This page has been archived and commenting is disabled.
Iraqi pawn to check the Chinese king?
Chinese exports of consumption and capital
goods to the United States
have steadily increased since the 1990s. In 1990 China’s
balance of trade with the US
was $10bn. By 2000 that figure had reached $83.8bn, a growth rate of 23.6% per
annum. During this same period, the Chinese Yuan declined in value from 4.7
Yuan/$ to 8.27 Yuan/$, a dollar appreciation of 5.8% per annum.
The Chinese government achieved this
devaluation of the Yuan by redirecting a major portion of its trade surplus
with the US
into US Treasury securities, or Treasuries. This was a short-term win-win for
both countries. China weakened
its own currency and hence its exports to the US became that much more
competitive. The US
received large capital account surpluses that allowed it to keep interest rates
low without fatally weakening the dollar.
At the beginning of the 21st
century China’s
uptake of US Treasuries was growing at more than 19% per annum. Fresh
Treasuries purchased by China
between 2000 and 2003 amounted to a third of the increase in the total amount
of Treasuries held by Foreign Entities. The trends in trade and Treasuries
intake pointed to a future where China
dominated US imports as well as US
bond markets and through it, US
debt.
The year 2000 brought with it the infamous US presidential election, and a Republican
administration perceived to be much more hawkish towards China than its
predecessor. Influencing it were think-tanks that sought to maintain American
dominance into the new century. This followed a number of reports about China seeking parity with the US in the
intermediate term and dominance in the long run. It was taken as a given that
as China’s economic and
geopolitical position improved, it would invariably clash with the US over control
of its expanding sphere of influence.
By relying on cheap Chinese goods, the US was
effectively subsidising the growth of its greatest potential competitor. This competitor
was also on the way towards becoming the US’s
largest creditor, thus acquiring political leverage over the US, putting the US in the unsound position of
having to continue buying Chinese exports or risk a disastrous depreciation of
the dollar and a rise in interest rates through carnage in the bond market. The
tech bubble had just burst and the US could ill afford either. They
could not reduce Chinese leverage unless they found a counterweight to balance
the Chinese dominance of the Treasuries market.
A suitable counterweight would need to satisfy
three conditions. Since services account for an overwhelming proportion of the US economy, the
counterweight would need to be a producer of consumption goods, capital goods
or commodities. It would need to be competitive in a market where China’s manufacturing
prowess could not dominate effectively, which ruled out consumption and capital
goods. And finally, it would need to be
open to an informal alliance with the US.
With consumption and capital goods ruled out,
the US
was left with crude oil, accounting for almost 9% of its imports. Venezuela, Saudi
Arabia and Canada have the three largest
proven crude oil reserves in the world. Of the three, Saudi Arabia is believed to have had a similar
informal alliance with the US
since the 1970s, which ruled it out. Canada and Venezuela have large reserves,
most of which are trapped in oil sands, the technology for extracting which was
in the nascent stage back then. Oil extracted from oil sands is also much more
expensive compared to oil extracted from conventional fields, making an
informal alliance with these two countries vulnerable to weak crude oil prices.
That left Iran
and Iraq
as the countries with the next largest proven oil reserves. Regimes in both
these countries were hostile to US
interests making regime change necessary. Regime change would require
occupation.
Iran, with a population of between
60mn to 70mn has a terrain that includes mountain ranges, rain forests, deserts
and swamps. It possesses a strong and well supplied military augmented well by
the Iranian Revolutionary Guards and fanatical paramilitary forces. These would
provide a fertile recruiting pool for a guerilla resistance which could
successfully leverage the terrain to thrive and deny the occupiers the
stability necessary to ramp up oil production. Having been the victim of a
US-sponsored coup in 1953, the regime in Iran would be better prepared for
such a possibility in the future.
Iraq had suffered for years under UN
sanctions which had weakened its society and economy. They had severely
degraded the fighting capability of its armed forces by preventing the import
of required equipment in sufficient quantities. Compared with Iran, Iraq’s lower population, desert
terrain and relatively untouched oil reserves made it a much more attractive
target.
