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Whither China's Vassal State
2010 will be a year of major transformations, punctuated by the following key escalating divergence: i) on one hand, the ongoing contraction of the US consumer will accelerate, because even as the stock market ramps ever higher (and on ever decreasing trade volume a 2,000 level on the S&P while completely incredulous, is attainable, but will benefit only a select few insiders who continue selling their stock at ridiculous valuations), household wealth will at best stagnate (as a reminder, an increase in interest rates "withdraws" much more household net worth, due to implied house price reduction, than any comparable boost to the S&P can offset), ii) on the other hand, China, which is faced with the ticking timebomb of continuing the status quo and hoping that US consumers can keep growing the global economy, or alternatively, looking inward at its own consumer class, and shifting away from its historical export-led model. The one unavoidable side effect of this prominent departure would be a renminbi appreciation, and a logical drop in the US currency, once the US-China peg if lifted (a theme opposed recently by SocGen's Albert Edwards, who sees the inverse as likely occurring). The main question for 2010 and beyond is whether this will be a gradual decline or a disorderly drop. And behind the scenes of all the bickering, jawboning and posturing, this is precisely what high level officials from both the US and China are currently negotiating. This will be one of the major themes that defines the next decade. Another phrase to describe this process is the gradual drift of US into a nation that is aware it is no longer the primary economic dynamo of global growth as China eagerly steps in to fill that spot.
Looking at the aftermath of the financial crisis, the two major consequences that will define US economic trends for an extended period of time, are the increasingly more frugal US consumer, whose savings rate is likely to increase gradually to the long-term low double digit average, and an ongoing outflow from equities into safer assets such as municipals, bonds and loans, as the maturing baby-boomers finds the volatility of the engineered equity market far too risky as they enter retirement age.
So with US consumption-led growth entering its twilight days, courtesy of assets that simply do not provide the kinds of returns that allowed for a savings-free lifestyle, what does this mean for Asia, and China in particular? Bank of America provides a good and succinct overview of the major historical themes that have defined Asian economics, and what the next decade will likely bring.
The essence of the Asian development strategy is to build manufacturing capacity for global demand. High savings rates allowed the needed investment in plants and infrastructure to be financed domestically. This strategy was pioneered by Japan in the 1950s and 60s, copied by the Asian “Tigers” (Hong Kong, Korea, Singapore, and Taiwan) in the 70s and 80s, and by a host of other Asian countries in the 80s and 90s. What changed the game was China’s adoption of the same strategy. Exports have increased nearly sixfold since China joined the World Trade Organization (WTO) in 2001. This had a profound impact on the global economy – but it had an even more profound impact on the China’s own economy and labor market. We estimate that 150 million Chinese workers joined the global labor force and began producing internationally traded goods. (As a contrast, the US labor force is 154 million people.)
The integration of China’s vast workforce into the global economy is what tipped the balance. The transfer of jobs and production from the US, where personal and corporate savings rates were low, to China, where savings rates were high, gave rise to huge imbalances. Within a few years after WTO entry, China’s current account surplus became the world’s largest, mirrored by an even larger US deficit.
Currency appreciation would have reduced wages, profits, and the flow of savings, but China was unwilling to allow market forces to play out. Thus, thePBoC (China’s central bank) intervened in unprecedented amounts, and the vast flow of Chinese savings was channeled abroad in the form of foreign exchange reserves – mostly short-duration government debt and bank deposits. Essentially, China was financing its own exports by purchasing short-term debt. The bulk ofthat found its way into US markets, keeping interest rates low and setting the stage for the housing bubble.
And herein lies the rub:
The financial crisis delivered a clear verdict, in our view, on the limits to the Asian growth model. It no longer makes sense to pursue double-digit growth by lending cheaply to the US consumer.
Yet change would require less reserve accumulation or – put another way – allowing the currency to appreciate against the US dollar, to which it is now effectively pegged. China needs to manage this “exit” carefully. Moving too fast risks a dollar crisis, with a disorderly drop in the US dollar and a spike in US bond yields. Moving too slow risks a boom-bust cycle in China, with capital inflows and strong monetary growth rates putting upward pressure on asset prices and inflation.
As noted earlier, the transitioning from the status quo, which worked for many years, but is now no longer relevant for the PBoC, will be likely even more critical than Bernanke's decision on when to finally begin raising rates. Because while the latter is mostly concerned with asset-price inflation (and stoking it every chance he gets), the Chinese decision will determine not only interest-rate policy for the US for decades to come, but will decide how soon the US should prepare to accept the consolation prize of first runner up in the global economic leader category. While on an absolute basis the US Economy is still a clear outlier, the rate of growth exhibited by China makes it a virtual guarantee that the days for US economic hegemony are numbered (even more so with GDP determination which is whatever the Central Committee says it is). The only open question is when will China decide it is finally time to shift away from the export-led growth model to one which prefers its own consumers as the source of growth. This transition will likely be of historical importance: just as the inception of the US vassal relationship with China lead to a historic and unprecedented boom in household net worth, doubling to $60 trillion in the span of a decade, so shall the unwind have a comparable impact to the downside.
It is merely this moment that Bernanke and the administration are doing all they can to prolong as much as possible. Alas it may be too late, as China seems to have finally realized that in the global prisoner's dilemma game, it has taken the constant US defections for far too long enough. And with the benefits of perpetuating the charade at this point outweighed by the detriments, 2010 could just be the year when China decides it has had enough.
For much more observations on the US-China relationship, and what lies in store for both the dollar and the renminbi, below is the most recent China FX roadmap analysis from BofA.
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A 2,000 level on the S&P??? That's batshit crazy.
If the China currency was allowed to float freely today....it may decline by 30% ....not rise....
China has its own Ponzi schemes....
Empty brand new cities nobody can afford to live in....
The world's largest and emptiest shopping mall....
There has been a lot of $ put into overbuilding for labors sake....
...........................
So the question becomes....
Which is weaker....an overbuilt China interms of no one to sell it's Wal Mart cheap goods ....and empty cities and malls nobody can aford to use....
Or the US,,,,,which after all was depending on China to recycle the Wal Mart money back into US treasuries....
Thus the US having no other short term choice rather than just printing more monopoly money.....????
Which is weaker ????
Particularly for the next 10 year or more adjustment period....
The Renminbi would rise against the U.S. peso, then fall later, as unemployment soars. However, that is wishful thinking, since China will not unpeg it from the U.S. peso.
Rising unemployment in the U.S. and Europe is a hell of a price to pay to keep the Chinese Communist Fascists in power.
The Obamsters are going to have to decide, do they want people on the street in the U.S. or on the street in China? This time bomb has been ticking ever louder.
China has built plenty of empty cities, but they have all filled up.
The consumer base is being kept down by the currency being kept down.
By the way fascism is in opposition to communism and capitalism, it is the third position. The Chinese are now reformed communist 'market socialists'.
The Chinese have actually had improving living standards, even if you exclude their export industries. China was literally a third world agrarian society only a few decades ago, it is a very different dynamic.
The people of china lived through the great leap forward and the culture revolution. A recession is not going to be that bad relative to what they had in the past. China's internal growth is still impressive.
Unlike China, the United States allows me a greater freedom to express viewpoints not covered in the Approved Communist Party Opinion. Think about that when you decide to trade freedom for transactional efficiency and goods/services of dubious quality.
Our constitution does not have a government-empowering Article 51:
Nor does the United States have the willingness to adopt such provision; the events on September 11th, 2001 have not caused anything to get that close (Patriot Act included).
Yes freedom for you to speak on either fox news or msnbc or cnn with preselected talking points. Any other source outside the msm and the power structure gets zero publicity and is dismissed as having zero credibility. Just like zerohedge.
The printing presses cost money to run, so do tv studios, free speech is bought and paid for always has been.
shoot your mouth off as much as you want , nobodys listening for the most part. So who gives a shit what the theroretical freedom difference is between countries.
