11/19. Ben Bernanke, Chairman of the Federal Reserve Board (FRB) gave a speech in Frankfurt, Germany, titled "Rebalancing the Global Recovery".

It was long, technical, and diplomatic in tone. He did not employ the terms "currency manipulation" or "expiring tax cuts". He did not reference the Congress, Obama, liberals, conservatives, or the Tea Party by name. However, the speech constitutes criticisms of the policies of the People's Republic of China (PRC) with respect to currency undervaluation, and the failure of the US Congress and President to pursue appropriate fiscal policies. And, he compared current events to the events that lead to the depression of the 1930s. This is unusually frank talk for a FRB Chairman.

In short, he said there are "emerging market economies" (including the PRC) and "advanced economies" (including the US). There was a financial crisis, and a global recovery is underway. However, it is a "two-speed" recovery, with the emerging market economies growing much faster. As for national currencies, and exchange rates, governments in some emerging market economies have intervened to prevent their currencies from appreciating. This is causing problems for the global economic system, said Bernanke, and must be stopped.

He advised the governments of the PRC and other emerging market economies to adopt policies for the benefit of the US, other advanced economies, and the global economy as a whole.

Bernanke (at left) made the case for why this harms the advanced economies, and the global economic system generally. However, he also explained the logic of this strategy for certain emerging market economies. He conceded that "the emerging market economies that have largely let market forces determine their exchange rates have seen their competitiveness reduced relative to those emerging market economies that have intervened more aggressively".

Yet, the gist of his speech was that the emerging market economies should adhere to a system of market determined exchange rates. In the longer run, "a two-speed global recovery may not be sustainable". He warned that some government policies today resemble policies that lead to the depression of the 1930s.

He also implied that while the FRB is doing its part in the monetary policy arena, increased employment and higher economic growth in the US also depend upon the Congress and President adopting appropriate fiscal policies.

PR China. Bernanke said that "The global economy is now well into its second year of recovery from the deep recession", due in part to the collaboration of policy makers "in both advanced and emerging market economies". But, "In recent months, however, that sense of common purpose has waned."

He said that the problem arises in part from the "two-speed nature of the global recovery". He said that "since the recovery began, economic growth in the emerging market economies ... has far outstripped growth in the advanced economies ... These differences are partially attributable to longer-term differences in growth potential between the two groups of countries, but to a significant extent they also reflect the relatively weak pace of recovery thus far in the advanced economies".

"Indeed", said Bernanke, "for some emerging market economies, the crisis appears to have left little lasting imprint on growth. Notably, since the beginning of 2005, real output has risen more than 70 percent in China and about 55 percent in India."

He said that "in recent months, some officials in emerging market economies and elsewhere have argued that accommodative monetary policies in the advanced economies, especially the United States, have been producing negative spillover effects on their economies. In particular, they are concerned that advanced economy policies are inducing excessive capital inflows to the emerging market economies, inflows that in turn put unwelcome upward pressure on emerging market currencies and threaten to create asset price bubbles."

And now, "authorities in some emerging market economies have intervened in foreign exchange markets to prevent or slow the appreciation of their currencies".

"Judging from the changes in the real effective exchange rate", said Bernanke while referring to a chart, "the emerging market economies that have largely let market forces determine their exchange rates have seen their competitiveness reduced relative to those emerging market economies that have intervened more aggressively."

He offered his view of how things ought to be. "It is instructive to contrast this situation with what would happen in an international system in which exchange rates were allowed to fully reflect market fundamentals. In the current context, advanced economies would pursue accommodative monetary policies as needed to foster recovery and to guard against unwanted disinflation. At the same time, emerging market economies would tighten their own monetary policies to the degree needed to prevent overheating and inflation. The resulting increase in emerging market interest rates relative to those in the advanced economies would naturally lead to increased capital flows from advanced to emerging economies and, consequently, to currency appreciation in emerging market economies. This currency appreciation would in turn tend to reduce net exports and current account surpluses in the emerging markets, thus helping cool these rapidly growing economies while adding to demand in the advanced economies. Moreover, currency appreciation would help shift a greater proportion of domestic output toward satisfying domestic needs in emerging markets. The net result would be more balanced and sustainable global economic growth."

