aixtron announced that CFIUS told both parties there were “unresolved U.S. national security concerns regarding the proposed transaction.” Rather than kill the deal, Aixtron and Fujian Grand Chip said they would appeal the recommendation directly to president Barack Obama—who sided with CFIUS. The White House said that there was “credible evidence” that Fujian Grand Chip “might take action that threatens to impair the national security of the United States.” The process—a CFIUS warning, an appeal to the president, and then a veto–was the same process that led to the collapse of the Lattice deal.

China is stumbling hard at acquiring the high-tech chip companies it wants so badly

Read next: A fund linked to the tech deal Trump just vetoed is an investor in China’s national security

Donald Trump Faults GOP Leadership for Looming Debt Ceiling ‘Mess’

August 24, 2017

Treasury officials have said Congress must raise borrowing limit by the end of September

Image result for Secretary of the Treasury, Steven Mnuchin, with President Trump, photos

Updated Aug. 24, 2017 10:34 a.m. ET

President Donald Trump on Thursday blamed the congressional Republican leadership for what he called the “mess” awaiting lawmakers this fall as they seek to raise the government’s borrowing limit, the latest criticism by the president on members of his own party.

“I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill (which just passed) for easy approval,” Mr. Trump tweeted Thursday morning, referring to Senate Majority Leader Mitch McConnell (R., Ky.) and House Speaker Paul Ryan (R., Wis.) “They didn’t do it so now we have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy-now a mess!”

Republicans have in the past balked at voting to raise the debt limit, forcing GOP leaders to turn to Democrats for the votes for the must-pass legislation. The debt ceiling increase allows the government to pay the bills stemming from past spending and tax decisions. Republicans need Democratic votes in the Senate to reach the 60-vote threshold to pass a debt ceiling increase.

Spokesmen for Messrs. McConnell and Ryan didn’t immediately respond to requests for comment on Thursday.

Treasury officials have said Congress must raise the government’s borrowing limit at some point near the end of September. If Congress doesn’t raise the debt ceiling to allow new borrowing, the U.S. could default on its debt or miss payments for benefits and salaries.

Republicans earlier in the summer were considering tying an increase in the federal debt limit to a bill extending funding for a program that lets military veterans get medical care outside of Department of Veterans Affairs facilities, people familiar with the idea said.

Write to Rebecca Ballhaus at and Kristina Peterson at


U.S. Freezes Assets of Venezuelan President Nicolás Maduro

August 1, 2017

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Treasury Secretary Steven Mnuchin, left, national security adviser H.R. McMaster, right, speak at the beginning of the daily briefing at the White House in Washington, Monday, July 31, 2017, on the situation in Venezuela. (AP Photo/Susan Walsh)

The U.S. Treasury Department announced Monday it has frozen the assets of and sanctioned Venezuela President Nicolas Maduro for undermining democracy in going ahead with elections on Sunday for a new legislative assembly. “Yesterday’s illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people,” said Treasury Secretary Steven Mnuchin in a statement. Under the sanctions, U.S. banks are prohibited from dealing with Maduro.


U.S. Freezes Assets of Venezuelan President Nicolás Maduro

The Treasury Department cites human rights violations

Venezuelan President Nicolas Maduro celebrating election results Monday in Caracas, Venezuela.
Venezuelan President Nicolas Maduro celebrating election results Monday in Caracas, Venezuela. PHOTO: NATHALIE SAYAGO/EUROPEAN PRESSPHOTO AGENCY

Updated July 31, 2017 5:57 p.m. ET

The U.S. imposed sanctions against Venezuelan President Nicolás Maduro on Monday, saying his government abused human rights and organized an illegitimate vote designed to advance an authoritarian regime, as the leader threatened his domestic opponents with imprisonment.

The U.S. Treasury Department’s move freezes any assets Mr. Maduro has within American jurisdiction, putting him in a small club of leaders it targets including North Korea’s Kim Jong Un, Zimbabwe’s Robert Mugabe and Syria’s Bashar al-Assad.

