Well… no more hedging on currency from Obama it seems.

The Group of 20 major economies took initial steps to address imbalances in the global economy on Friday. But they did not act as assertively as President Obama had hoped, and he left little doubt that he considered one country, China, the primary source of the problem.

Scrapping a longtime practice of speaking with diplomatic caution about China’s currency policy, Mr. Obama accused Beijing of intervening aggressively to keep its currency, the renminbi, below its market value to promote exports. He said it was a mistake for nations to think that “their path to prosperity is paved simply with exports to the United States.”

Hopefully this provides Harry Reid with the impetus to bring currency reform to a vote in the Senate during the lame duck session, which is imperative.

And for those people saying it is just some savings problem, or the market working:

Mr. Obama appeared to remove the remaining wiggle room he had on the subject of the renminbi, declaring: “It is undervalued. And China spends enormous amounts of money intervening in the market to keep it undervalued.”

That really is the clincher in responding to the currency apologists.  China buys $1-2B per day to maintain its peg.  It is government intentional action.  It is cheating.

If the Administration wants to fix the economy, we can’t be the consumer of last resort.  If you want the private economy to grow, then we need balanced trade and then net exports.  The election had some hard lessons, and perhaps this is a lesson learned.  (Oh, by the way, Larry Summers is gone.  There seems to be a bit of a change since he went to spend more time with his family).

China, Germany and other net exporters will squawk.  But we control our own destiny.  Our credit cards can’t fund their growth anymore.