A US-friendly regime in Iraq could ramp
up oil production by involving American oil firms. This involvement would serve
to reduce the US
trade deficit which, economists were warning, was rising to unsustainable
levels. Iraq would sell crude
oil to the US
and use the dollars thus earned to buy US goods and services to modernise its
infrastructure. As a client state, Iraq
would also depend on the US
for defence, thus providing the US
with a captive market for its arms, ammunition and weapons systems. Most
importantly, the plan would provide the US
with a reliable financer, eager to gobble up the ever increasing issuance of US debt.
The US
did not invade Iraq
to take over its oil reserves, as is commonly believed, since that would have
been a diplomatic poison-pill, and impossible to explain to the electorate back
home. Perhaps the reason Iraq
was invaded and a regime change undertaken was to provide the US with secure access to crude oil, provide it
with a pliant client state that would endeavour to help reduce the US’s trade deficit, and assure it of continued
purchases of US Treasuries, thus reducing China’s dominance and leverage. As
a net importer of crude oil, China
would be negatively affected by American control of two major oil producers – Saudi Arabia and Iraq.
The insurgency that arose following the
invasion has prevented this plan from coming to fruition and has placed a
severe strain on the US
economy, making the US even
more beholden to China
for its continued economic survival. Perhaps China should send the insurgents a
thank you note, if it hasn’t done so already.
»
- jester's blog
- 4237 reads
- Printer-friendly version
- Send to friend
- advertisements -
Waiting for the day when Nixonites Cheney, Rove, Rumsfield and fool Bush would be brought in front of people and asked to answer a simple question: Why did you send so many of our brave and young to death in Iraq insteading of seeking and destroying the Al-queda in Afganistan ?" How are these people getting away with such a war crime: a war for no reason, that made us poorer by a Trillion Dollars: What was the strategy here ?
There was an article a few weeks back that the US was opening bidding of Iraq oil rights to Chinese oil firms. My reaction at the time was now we know what we had to give up in order to get the Chinese to keep buying treasuries...
http://www.geo-pol.com/currency/index.htm
Interesting subject; I reproduce my thoughts on it, with links provided. As far as I am concerned, the invasion of Iraq was entirely about China.
http://seekingalpha.com/author/sw-richmond/comment/269979
Fiat money, backed by nothing, makes no sense and is unworkable.
When the dollar was backed by gold, the US central bank held gold for which dollars could be redeemed. When Nixon made the dollar non-redeemable in gold, oil became the most important commodity in relation to dollars / fiat currency. Since economies run on energy, and since oil is the most BTU-intensive, easily transportable yet reasonably available energy source, it seems apparent that the most valuable "thing" that a nation can buy on the international market with fiat money would be oil. If that is the case, then the perceived value of a fiat currency, especially the world's reserve currency, would be measured by the amount of oil it can buy.
If large oil producing nations (e.g.Saudi Arabia) could be induced to regulate the amount of oil in the markets to maintain a relatively stable oil price, then the buying power of the world's reserve currency could be maintained relatively stable, providing a stable monetary regime for world economic activity. If the world's largest military promised to defend that oil supplier from any attack, to maintain the supply, to maintain the Saud family control of it, and if the Saud family promised to sell oil denominated in dollars, then the dollar could remain supreme and there would be relative monetary stability for the West. The dollar is, in effect, redeemable in oil. Anyone trying to buy oil must first sell things to the US in order to get dollars with which to buy oil. US consumers are guaranteed a steady flow of consumer junk that they buy with dollars.
If oil is the de facto commodity backing of the US Dollar, then, once the US domestic supply of oil is depleted, then the US completely loses control of the value of the dollar. In order to regain some ability to intervene in the ability of the dollar to buy oil, what better way than to stockpile oil? It is a direct play of dollars against oil. If the dollar buys too little oil, the US can buy dollars with oil, increasing the supply of oil and reducing the supply of dollars.
Saudi Arabia is in essence a giant bank, where the world borrows oil, and pays interest in the form of wealth transfer. It makes sense then for the world's most powerful army to guard it.
http://seekingalpha.com/article/97947-update-crude-oil-priced-in-gold?so...