It was unclear if Mr. Maduro had any U.S.-linked assets but the designation bans his access to the U.S. financial and commercial markets and prohibits any American entity from conducting business with him.

Caracas said 8.1 million people voted on Sunday to choose delegates to form an assemblyto write a new national charter. The results drew scorn from many Venezuelans and condemnation from governments in Europe and the Americas who say the assembly will give the government unchecked authority.

The results were a foregone conclusion, since voters had been asked to choose 545 delegates from 6,000 candidates handpicked by the ruling party. Critics of the vote said it also was plagued by a lack of independent observers and safeguards to prevent people from casting multiple ballots.

“Yesterday’s illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people,” U.S. Treasury Secretary Steven Mnuchin said, adding that Caracas used violence, repression and corruption to cow his opponents. The Treasury warned that any officials connected with the constituent assembly created in Sunday’s vote also risk U.S. sanctions.

The Treasury didn’t impose oil-related sanctions even though senior U.S. officials had warned they were considering a ban of the petroleum trade with Venezuela if Mr. Maduro moved ahead with the constituent assembly.

National Security Adviser Lt. Gen. H. R. McMaster signaled at a White House press conference that the U.S. administration showed restraint out of concern some U.S. penalties could hurt ordinary Venezuelans. Mr. Trump is “only considering those options that would benefit directly the Venezuelan people,” Mr. McMaster said.

Last week, the U.S. leveled sanctions on 13 high-ranking Venezuelan officials for alleged corruption, human-rights violations and undermining the country’s democracy, warning that any individuals who became members of the constituent assembly risked being added to the U.S. sanctions list.

Analysts and people familiar with the matter say the latest sanctions are part of a broader set of escalating actions that politically isolate the Maduro government and complicate any of its efforts to raise fresh funds or sign new deals through state-owned entities.

“It shows the seriousness of the administration’s concerns and sends a message that the constituent assembly is not going to be accepted,” said Mark Schneider, a senior adviser at the Center for Strategic and International Studies and former top State Department official.

Mr. Maduro, a 54year-old former bus driver and union leader, was handpicked by his mentor, the late strongman Hugo Chávez. A former lawmaker who helped rewrite the constitution in 1999 under Mr. Chávez, Mr. Maduro served several years as Venezuela’s foreign minister and vice president.

Since taking office in 2013, Mr. Maduro has presided over a nation in disarray. The country´s economic meltdown intensified due to years of mismanagement and a sharp drop in oil prices, the country’s sole source of hard currency. Soaring inflation and severe shortages of food and medicine have led to widespread turmoil and an exodus of Venezuelans from the country. On Monday, he threatened to imprison his adversaries with imprisonment.

“Some will end up in a jail cell,” Mr. Maduro said. “We are going to write a new history.”

Mr. Maduro also said he would look to force the opposition to sit down for negotiations through a so-called truth commission that he previously said would be created by the new constituent assembly. Though he made his comments in a threatening manner, Stalin González, an opposition member of congress, said that the two sides needed to embark on real negotiations.

“An accord has to be the way out,” he said. “Today we have to bet on an accord being a possibility.”

Rhetoric on both sides portended heightened instability in a nation racked by protests. Ten more people died in confrontations between protesters and security forces on Sunday.

Still, the government deemed the vote a resounding success that would allow it to calm unrest and improve the economy. Mr. Maduro has done little, though, to clarify how the government would make corrections, since economists say state controls of the economy, including stringent price controls, are to blame.

“Now is the time to keep fighting in Venezuela for peace, for free elections,” Julio Borges, head of the opposition-led National Assembly, said in a television interview on Monday. “Maduro is behaving like an emperor.”

While many in the opposition despaired at what they said was an increasingly autocratic tint to the Maduro administration, others worried that a government saddled with a collapsing economy and low popularity risks collapse.