So, Bernanke asked rhetorically, "why have officials in many emerging markets leaned against appreciation of their currencies toward levels more consistent with market fundamentals? The principal answer is that currency undervaluation on the part of some countries has been part of a long-term export-led strategy for growth and development. This strategy, which allows a country's producers to operate at a greater scale and to produce a more diverse set of products than domestic demand alone might sustain, has been viewed as promoting economic growth and, more broadly, as making an important contribution to the development of a number of countries."

However, he argued, "increasingly over time, the strategy of currency undervaluation has demonstrated important drawbacks, both for the world system and for the countries using that strategy."

He offered several arguments. It is not fair. It is not sustainable; "strong expansion in the emerging market economies will ultimately depend on a recovery in the more advanced economies". It fails to take into account that "the ultimate purpose of economic growth is to deliver higher living standards at home".

Defense of US Quantitative Easing. A central bank, such as the US FRB, ordinarily can increase or decrease the money supply, interest rates and/or inflation (and indirectly, economic activity) by using their traditional tools, such as setting the bank reserve requirement, changing the discount rate (the interest rate that the central bank charges for loans to commercial banks) and engaging in open market operations (buying and selling government securities).

Bernanke defended the FRB's recent actions, which have frequently been referred by others as "quantitative easing". Although, he said that the use of this term to describe the FRB's "policies is inappropriate".

He said that the FRB's Federal Open Market Committee (FOMC) "purchased Treasury and agency-backed securities on a large scale from December 2008 through March 2010, a policy that appears to have been quite successful in helping to stabilize the economy and support the recovery during that period."

He continued that the FOMC "announced this month that it would purchase additional Treasury securities. In taking that action, the Committee seeks to support the economic recovery, promote a faster pace of job creation, and reduce the risk of a further decline in inflation that would prove damaging to the recovery."

"This policy tool will be used in a manner that is measured and responsive to economic conditions." He added, "If necessary, the Committee could also tighten policy by redeeming or selling securities."

US Fiscal Policy. Bernanke asserted that "The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs."

However, his speech was also directed at US fiscal policy. He said that "in general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve."

The FRB has great powers with respect to US monetary policy. In contrast, fiscal policy making lies with the Congress and President. The FRB cannot change tax policy, spend money, or tell the Congress how much to spend. He said that "Monetary policy is working in support of both economic recovery and price stability, but there are limits to what can be achieved by the central bank alone."

What he did not explicitly state, but perhaps implied, was that businesses are not creating more jobs or investing in new equipment and software, because they are pessimistic as a consequence of US fiscal policies that adversely affect them, such as huge deficits, failure to extend the expiring Bush tax cuts, failure to extend the research and development tax credit, and imposition of new health care burdens.

That is, Bernanke may be asserting that the FRB has the appropriate monetary policies in place. Now, the Congress and President need to follow through with appropriate fiscal policy.

He did not expressly explain this. However, he went much further than FRB Chairmen usually go.

11/18. Rep. Dana Rohrabacher (R-CA) spoke in the House about the People's Republic of China (PRC). He said that the PRC is an Orwellian high tech police state, and a threat to US prosperity and freedom.

It was a long speech, in which he addressed the PRC's use of information technology to suppress free speech and democracy generally, and PRC's interference with Google's operations specifically. He also addressed demands that companies doing business in the PRC transfer technology. He also discussed the PRC's acquisition of US missile technology during the Clinton administration.

He said that "the aggressively authoritarian and murderous regime in Beijing holds power with an iron fist at home and makes alliances with gangsters and tyrants the world around". He said that "They mean to eclipse our country and, yes, extinguish our ideals of democracy and individual freedom".