This thesis also perfectly explains the US invasion of Iraq, as an expansion of the US strategic petroleum reserve. It puts the Sauds on notice that we have a large army at their backdoor to defend them, or seize them, as might be necessary. We are positioning an army in a better location to protect the bank. Fort Knox has the US Army protecting it, and so does the Saudi Oil Bank.
Our old enemy, Russia, has too much oil of its own, which gives it too much influence in the oil markets and hence in the value of the US dollar. It was essential to increase the US's domestic supply by seizing Iraqi oil. The Russians counter by befriending Venezuela, a major oil exporter, and by invading Georgia (on a pretense) in order to threaten control of Caucasus oil.
We are building huge military bases in Iraq. We will never leave voluntarily. Loss of control of oil = loss of control of the buying power of USD = loss of dollar's reserve currency status = loss of US international power.
Didn't Saddam Hussein change the denomination of Iraq's oil bourse from dollars to euros or basket of currencies prior to the invasion? I remember Iran threatening the same thing and how many US battle groups are now stationed in the Strait of Hormuz? And didn't China's treasury purchases pay for the wars in Iraq and Afghanistan? They always have a multi-faceted long-term game plan.
The very first sentence of this article is incorrect, given the present decline underway. The avalanche of inaccuracy proceeds unstopping thereafter.
Sometimes a cigar is just a cigar. Why Iraq happened was exactly what Bush . . . AND BLAIR . . . explained. Never, EVER, forget that Tony Blair could have stopped it if he had not been persuaded. He was about the only person on Earth that had enough clout with Bush to influence him, and he could have had the UK stop all the resolutions in the UN if, again, he had not been persuaded.
He was persuaded by the intelligence and by the overall rationale, just as Bush was, and as almost all of Congress was. There have been far worse mistakes made in history. This one is likely to have a happy ending -- and the Chinese are not involved at all.
Oil reserve quantities and those supposed marvelous Caspian totals can await a more relevant thread.
talking conspiracy, global chessboard and all that: How do we know Chinese are not secretly financing the insurgents in Afghanistan and Iraq. CIA did exactly the same thing to Soviets in the 80's. The scariest thing about Chinese secret service? You never hear about them. That is one hell of an efficient secret agency.
For a posting it is sufficient. Decisions lately are updates to the Golden Gimmick from Truman times and Diplomatic blather then about Aramco in reality to play nice, and settle account's. To me Iran is a persian Culture and the Fanatical elements have checked there potential. Other than the Great Game from Peter the great and British mandates to rinse and repeat issues of the region and even from Alexanders times the region has one value alone. Deep water ports to central Asia. M Martin circa 1982 knew the piggyback globalist bent of mind issues very well to problematic conclusions wrapping up today per se. I still have a issue with the Arab League in oil regions stained in African blood, where China was allowed with a thin veil to supply there regional oil plays needed. Since Russia has supplied a oil line to there Red Shade partner China. Mr.Obama has visited the African region, and when Ms. Rice did convey our concern much earlier she had to convey no vital interest in the region. This context played out generational reality's and yes connecting the dots and subsequent documentation are there. Last bond issue for Iraq was comical to read about if it was not such a serious issue. Price of slaves dropped a long time ago in the region in question.
Nothing new under the sun. 1929
The Barakzai dynasty that has ruled Afghanistan since 1826 ends October 17 as King Amanullah, now 37, abdicates and flees west in a Rolls Royce along with 17 of his followers after a 10-year reign in which he has drawn up the country's first written constitution but failed to modernize Afghanistan's tribal society, although he has tried to model a secular government along the lines of Turkey's, abolished slavery, attacked corruption, created a government budget, and reorganized taxes. Mohammad Nadir Khan and his brothers take over the government and Nadir Khan is elected shah by a tribal assembly; he begins a bloody persecution of the opposition and will reign until his assassination in 1933.
