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How Low Can You Go: Selling Out Taiwan To Settle U.S. Debt With China?
Static Chaos
Post-Lehman and after the Too Big To Fail Wall Street banks were ultimately bailed out by the American taxpayer, Moral Hazard was cited as a major systemic risk to the global financial system. Three years later, a NYT OpEd piece has managed to potentially take Moral Hazard to the next level -- the fiscal and ethical system of the U.S. government.
From NYT written by Paul V. Kane (emphasis mine):
"With a single bold act, President Obama could correct the country’s course, help assure his re-election, and preserve our children’s future.
....He should enter into closed-door negotiations with Chinese leaders to write off the $1.14 trillion of American debt currently held by China in exchange for a deal to end American military assistance and arms sales to Taiwan and terminate the current United States-Taiwan defense arrangement by 2015."
Kane then went on to pat himself on the back that
"This would be a most precious prize to the cautious men in Beijing, one they would give dearly to achieve."
For those unfamiliar with this part of U.S. foreign policy history, here is a quick rundown excerpted mostly from Wikipedia:
The Taiwan Relations Act (the TRA) is an act of the United States Congress passed in 1979 under President Jimmy Carter after breaking the relations with the Republic of China (ROC) - Taiwan to establish diplomatic relations with the People's Republic of China (PRC).
While not recognized as "the Republic of China (ROC)", Taiwan is to be treated under U.S. laws the same as "foreign countries, nations, states, governments, or similar entities" under the TRA. The TRA also requires the United States "to provide Taiwan with arms of a defensive character", and "to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan."
U.S. administrations have since sold arms to Taiwan in compliance with the Taiwan Relations Act despite protests from Beijing. The TRA does not require the U.S. to intervene militarily if the PRC attacks or invades Taiwan, and the U.S. has maintained a "strategic ambiguity" in that scenario. However, a July 2007 Congressional Research Service Report confirmed that US policy has not recognized the PRC's sovereignty over Taiwan.
From the bio at NYT, Kane is "a former international security fellow at the Harvard Kennedy School, is a Marine who served in Iraq." As leaned as Kane might be, it is a serious stretch even for him to have come up with such a "creative solution" to America's debt problem, by selling out another government, which has very little to do with the debt agreement between China and the U.S. to begin with, breaking enacted U.S. laws all through "closed-door negotiation" with Beijing, without a single regard and consult to Taiwan.
Furthermore, Kane's proposal is essentially the epitome of Imperialism much despised by the West in that using Taiwan as a leverage to settle the U.S. debt owed to China, thus implying Taiwan as a piece of property owned and could be "traded" by the United States in a debt settlement negotiation.
Inter-country courtesy and decency to Taiwan aside, Kane's suggestion is just plain wrong on so many levels. It is ironic how the Arab Spring is overthrowing autocratic governments and leaders left and right, yet Kane has regressed to the opposite as to recommend President Obama basically bowing, symbolically as well as physically, to China, which is still largely autocratic despite recent progress, all for a quick trillion bucks.
Kane has also worked out the math for China:
"A deal for the resolution of Taiwan’s status could save China $500 billion in defense spending by 2020 and allow Beijing to break even by 2030, while reducing America’s debt and serving our broader economic interests."
Where do you think China would put the $500 billion saving in Taiwan defense? Hint: Beefing up the defense (think nuclear) against the U.S. would be a good guess!
Kane's conclusion:
....By tackling the issue of Taiwan, Mr. Obama could address much of what ails him today, sending a message of bold foreign policy thinking and fiscal responsibility that would benefit every citizen and be understood by every voter.
I'm sure the world community would be thrilled to learn that Obama's "bold foreign policy thinking", "fiscal responsibility", and his re-election all hinge on a tiny island with a population of mere 23 million. Jimmy Carter sold Taiwan out some 30 years ago, conceivably it would not be hard for the U.S. to do it again. But seriously, how low can you go?
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web bot, I'm sorry man but what the hell are you babbling about? I'm and American and I live in China. I have been studying Taoism. I'd love to hear what it is in the Tao de Ching, which you obviously have read, giving you indication that China will go to war with us. I'm not saying that it won't happen, but Taoism will have as much to do with it as Christianity had to do with killing the Native Americans. If you are Mormon, then I guess there is no argument here.
First, don't speak of those with common sense. You can't even do a wikipedia search. China, for the most part, is not a taoist nation. It may have begun here but Confucionism and Buddhism are exponentially more popular here. And to be fair, most Chinese are terrible Buddhists. They say they are Buddhists, then go to the temples to pray to a money god. Now, if you don't understand why that makes them bad Buddhists, this would be a good time to try the wikipedia thing!