But, he added, "I am not a China basher."

Rep. Rohrabacher (at right) was first elected to the House in 1988, and is now a senior member of the House Foreign Affairs Committee (HFAC) and the House Science Committee (HSC). He is currently the ranking Republican on the HFAC's Subcommittee on International Organizations, Human Rights, and Oversight. He may become the Chairman of the HSC in the 112th Congress.

Before his election, he was a speech writer for former President Ronald Reagan.

He said that that U.S. must "defeat this evil plague of radical Islam". But, he continued that a "greater threat is just over the horizon. I am referring to China, a dragon of immense power and insatiable appetite. This challenge will far outshadow the current battle with radical Islam."

He said that the PRC is ruled by a "band of cronies" that is "kept in power by the brutality of their hacks and thugs and the deployment of technology which all too often can be traced back to Western benefactors. With modern Western-developed technologies, they have created a high-tech police state that mirrors the imagination of George Orwell in his prescient novel, ``1984.´´" See, book [Amazon] titled "Nineteen Eighty-Four".

"The Chinese regime as of late has been masterful at manipulating the greed and avarice of Western businessmen, even as China itself continues to undermine international financial markets and hammers many of those Western corporations which have already set up there in China", said Rep. Rohrabacher.

"Beijing maintains a massive pool of near-slave labor to even attract more foreign capital and manufacturing know-how. This is at the same time that they undervalue their own currency to secure the dominance of their exports, even as they enforce the restrictions they have placed entry into their market."

He said that "new China laws demand that Western companies, who are now operating in China and wish to, give up technological secrets that can be used for economic and military advantage".

He asserted that "They are destroying the economic potential of their future competitors. So much more sophisticated than Mao, the Chinese oligarchs of today look and speak Western. They mean to eclipse our country and, yes, extinguish our ideals of democracy and individual freedom, even as the West stumbles in its retreat before this aggressive and autocratic global force."

He continued that "America's corporate elite has not seemed to notice the obvious downside for their fellow Americans in sending jobs, capital, and technology to China."

He also said that "China holds the largest amount of American bonds than any nation and holds the highest percentage of our debt, and has repeatedly threatened to quietly dump those bonds and devastate our national economy if we don't comply with its wishes. What is their goal? First, of course, it is to maintain their unfair trade advantage built on near-slave labor, environmental desolation, devalued currency, and a heavily restricted access to their market, while enjoying access to our market and a continual flow of U.S. investment and technology and know-how into their country. Yet, now if we move to correct the imbalance by seeking equality and fairness in our trade policies, there will be a heavy price for us to pay."

He also discussed Google, Microsoft and Yahoo. He said that "Google and other American companies have enabled the communist Chinese dictatorship to track down dissidents, who are then jailed for daring to oppose tyranny and corruption or to worship God as they see fit."

"Once compromised, companies like Google found themselves curtailing the free flow of information to millions of Chinese citizens, turning the Internet into a tool for repression rather than a facilitator for free expression, and, thus, a vehicle for the advancement of the human condition."

He also said, "To Google's credit, uncomfortable with the role that it was being forced to play, Google decided not to go along with the heavy handed plan that the Chinese regime expected them to play and to implement. At great risk to their company, Google's executives refused to go along and took a stand against repression. Yes, kudos to Google for that."

See, story titled "Google Accuses Red China of Cyber Attacks Directed at Human Rights Activists" in TLJ Daily E-Mail Alert No. 2,036, January 19, 2010, story titled "Google Offers Uncensored Search from Google Hong Kong" in TLJ Daily E-Mail Alert No. 2,063, March 24, 2010, and story titled "Google Releases Paper on Global Free Flow of Information on Internet" in TLJ Daily E-Mail Alert No. 2,160, November 19, 2010.

"Conversely, shame on the rest of the high-tech entourage who collaborated and were even used to advance tyrannical corruption. Google was not backed up, for example, by Microsoft or Yahoo Internet providers", said Rep. Rohrabacher.