Elsewhere in the Middle East, Iraq took a big step toward gaining independence from the British. The Iraqi government had, since the end of World War I and the beginning of the British Mandate in the Middle East, constantly resisted British efforts to control or restrict them. In September, Britain announced that it would support Iraq's inclusion in the League of Nations, this signaled the beginning of the end of their direct control of the region.
http://www.ndu.edu/inss/McNair/mcnair47/mcnair47.pdf
A popular Government, without popular information or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or
perhaps both. Knowledge will forever govern ignorance; And a people who mean to be their own Governors, must arm themselves with the power which
knowledge gives. JAMES MADISON to W. T. BARRY August 4, 1822
In late 2002 and early 2003, with the Administration's rhetoric about Hussein-AlQueda collaboration and WMDs going ballistic (while the U.N. inspectors and Hussein were saying there were no WMDs), leading to the famous ultimatum (which everyone now seems to have forgotten) to Hussein to "produce a complete list of all the WMD's" or face destruction, I was asking myself "What the F**ck?"
Having worked for the State Department, this wasn't making any sense to me. There was no actual reason to believe any of these "reasons" for an invasion, the ultimatum was an obvious Catch-22 that would be rejected by anyone, and the decision to invade had clearly already been made. My question was, Why? We were already in Afganistan, in the middle of a stock market disaster and recession (Greenspan and Bernanke were talking about having to save us from deflation), and simplistic theories like Bush's dad-issues didn't cut it.
Once I researched the geopolitical theories of the neo-cons that had been installed in the White House and read all the right-wing editorials and think-tank papers (including the Project for a New American Century) going back a decade, it all became very clear.
Ever since Saudi Arabia had hosted the U.S. military in the First Gulf War, there was a rising unstable militant reaction within the Kingdom to get the infidel troops off holy soil (by the way, Bin Laden's initial stated purpose for his vendetta against the U.S. was our "invasion" of the sacred land of the Prophet).
The neocon dream was to kill many birds with one stone: Invade and occupy Iraq (no one anywhere liked Saddam Hussein), install a friendly gov't (as we did in Japan and Germany after WWII) with a huge permanent U.S. military presence in the heart of the muslim oil patch, and open the Iraqi oil resources to the "free" market (reversing the 50-year petroleum nationalization trend that led to OPEC and funded terrorism). Once we had a few hundred thousand troops based in a "pacified" Iraq (that was the original plan - Rumsfeld eventually got his personal way for "smaller is better" invasion, to much neo-con tooth-gnashing).
Iran and then Syria would be Acts II & III - easily done when the hardware and manpower are already in Iraq and everyone fears us completely (reversing after-effects of the Vietnam fiasco, when we couldn't get no respect no more). Now we would control (as "allies with our bases")all the major players in the Muslim Heartland, and the Palestinians would just lay down their weapons and crawl to the Isrealis and there would finally be peace in the Holy Land. Q.E.D.
Crazy? Maybe, but it was such a COMPLETE strategy that I had to admire it (those old liberals, and even Reagan, were puny geopolitical thinkers next to these guys). I hadn't seen any military-based global expansion concepts like these since Joseph Stalin's day (I don't mean that sarcastically). It certainly explained why the drive to invade Iraq was so strong while "justifications" were so absurd, and was consistent with slips of the tongue like "Crusade" and images like "Axis of Evil" (N. Korea - and maybe some others - could come later).
The problem was: This strategy was obviously way, way, way too grandiose. Clearly, we could knock down what was left of Hussein's military extremely easily (Rumsfeld had that right), but even Iraq itself would be difficult and expensive to occupy, rebuild, and exploit, and the rest of the Great Plan would be stunningly complex to carry out and subject to Murphy's Law squared (not to mention freaking out the rest of the world into an anti-American paranoia, sort of like Hitler did in Europe).
Impressive fantasy, but could these clowns actually pull this off - either geopolitically or domestically? I had to laugh and made a bundle betting with conservatives about whether WMDs would be found. Not surprisingly, the whole Grand Plan fell apart as soon as victory was declared over Hussein and we had to deal with Iraq itself. The rest, as they say, is history.