Francisco Rodríguez, who has strong links with government and opposition officials here and is the chief economist at New York-based brokerage Torino, said that as support for the administration declines, it may not be able to maintain its hold power “even with the institutions of an authoritarian state.”

“In other words,” he said in a note to client, “even non-democratic governments require some level of political support for their grasp on power to be stable, and it is unclear whether the government’s current numbers are still above that threshold.”

Write to Ian Talley at, Juan Forero at and Anatoly Kurmanaev at

Appeared in the August 1, 2017, print edition as ‘U.S. Hits Maduro With New Curbs.’


U.S. Treasury Stops Short of Calling China a Currency Manipulator

April 15, 2017

Department’s report does sharply criticize Chinese exchange-rate policies

Chinese 100-yuan notes being counted in Hong Kong. The U.S. Treasury Department said China would remain on a ‘monitoring list’ of trade partners with policies deemed to be a risk to the U.S. economy.

Chinese 100-yuan notes being counted in Hong Kong. The U.S. Treasury Department said China would remain on a ‘monitoring list’ of trade partners with policies deemed to be a risk to the U.S. economy. PHOTO: XAUME OLLEROS/BLOOMBERG NEWS

WASHINGTON—The U.S. Treasury sharply criticized China’s exchange-rate policies on Friday, though it stopped short of labeling the Asian trade giant a currency manipulator, as President Donald Trump said he would do while running for office.

“China has a long track record of engaging in persistent, large-scale, one-way foreign-exchange intervention,” the Treasury Department said in its semiannual report on foreign exchange policies of major U.S. trade partners. Although Beijing has allowed the yuan to slowly appreciate in recent years and actively fought depreciation recently, its past interventions “imposed significant and long-lasting hardship on American workers and companies,” the Treasury said.

The report followed an apparent warming of relations between the U.S. and China following a visit to Washington and Mr. Trump’s Mar-a-Lago resort by Chinese leader Xi Jinping last week. Mr. Trump is counting on Mr. Xi for support in a confrontation with North Korea. After the visit, Mr. Trump told The Wall Street Journal he wouldn’t name China a currency manipulator, a label that may have led to a deepening trade confrontation.

Still, the administration sought to stick to some of the tough themes Mr. Trump laid out as a candidate and as president on trade and currency.

“Treasury will be scrutinizing China’s trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the United States,” the Treasury report said.

The report has traditionally been used as a diplomatic tool to prod other countries whose currency policies were deemed a threat to U.S. industries. The latest report’s censure of China and other countries, including South Korea and Germany, could be used in the future as a pretext for new tariffs.

“Treasury is committed to aggressively and vigilantly monitoring and combating unfair currency practices,” the report said.

Preserving a two-decade precedent, no country was named a currency manipulator.

Along with Friday’s about-face was an acknowledgment by Mr. Trump and his team that Beijing has been propping the yuan up over the last two years, instead of pushing it down as the president had previously alleged. Building debt problems and a slowing economy has put downward pressure on the yuan, forcing the central bank to burn through $1 trillion, or a quarter of its foreign-exchange reserves, to keep the currency from falling.

“The administration clearly realized this was not the right time to have a fight with China over currency,” said Brad Setser, a senior fellow at the Council on Foreign Relations and a former senior U.S. Treasury official in the Obama administration.

Still, “there’s a clear suggestion that China needs to do more to open up its markets to U.S. goods and services,” Mr. Setser said. “The challenge will be getting real changes that have a real impact on the size of U.S. exports to China.”

Most Western economists agree Chinese authorities in the past used an undervalued exchange rate to help fuel its rise to being the No. 2 economy in the world. A cheaper currency makes products less expensive to produce and more attractive to buyers overseas. That was an essential factor in making China the world’s biggest manufacturing base, but it cost the U.S. and other countries millions of jobs.

During his campaign, Mr. Trump tapped into anger at China that was pent up in major manufacturing states, saying he would label the country a currency manipulator and slap fresh tariffs on its imports.