See also, story titled "House Committee Grills Yahoo Executives" in TLJ Daily E-Mail Alert No. 1,671, November 7, 2007.

He continued. "Now China is preferring to intensify draconian laws requiring telecommunications and Internet companies to inform on customers who discuss state secrets. That term, ``state secrets,´´ can be defined as anything from negative economic statistics to information on environmental calamities or references to Tibet, Taiwan, the Falun Gong, Uyghurs or anything else that would anger the dragon. The Chinese regime obviously understands its control of technology is a way to control the future."

He concluded that "our greatest hope" is that the people of the PRC "will some day demand and win their own freedom and thus shift China into the family of free nations and free people". He added that that should be the goal of the US as well.

See, Congressional Record, November 18, 2010, at Pages H7594-7600.

The House will not meet. It will next meet on Monday, November 29, 2010, at 2:00 PM. See, HConRes 332.

The Senate will not meet. It will next meet on Monday, November 29, 2010, at 2:00 PM.

9:30 - 11:00 AM. The Information Technology and Innovation Foundation (ITIF) and will host an event to discuss a report [107 pages in PDF] titled "The Good, The Bad, and The Ugly (and The Self-Destructive) of Innovation Policy", by Steven Ezell (ITIF) and Robert Atkinson (ITIF). The speakers will be Atkinson, Grant Aldonas (Split Rock International), Marcus Noland (Peterson Institute for International Economics), and Bruce Stokes (National Journal). See, notice. This event is free and open to the public. Location: ITIF/ITIC, 6th floor, 1101 K St., NW.

11:00 AM. The Free Press (FP) will host a news conference by teleconference to release and discuss a report titled "Restoring FCC Authority to Make Broadband Policy: A Way Forward After Comcast v. FCC". The speakers will be Tim Wu (Columbia University law school), Susan Crawford (Yeshiva University law school), Aparna Sridhar (FP), and Josh Silver (FP). The call in number is 888-792-8352; the conference ID is 24410747.

12:00 NOON. Deadline to submit written comments to the Office of the U.S. Trade Representative (OUSTR) regarding Malaysia's participation in ongoing negotiation of a Trans-Pacific Partnership (TPP) trade agreement. The OUSTR seeks comments on, among other things, "electronic commerce issues" and "trade-related intellectual property rights issues that should be addressed in the negotiations". See, notice in the Federal Register, October 20, 2010, Vol. 75, No. 202, at Pages 64778-64779.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rulemaking (NPRM) [79 pages in PDF] regarding expanding the FCC's disability access technology mandates. The FCC adopted and released this item on August 5, 2010. It is FCC 10-145 in WT Docket No. 07-250. See, notice in the Federal Register: September 8, 2010, Vol. 75, No. 173, at Pages 54546-54560. See also, story titled "FCC Adopts Disability Access Policy Statement, Order, and NPRM" in TLJ Daily E-Mail Alert No. 2,120, August 6, 2010.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking and Notice of Inquiry [102 pages in PDF] regarding the use of microwave for wireless backhaul. The FCC adopted and released this item on August 5, 2010. It is FCC 10-146 in WT Docket Nos. 10-153, 09-106, and 07-121. See, story titled "FCC Adopts Wireless Backhaul NPRM and NOI" in TLJ Daily E-Mail Alert No. 2,120, August 6, 2010, and notice in the Federal Register, August 24, 2010, Vol. 75, No. 163, at Pages 52185-52209.

Deadline to submit comments to the Copyright Office (CO) regarding its proposed rules changes affecting deposit account holders. The CO notice states that it proposes to "set the minimum level of activity required to hold a deposit account at 12 transactions per year; require deposit account holders to maintain a minimum balance in that account; mandate the closure of a deposit account the second time it is overdrawn; and offer deposit account holders the option of automatic replenishment of their account via their bank account or credit card." See, notice in the Federal Register, October 8, 2010, Vol. 75, No. 195, at Pages 62345-62348.