I have been to china twice and my trip this summer was for 10 weeks.
They hardly have stop or yield signs. The drivers are defensive, cautious, crazy and rude at the same time but there are few accidents. Seriously, Beijing has 20 million people and I saw 1 yield sign in 6 weeks in that city.
Cars do not have the right of way in a society of peasants for whom the car came later. Its like whoever get there first has the right of way. The cops do not have guns and don't bust people everywhere all the time.
It is a respectful place. It felt more libertarian than here, the weather is nice and the market opportunities huge.
You and your white freeper brothers are free to delude yourselves, but you are all fundamentally wrong.
Look at where china was 30 years ago. It was literally a third world country. Look at India, bangladesh, etc today. That was like china.
Whereas the US has actually seen falling living standards from its first world status, only to be subsidized partially by a credit bubble.
This is empire decline for the West.
I'd sure like to know how long you'd last talking outside the Communist Party approved script, and in a non-Westernized part of China.
They sure know how to disappear people who seem to give their government (or the businesses) trouble.
As for the nice weather, enjoy living in a country that makes Los Angeles's worst pollution look pristine.
Smooth business transactions (at the cost of about every other freedom) != Libertarian
Enjoy living in the US once the currency collapses and the riots start.
By the how how long did Saddam last when he started selling oil in euros?
Try and express non-msm viewpoints and see what happens.
That is why news sources like zerohedge are given no credibility.
It takes money to setup a news studio, printing presses. There has never been a "free press" not corrupted by money and political interests.
Get out of your fox/nbc/cnn bubble.
Have you dropped your marbles ?
Communism is involuntary Utopianism, as developed by a paid stooge in the Library of London.
As practiced here on Earth, let's say in the USSR, Cuba, and China, Communism is simply Fascism in disguise. You do it my way or I will kill you, oh what the heck , I will kill you anyway. Lenin, Stalin, Castro, and Mao didn't let the Communist Manifesto get in their way.
Like how "capitalism" and "democracy" deals with its enemies.
After exterminating its native population naturally, the us goes to exterminate foreign populations. Whether it be iraq, vietnam or any other failed corporatist military expedition the us has been in over the past 60 years especially.
I agree, and my vote for which is weaker goes to China.
IMHO that BoA report jumps the gun. 1H 2010 is still too soon for RMB revaluation. There's still plenty more meat on the bone of the US consumer despite the rumors of his demise.
And even if there wasn't, and consumer spending drops *rapidly* in 1H 2010 -- China is not a nation that responds quickly to these things. They won't rebalance FX into declining sales. They'll go the other way in an effort to cling to stability.
That's just how the PRC works...
It's clear that the China experience with and reliance upon incrementalism is shining brightly today. When China elects to use the coin of unexpected reversal will be interesting.
"China is not a nation that responds quickly... That's just how the PRC works..."
In all the dealings I've had with Chinese Electronics manufacturing companies, that's not been my experience. Mine has been that they constantly evaluate (in this case a product) and cut it off when they think the ROI is too low (Zero).
I don't think you will see the China committed to this economic configuration, shall we say, of course. Nor do I expect they will panic. However they will IMHO move deliberately and with whatever haste is necessary. So, to me the article seems exactly correct... how China exits provoking as little loss from the reconfiguration as possible... for them.
We are fortunate a Dollar crash is not in their favor, I think.
first in! w00T
Great reporting guys. I totally agree. China is a bubble waiting to pop!
Not in the near future pal.
... "The only open question is when will China decide it is finally time to shift away from the export-led growth model to one which prefers its own consumers as the source of growth."
The answer is "never". Authoritarian regimes with historically fresh revolutions do not share; hence, no Chinese middle class. Coming soon to a theatre near you, "Jubilee Nation", sung by the PPT barbershop quartet.
I totally disagree. There is a burgeoning middle class, the size of which will be astounding. The old school communists gave life to a new generation of consumers.
The old schoolers, those who were raised by Mao, who's belief systems were shaped and shaken to their core not being able to trust your own neighbors, by rationing, uber conservatism, and harmonious thoughts of equality, gave birth to a new generation that does not want to live like that ever again.
There is a huge middle class underway in China.
You mean middle class a la Argentine of 2001????
-China has to feed 1.5 bln people a day!!!
-China has no natural resources and US consumers 'helped' to contaminate this country beyond repair
-China's only wealth is a pile of US monopoly money that they cannot use because this will cause rapid inflation of the $....
So please give me some real facts for 'huge middle class underway in China".
+1
Two anonymous comments have hit the nail on the head.
The rest of the commentators do not understand what is actually happening in China. As regards the article itself .. wishful thinking.
The US had growing pains in the 19th century too. It is not fair to single out China, which is taking the fast track by the way. Of course there will be ups and downs/
They're worse than Argentina.
That is, unless you want to call the following things 'natural resources':
No doubt that there are plenty of folks from China or in support of China willing to try to say otherwise.
"China has no natural resources"
What utter nonsense. China produced over 200000 kilograms of gold last year, which I believe was the most in the world. They have huge coal reserves, which is why they are sidestepping Kyoto/Copenhagen. They also have huge supplies of strategic metals, like antimony, vanadium, and manganese, many of which are used in high density batteries. Plus, China has been using US consumer dollars to buy oil rights all over the world, from Africa to South America to Canada.
I guess you missed 60 Minutes last night. They had a piece about how SoCal was running out of water, caused by fights between urban users, who want lush green lawns in the middle of a natural desert, and SoCal farmers, who want lush green crops in the middle of a natural desert. A lot of people are homeless, and what were they fed? Among other things, carrots imported from China. But as the Chinese middle class grows, water is likely to be their greatest need in the future. Water, not oil, may well prove to be the strategic asset of the early 21st century.
already going on.. watch FLOW
you dont need anything else.. you NEED water
in my area it has rained more than any recent year - and they still charge more and more for it... what does tell you for places that never get rain/snow caps??
their food is home grown. thats a market in any currency. The food is so delicious btw.
america debt is americas problem. debtor debtee big difference
Scooby,
While I agree w/your assessment, China is in a huge bubble all their own.
One has to wonder what happens, when the BIG flush occurs.
Disagree, China has a growing and wealthy middle class. They are important to The Party for two reasons. First, they are the co-opted educated workers. These folks are making money because The Party wishes them docile. They permit them to buy cars, nice apartments and plasma screen TVs. The new Middle will not make waves.....or get any silly notions of more freedoms or democracy. Secondly, a growing (and high profile) middle class is important to The Party's rhetoric that China is encouraging consumption, in spite iof a large body of data pointing to the contrary.
As for one of the questions posed by TD:
"The main question for 2010 and beyond is whether this will be a gradual decline or a disorderly drop"
Should be no worries here. The Chinese, as a culture, baring revolution" don't do anything in a "jaw dropping" way.
Very important distinction. The burgeoning middle class values education above and beyond most. So what you call the "co-opted educated workers", may in fact not be as co-opted as you describe.
Too, if we compare a burgeoning middle class group here in the US to one in China we see a stark, shocking, important difference. Case in point. African-Americans vs. 2nd generation farmer families with urban residence permits(lets say in Chungdu).
African American's value the rapper Plies ( http://www.google.com/search?hl=en&q=plies ) who truly represents their struggle to succeed in America. And if they don't succeed, no worries their African American congressional rep will get more benefits from the Obama admin, and their local Acorn office will support them while they play Pimps&Ho's.
The farmer family has Zero welfare opportunities. Does not value song, dance, and sloth rather high education, family, and work, work, and more work. Much can be said for these simple facts.
So who's going to "win". We all have our opinions.
...and which nation destroyed themselves more with drug addiction??
do you think they will keep the opium out this time?
chinaguy - Thanks for providing some of the best in local flavor in the ZH comment section this year.