Dumb Luck or Dumb policy? Unsure myself but given a playback it did stop the supply chain issue of the cake. Reality is NeoCons generally are not that smart anyway.
http://www.canada.com/topics/news/national/story.html?id=f65c5538-bb56-45eb-9f0d-4b6d28d90d01
http://www.bloggernews.net/116579
it is interesting, that bush had the plans in place to invade afghanistan and iraq almost overnight after 911. so he goes and during our time of fear, he pushes through this horrible homeland security act. now we lose some more freedoms and the Posse Comitatus Act is scrapped, and habeas corpus is no more. bush said, oh the constitution is just a god damned piece of paper, (sic). so maybe it is. maybe it always was just one big lie. here bush is lying...
http://www.youtube.com/watch?v=f_A77N5WKWM
so now my sons and daughters fight and die for nothing in countries that never have done anything to us???? God help this country to see the real truth of all of this and I pray that somehow someway, we will wake up before it is too late for us. That day of destiny is rapidly approaching. Someone on here said one time, to me, that after I went off on what appeared to be a tangent, about ww2, that somehow to him, it was all connected. To him i say this. yes , yes it is all connected. it is all connected......
and now obama, who was elected by fools, because he promised them "change" i say to you. where is this change? where is it? there is no change. he is bush 44 or clinton 2, or whatever. traitors they are and traitors they will always be. how much more of this will it take to wake up the american people and get them stone cold angry? how much? when they are carting us off to camps to make our minds right?????? God help this land......
I just hope you Americans are too busy shooting each other with your legally owned weapons to start nuking other countries. So does the rest of the world. Sorry but your brainwashed culture is on the brink and the planet just hopes you go down in flames minding your own business.
the iraq or afghan wars have nothing to do with anything that promotes our interest. let us go back to 911 and examine the excuses made to invade these countries. now we know these reasons were lies. so why do we fight these wars? is it not true we are now invading pakistan? why is this? why is our army being used to fight these wars that never end? you have to understand. arabs have never had anything to do with any terrorism in this country. never. i repeat. muslims have never had anything to do with terrorism in this country. think about it. it is not in their best interest. they know this. so they don't do it. if they are not doing it, then who is?
The only thank you note China would send anyone would be to thank them for taking a load of US dollars off China's hands.
In February, China completed a deal with Russia for Russian Oil. China will loan Russia $ 25 billion in US Dollars, for 20 years of Russian oil at 300,000 bbls per day.
This deal came after Norsilk Nickel completed a stock buy back at US $2.65 billion, realized they had no cash, then tried to resell the stock for US $350 million. I do not believe they have found a buyer yet.
China will do anything to get rid of US dollars. Even make deals with a self eating communist country like Russia.
Two communist countries dealing in the future. It must be like trying to get the north poles of two magnets to stick.
Wasn't it china that signed oil deals with iraq since the invasion? It was the most palatable for the US to benefit from the invasion; reducing oil pricing pressure world wide. China definitely doesn't want a disruptive insurgency.
You are giving the former administration too much credit. These were not deep thinkers. Short term gain was as far as they could see.
What else could explain the fact that the pentagon recinded a clause calling for Iraqis to be hired in reconstruction. With unemployment at 68%, the Iraqis were supposed to sit back and watch a stream of foreign slaves come in as subcontractors for the reconstruction.
Any person who was not a one-step-and-rest thinker would have seen the danger in that.
Think of these names:
Rumsfeld
Bremer
Wolfowitz
Feith
To me, they evoke images of a clown parade. On paper, they appear as intellectuals, but on paper, Citi is solvent. They are mental defectives who have enriched themselves by acting as conduits between industry and government contracts.
The most powerful army ever assembled in history was cut low by the dumbest civilian leadership ever assembled in history.
With this gang, nothing but Occam's razor will do. They needed to rush to war without a plan because they loved the sound of it, and they smelled money. That's it.
I wouldn't care to speculate on whether the former admin was ignorant or not. If they were as dumb as they're made out to be, it would be easier for someone with an understanding of what needs to be done economically (find another exporting nation to finance our deficits) to convince the former admin by 'sugarcoating' it - i.e. aligning it with the sort of objectives the neocons would drool at.