The House will not meet.

The Senate will not meet.

Supreme Court conference day (discussion of argued cases, and decision on cert petitions). Closed.

10:30 AM - 12:00 NOON. The Heritage Foundation will host a panel discussion titled "Southeast Asian Economic Community and American Interests". The speakers will include Barbara Weisel, Assistant U. S. Trade Representative for Southeast Asia and the Pacific. See, notice. The HF will webcast this event.  Location: HF, 214 Massachusetts Ave., NE.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its October 25, 2010, Public Notice (PN) regarding its closed captioning rules. This PN is DA 10-2050 in CG Docket 05-231, ET Docket No. 99-254. See, notice in the Federal Register, November 17, 2010, Vol. 75, No. 221, at Pages 70168-70169.

Thanksgiving Day. This is a federal holiday. See, Office of Personnel Management's (OPM) web page titled "2010 Federal Holidays". This is also a Supreme Court holiday.

Deadline to submit comments to the Department of Defense (DOD) in response to its notice of proposed rulemaking regarding amending its Defense Federal Acquisition Regulation Supplement (DFARS) regarding patents, data, and copyrights, including for software. See, notice in the Federal Register, September 27, 2010, Vol. 75, No. 186, at Pages 59411-59468.

The House will meet at 2:00 PM. See, HConRes 332.

The Senate will meet at 2:00 PM.

POSTPONED. 9:00 AM. The House Ethics Committee (House Committee on Standards of Official Conduct) will hold its "adjudicatory hearing" in the matter of Rep. Maxine Waters (D-CA). See, notice [PDF]. See, notice of postponement.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [25 pages in PDF] regarding commercial radio operator licenses for maritime and aviation radio stations who perform certain functions performed within the commercial radio operators service. The FCC adopted this item on August 31, 2010, and released the text on September 8, 2010. It is FCC 10-154 in WT Docket No. 10-177. See, notice in the Federal Register, October 29, 2010, Vol. 75, No. 209, at Pages 66709-66715.

Deadline to submit comments to the Copyright Royalty Judges (CRJ) in response to the CRJ's request for comments on a motion of Phase I claimants for partial distribution in connection with the 2008 cable royalty funds. The CRJ also request comments as to the existence of Phase I and Phase II controversies with respect to the distribution of 2008 cable royalty funds. See, notice in the Federal Register, October 29, 2010, Vol. 75, No. 209, at Pages 66798-66799.

Deadline to submit comments to the Copyright Royalty Judges (CRJ) in response to the CRJ's request for comments on a motion of Phase I claimants for partial distribution in connection with the 2008 satellite royalty funds. The CRJs also request comments as to the existence of Phase I and Phase II controversies with respect to the distribution of 2008 satellite royalty funds. See, notice in the Federal Register, October 29, 2010, Vol. 75, No. 209, at Pages 66799-66800.

11/18. Sen. John Rockefeller (D-WV) and Sen. Kay Hutchison (R-TX) spoke in the Senate regarding S 3386 [LOC | WW], the "Restore Online Shoppers' Confidence Act".

Sen. Rockefeller, the Chairman of the Senate Commerce Committee (SCC) stated that "This legislation is not intended to limit a company's ability to provide its customers with a seamless transition when a company sells its assets or arranges to have a new entity provide the products and services it previously provided to its customers."  See, Congressional Record, November 18, 2010, at Page S8053.

Sen. Hutchison, the ranking Republican on the SCC, asked "about how this bill would affect an online company that bills its customers monthly for an ongoing service and decides to enter into a deal with another company to provide the backend billing and other services to those same customers. What is the intent of the legislation?"

Sen. Rockefeller, the sponsor of the bill, responded that "The bill would not consider the company providing backend billing and other services for the initial merchant to be a posttransaction third party seller. Therefore, the provisions of the bill governing post-transaction third party sellers would not apply."