Concerning your observation: "The Chinese, as a culture, baring revolution" don't do anything in a "jaw dropping" way."
I suspect that China understands the value of this observation and what a well implemented moment of reversal could bring if leveraged.
The old saying is "The West plays chess. China plays Go."
The west may play chess but America can barely manage checkers. That's the problem.
Do not be surprised if there are folks in the First World willing to shatter those illusions. They will only increase in number until the fellow travellers selling out their own United States (read: Anyone who moves businesses to China) begin to see the error of their ways.
Article 51 seems to have a strange way of turning your favorite country's dissenters horizontal and missing a few organs - in ways that the United States will never allow. It would be similar to the majority party in the United States using the military to disappear people or violently censor.
Trading freedom for transactional efficiency(as China wishes to do) has its limits. In that light, do not be surprised when the Communist Party's house of cards collapses; prepare to find another country that won't see you as a threat (the United States in the near future).
Oh yeah, Tiananmen Square, the Korean War, and Tibet weren't jaw dropping.
Relative to rodney king, the vietnam war, the iraq war, arming the "terrorists" in afghanistan during the 80s and now at war with the same "terrorists".
@Rollerball
Totally agree. China is vastly over-rated as a power. It is a military threat, to be sure, but it is no match economically or militarily for a country of free men. Unfortunately, America, at the moment, is becoming more authoritarian and corporatist interests are attempting to consolidate power at the expense of the American public. If we are successful in repelling these forces, we will enjoy a new economic and political renaissance. That is all the more reason that we should all be politically active and working to bring that important change. Regardless of the hand wringing that we all succumb to, American democracy and free enterprise are still the greatest experiments ever tried.
:-) What wonderful arrogance.
Let me know how it works out for ya, but first... just go back to sleep for a little longer. Dreams of Cheap Goods from China will dance in your head!
Sorry I just couldn't resist.
Great. I love the ideals on which this country was founded and somebody comes along and calls me arrogant. I doubt you would call me a "consumer" since I have income below the national median and no debt other than my house mortgage (BTW, I don't have a HELOC and don't do cash outs). I drive a 16 year old car. I live less than a mile from my office and refuel, on average, about every 5 weeks. Maybe you should heed any urge to resist posting next time.
First, the ideals of self-reliance and freedom from government have morphed into "What's in it for me?", and in the words of Grampa Simpson "Gimme, gimme, gimme". And that's true at both personal and corporate levels.
Second, as I've posted before, with the exception of Pearl Harbour, no part of the US or Canada was damaged during WWI or WWII. We exited WWII with the world's mightiest manufacturing capability, and many of our good engineers were still living, while Germany and Britain had lost many, and those minds were occupied for almost 20 years just trying to rebuild.
Finally, as I've also posted before, and no one has ever said a word in refutation, Canada and the US had high strategic barriers - tariffs, the oceans, transocean communications, and higher education. All of these have been eroded either totally or partially. Thanks to the WTO, very few tariffs left. Thanks to container ships, the cost of shipping goods fell dramatically in real terms. Thanks to fibre optics and modern telecom systems, telecom costs have dropped ferociously; you can now call India from Toronto for 2 cents/minute. 30 years ago, it cost 56 cents (in 1980 dollars) to call from Toronto to Vancouver. Finally, the Internet made asynchronous communication cheap, easy, and fast, enabling businesses to coordinate wide spread locations effortlessly. All of these technical developments have eroded the strategic barriers that allowed Canadians and Americans to enjoy some of the highest standards of living in the world. We have to face facts - our incomes are going to fall relative to the rest of the world, because there is no longer any reason why we should be higher. More kids study English or history at school than study engineering.
Go read some of William Gibson's books. He describes a bifurcated world - one where creative people live lives of luxury, and those who aren't so smart live lives of penury. That's the future, my friend. I hope your kids are studying science or math.
American democracy? What are you talking about? That two-party dictatorship? Or McCarthyism?
America is not a democracy? I guess my tin foil hat is a little less tinny than yours. Yes, Viginia, we do have open and free elections in this country, regardless of what one thinks of hanging chads et al. McCarthyism? This was always a faux threat. Alger Hiss was a Russian spy and there were communist elements here working on the overthrow of our government. A lot of these traitors were active in the Hollywood community. Do some research on Elia Kazan. Of course, it appears that Obama, Summers, Geithner and Bernanke are doing their level best to win this one for socialism without a shot being fired. Stop worrying about McCarthyism and start worrying about the fascist tendencies of the Left (politically correct speech, campaign contribution limits, takeover of media and academia, Environmental regulations, Socialized medicine, etc.). Al Gore is a far larger threat to American liberty than Joe McCarthy ever was. I will agree with you on the lack of political options, so I suggest that you heed my advice in the original post: Get active and stay active.
"America is not a democracy?" - It's not.
France is a democracy, as well as the Netherlands and Belgium. Perhaps Sweden. US is not.
@Zina,
I really need you to explain why France is a democracy and America is not. Very interested to hear your reasoning.
In the last French presidential elections (2007) every single voter, anywhere in France, had the option of voting for Nicolas Sarkozy (had 31.18% of votes), Ségolène Royal (25.87% of the vote), François Bayrou (18.57%) Jean-Marie Le Pen (10.44%), Olivier Besancenot (4.08%), Philippe de Villiers (2.23%), and other 6 candidates.
It's democracy - not a two party dictatorship.
@Zina
"Two party dictatorship" is an oxymoron. France and the U.S. are both, basically, social democracies. Other than large cultural differences (e.g. SUV's versus Le Metro, football versus soccer, beef versus eggs), there is very little difference between the two democracies. France does have more political parties, but these parties still have to form coalitions in the vote buying process.
BTW, I don't know who is flagging Zina and me as "junk", but this is a polite debate b/t Zina and me, so just ignore it if you must.
Ppoor people who are anti-socialist make me giggle.
Don't any of you know the USA is a Republic????
It THAT why the schools don't teach Civics anymore?
If folks don't even understand the basic function of the
nation, how can the comments have creditibility?
Democracy...why that is what we send our young men in uniforms to other countries to "sell" to the people there.
Socialism...why that, like charity, begins on Wall Street.
The best engineering of a 'socialized' America was hatched at Goldman and executed by their fraternity brothers in every corner of finance around the world.
Even my fu*#ing eye drops are now made in China with their poluted water. You think America will get it's act together, that is opitmism I do not share. We are broke, we have exported all the machines AND the distribution to our old 'enemy' (you Vietnam Vets should be crying your eye out since the Chinese Army fought you when you thought they were Vietnamise). Exactly how is an American demanding better than minimum wage going to compete with 25 cent an hour workers with NO benefits?
The plan is to destroy Americans wealth. There is no way that America can compete in the NEW WORLD ORDER unless we dumb down our wealth just like we have dumbed down our citizens. Got milk?
Yes, we have a representative democracy sometimes referred to as a republic. Republic and democracy are not mutually exclusive terms.
America was never meant to be a democracy. It was designed as a constitutional republic. It was only since it was redefined as a democracy that it began to go downhill
Our generation is the one watching the US decline in its prominence....like a trainwreck unfolding, it's predictible yet nothing any of us can do.
Once the US is actually unable to continue the globalization gig than the world will know how weak and incompetent the CCP really is... all these nice cuddly ideas of China and the third world is going to be a bigger shock than the utter poverty of the Western world. Orderly ?? The worlds leaders have never done anything orderly without the power of a gun and money as a guide.
ABSOLUTELY agreed. There will be nothing orderly about the next 3-5 years. China is a nation created by America (and Wal Mart).
There is no true Chinese "middle class" as we define the word. Sure, they are buying more "cars" right now but that is eye candy for CNN and western consumption.
Our forefathers who founded this nation came here to start afresh and we simply fucked it up. Unless we get our shit together soon then we're going to pay a heavy price. These are really "individual" prices that will be paid.
