Uncle Sam, Your Banker Will See You Now

[HighDemonslayer]

August 08, 2007
Uncle Sam, Your Banker Will See You Now

By Paul Craig Roberts

Early this morning China let the idiots in Washington, and on Wall Street, know that it has them by the short hairs. Two senior spokesmen for the Chinese government observed that China’s considerable holdings of US dollars and Treasury bonds "contributes a great deal to maintaining the position of the dollar as a reserve currency."[China threatens 'nuclear option' of dollar sales By Ambrose Evans-Pritchard, London Telegraph, August 9, 2007]

Should the US proceed with sanctions intended to cause the Chinese currency to appreciate, "the Chinese central bank will be forced to sell dollars, which might lead to a mass depreciation of the dollar."

If Western financial markets are sufficiently intelligent to comprehend the message, US interest rates will rise regardless of any further action by China. At this point, China does not need to sell a single bond. In an instant, China has made it clear that US interest rates depend on China, not on the Federal Reserve.

The precarious position of the US dollar as reserve currency has been thoroughly ignored and denied. The delusion that the US is "the world’s sole superpower," whose currency is desirable regardless of its excess supply, reflects American hubris, not reality. This hubris is so extreme that only 6 weeks ago McKinsey Global Institute published a study that concluded that even a doubling of the US current account deficit to $1.6 trillion would pose no problem.

Strategic thinkers, if any remain who have not been purged by neocons, will quickly conclude that China’s power over the value of the dollar and US interest rates also gives China power over US foreign policy. The US was able to attack Afghanistan and Iraq only because China provided the largest part of the financing for Bush’s wars.

If China ceased to buy US Treasuries, Bush’s wars would end. The savings rate of US consumers is essentially zero, and several million are afflicted with mortgages that they cannot afford. With Bush’s budget in deficit and with no room in the US consumer’s budget for a tax increase, Bush’s wars can only be financed by foreigners.

No country on earth, except for Israel, supports the Bush regimes’ desire to attack Iran. It is China’s decision whether it calls in the US ambassador, and delivers the message that there will be no attack on Iran or further war unless the US is prepared to buy back $900 billion in US Treasury bonds and other dollar assets.

The US, of course, has no foreign reserves with which to make the purchase. The impact of such a large sale on US interest rates would wreck the US economy and effectively end Bush’s war-making capability. Moreover, other governments would likely follow the Chinese lead, as the main support for the US dollar has been China’s willingness to accumulate them. If the largest holder dumped the dollar, other countries would dump dollars, too.

The value and purchasing power of the US dollar would fall. When hard-pressed Americans went to Wal-Mart to make their purchases, the new prices would make them think they had wandered into Nieman Marcus. Americans would not be able to maintain their current living standard.

Simultaneously, Americans would be hit either with tax increases in order to close a budget deficit that foreigners will no longer finance or with large cuts in income security programs. The only other source of budgetary finance would be for the government to print money to pay its bills. In this event, Americans would experience inflation in addition to higher prices from dollar devaluation.

This is a grim outlook. We got in this position because our leaders are ignorant fools. So are our economists, many of whom are paid shills for some interest group. So are our corporate leaders whose greed gave China power over the US by offshoring the US production of goods and services to China. It was the corporate fat cats who turned US Gross Domestic Product into Chinese imports, and it was the "free trade, free market economists" who egged it on.

How did a people as stupid as Americans get so full of hubris?

COPYRIGHT CREATORS SYNDICATE, INC.

[BainbridgeShred]

I love how people talk about this issue (And it's been being discussed for years) as if China is some kind of economic powerhouse that would be able to devalue the dollar at no loss to its own economy. If China were to piss the US off in the least, much less proceed with something like it, it would devaste the already faltering Chinese markets (Think paper tiger). Basically, it's lose-lose. And the only way that China would do this is if they thought they could achieve a military victory against the US.