He continued that "This legislation is intended to prevent the kind of fraudulent transactions the Commerce Committee exposed in its recent investigation -- where a consumer intentionally purchases products or services from one company and ends up unknowingly purchasing products or services from a different, unrelated company. As we have discussed, this bill is not intended to prevent a company from making a business deal that would provide continuity of service to its customers by entering into a business arrangement that gives another company the right to deliver products and services intentionally purchased by consumers and to bill for those products and services."

Sen. Rockefeller introduced this bill on May 19, 2010. See, story titled "Sen. Rockefeller Introduces Bill to Regulate Aggressive Sales Tactics on Internet" in TLJ Daily E-Mail Alert No. 2,086, May 21, 2010.

The SCC amended and approved it on June 19, 2010. See, story titled "Senate Commerce Committee Approves Bill to Regulate Aggressive Sales Tactics on Internet" in TLJ Daily E-Mail Alert No. 2,096, June 17, 2010.

The related bill in the House is HR 5707 [LOC | WW], introduced by Rep. Zach Space (D-OH) on July 1, 2010. HR 5707 was referred to the House Commerce Committee (HCC). Neither the HCC nor the full House has taken any action on either HR 5707 or S 3386. Rep. Space lost in the November 2, 2010, election.

The bill, as approved by the SCC, provides that "It shall be unlawful for any post-transaction third party seller to charge or attempt to charge any consumer's credit card, debit card, bank account, or other financial account for any good or service sold in a transaction effected on the Internet, unless ... before obtaining the purchaser's billing information, the post-transaction third party seller has clearly and conspicuously disclosed to the purchaser all material terms of the transaction ... and ... the post-transaction third party seller has received the express informed consent for the charge from the consumer whose credit card, debit card, bank account, or other financial account will be charged by ... obtaining from the consumer ... the full account number of the account to be charged; and ...the consumer’s name and address and a means to contact the consumer; and ... requiring the consumer to perform an additional affirmative action, such as clicking on a confirmation button or checking a box that indicates the consumer’s consent to be charged the amount disclosed."

The bill also provides that "It shall be unlawful for an initial merchant to disclose a credit card, debit card, bank account, or other financial account number, or to disclose other billing information that is used to charge a customer of the initial merchant, to any post-transaction third party seller for use in an Internet-based sale of any goods or services from that post-transaction third party seller."

The bill also provides that "It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature, unless ... before obtaining the purchaser’s initial agreement to participate in the negative option plan, the seller has clearly and conspicuously disclosed all material terms of the transaction ..."

11/19. Sen. Patrick Leahy (D-VT) spoke in the Senate about judicial nominees. He wants the Senate to confirm pending nominees. See, Congressional Record, November 19, 2010, at Pages S8116-7.

11/18. The Senate confirmed Jacob Lew to be Director of the Office of Management and Budget (OMB). See, Congressional Record, November 18, 2010, at Page S8110. See also, statement by President Obama.

11/19. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released a draft of SP 800-78-3 [20 pages in PDF] titled "Cryptographic Algorithms and Key Sizes for PIV". The deadline to submit comments on this draft is 5:00 PM on December 3, 2010.

11/17. The Information Technology and Innovation Foundation (ITIF) released a paper [7 pages in PDF] titled "Policymakers Should Opt Out of Do Not Track". The author is the ITIF's Daniel Castro. This paper states that "For the last few years privacy fundamentalists have called for a national Do Not Track feature for online advertising modeled after the national Do Not Call Registry. The purpose of a Do Not Track feature would be to provide consumers a single, centralized mechanism to opt out of all online profiling for targeted advertising. However, such a mandate would impose unnecessary costs on software developers, result in more intrusive and less relevant advertising for consumers, and, if widely adopted, significantly harm the current funding mechanism for the Internet ecosystem, resulting in less free Internet content and services."

11/17. Federal Communications Commission (FCC) Commissioner Michael Copps gave a speech [5 pages in PDF] in Albuquerque, New Mexico, to the National Congress of American Indians.

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