We need to find organized mechanisms to starve the federal government beast or this just may get bloody.
I'm not sure starving is an option. To starve the government is to foment a power struggle that would be ugly at best. Better to simply use the power of representation by placing real Americans in power , persons who answer to the same ideas as the founders of America.. Freedom. Freedom from the ignorance of the rest of humanity.
"I'm not sure starving is an option."---it is the only moral option.
"placing real Americans in power , persons who answer to the same ideas as the founders of America.. Freedom." --- the only "real" Americans, with the ideals of the framers, are marginalized (Ron Paul, Kucinich, Wellstone, etc), or corrupted once elected (name most incumbants). The beast has powerful $$$ and influence (makes for "funny weather" days when flying to northern Minnesota (Wellstone)).
Sadly, ugly is what may need to happen to re-awaken the old school American independance, frugality and outside the box thinking...sorry, I wish it were different, but I think not.
Also wish it was different, but I agree with you.
There is nothing that quite focuses the mind like not eating for a week or the taste of your own blood in your mouth.
"In order to put voting in its proper perspective, imagine that you are a prisoner in a state penitentiary. But it’s a democratic prison, in which the inmates are allowed, every four years, to select who is to be the warden. The prison system presents you with two choices: candidate A, who promises larger cells and less crowding, and candidate B, who promises better cafeteria food and extended exercise periods. You may vote for either candidate, but implicit in the process is the understanding that you will remain a prisoner. If a fellow inmate decides to run for the job as a "Prison Liberation Front" candidate who promises to tear down the prison walls, his name will not appear on the ballot. Indeed, he will likely be sent to solitary confinement. He will have learned, as will you, the real lesson implicit in every election: no matter who you vote for, the government always gets elected, for if voting could change the system it wouldn’t be legal." -Butler Shaffer
---VERY nice!!! Think I'll scrape and paste that into a blog post tonight...Thanks!
CCP has been much better for China than the KMT ever would have been.
As for "Freedom" tell that to the REAL AMERICANS, the native americans and the black slaves.
Today native americans and african americans are still disproportionately in prisons and falsely accused of crimes, while living in generally lower income communities compared to whites.
Except for the fact that dissent doesnt make you short a few organs. That, and we know what really happened on June 4, 1989 in Tiananmen Square; military from your rural divisions was used to to exact a massacre on the urban sympathizers and dissidents(not to mention the attempt to censor *our* media wishing to cover a less partial, more accurate account of the events). Finally, the SAT/ACT/etc. number does not permanently bless or curse someone like your educational tests do; we're less selective in our high-quality secondary education.
But then you memorize the official Party position as if it was the only opinion there.
Oh, and before the inevitable 'you do not understand', the United States does understand your kind, and quite well. That's why there are folks who sell out the United States and offshore jobs to your country.
As for the massacre of the native americans?
Do they not have rights. If I recall correctly you didn't "finish the job" there are still a few million of them left.
The treatment of Native Americans and African Americans in the U.S. was a disgrace.
Murdering your own people (in China) was a necessity, was it not ??? Otherwise the Fascists that run China might not be able to live the lives of little princes that they do.
Is this not so, my little China apologist?
So what are they communists or fascists? You european colonizers can't even make up your own mind. They are totally different ideologies. Fascism was the third position between communism and capitalism.
This is compared to america murdering innocents overseas in faraway lands for illegal wars while at the same time claiming to be a nation of peace. LOL
according to my my friends who were there:
by the tim the tanks showed up there were few people left on the square because most who had been there were the children of the connected. They knew wat was comming and left. The dumb ones stayed
blacks commit more crimes.
Unless you expect everyone to believe that the next of kin of a murder victim would rather see an innocent black man get punished than the ACTUAL PERPETRATOR, assuming they know who it was.
Also, almost all witnesses to crimes must be lying too...as they point the finger at black men instead of those actually responsible.
As blacks statistically commit >50% of the rapes, it is clear too that rape victims are lying and accusing black men, so deep is their racism that they'd rather see a black man go to prison than the PERSON WHO ACTUALLY RAPED THEM.
People who were robbed, likewise. They'd rather point the finger at a black man than the actual robber. As blacks are highly likely to be victimized by crime, it is somewhat paradoxical that THEY TOO finger black men when in actuality it was I guess a white man that did it.
Do us a favor: buy a fucking clue.
Of course and to a stormfronter such as yourself that is why blacks should either belong in the zoo or as slaves for the white man.
Fact: Blacks are falsely accused of crimes more so than any other race in the US.
Perhaps our China apologist can enlighten us with comparative statistics, as to the race of those falsely accused in China, versus those falsely accused in the United States.
Gosh, none available in China ? Shouldn't take long to make some up....
And my oh my, those foolish Americans actually provide those statistics- probably to harm themselves.
How much of the thin party gruel can you hold down before you have to throw up all the non-sequitors shoved down your throat by your Party boss ??
The non-Han population has actually grown in China. In tibet, turkestan, manchuria, mongolia etc.
Whereas of course America's "final solution" was to simply "deal" with the natives then so they wouldn't have to be "burdened" with them in the future.
As for party talk. Just look at your own msm, and look at the sheeple in your elections. They think they are in charge when in actuality they control nothing.
The thing is China has never claimed to be this "sacred" land of "freedom", "democracy", "peace", "hope", and "human rights" activists. Whereas America does and is routinely shown its hypocrisy.
With this post....
I have come to realize after a years worth of reading Zero Hedge that doing so has led me to take my eye off the prize.
There are concerns published here that a mere mortal such as myself will never have much of an effect on. Is it possible for a butterflys wings to effect a wind storm elsewhere?
You do have some power and control within your proximal range of grasp. In other words as all politics are local so should be your efforts.
Perhaps your efforts will not matter, but keeping the big picture in mind is wise. No man can stop a tsunami after all, but he sure can look up and see the tide receeding, and act appropriately.
I don't buy that all politics are local. History is littered with the ghosts of peoples and places that thought all politics were local, until another people proved them tragically wrong.
Get ready for fireworks! 2010 will be the year that decides the inflation/deflation debate.
Recently I've come across 2 interesting facts:
1) By Jan 1931, nominal manufacturing wages only fell by only about 2%, when consumer prices had already fallen 8.1%. (Source: Animal Spirits) I was surprised by that fact since even consumer prices hadn't fallen by that much, and wages showed why they are 'sticky'. Labor in the US still feels pretty expensive (and with healthcare will only increase), so I wonder if 10% will creep up more?
2) Also, the failure of Kredit-Anstalt, an Austrian Bank in May 1931 (from losses in of all places- Eastern Europe) set off a new round of debt-deleveraging that was just as painful as the 1929 crash in destroying confidence in the banking system. Is history going to repeat itself, or rhyme with a failure coming out of Asia, or dare I say it, the US?
The past year reminds me of the two weeks after the crash in 1929. The bankers gathered round, decided to build confidence and buy up the market. It worked for a bit, but ultimately Mr. Market was too big. Plus, the bankers didn't trust one another and several defected, selling high and shorting the market. There are simply too many holes in the dyke.
The reason wages didn't fall during this period is because the administration had decided to implement wage controls. Businesses were convinced by the adminstration that wages should remain the same and in some cases they suggested wages should rise. The natural market forces were subverted in an effort to keep wages and product prices up.
Since when has BoAML become the resident expert of China on ZH? It is disappointing that whenever a view fits ZH's pet peeves, ZH would quote anything even if it comes from the devil.