Next, I am sick of people trying to stir up trouble by attempting to vilify a group of people they have no knowledge about short of what the see on the mainstream media. By and large the people here are friendly and don't have a problem with America. Sure, there are assholes here, just as there are everywhere else. As people we have the right to be assholes sometimes, but an unfortunate few abuse the priviledge. I've been here almost 3 years. There is not even anything on the state run, propoganda spewing Chinese media that says anything about America that isn't actually happening. They talk about the market woes and the unemployment and occasionally a natural disaster of epic magnitude.
I am willing to bet that you are an American who has never left the lower 48 other than maybe Canada. Maybe Mexico to party and buy cheap stuff. Get out and form some opinions with a factual basis.
And about the only opinion that most people have of the government here is the same that most have everywhere. A pack of lying, cheating, killing, greedy bastards that are best kept as far away from everyday life as possible. Hell, the only reason most people even join the Communist party here is so that they can develop contacts to advance their business interests.
Please stop being part of the fear mongering and the hate that is keeping us focused on the wrong thing. Focus on the real goal. The elite power structure that is screwing you, without the decency of using lube, and then expecting you to be happy about it!
STOP BEING PART OF THE PROBLEM!!!!!!!!
+1 million
As an American who has lived in China for 6 years, has a Chinese wife, 1/2 Chinese son, and a father-in-law who is a party member - you are completely 100% correct Piranha.
China already knows it has Taiwan in its pocket. It is just a matter of time. They wont rush it, though, since the calculus demonstrates waiting for the trends to do their work is less costly than rushing with a military confrontation. The only risk is that the military does something on their own.
What do you expect compromise from a nation like china for? China claims the open sea all the way to the coast of Brunei and Malaysia as their "undisputable terriotorial waters"
China claims that who the heads of the EU meet with is China's internal affairs.
Chinas has infiltrated most major usa corporations with their college grads (I know, many were in my classes and it was obvious who they were by what they were doing)
China wipes out resistance to its imperialism by attrition, cooercion, bribery, demographic change through immigration, whatever works.
China takes a long view.
China flag is red and yellow the colors of war and money (gold). the west has been blinded by its own greed in wanting to do business there and now it gets its karma handed back to it for supporting this communist impire.
But, as for Taiwan, China will rewrite the history books to suit its story line like it does in Tibet and everywhere else. Its just a matter to play out the game.
Geeze. Has anyone asked Taiwan what they think of this deal? Or would that be unpatriotic on their part?
China wouldn't go for it, because they know something that we fail or don't want to think about. And that is eventually they will take Taiwan and we will give it to them without a fight. They want that money hanging around our necks like an albatross. China's military and economic power is designed to out manouver the US. Because they know as well as the US knows that Taiwan and all the rest is a means to an end. They know that in the future we will be at war with China, because they know that the US is blocking them from real true superpower status.
Buck Johnson? I hope you are right! I can't wait to steal some Chinese CDs'. Sarc on (:
better yet! can I have first dibs on a Ghost City? Communism at it's best? 1.4 billion and emptiness everywhere.
How is that copper trade working out?
I remember the Hong Kong , turn over talks in the 80s'. The off shoring, and other worthless bantering! That ALL came to pass!
How to sell Taiwan when we don't even own it? Wait, you mean we can now naked short sell a nation as well? Wow, I didn't see that coming.
You know, the US government used to be largely funded by import duties and tariffs prior to 1913. Prior to the earned income tax and prior to the creation of the US Federal Reserve.
We also get to buy the cheap Chinese piece of crap 20 times over because of poor quality and longevity. There really is not a cost savings in the cheap crap, only initial purchase price.
At the time of Smoot-Hawley, the US was in the export position that China is in today.
Reply to Phili
Clearly any moron can become a Fellow at the Kennedy School. If not for that this article would be just another blog post somewhere.
$1.1 trillion is less than 10 months of deficit spending under Obama. How in the hell does that change our course and preserve our children's future? In under a year we are right back where we started.
Never mind the fact that China isn't going to spend over a trillion dollars for a promise from politicians who won't be around after the November election.
Listen, Asians aren't stupid. Get a clue real fast or we're done. Our only option is to be leaner and more productive than they are.
Kane is a liberal fucktard.
I lived in Taipei for several years and found the Taiwanese people pretty amazing on many levels. In my experience they have been outstanding in business affairs, as well as far more trustworthy, far better educated and astronomically more creative thinkers and problem solvers than the average mainland Chinese.
And Taiwanese stinky tofu (Cho Doe Fu) is much tastier.
The Taiwanese also have a distinct sanctity for life compared to their mainland neighbors.
Kane's depth of knowledge of the importance of Taiwan as a partner in many areas OTHER THAN ECONOMIC is a joke. A move like this would have massive implications.