[Blue_turnip]

I love how people talk about this issue (And it's been being discussed for years) as if China is some kind of economic powerhouse that would be able to devalue the dollar at no loss to its own economy. If China were to piss the US off in the least, much less proceed with something like it, it would devaste the already faltering Chinese markets (Think paper tiger). Basically, it's lose-lose. And the only way that China would do this is if they thought they could achieve a military victory against the US.

Lol, please explain.

[Blue_turnip]

I love how people talk about this issue (And it's been being discussed for years) as if China is some kind of economic powerhouse that would be able to devalue the dollar at no loss to its own economy. If China were to piss the US off in the least, much less proceed with something like it, it would devaste the already faltering Chinese markets (Think paper tiger). Basically, it's lose-lose. And the only way that China would do this is if they thought they could achieve a military victory against the US.

I really don't get what a military victory has got to do with anything. And honestly, judging the US's performance in Iraq I reckon China would definately give the US a run for its money in a hypothetical war.

But that is irrelevant.

Now explain how China would get fucked over if they were to 'piss the US off in the least'.

[Scott]

Seems that Paul Craig Roberts should be working at the Federal Reserve, what a wealth of knowledge.

Sure China's holding of US$ are substantial (I think just over $1trillion) but the daily turnover in foreign exchange markets is in the tillions so they may be able to have a short term influence on the dollar but not over the long term.

Japan also holds a large amount of US$ but no one's complaining.

Anyway, if China did decided to offload a large amout of USD it would be to their own detriment becasuse they would be selling at a huge loss.

[Blue_turnip]

Hey Scott.

My knowledge on this topic is fairly limited but from what I understand people aren't complaining about the japs having lots of US$ because i don't think america isn't imposing sanctions against them like they are china.

[Cass]

Now explain how China would get fucked over if they were to 'piss the US off in the least'.

The majority of stuff (clothes, toys etc.) that Americans own was made in China. Think about what that would do to the Chinese economy if the U.S. suddenly stopped buying their shit.

[Blue_turnip]

Now explain how China would get fucked over if they were to 'piss the US off in the least'.

The majority of stuff (clothes, toys etc.) that Americans own was made in China. Think about what that would do to the Chinese economy if the U.S. suddenly stopped buying their shit.

Exactly, America is dependant on China for stuff. America isn't just going to suddenly stop buying clothes.

America isn't the sole country buying from China - you don't run teh world.

Yet America doesn't have much stuff China wants.

Basically America wants more from CHina than China wants from America.

I found the comment that suggested China would get fucked over if they were to 'piss the US off in the least' a bit objectionable. It basically comes across in like 'America will just pwn China if they do anything wrong', which is just blatantly false.

[Scott]

Hi Ollie,
your right, the US isn't threatening to impose sanctions against the Japanese and I guess that was the point I was trying to make.

It seems there are a number of American politicians and commentators, like the one whose article prompted this thread, that seem to have a fear and prejudice against China.

There is a lot of complaining about China's manipulation of its currency and it's accumulation of foreign currency reserves whereas Japan did exactly the same thing for decades without a complaint.

No one complained about all the Japanese cars and electronics that America imports or the huge US$ reserves held by the Japanese government.

Don't get me wrong I'm not trying to have a go at the Japanese, I'm just trying to point out the double standard of those people making such a bid deal about China.

[Cass]

Exactly, America is dependant on China for stuff. America isn't just going to suddenly stop buying clothes.

When hard-pressed Americans went to Wal-Mart to make their purchases, the new prices would make them think they had wandered into Nieman Marcus. Americans would not be able to maintain their current living standard.

America isn't just gonna suddenly stop buying Chinese products, but if Americans can't afford to 'maintain their current living standard' then they aren't going to be buying as much Chinese made stuff and the Chinese economy will start to suffer. America may not be the only country that is buying from China, but it is still one of the biggest.

[Blue_turnip]

America isn't just gonna suddenly stop buying Chinese products, but if Americans can't afford to 'maintain their current living standard' then they aren't going to be buying as much Chinese made stuff and the Chinese economy will start to suffer. America may not be the only country that is buying from China, but it is still one of the biggest.

