Adam Carr of ICAP really hits the nail on the head with this critique of US excuses for the GFC, which Paul Krugman has been keen to peddle:
"We’re not far way from some fairly important meetings on exchange rates, although whether anything comes out of them is another thing. I suspect not if Treasury Secretary Geithner’s comments are anything to go by. Without even smirking, he said that exchange rates should be flexible and that large countries with trade surpluses (ie China) should allow their currencies to appreciate, rely less on export driven growth and stimulate domestic demand. ie America’s economic problems are the fault of the Asian economies and in particular China. In the US view, it is /was the penchant of many Asian nations to prudently save that forced US consumers to gear up beyond any sensible level. This apparently is why the US has a trade deficit – Asian savings and China’s decision to allow the Yuan to appreciate in an orderly way. It’s obviously impossible to hold a sensible discussion on exchange rates with this level of delusion. Until the US can face up to the fact that their own economic policies caused the GFC, that it is the savings/consumption decision of their own citizens that drives the US trade deficit and that the value of the Yuan is nearly irrelevant for any of this, there is little hope for a reasonable outcome. The US needs to stop blaming others for self inflicted problems."