One in particular is the intelligence windfall we receive as a direct result of having a technically savvy friend and ally about 80 miles off the PRC's shore.
When the Brits had Hong Kong, the U.S. has a significant embassy operation. When HK went back to the PRC, the shop was closed. While some of the operation moved to Beijing, all of the important stuff you need to do at arms length was moved to Taiwan.
While we do not have formal diplomatic relations with Taiwan, the reality is that literally each and every function of a U.S. foreign mission is carried out just the same by AIT (American Institute in Taiwan). In fact, about the only thing that makes their massive facility any different than other U.S. foreign missions around the world is the lack of an official seal on the front gate.
This would be a blunder of enormous proportion.
Dude's problem is he's thinking too small. If Taiwan can fetch a trillion (almost a whole year's deficit!) imagine what they could get for some other places. How much for Iraq? Libya? Iran? California? Kansas?
Bullish. Long Chattel.
More like short chattel, only better.
Borrow Taiwanese chattel that you don't own, sell it for proceeds to today, and use the proceeds to pay down US debt. Only the best part about this trade is you get to keep the proceeds and never have to buy back the chattel.
Ingenious!
I think Kane is on to something. Maybe Kane should sell the concept to Europe.
Perfect hedged trade: short Greek and Italian chattel, long German volk.
While there at it, why don't we give Israel away to the Iranians? All they have to do is pickup the $3 billion yearly bar tab, and take all of Bibi's obnoxious phone calls...we can throw in 50 brilliant neo-con opionion writers, and a few hundred think tanks to sweeten the deal...you think maybe it might get a write up in the NYT??
http://www.thecactusland.com/
Great reply. But there is more we could throw in to make it work. The problem is Israel controls the USA and not the other way around.
Does Taiwan have gold? Ok, then not before all gold in Taiwan is shipped to the US.
j/k
Good point about using Taiwan like a piece of property.
This is only a recommendation to cancel the treaty, doesn't mean hand over the whole island... well it might as well, but China would still need to "nudge" Taiwan to join.
Imagine what would happen with Japan and S. Korea. They would have to re-think their own defenses and relations with China and USA.
Taiwanese could probably be... a little resentful of the US. Even if asylum is granted to some Taiwanese and allowed to immigrate.
And... what is the current debt 14T? -1.14T? There's still a lot out there. Japan would probably then be left holding the largest reserves... and do the same as China, start building up USD T's... and then start "nudging" the US to act in whatever way they wish. Except this time instead of wanting US troops out of Japan, they'll want a larger build up.
Taiwan holds about $153 billion in U.S. debt.
Taiwan's foreign reserve ranks 4th in the world, after China, Japan and Russia.
Taiwan's gold-holding ranks 13th in the world.
" help assure his re-election"
seriously? that is one of the reasons we should do this? why is the re-eelection of Obama so damn important?
It's important to the folks at the NYT. It's not cool in their circles to be anti-Obama. Believe me, it's really that simple.
I'm sure he thought he was being clever, but it was really just a terribly thought out idea.
In fact the opposite of what he said is true, and I suspect he has simply never been on the creditor/investor/management side of things. The existence of the US debt to China is probably the most powerful curb on anti-social behavior by the Chinese. As America's largest creditor, the Chinese have a huge interest in maintaining the American system. If the US could one day magically wipe out all its debt to China, that would in fact finally give China carte blanche to run wild and do whatever the hell it wants to do. Being creditors to the world is actually a positive socializing influence.
So Taiwan is only worth 10% of the US debt? Well heck, throw in Japan and they might write the whole thing off! With no debt, we'd start wasting even more money, and before you know it, in 20 years we'd be at it again and have to monetize a few more democracies. I wonder how much we could get for India.
why not thrown in Alaska and Hawaii for about one $Trillion each? that would get rid of Palin and any pesky birth records in Hawaii.
well perhaps the Americans could cut a deal with the Saudis in return for $3 trillion, to abandon israel.
of course, the Israelis have nukes, so, they may well prove a dangerous foe, even on their own.
of course, the Israelis have nukes, so, they may well prove a dangerous foe, even on their own.
Which is why there still IS an Israel and the USA did not sell it out long ago, like it does all its "allies" soner or later.
usa less than 300 years, Saudi arabia less than 100 years. Israel more than 3000. I will bet on Israel any day.
1948 to 2011 is 3000 years? Time sure flies when you're having fun.
check the bible. its called J & S.
well perhaps the Americans could cut a deal with the Saudis in return for $3 trillion, to abandon israel.
of course, the Israelis have nukes, so, they may well prove a dangerous foe, even on their own.