Get this into your head: the RMB and all emerging markets would engage in global devaluation sometime in the next 3 years. The trigger for that is the utter chaos and financial catastrophe that has been temporarily delayed by Keynesian money printing. If ZH and people on this forum would only be rational, the problems among western financial institutions and the shameless doctoring of economic statistics of all forms are clear signs that the truth out there is really far worse to merit such shambolic cover-ups by governments of all stripes in the democratic world. Not only are politicians and governments doing it, they are abetted indeed aided by the mass media and intellectual elites. That alone tells you that something is very wrong. The few logical voices out there are marginalised, as folks here have noted time and again, yet everyone here are still hoping things would turn out better than they suspect. But gold prices is telling everyone that far more pains lie ahead for the western world in the near future.
There is no viable response in the emerging world to the collapse of the grossly exaggerated global demand built up over the last 2 decades by distorted low interest rates led the Fed. Too much supply have been built up in the manufacturing (and service in the case of Indian IT firms and call centres) economies in both emerging and developed world. Just look at US debt over the last 2 decades and that tells a lot. People here fantasize that the US can print its way out, or default like Argentina. Well, the last time I checked Argentina did not have the global reserve currency and it accounted for less than 1% of global debt. Even then, many western lenders were shaken to their core when Argentina defaulted. There is no solution of default for the US unless the US want to trigger a world revolution and total collapse of all the western banks loaded to their gills with US treasuries. And JPM and Goldman with their gezillions of interest rates derivatives would implode. No American politicians, and the Fed, would allow that to happen.
But the end would come, even without a US default. When global interest rates are forced to rise rapidly sometime in the next 3 years from intoxicated western governments, the financial collapse would precede total consumer collapse. No more silver bullets from Keynesians thereafter, central banks would fall to the mass uprisings now nascent in countries like Greece and soon to spread across the western world.
Historically too, the timing is correct. Since the 1500s and the defeat of the Islamic world, the world has witnessed 500 years of western colonialism and economic dominance built on eastern technology breakthroughs in mathematics and science. Borrowed time is now to be return.
This is vintage LOLs. Are you combining some hilarious pro-Islam historical revisionism with the standard tin foil hat Gold Bug / nWo story? I welcome this angle, it will lead to even more comment LOLs in 2010.
+1
Islamic countries have invented nothing,.. since they became islamic.
Wikipedia tells a different story:
http://en.wikipedia.org/wiki/Inventions_in_medieval_Islam
No better place to get your (massaged) "facts" than wikipedia. Now you should look up Climategate and Al Gore. The first doesn't exist (except as an oil company conspiracy) and you can find Al Gore under "Saint".
And perhaps the most informative clue is that Wiki combines the terms Islam and Medieval, now that truly is appropriate.
Geez, now I need to puke....
Climategate? Oh yeah, Venus is hotter than Mercury. Perhaps it has something to do with 96% carbon dioxide in atmosphere...
Those were "inventions" made either by the pre-islamic peoples or the recently converted. Islam more or less stagnated socities. What they did develop was basically derivative of older discoveries.
Double post.. sorry
Exactly... and what they claim as those few accomplishments, well those are left overs from the ancient genuis' such as Euclid and his guild, even Islam itself is a product of the Christians and Jews. Heck Mohammads father was a Christian , his mother a Jewess. It was Ptolomy Soter( savior) , of Alexander the Greats Diadochi ( successors) who is the one person , though there were many, that the east should thank for any real innovation, but he is not recognized .
Actually, there's a whole contingent of rationale ZH space monkeys who tend to focus on larger issue macro-perspective trends. We leave the political hand-wringing to others who still believe in a world where the US government represents their collective interests.
Ultimately, it all comes down to the ability of the world economy's productive output to service the next tranche of debt necessary to propel the global FRB system to new levels of investment, production & consumption. Historically, the servicing of pyramided debt has been achieved over and over again by either new discoveries of core energy sources and/or improved utility and maximization of existing proven reserves.
Unfortunately, even if we were to have 100-500 years of existing energy reserves, it doesn't do anything for us other than to service the existing layer of debt. We need to be able to add an additional layer of debt in order to inflate asset values and depreciate/roll-forward current principle+interest balances so that they may be re-packaged and sold off as FI investments (ie bonds).
(Some call this Ponzi finance; I call it the reality of our global economic system which has been extant for at least 200 years, if not longer. It is what it is, so in order to keep the game going, we need to repeat the same steps that got us here. Yes, I know it sounds crazy, but if the music were to stop, we would looking at a 30-50% contraction. Is it any wonder then that central banks + governments have abandoned all pretenses about following traditional trade practices, laws & customs? They are neither crazy nor stupid - they know damn well what's in store if we don't pull off a miracle.)
So let us focus instead of what's out there on the horizon in terms of a paradigm shift in energy optimization and/or economic efficiencies. If something shows up, we're good to go; all of this little 'unpleasantness' will be soon forgotten. But if we, as a global community, don't have something lined up pretty soon, then political matters may begin to gain their own momentum that would foreclose future consideration of possible solutions. That is, until the blood letting has run its course.
A few super-doomers are convinced there is nothing that can save our bacon this time around. I'm still holding out judgment, but I will admit it needs to be pretty damn impressive; a real game changer if you will. This would include a massive new source of energy controlled by the US that would be equivalent to gas at $.25 cents/gallon. Or some form of genetically altered food supply/health care solutions that reduced current costs by 1/100. Moving production off-shore to China provided a huge boost over the last 20 years - it really drove down production costs. However, unless we find another planet in which to off-shore production away from China, I don't believe this trick will work again.
So, to recap, unless we come up with something pretty darn quick, we simply will not have sufficient productive output to service the next tranche of debt necessary to cover baseline investment, production & consumption. If this thing really tilts over & goes tits-up, then the US gov't will resemble those slow-mo shots of the Twin Towers as they collapsed inward, gaining momentum all the way down.
+ 1
B9K9,
Agree.............
Game Over.
Unless, it's a GOD thing. We are damned if we do, and damned if we don't.
I see NO Way out of this imposion globally......period.
Just the time frame is the unknown.
All that humans have ever done with increasingly dense energy is move more matter more quickly (with the attendant ecological impacts). Be careful what you wish for or we really will require "another planet"...
that is succinct, and accurate far as my history study (flawed as it is) would conclude...hope for the best, prepare for the worst.
Same thing I have been saying. Fusion or bust.
We're at the end of the growth phase of industrial economics until a new, growable source of energy is discovered.
This one has to be as big as coal vs oil or wood vs coal. Aka, completely new. Stopgaps like fission or solar panels do not cut it.
If we were to invent voltaics with insane efficiencies and high EROIs, that could suffice, but there is still the scalability issues along with the need for growth (aka, more sun)
yes 'eastern technology' was the true innovators
and it was an eastern strategy to be kicked around for 500 years so that we can get exhausted
when the western man learned that he is an insect, he said fuck off life and no more bambinos
the chinese man say, what's the problem?
yes, we go back but way back to the life of an insect
You are highly astute and plausibly correct except for one thing. I beleive the world today is being run by an international cabal of individuals whose basic premise is somewhat different than the one you adhere too.
The welfare of humanity as a whole is not the primary goal, even if logic dictates it must be.
Rather, Mankind is like a beehive that has digressed to the point the Queen engages in cannabalism.
The reason for this is overcrowding and the psychological reaction of the hive mind to contraint.
Rats become homosexual drug addicts in such conditions, and it appears mankind is no different.
I suggest that what you forbid, the default of America and the ensuing chaos, one must in fact entertain in tandem with a re-evalutation of how the ensuing destabilization can be utilized to effect the reformation of human priorities on a moral level.
Sincerely,
-MobBarley
'Caveat Omnia'
huh wtf? Eastern breakthroughs in science and math? Like what?
The transistor? Calculus? The laser? The microprocessor? Aluminum? The radio? The light bulb?
Every breakthrough was western not eastern. Any notion to the contrary is utter bullshit
Note the timeframe the author mentioned-- before the 1500's.
Who invented algebra? (hint, look at the etymology of the word)
Who invented gunpowder?
When did the Renaissance start?