Amid rising concerns about an increasingly belligerent North Korea sparking a dangerous conflict with U.S. allies Asia, Mr. Trump earlier this week said he decided to treat Beijing with more leniency on trade and currency in exchange for Beijing’s help in reining in Pyongyang.

China was not alone in being targeted in Treasury’s latest report.

Repeating criticisms made under the Obama administration, the Treasury Department also kept China, Japan, South Korea, Taiwan, Germany and Switzerland on a special “monitoring list” that flags trade partners with currency and other economic policies deemed to be a risk to the U.S. economy.

The name-and-shame list can trigger sanctions against offending trade partners if the countries can be shown to intervene in foreign-exchange markets and maintain large trade surpluses with the U.S. and rest of the world. None of the countries met all of the criteria.

Japan and South Korea, two major U.S. trade partners, have long been on Treasury’s radar in part because they have pushed down the value of their currencies in the past. And even though Germany doesn’t control the value of the euro because it is only one member of the European currency union, the country has been targeted because its economic policies and a relatively weak euro have helped the country to achieve the world’s largest trade surplus.

Future reports could step up the criticism, given Treasury’s latitude under the original laws guiding the report to Congress.

China could again allow the yuan to fall, triggering fresh criticism from U.S. manufacturers and renewed political pressure on the administration to label them a manipulator. There are costs to keeping the yuan stable beyond selling exchange-rate reserves. It also makes it harder for the government to meet its growth targets.

Also, the Commerce Department is preparing a study of why the U.S. has such large trade deficits with other nations, and some analysts believe that could lay the foundation for applying countervailing duties against countries that manipulate their currencies. The exchange-rate undervaluation, under a proposal the Commerce Department is considering, would be considered a subsidy.

While some trade experts question whether that plan would be compliant with current World Trade Organization rules, the administration could still use it as a pretense for levying across-the-board tariffs on imports from a currency-manipulating country.

Although many of the findings in the report repeated the basic assessments made under the Obama administration, the report still carried a distinct Trump administration tone. For example, it used sharper language in its warning trade partners against exchange-rate offenses.

“Though there has been a trend in the last two years towards reduced currency intervention by key trading partners, it is critical that this not represent merely an opportunistic response to shifting global macroeconomic conditions…but a durable policy shift away from foreign-exchange policies that facilitate unfair competitive advantage,” the report said.

“The United States cannot and will not bear the burden of an international trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates,” it added.

Write to Ian Talley at


Trump’s Currency Complaints Hit Unexpected Targets

February 17, 2017

Top-five trading partners China, Japan and Germany brush them off; Taiwan and Switzerland seem to be paying heed


Feb. 17, 2017 3:47 a.m. ET

HONG KONG—U.S. President Donald Trump’s accusations of currency manipulation appear to be reaching an audience he may not have primarily intended.

Mr. Trump vowed on the campaign trail to revive American manufacturing, in part by taking a hard line on Chinese trade practices and labeling the country a currency manipulator. Since taking office, the president has accused both China and Japan of consistently devaluing their currencies,…

Mr. Trump vowed on the campaign trail to revive American manufacturing, in part by taking a hard line on Chinese trade practices and labeling the country a currency manipulator. Since taking office, the president has accused both China and Japan of consistently devaluing their currencies , while his top trade adviser Peter Navarro has accused Germany of benefiting from what he termed the “grossly undervalued” euro .

All three countries, which rank among the U.S.’s top five trading partners, have brushed off the Trump administration’s claims.

“No one has the right to tell us that the yen is weak,” Japan’s finance minister Taro Aso told parliament on Wednesday, following last weekend’s meeting between Mr. Trump and Prime Minister Shinzo Abe . Japan hasn’t directly intervened in currency markets since 2011 following a major tsunami and resulting Fukushima nuclear disaster.

“The charge that Germany exploits the U.S. and other countries with an undervalued currency is more than absurd,” Jens Weidmann , the president of the German central bank, said earlier this month.