Jester,
"if you torture the data long enough, it will confess"
exactly.
Corrupt and Dumb.
I think one of the key points goes back a few years further than where your analyais begins- the fall of the Soviet Empire. We had an arrangement that allowed the US and the Soviets to expand after WWII. This arrangement was spun to be called the "cold war". When Reagen ramped military spending to end the cold war, it is generally agreed among "experts" that the Soviet Union failed financially trying to keep up, but we surived.
The truth is probably more like we both went broke, plus the convenient arrangement that all political and financial planners could depend on was gone.
We (the US) became aimless looking for a mission [Huntington's "Muslim threat (tm)" and "China our next enemy (tm)" being two favorites for the war mongers (aka, Ike's military industrial complex]. Derivatives started to increase from a few billion to todays astronomical quadrillion. And we still do not have a mission, except it is clear that the Bush administrations chose the Muslim threat as our mission.
I can see your hypotheses addressing both the "Muslim threat (tm)" and "China our next enemy (tm)" policy options; though the China threat has been changed from a military one to an economic one.
Too many mistakes to mention...
Any attempt to grab Iran's oil reserves and crush the regime would involve seizure of the arab province of Iran.
The remainder of the country would be ignored.
Without their oil income Iran means nothing to anyone.
BTW America is doing all that it can to ramp down Iranian oil production and exports.
And for the Peak-Oil crowd: Iraq's reserves have been recalc'd upwards. Baghdad figures that they've got more crude than the magic kingdom!
Further, for some unknown reason, the MSM always omits the Caspian Sea mega-deposits. These also scale up towards KSA.
But would the rest of the country ignore them? Furthermore, you make it sound like the Arab provinces of Iran are unpopulated. Nothing could be further from the truth. These provinces will have a strong state and security apparatus presence because they are arab provinces, making them that much harder to subdue.
Excluding Venezuela and Canada (unconventional oil) the 3 largest reserves are Saudi Arabia, Iran, and Iraq (in that order, I believe) and having a military stranglehold on #'s 1 and 3 with 100k+ troops on the border of #2 is of obvious geostrategic advantage. It's that simple, no conspiracy theories required. And the insurgency, it doesn't hurt the oil production to a significant degree. In fact, the US probably likes it, giving them control of the only unutilized (cheap) capacity, and therefore, to a point, the ability to control prices worldwide.
Does having troops there really matter? The US has the capability to move troops across the world in force and at will. How then does it help to have troops on the ground, making nice targets in the desert, dying by the tens every week?
The same effect can be achieved with a CBG or two in the vicinity, without the attrition.
http://musingsoniraq.blogspot.com/2009/04/falling-oil-revenues-and-uneve...
This is one of many who disagree.
The insurgency is taking away that ability to manage prices.
Anonymous 53737= That is a poor and lazy analysis of the reasons US invaded Iraq. Please go home and open a book.
Simplistic reasoning is very satisfying emotionally because it supplies the person with his/her minimum daily requirement of confirmation bias.
A point that is interesting enough. But only a point among many.
Perhaps China has already sent the Iraqi insurgents more than a thank you note.
Perhaps China has already sent the Iraqi insurgents more than a thank you note.
Tin, really,
Well if it was really about WMD they killed a load of people for nothing. Pick your poison.
I forgot how much yellow cake was shipped to Canada from Iraq does any remember the tonnage they got a short time ago? It was indeed very much and they got a bargain for sure into nuclear fuel.
T-I-N-F-O-I-L
Come on. Oil is at the very root of our survival. Example: Think of how much agriculture depends on petrochemicals for fertilizer, tractors, combines, pesticides.
Who's one of the biggest exporters of these chemicals? Saudi freakin' Arabia. And they are not exporting horse-shit or cowpies!!!
W. finished his dad's war, simple. Glad he did, and so are they for the most part. Putting China into the equation is a stretch. Yeah we have interests there and we have always wanted peace in that region, but we have made mistakes. Liberating them from tyranny and having faith in the muslim people makes sense to me.