Is Japan a western country? They invented a lot of things, specially since 1970.
huh wtf? Eastern breakthroughs in science and math? Like what?
Like the concept of zero. Like the decimal system of number representation. These were Hindu-Arabic innovations. How far would the science of mathmatics have advanced with roman numerals? Try doing long division with roman numerals for your answer.
Mathmatics is the basis of all other sciences (except maybe philosophy), and the foundation of modern mathmatics is Eastern.
Try running a computer without the binary system. Your argument holds a little water, but not so much.
The binary system came from the east lol.
Actually the basic math and technology was developed by the east. Even calculus was developed in South India. This all allowed for the west to advance.
By the way the first intel chip was developed in cooperation with a japanese firm busicom and a japanese engineer was one of the three chief designers for the chip.
One breakthrough that westerners deserve full credit for though, would be nationalist, historical, and revisionist propaganda on a level never before seen in human history.
Total ROTFLz on this.
Calculus developed in South India...WTF? Differential calculus was invented by Isaac Newton.
I mean, let's click down the list of the significant breakthroughs in science and technology in the last 200 years. Please, let's.
The transistor was invented at AT&T Bell Labs. Go down the list of everything you use on a daily basis, the refrigerator, electric power, lighting. Michael Faraday, Fourier, Newton, Edison, the Wright Brothers, Rutherford, Curie...there are too many to list.
What is revisionist bullshit is crediting those NOT RESPONSIBLE for the invention of things merely because we do not like the lack of diversity in the history books.
The white man's flag is on the moon.
Go fucking watch Avatar again or something; I'm through with this delusional bullshit. Like somehow the invention of the zero trumps the ENTIRE freaking contribution of Greece and Rome. The islamic standard bearers were turks and persians; take a look at a damned map if you cannot figure out what part of the world that is.
Yes calculus was developed in Southern India centuries before newton. Don't let eurocentrism distort history however.
Greeks and Romans did not contribute much to human history, much of their "advancements" were copied from egyptians, persians, indians, etc.
Yes the West has advanced, but only off of previous eastern advancements.
By the way, what is most ironic about northern europeans claiming southern european civilization as their own (ie roman/greek) is that northern europeans consider themselves superior to southern europeans and they were even the barbarians that destroyed roman civilization by the way. Until the rape and pillaging of the americas and the transatlantic slave trade northern europeans were barely a blip on the radar of human civilization.
All of iran is in asia. As for anatolians, first of all most of turkey is in asia, except for a tiny stripe around western istanbul. By the way anatolians, are not europeans. They are a mixed european/middle eastern/central asian melting pot.
Much of your "eastern" argument is grounded in the eastern Roman empire as built by Constantine, a Roman emperor.
Long before Mohamed found the rich Widow, the Roman's brought clean drinking water so scholars, such as yourself, could sustain themselves with great thoughts !
Keep blaming the white man, for only he is burdened by the WORK ETHIC.
Much of your "eastern" argument is grounded in the eastern Roman empire as built by Constantine, a Roman emperor.
Long before Mohamed found the rich Widow, the Roman's brought clean drinking water so scholars, such as yourself, could sustain themselves with great thoughts !
Keep blaming the white man, for only he is burdened by the WORK ETHIC.
No, I've already stated that the romans and greeks did not contribute much as the eurocentrists claim.
The persians, egyptians, mesopatamians, indians already had systems in place.
Of course the romans intruded upon nearby mediterranean locations and obtained their technologies.
By the way you are admitting that the roman empire was at least partially actually composed of easterners and non-whites. Therefore roman advances were not necessarily "white" advancements. LOL just take a look at how wonderful the "purest" whites of northern europe where doing at that time.
Don't we really have to give credit to the first monkey. Enough already, unless you wish to provide CONVINCING historical evidence.
So far, nothing looks very convincing.
Of course according to the western christian imperialists themselves they can never be wrong. It is white man's burden to re-write history and to handle the "lesser" races.
Can someone tell me why bank stocks have been trending lower over the past few months (since mid-Oct for US banks, and more dramatic fall for Euro banks)?
It's only in the past month or so that Greece (PIIGS) and Dubai solvency issues came on the scene. And wouldn't the steepening yield curve help banks?
I know I'm missing something. Any thoughts?
Chinese Premier Wen Jiabao on Sunday struck a defiant note about the country's controversial exchange rate policy, saying the government would not give into foreign demands to let the yuan rise.
"We will not yield to any pressure of any form forcing us to appreciate. As I have told my foreign friends, on one hand, you are asking for the yuan to appreciate, and on the other hand, you are taking all kinds of protectionist measures," he said.
"The true purpose (of these calls) is to contain China's development," he added in an interview with the official Xinhua news agency.
http://www.reuters.com/article/idUSTRE5BQ0D820091227?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+News%29
I saw this article this morning, too, and checked in to get the ZH perspective.
Don't look for China to allow their currency to appreciate before unwinding domestic stimulus programs; much in the same way we won't see Bernanke lift rates before unwinding QE measures.
Lizzy, I think that should be the end for the inflation/deflation debate. They're exporting the hyperinflation next.
Lizzy - The flavors are changing. We had the "globalization will heal all" flavor which is being replaced with the "national sovereignty shall not be impinged" fairly rapidly. Classic and predictable.
absolutely spot on.
protectionism and nationalism is the reversion to mean during shaky times.
abolutely predicatable. I still remember the G7/G20 meetings at the "onset" where every leader was spouting out about "...we must not engage in protectionism." Talk about ringing the bell....
and the wheel keeps turning...every 20-40 years you find yourself back to where you were then, kinda like music and teen fashion...nationalism -->globalism -->nationalism...around it goes, never stopping.
"decide it is finally time to shift away from the export-led growth model to one which prefers its own consumers as the source of growth."
Or is there a delicate balance in between. A horse race with export-led_growth_model to win and internal_consumer_growth to place. Either way the owner of the track wins big with their mostly invisible VAT on consumer items, and owning & leasing all land in China.
The cranes are still swinging in the larger cities. Adding another 150 million workers would be easy if they could spur internal demand for Walmart nick-knacks.
Class envy and consumerism is alive in China and that's all you need to import The Squids bubble machine.
An excellent overview of the tectonic forces that are rubbing up against eachother. How and when this pent up friction resolves itself will be most interesting. As others have pointed out we are witnessing the opening scenes of a historic period.
Right now the market is still in an uptrend, which has recently started to accelerate.
If the banks and big oils rally start running, then the bears are going to get utterly destroyed.
Sorry...
And watch China...
If this is a mid-level consolidation that breaks topside, watch out...
"bears are going to get utterly destroyed"
Using what for a time horizon? Weeks? A couple of months?
Keep an eye on XOM and GE....
Both look ugly right now, but if they turn around????
Living in a multicultural city, and working as an English instructor for recent immigrants, I have had many unique conversations with people recently arrived from mainland China.
IMHO, China is not the monolith we Westerners imagine. I taught a Mandarin guy and a Cantonese guy together. The tension between the two was palpable. The Mandarins consider themselves totally and irrevocably superior to the Cantonese. Moreover, a former Shanghai resident told me that he expects some kind of a revolution in China before long. Yes, coastal China is a "free-market" (notice the quotation marks before you post) showcase. However the interior of the country hasn't changed much for centuries. This can never be good. For anyone.
"Moreover, a former Shanghai resident told me that he expects some kind of a revolution in China before long."
This possibility has about as much chance of realization as the Hungarian uprising in 1956. The poverty of the rural masses in China has been roughly the same throughout the 60 year history of the Peoples Republic. Its not significantly any worse now than ever its been. The revolutionary potential in China is of the same type that it is in Iran, elitist, university centered, externally nourished. It is the great dream of the Western, imperialist media, readers of the Washington Post, the New York Times, and PBS's devotees, you know, the snakes that think its OK for us to be escalating in Afghanistan so long as it promotes the self-serving purposes of a radical feminism. Ask your friend from Shanghai if he or she thinks Communist power in China has diminished any since 1989. Even in its most tumultuous periods, say the Cultural Revolution, the party has never even come close to losing its central position.