China hasn’t directly commented on Mr. Trump’s criticisms, but most analysts say Beijing recently has been propping up the yuan by selling foreign-currency reserves rather than looking to weaken it.

Still, some smaller economies look like they are taking notice, notably Taiwan and Switzerland. The U.S. Treasury found in October that both had engaged in persistent, one-way currency intervention, essentially by buying foreign currencies like the U.S. dollar and selling their own to maintain weak exchange rates.

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Analysts say the central banks of Switzerland and Taiwan are now stepping back from those activities, perhaps to avoid closer scrutiny from the Trump administration. The upshot: The Swiss franc has advanced nearly 2% against the U.S. dollar this year, while the new Taiwan dollar has surged 5.3%. Both have outperformed the euro and yen since the U.S. election in early November.

Taiwan’s central bank bought $500 million in foreign currencies in the fourth quarter, well below its quarterly average of more than $3 billion since 2012, according to Khoon Goh , head of Asia research at ANZ in Singapore, who said he suspects it is stepping back from “currency-smoothing operations.” The central bank said it doesn’t comment on currency policy.

For the first nine months of last year, the Swiss National Bank /quotes/zigman/1379668/delayed CH:SNBN +0.12% intervened heavily in currency markets to slow the franc’s rise, spending an amount roughly equivalent to its current-account surplus for the period, J.P. Morgan/quotes/zigman/272085/composite JPM -0.76% analysts note. Over the following four months, the scale dropped to around two-thirds of the surplus.

“It’s not an entirely fanciful suggestion that the SNB might be tapering intervention in order to the guard against the risk of being cited by the U.S. Treasury as a currency manipulator,” the analysts wrote in a note.

The Swiss National Bank declined to comment.

For the U.S. to label an economy a currency manipulator under the current law, it must have a large trade surplus with the U.S. and a hefty current-account surplus and persistently intervene in the currency in one direction. As of October, no economies met all three criteria.

Recent comments from officials in South Korea, which the Treasury has flagged for its hefty trade surplus with the U.S. and its current-account surplus, suggest they’re similarly eager to avoid U.S. ire, says Govinda Finn , senior analyst at Standard Life Investments in Edinburgh. The Korean won has surged 5.2% against the dollar this year.

But any gains in the Korean and Taiwanese currencies due to U.S. political pressure may not last, he said: “On a longer-term horizon, there’s a pretty strong case to say both of those currencies can and will weaken as the authorities look to support their economies.”

Jenny W. Hsu contributed to this article.

Write to Saumya Vaishampayan at

The CIA Keeps Putin’s Secrets

January 4, 2017

Western governments stayed silent on the U.K. polonium murder of a Putin critic.

The Russian president in Saint Petersburg, Russia, Dec. 26.

 The Russian president in Saint Petersburg, Russia, Dec. 26. PHOTO: GETTY IMAGES

Jan. 3, 2017 7:05 p.m. ET

Here’s one more way U.S. intelligence on Russia may not be up to snuff. Many would like President Obama to repay Russian hacking by releasing secret details of Vladimir Putin’s stolen wealth, estimated at up to $160 billion. They may be disappointed to learn the data don’t exist.

The idea of weakening Mr. Putin by laying out his secrets is a good one. We proposed it here three years ago. But even then, when the U.S. Treasury announced sanctions on Mr. Putin’s “personal bank” after his Crimea grab, it was quoting the 10-year-old allegation of one of Mr. Putin’s domestic opponents. Treasury revealed nothing you couldn’t find from Google.

A second problem may be that Mr. Putin actually owns title to nothing. At least in the latter stages of Russia’s kleptocracy, he merely points to things and people give them to him. Recall Patriots owner Robert Kraft at first acquiescing in the politely diplomatic storyline that he gave his 2005 Super Bowl ring to Mr. Putin as a gift. Later, Mr. Kraft came clean: Mr. Putin asked to try the ring on, then “put it in his pocket, and three KGB guys got around him and walked out.”