Great article but I have one small contention: CN hardly needs $500 billion to bolster its nuclear defenses. As another poster stated on another thread, nuclear war is only feasible between a state with nuclear capability and a state without. China currently possesses sufficient nuclear capability to deter attack from the U.S. or Russia. Put simply, they only need enough to slip one past the goalie. A single strike with a conventional CN nuclear ICBM would kill over 10 million and cause untold economic damage. No.... More likely they spend a little on nukes and the rest on empty cities.
I thought Israel already gave China our country?
China could buy a lots of land, forests and mines for $1.14 trillion.
I think they will wait until Taiwan gives up.
Furthermore, it is probably cheaper to bribe politicians in Taiwan. Or use sexual extortion.
Taiwan won't give up. Long live a free Taiwan!
If you have no morals or principles, then anything goes. The only problem with this idea is that it would signal to the rest of the world that what ever little shred of credibility the USA might have left regarding its alliances was now gone. Thus, it becomes every man (nation) for himself. We have allies other than Israel with nuke capabilities, and who is to say they might just get scared enough to decide to use them. Talk about chaos. Israel would for sure take defensive actions against the Arab world realizing its alliance with the US was worthless. Who knows, the more I think about this, the more I like it. World wide chaos, famine, pestilence, disease - when the word is that the meek shall inherit the earth, is it talking about cockroaches?
It looks like Kane is not too Abel to understand the depth of his depravity.
What will he sell next time the USA runds up a debt with China? His children, grandchildren?
Perhaps Mr Kane would be willing to tell China that for another trillion dollars the USA would turn a blind eye to the invasion of Australia by China.
Or is it the case that the US government has scripted the piece for Kane in an attempt to fly a kite in the face of China.
Whatever the reason, it is truly a sorry day for free and lateral thinking.
actually... you don't mean "lateral" thinking... you mean "LIBERAL" thinking... yes... @$#dam #uckin liberal thinking.
Look where #uckin liberals have gotten us to with their welfare state hand outs and government controlled planning.
There you go placing labels again. You haven't got a fucking clue. http://www.youtube.com/watch?v=Xbp6umQT58A&feature=related
There you go placing labels again. You haven't got a clue.
Australia should seriously consider getting nukes. It is a mouth-watering prize, and Uncle Sam isn't going to be able to defend it forever.
Yes our bikini babes are ripe for plunder by the male heavy chinese horde.
But sadly we have a marxist lite/ greeny muslim alliance in government at the moment so the only guns we'll be buying are spud guns.
I'd rather we have our present government, than one led by Abbott the Mad Monk and the rest of the Koch-suckers, BigDouche.
You obviously then dont play the pokies and are therefore are a latte sipping, smh reading ringpiece.
Go off and smoke a sneaky ciggie from your plain packet and dream of more and more curtailments of your freedoms in the name of our union lawyer PM.
Although i give you Abbott is a gimp.
Maybe Holder will divert Operation Fast and Furious to Canberra.
Even better idea:
Cheap oil in exchange for cutting off aid to Israel.
I'm sure the New York Times would publish an op-ed like that.
Exactly. A de-escalation of tension between China and USA should be on the basis of what is good for peace and not a sell out of principals. I doubt anyone would gave the gall to either write or publish such a proposal as the one you have put forth.
Sell Taiwan to the Chinese. Get the debt canceled. Then conquer it back.
USA! USA! USA! USA! USA! USA! USA! USA! USA! USA! USA! USA!
Wouldn't it be simpler to just cancel all of China's Treasury CUSIPs, and leave Taiwan out of it?
Tell them: The first 33% is canceled because you put melamine in the baby's milk. The second 33% is canceled because of the sulfur-laced drywall you covered Florida with. The last 34% is canceled because we really just don't like two-faced lying brutal thug chink mobsters. But hey, nothing personal.
What a blow to Wal-Mart. They'll have to go looking for U.S. manufacturers of $13 plastic shoes. That will mean thousands of new jobs in Chicago.
While we're at it let's give them the Sudetenland.
Yeah Taiwan,
How about just sell them Alaska too while you're at it.
So fat dumbasses can keep buying plastic shit and be bought off with welfare checks.
Fuck that.
The Times is fraught Quislings such as this.
Pucker up, Taiwan, for a Judas kiss from the perfidious Grey Lady.
D.B.
We have heard that a "team" is on its' way to NYC / DC from Taipei as we speak.
The "problem " of Mr. "kane" or whoever he is/was will go away shortly.
A likely "suicide"...
well bankers rent-boy, Obumma, has already sold his Marxist soul to the fascists so journalists muting selling-out Taiwan in exchange for US debt isn't such a stretch
The White House, Senate and US Congress are all whore houses ...maybe one day those insane 52% of zombie voters who vote will wake up to the fact