Inconsistent arguments/reasoning...
1.
By relying on cheap Chinese goods, the US was effectively subsidising the growth of its greatest potential competitor.
How exactly were we "subsidising" China's growth, by accepting their products below market value?
2. The Chinese government achieved this devaluation... a short-term win-win for both countries. China weakened its own currency and hence its exports to the US became that much more competitive.
However the opposite dynamic (for some reason) means... putting the US in the unsound position of having to continue buying Chinese exports or risk a disastrous depreciation of the dollar and a rise in interest rates through carnage in the bond market.
Why is depreciation a "win" for China but "disastrous" for the dollar?
Too much "conspiracy"
Subsidising, here, shouldn't be taken to imply a literal subsidy. It's meant to imply that by continuing to buy Chinese goods, the US is financing the growth of its biggest competitor in the long term. Perhaps I should have worded it better.
Depreciation is a win for China because a weaker Yuan makes Chinese exports more competitive. It is disastrous for the dollar because it makes US products and services uncompetitive, reducing employment opportunities.
Seems to me that the Chinese finance us to take their goods... the subsidy, or financing, runs the other way.
You didn't address/understand my second point. In one paragraph you say that Yuan depreciation was a "win" for China. In another, you say dollar depreciation would be disastrous for the US. If a weaker Yuan makes Chinese exports more competitive (good for China), then also, a weaker dollar makes US products more competitive (good for the US)... You can't have it both ways.
For an economy that manufactures a lot and imports little, yes, a weaker currency is a good thing because it enables the economy to ramp up production and export the surplus.
The US is not that economy. It imports most of its consumables. A weaker dollar means its consumables are much more expensive, but it doesn't necessarily mean its exports shoot up.
A weak dollar would force the US economy to change structurally, and maybe it'll regain its old manufacturing base and begin exporting in force again, but between now and then will lie a painful decade of adjustment and horror.
Finished his Dad's war?
What date did the war end? I must have missed it.
What did you do, put this together on a typewriter? That and the spelling undoes any credibility.
Signed,
Martin Armstrong
What font would you like it in? Wingsdings?
As for the spelling, it's British English. Perhaps you've heard of an island called Britain, where this language called English is claimed to have been invented.
The Brits don't speak the language so much as they chew it up and spit it out.
I put this response to another post, but I thought it worth repeating here:
http://www.nytimes.com/2009/08/22/business/economy/22charts.html?_r=2&re...
Hmmm, selling off US Treasuries at the rate of 25b a month in order to avoid flooding the market with them all at once and thus destroying the value too quickly, they could rid themselves of their entire stock of 800b in 32 months, or just under three years. Of course, the Dollar would collapse at some point in this process but they would have gotten a good deal of value out of them by that time and most likely converted it to gold or something like that which would retain its purchasing power.
Next stop after collapsing the US? Taiwan, to sieze control of their tech industries with military force and repatriate the giant art collection that the Nationalists took with them when they split. If you don't understand China's national ambitions, then none of this makes the least bit of sense. I was in a conversation with a friend yesterday where I said, "We just lost a war with China." He told me it wasn't a war, just a friendly disagreement. "We were thinking about it that way, you're right. The Chinese weren't. That's why we lost."
What Jester means, literally, is that we were helping a country with ambitions that run counter to our own to build themselves up in a big way. Fiat currency is only paper in the end, they know that. If it all goes kablooey tomorrow, they still have their manufacturing capacity which we so cleverly helped them to build, they have a great working relationship with the Saudis, and they own half of the raw materials in Africa. Forget about the money: it is only a tool. Fiat currencies especially are like that. The US, on the other hand, is DEVASTATED. Currency collapse means no more world-class military (it runs on oil, remember? We spent the last fourty years strategically suppressing alternative energy so we could keep petrodollar recycling running, sucks that oil is a fungible asset) which means no more Superpower status. Which means China gets to do WHATEVER THEY WANT within their own region, which is probably what they wanted in the first place.