The extreme murkiness of who owns what, and for how long, under Putin sufferance is illustrated by the financial coup with which he ended 2016.

To relieve a strained Russian budget and show the country’s appeal to Western investors, his underlings arranged a partial privatization of state-owned oil giant Rosneft. Yet the Italian bank supposedly financing the purchase admitted it was still mulling whether to participate. The key Western participant, Anglo-Swiss mining giant Glencore, was revealed in the Russian press to be off the hook for most of the cash for its $5 billion stake: “Russian banks provided it an exemption from this obligation.”

So where the money came from and who might end up owning many of the shares is about as clear as mud.

Still, critics are not wrong to suspect Mr. Putin is sensitive to corruption allegations. Nobody predicted the Arab Spring, the Ukrainian revolution, the fall of Gadhafi, etc. Mr. Putin cannot be certain when a public eruption might sweep him from his throne.

Igor Sechin, the Rosneft chief and Mr. Putin’s No. 1 ally, has been flinging lawsuits in all directions to suppress Russian media reports about his mansions and yachts. A billion-dollar palace on the Black Sea, allegedly built for Mr. Putin with diverted hospital funds, has been shrouded in murky transactions. Reportedly the property is now owned by a friendly businessman who paid many times its market value.

At least the CIA ought to have complete files on Mr. Putin’s early days when Russia’s media culture was wide open and free-wheeling. His alleged involvement in the disappearance of $93 million in food money as deputy mayor of St. Petersburg was documented by a special committee of the city’s elected legislature.

Ditto the 1999 apartment block bombings that killed 293 Russians and helped cinch his election as president. Even before the attacks, reputable European and Russian newspapers in Moscow reported that such outrages were being planned by Russia’s secret police. Several subsequent scholarly and journalistic studies have endorsed the view that these “terrorist” acts were actually engineered by Mr. Putin’s supporters.

U.S. intelligence agencies surely have definitive estimates on both of these episodes. The CIA may also be able to tell us more than we already know about many convenient murders and suspicious deaths that greased Mr. Putin’s rise and protected him from inopportune disclosures.

OK, let us stop kidding ourselves. Let Rep. Adam Schiff, a top Democrat calling for exposure of Putin secrets, stop kidding himself. Western governments have kept silent even on the polonium murder in London of dissident Alexander Litvinenko, an act of international nuclear terrorism. Why? Because they are unwilling to press hard on the Putin regime, fearing either blowback or his replacement by the devil they don’t know.

Mr. Obama’s sanctions have been precisely calibrated with these fears in mind, and Donald Trump brings only so much room for change. Rest your mind: Nothing in “The Art of the Deal” suggests Mr. Trump would voluntarily surrender the leverage Mr. Obama’s existing sanctions give him in future dealings with Mr. Putin. At the same time, he will stop accommodating Mr. Putin by supplying loud but weak rhetoric that Mr. Putin can play back to the Russian people as evidence the U.S. represents a geostrategic threat that Mr. Putin is manfully and victoriously outwitting.

The best and likeliest outcome if Mr. Trump is successful is that Mr. Putin will stop being an international problem in the run-up to his own re-election in 2018 and a year or so thereafter. Mr. Trump will be freer to concentrate on domestic reform and reacting to whatever emergencies the European Union inevitably throws up in the new year.

This holiday will be temporary. Mr. Putin, who has no realistic hope for a peaceful retirement, and whose society and economy are rotting out from under him, is almost certain to be a bane for the world and Russia in the coming decade.


IranAir to buy 80 Boeing planes in biggest US deal since Islamic revolution

December 11, 2016

Reuters and AFP

© Paul J. Richards, AFP


Latest update : 2016-12-11

IranAir said it signed a deal on Sunday to buy 80 passenger planes from U.S. aircraft maker Boeing, state news agency IRNA reported, in the biggest U.S.-Iran deal since the 1979 Islamic revolution.