Any attempt to grow China’s consumer sector must allow for the reasons underlying the country’s high savings rate - an almost complete lack of social safety nets (unemployment insurance, employer or government health care, pension system, . . ), fear of social and economic turmoil, and the traditional values of sacrificing for the child’s education and providing for one’s parents in their old age.
Unless and until the Chinese government makes material improvement in its support systems, we won’t see consumer spending grow much faster than the workforce. Which will mean continued emphasis on investment and exports.
Whats worse than a Mercantilist?
A "cut and paste" Mercantilist.
or one that plays that game (which usually has a nasty end) with the worlds owner of the fiat currency of record.
It's all about interpretation.
Both countries Mercantilist with 6 degrees of separation.
China is not mercantilist it is market socialist. Which has adopted some principles of the old forgotten dead american system of economics which built this country by the way.
I want to use the junky-dealer analogy for a better understanding.
- Junky-US consumer
- Dealer-China
- Substance-Chinese exports
- Crack house-Walmart, Best Buy etc
- Mob boss-Corporate America
- Payment agreement-USD/RNM peg
- Layaway plan-Bond yields
So the Mob decides to search for a cheaper more abundant source after tapping out all other options (not enough profit margin with NAFTA pot). Meth labs, opium fields and coca crops are established and the goods cut, laced and exported for US consumption. With this level of competition, local dealers are forced to either cut their base or resort to whoring. Supply is abundant and a no worries, good faith billing option provided. Why drink when it's cheaper to just pop. But before you know it, the OD's start piling up. Junkies are becoming scarce and others are resorting to counseling, methadone or even back to local pub brew. All of which frustrates the Boss and dealer. Pimps are sent out to encourage the dealer to push locally but knows this is fruitless since the farmers, cultivators, chemists etc are too familiar with their junky neighbor to the east; besides they don't want to consume their own stinkin junk. They want Special K and Israeli E. So the dealer, hell bent on avoiding riots, unrest and growing losses, decides to remove the layaway option, reduce exports and stock piles rather than facing his suppliers. This enrages the boss for it's his investment that he sees at risk. Without delay, he forcefully demands the dealer to push back on the suppliers to consume their own poison, reigniting a 21st century opium war. This is the only end game I see. Let's hope the US sobers up in the meantime.In a major USD advance, RMB could depreciate versus USD while appreciating against other currencies.
China should be the sister city to Las Vegas. Las Vegas is a shell town, running a shell game, where the volume of gainful employment is overwhelmed by prostitution in all its various forms, where the servants do the laundry, for the other servants who are holiday. If the numbers don't seem to add up, you better hire a government statisticians. Financial transparency in China is like the great mirrored casino walls, and just as easy to game. This is a land with no mass culture, no working class, Communism with no labor unions, no Democracy, a few nuke missiles. A few hundred years ago they were run by warlords, an ancient culture to be sure, but no better than say Mexico, which rises out of the ruin of two and possibly three great civilizations.
By whoring themselves out as the cheapest source of labor, they were actually late to the party, and now are poorly positioned for the next great technological change. They build smokestack cities, while the rest of the industrial world lays plans for urban centers which rival that in Fritz Lang's 'Metropolis'. You should have compassion for the Chinese people to be sure, but better have some for yourself, you were the rube in this con game. Your free market goods were unable to compete with those made by socialist worker bees, so now you are going to join them, and not the other way around.
Don't worry about the Chinese and their massive foreign holdings either, we have the most cunning, corrupt, and brilliant financial con men on the planet. They aren't going to give up Manhattan for the slums of Bejing. Fundamental changes arising from within Chinese society would surprise everyone, expecially Google and Microsoft, who help the Chinese police keep blogs and journalists locked up in jail. Are you suddenly feeling a little afraid, my little Peking ducklings? Is that why you voted for Obama? Are you just a bit more anxious now, that he has paid his campaign contributors so handsomely, and your rice paddy looks so poor?
Don't worry too much, the financial wizards have your back. Bernanke will pay them off in gold probably. Here, you take this pretty rock in exchange for all that sweat labor you gave us. But, if Obama finally gets around to paying his constituents a visit, he might decide to reinvent the AMERO and then all this global currency talk will be put on hold. Then America will decide when and how many dollars the foreign dollar victims receive for each AMERO, and when they have to convert.
And if you wonder, is America worth it, should we become a country of financial oligarchs, consider what the world would look like without American Culture, our greatest export, the movies and entertainment the Chinese routinely pirate. Without American culture the rest of the world is a dark gray slum, and perhaps even the bearded Bernanke knows this. I hear he fancies himself the professor in Gilligans Island, surrounded by Mary Ann and Ginger. My guess is he is one of the last red hot lovers, and that's his desert island.
They build smokestack cities, while the rest of the industrial world lays plans for urban centers....
Great analysis but I'm confused with this line. Venus program pipe dream??
might you be a computer/software engineer? If not, you think like one...:) No offense meant as I am one...:)
im an artist interested in boolean algebra and set theory ( the artist is part visionary, part mathematician) and i read mcluhan. no offense taken, ( to paraphrase the outlaw josey wales)
ahh, well the mathematical part then makes sense...I am computer engineer who also plays music, mathematical, yet not...I hear you...:)
So-called cunning men playing with fire also brought down all the major empires in the history of the world. Eventually they will choose to increase their own individual fortunes, at the expense of the society, which causes that society to decline.
US has about as much or less transparency economically at this point. Actually china was run by warlords until about 60 years ago. It was literally the sick man of asia. More like the whole us economy is las vegas. China at least has a growing a consumer base internally. Whereas a substantial portion of the us manufacturing base simply is due to the Military-industrial complex. When the dollar collapses, so does the MIC at least to a great extent.
You are too confident in these cunning men that is for sure. Face it this is the final stage of empire decline for the West.
Finally. Somebody does get it. But it's not just the currency. There are 2 ways to rebalance. Chinese exports drop to match world demand or Chinese demand increases to absorb world production. One way is more painful than the other. An additional problem is that China exports labor to world always in need of more economical labor, but the industrial world would like to exchange technology in return. There are more barriers to technology than just currency-property rights & the ability to amortize development costs being an important one.
Whither is operative word ... better spelled wither.
Nobody can successfully make the case that China is not a very serious country, and are a permanent player on the world stage. They are building a vast middle class, and an enormous manufacturing infrastructure, and have done so in a spectacularly short period of time.
But having said that, they are still an utterly dependent economy. The USA & ROW must buy ridiculous amounts of Chinese goods just to keep the status quo. Someone (I forget who) added up the total amount of money the Chinese populous could possibly spend on their own stuff, and it's a TINY fraction of what US consumers actually spent (much to our collective regret). Add the ROW's collapsing consumers, and the fact that the Chinese don't buy stuff anyway, and China is in a simple inescapable bind.
They gladly accepted a generational windfall, but mistook it for a "new future". They reinvested everything in maintaining and preparing for a world that will never come. It was a mirage, a one off spending binge that is over because we're all broke. So I think that's the other simple fact, they built too many factories to service a world that doesn't need or want servicing.
As for their much trumpeted $2T surplus, the Fed has shown us that's peanuts when a dedicated central banker starts writing checks. The inevitable reduction in GDP and consequent recession/depression will eat up their surplus pretty quickly. And the results will be the same as here.
I think the fundamental fact is that the laws of economics are the same for everybody. The Chinese are spectacular in their own way, but cannot repeal the bone crushing mechanics of too much debt in a shrinking economy, or the painful consequences from speculating with 'stimulus' money. They're in the same boat as everybody else, and will suffer the same fate along with all of us.