The agency quoted Farhad Parvaresh, the chairman of Iran’s flag carrier, as saying that the 10-year deal included 50 Boeing 737 aircraft and 30 777 planes.
Boeing said in June it had signed a tentative agreement to sell 100 jets to IranAir after Iranian statements about the deal.

IRNA said that Fletcher Barkdull, a Boeing regional director, was in Tehran for the signing ceremony. The agency quoted Barkdull as saying that the deal was worth $16.6 billion and had been approved by the U.S. government.

In November, the U.S. House of Representatives passed a bill intending to block the sale of commercial aircraft to Iran, that would bar the U.S. Treasury from issuing licences that U.S. banks would need to finance sales of commercial aircraft.

Congressional Republicans are making efforts to counter last year’s nuclear accord between Iran, the United States and other world powers, that eased sanctions on the Islamic Republic.

The Boeing deal would help modernise and expand the Iran’s ageing fleet, kept going by smuggled or improvised parts after decades of sanctions.

Boeing 777 being built


China Holdings of U.S. Treasuries Drop to Almost Four-Year Low

October 19, 2016

By Scott Lanman

October 18, 2016 — 4:00 PM EDT

China’s holdings of U.S. Treasuries fell to the lowest level since November 2012, as the world’s second-largest economy draws down its foreign reserves to prop up the yuan.

The biggest foreign holder of U.S. government debt had $1.19 trillion in bonds, notes and bills in August, down $33.7 billion from the prior month, the biggest drop since 2013, according to U.S. Treasury Department data released Tuesday in Washington and previous figures compiled by Bloomberg.

The portfolio of Japan, the largest holder after China, fell for the first time in three months, down $10.6 billion to $1.14 trillion. Saudi Arabia’s holdings of Treasuries declined for a seventh straight month, to $93 billion.

China sold an estimated $570 billion in foreign-exchange assets from August 2015 to August 2016 in an effort to keep the currency from plunging, according to an estimate by the U.S. Treasury released last week. It reiterated that China’s efforts to support the yuan were preventing a rapid depreciation that would hurt the global economy.

China’s foreign-exchange reserves fell $16 billion to $3.19 trillion in August, and are down from a peak of close to $4 trillion in 2014. The reserves dropped another $19 billion in September to the lowest level since 2011.

The report, which also contains data on international capital flows, showed net foreign buying of long-term securities totaling $48.3 billion in August. It showed a total cross-border inflow, including short-term securities such as Treasury bills and stock swaps, of $73.8 billion.

Net foreign selling of U.S. Treasuries was $24.8 billion in August, while foreigners purchased a net $2.73 billion in equities, $22.8 billion of corporate debt and $29.6 billion in agency debt, according to the report.

Liberal Media Insists Trumps’s Tax Records Tell Us He’s Evil — But The Truth Is, This Shows How Unfair The U.S. Tax Code Is (And It Drives Businesses Owners and Jobs To Leave America)

October 2, 2016

Trump Tax Return Shows He Could Have Avoided Taxes for 18 Years: NYT

How will NYT article about Donald Trump’s tax records impact race? 4:00

The New York Times has published documents it said were Donald Trump’s 1995 income tax returns, and the documents appear to show the businessman and GOP nominee reported a nearly $1 billion loss.

Trump declared a nearly $916 million loss on his 1995 state income tax returns according to the documents, the Times reported in an article posted online Saturday night.

An unsigned statement from the Trump campaign posted to its website late Saturday did not appear to deny or dispute a single fact in the Times story, but asserted the document was “illegally obtained.”

Trump himself tweeted early Sunday: “I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them.” Again, he did not deny or dispute the Times’ findings.

Three tax experts hired by the Times said the size of the deduction and tax rules governing wealthy filers could have allowed Trump to legally pay no federal income taxes for 18 years. There is nothing in the report that shows he actually took advantage of the rules to avoid paying taxes.

I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them. @nytimes

Trump has based his campaign on his experience as a successful businessman, vowing to rewrite trade agreements and make deals with other countries that would ensure jobs return to the U.S.

Trump has declined to release his tax returns, an issue which was raised by his Democratic rival Hillary Clinton at the Sept. 26 presidential debate.

Clinton at the debate suggested the returns might show Trump hasn’t paid any federal taxes, which Trump did not address.

When Clinton said a couple years of returns when Trump was trying to get a casino license showed he didn’t pay any federal income taxes, Trump interjected: “That makes me smart.”

The Clinton campaign pounced on the Times report. Campaign spokesman Brian Fallon tweeted: “Trump’s returns show just how lousy a businessman he is AND how long he may have avoided paying any taxes.”

The Times published the first pages New York, Connecticut and New Jersey state tax returns online. The newspaper said the three pages were emailed to reporter Susanne Craig last month.

Related: Tax Comments Are The Gift Trump Keeps Giving to Clinton

The Trump campaign in a statement after the report was published said the tax document was “illegally obtained.”

“The only news here is that the more than 20 year-old alleged tax document was illegally obtained, a further demonstration that the New York Times, like establishment media in general, is an extension of the Clinton Campaign, the Democratic Party and their global special interests,” the campaign said in a statement.

“Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required,” the statement continued. “That being said, Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes, along with very substantial charitable contributions.”

The Times also said a lawyer for Trump threatened legal action against the newspaper if the records were published, arguing in a letter to the Times that publishing records without Trump’s authorization would be illegal.

Related: Video of Trump Deposition in D.C. Hotel Feud Released

Trump’s tax returns have become a line of attack among Clinton and her supporters.

Vice President Joe Biden on the “The Tonight Show with Jimmy Fallon” on Thursday ripped Trump for his “that makes me smart” comment.

“What does that make the rest of us? Suckers? I really mean it. Think about it”, Biden told Fallon.

The tax experts hired by the Times said there is nothing in the 1995 documents that suggest any wrongdoing, the newspaper reported.

The Times said it showed the documents to an attorney who has handled Trump’s taxes for three decades, Jack Mitnick.

The paper reported that Mitnick said “This is legit,” referring to the documents.

The Trump campaign in its statement to NBC News criticizing the Times report Saturday used a version of a line he has used in his campaign.

“Mr. Trump knows the tax code far better than anyone who has ever run for President and he is the only one that knows how to fix it,” the campaign said.

Trump in announcing a tax plan in September of 2015, which he later scrapped, said: “I fight like hell to pay as little as possible. Can I say that? I’m not a politician. I fight like hell always because it’s an expense.”


We at Peace and Freedom will not join the mainstream media attack on Donald Trump. What his tax records expose is the failure of your U.S. government.

For decades, there has been a simmering debate on the “unfair” U.S. tax code.Yet the loopholes and problem areas have never been fixed.

The notoriously bad — and unfair — U.S. tax code has contributed to businesses and jobs moving away from American. The corporate leaders of Google (Alphabet), Apple and Pfizer can explain this better than most.

Every American should grow up and ask tougher questions like, “Why has the Obama Administration accused companies of being ‘unpatriotic’ when these businesses are only trying to make a profit amid a notoriously burdensome and unfair U.S. government — and that starts with the U.S. tax code and includes all the regulations President Obama has put into place — without Congressional debate or agreement — that further erodes the likelihood potential new-start companies from getting going and further encourages business owners to flee the U.S. — taking their jobs and tax revenues on to foreign shores.”

As Ronald Reagan said, “Government is not the solution. It’s the problem.”

John Francis Carey
Peace and Freedom



Trump Tax Records Obtained by The Times Reveal He Could Have Avoided Paying Taxes for Nearly Two Decades

Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by The New York Times show.

The 1995 tax records, never before disclosed, reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived from the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.

Tax experts hired by The Times to analyze Mr. Trump’s 1995 records said that tax rules especially advantageous to wealthy filers would have allowed Mr. Trump to use his $916 million loss to cancel out an equivalent amount of taxable income over an 18-year period.