As for currencies, in a deflationary environment, cash becomes king and currencies appreciate relative to local assets. Most central bankers will follow the QE strategy of western countries and japan, struggling vainly against the deflationary tide. International trade will continue to slowly shrink, so what currencies do relative to each other is hard to say.
I guess the one imponderable is the propensity for desperate governments to start wars. WW II got us out of the depression, but let's all hope the Chinese don't copy that page from western "economics".
I think the key question is whither or whether the vassal state (US) will indeed wither in the end.
You have to feel sorry for the future Chinese middle class. The drywall in their homes will cause lung cancer. The toys they buy for the one and only kid the government will allow them to have will have enough lead paint on them to cause severe retardation. The medical supplies and drugs they will take for simple cures will kill them. And, as the middle class learns to keep up with the Jones, the milk given to that one and only child will kill it. However, at this time, there is good news for the Chinese.
A single Chinese mom discovers a way to whiten teeth at home.
A single unemployed Chinese mom makes $ 70,000 a year on the Internet.
Obama wants single Chinese moms to return to school.
"A single Chinese mom discovers a way to whiten teeth at home.
A single unemployed Chinese mom makes $ 70,000 a year on the Internet.
Obama wants single Chinese moms to return to school."
lmao!! so someone else shares my annoyance at the major ads on the internet...but you forgot one: Obama wants Chinese moms to lose weight using one rule....OBEY!! (and use acai berry, as seen on the "other "O"", Opera, or is that Oprah?)
look at the major assumptions in that post - there's no hope until people can accept that GLOBAL GROWTH HAS CEASED.
There isn't going to BE any global growth so long as energy supply declines.
The economists and planners cannot get their heads around that this is not some "cyclical" trend. It's really a significant epoch.
There ISN'T ENOUGH oil for the Chinese "consumer" to consume like we do! This is simply inarguable. We'd need 5 or 6 more Ghawars just to manage the supply needs of that.
The economists and forecasters simply cannot wrap their heads around this and let go of the notion of growth being the answer for everything. We cannot freaking grow forever...when does the discussion occur as to when growth must naturally end because we live in a finite system? These morons actually seem to believe that we'll just find the energy to power per-capita consumption needed for the "developing world" to grow and consume like the west.
+11
When usury ends... ie Never!! But don't forget Obama has Big plans for other sources of power.... sick!.
This is why the chinese aggressively investing in nuclear tech and alternative energies. Whereas the us hasn't invested in a nuclear power plant since 1973.
ding, ding, ding, ding....we have a winner!!!
I JUST DON'T UNDERSTAND WHY ANYONE BELIEVES THE FIGURES AND NUMBERS THAT COMMUNIST CHINA BLOWS. They are COMMUNIST, THEY KILL REPORTERS THERE!!
That doesn't matter to my liberal media. You can't trust Fidel and you can't trust China. We aren't buying anything and they grow 9%, HUH? RIGHT! THEY ARE LYING TO YOUR FACE.
WE ARE THE WORLD AND WE OWE THEM TRILLIONS AND BETWEEN THIS ADMINISTRATION'S POLICIES AND 500 TRILLION IN SECURITIZATION TO EAT, DEPRESSION II IS ON THE TRACKS WARMING UP.
ENGLAND IS READY TO BECOME ICELAND, THEY WILL WALK OUT THE GOVERNMENT.
SPAIN AND ITALY AND GREECE ARE GONE. EASTERN EUROPE IS GONE. CHICKENS ARE COMING HOME TO ROOST AND AMERICA HAS ABOUT 6000 BANKS THAT ARE GOING TO FAIL. IF WE OWN THE BANKS, WHY DO WE NEED MORE THAN ONE?
So the "communists" kill reporters and are therefore evil. In case you haven't noticed the us is running a "capitalist" ponzi scheme and has been killing plenty of innocent people in a faraway conflicts overseas for greed at least since the end of ww2.
America’s founders went to war to stop “taxation without representation.” What now do we make of a land being squeezed lifeless by “confiscation without representation”?
Big bankers and their big bucks now run a big government, answerable, not to Oregonians, Vermonters or Texans, but to Morgans and Goldmans.
A coup d’etat in-the-making is staring America in her collective face: how long before all see it? Savers? Investors? Pensioners? Busted homeowners? Depleted wage earners? Small businessmen? Entrepreneurs? Displaced manufacturers and workers? The millions of unemployed walking the streets of America?
Trapped in a box canyon we debate the Fed’s next move as we look for an exit.
This faltering great nation is in the final stage of an international financiers coup d’etat-- an unconstitutional deposition of her founding government by a small group of “establishment” bankers who have replaced the deposed constitutional government of America’s Founders. Are the plotters measuring the drapes in Beijing for their new headquarters offices? The Congress and the presidency are in their hands; US policy, foreign and domestic, is in their hands. The assets and freedom and borders and future of the American people are in their hands. Is it to be temporary, or permanent? The people must decide.
Doubt me? By wiki definition, “a coup d’état succeeds when the usurpers establish their legitimacy if the attacked government fails to thwart them--by allowing their strategic, tactical, and political consolidation--and then receiving the deposed government’s surrender, or the acquiescence of the populace and the non-participant military forces.”
Heck, our “government officials” gave the U.S. to them for a mere pittance in chump bribe change; our “elected” president and his bride eagerly redistribute our wealth to the IMF and the World Bank as aid to the exploited peoples of the world to enable them to repay their banker debts, our “non-participant military forces” are actually aiding and abetting the enemy by fighting their confiscatory resource wars.
As military historian Edward Luttwak said: “A coup consists of the infiltration of a small, but critical, segment of the state apparatus, which is then used to displace the government from its control of the remainder.” And as we sit and watch, the bankers, under the false flag of the Federal Reserve System, continue to transfer billions, nay trillions, big time into their world depositories--the likes of the Goldman Sachs squid and the Rothschild-Rockefeller consortium behemoth known as JPMorganChase.
Hey JR
You already have your answer from Goldman- "Bonuses all around boys"
As to the MSM, they are increasingly sounding like the Radio Berlin message from Stalingrad "We are all very warm, with lots of food, danke Mein Fuhrer"
It is coming, don't be discouraged.
The coup happened in 1913 with the Federal Reserve Act becoming law.I believe it was Franklin? who said something like..without a revolution every twenty years The Republic would be lost...well it is lost buried and rotting in a FED vault in New York..Happy Holidays!
Revolution Bitches!
(nonviolent and with the proper permits of course..in case the NSA is watching)
Putin and Hitler are the inevitable end-state that face the banker class. The king versus the goldsmiths, you bet on the king.
Our banks have but one power - the dollar. If the dollar loses confidence, they are powerless.
Right now the major countries are trying to figure out a way to get out of Dollar, Inc.
Thanks TD
The truth discovery process can take you inside the tent of your opponent sometimes. Don't stay too long.
China has been a feudal society for thousands of years. It has been built on hoarding and larceny, both collectively and individually. Who wouldn't steal to feed his family ? The idea that China has or can develop a "middle class" consumer in the model of the U.S. is preposterous.
Under the law of unintended consequences maybe the U.S. has (inadvertently or cleverly) poisoned China. Since China has consistently refused to let their currency float, and having financed the great American bubble, now the music has stopped, so they must "invent" their own middle class.
First you accelerate a construction boom, then you try to cobble together the "middle class" working family to "consume" this stuff.
Anyone that has been to China knows that construction workers and factory workers do not have sufficient wages to purchase a home/apartment, so China will need to copy the American model and create a Fannie Mae. They can charge less than the market price of money and subsidize a further expansion of housing.
Once this model collapses in a few years, it will all be over for China. Unless, of course, Bernanke is available and the price of ink has come down.
to Anon 175335: We can thank Islamic scholars for the "zero" and that is it. Islam is still a religion founded in murder and the breeding of ignorance. The enslavement of the many for the benefit of the few.