On the contrary, when the americans can't afford to 'maintain theiir current living standard', they'll be buying less homosexual clothes from big brands and more dirt cheap stuff from China.

While it won't last forever, labour in China is extremely cheap. America, even if their economy suffers, won't stop buying from China.

[BainbridgeShred]

Blue_Turnip, I think I've made it a point in the past not to respond to you, because most of the snide questions/remarks you make could be just as easily answered by a Civics, History, Foriegn relations, or Economic's class which you either never took or didn't pay attention to. Either that or you majored in Liberal Arts.

I really don't get what a military victory has got to do with anything. And honestly, judging the US's performance in Iraq I reckon China would definately give the US a run for its money in a hypothetical

China definitely could give the US a run for its money in a war. They have a lot of tricks up their sleeve's which they could use on us if something made them so decide to. What you don't understand though, is that a hypothetical war with China and the war in Iraq have absolutely nothing in common; and that battle between US and China would mean a completely different ballgame. It would effectively be the war the United States had been anticipating in it's military strategy for the last 60 years. The nation building-whatever you want to call it that's going on in Iraq would be out the window against a nation like China.

Now explain how China would get fucked over if they were to 'piss the US off in the least'.

I will, but maybe I should've spoken more clearly hear. It is very possible that China could push America very far before the US did anything, but something like the invasion of Taiwan (Which high-level Chinese officials have been muttering about recently) or a sell-out of the US dollar, would be an monumentous aggression.

Exactly, America is dependant on China for stuff. America isn't just going to suddenly stop buying clothes.

This is where your faulty understanding of economic's I was talking about earlier comes in. And I could type for hours about it, but I'd rather go see if my hot or not ranking has passed 8.5

So here, http://www.washingtonpost.com/wp-dyn/co ... 01580.html

It sometimes seems as if almost everything we buy comes from China: DVD players, computers, shoes, toys, socks. This is, of course, a myth. In 2006, imports from China totaled $288 billion, about 16 percent of all U.S. imports and equal to only 2 percent of America's $13.2 trillion economic output (gross domestic product). Does that mean we don't have a trade problem with China? Not exactly.

Read that for a decent (Though slightly misguided and waaay shortsighted) look at the overall economic picture between the two countries.

I should have never made it sound like a war (Military or Financial for that matter) would be easy-going's on the US. It would mean a dramatic increase in poverty (Especially in the short-term, as Scott mentioned) and a general devaluement of living standard for the bottom 95% of the American tax bracket. With that said, the effects on China would be even greater, because China is an export nation, while for the more recent half of it's life has been gradually becoming more of an import nation. Still, US infrustructure is tons more stable than China, because China is a strange mix of a Mercantilist nation and a Stalinist one. And remember how far Stalinism got anyone.

Y

et America doesn't have much stuff China wants.

CHINA WANTS AMERICA'S TRADE MARKET.

I could've just typed that earlier and this post would be over.

America isn't just gonna suddenly stop buying Chinese products, but if Americans can't afford to 'maintain their current living standard' then they aren't going to be buying as much Chinese made stuff and the Chinese economy will start to suffer. America may not be the only country that is buying from China, but it is still one of the biggest.

This about sums it up. China is more dependent on the US because they need our market, which is why they have so much of our fucking debt to begin with, which is why if one of us goes down as the result of the other, both of us go down. It's one big stupid global catch-22. But what it would then become is a game to see who would out do eachother. In that fight, America is my predicted winner. Anyone who wants to argue the counterpoint has a few valid arguments in my book though.

On the contrary, when the americans can't afford to 'maintain theiir current living standard', they'll be buying less homosexual clothes from big brands and more dirt cheap stuff from China.

While it won't last forever, labour in China is extremely cheap. America, even if their economy suffers, won't stop buying from China.

It makes me smile, because there have been enough examples in US history where American's have proved their ability to rough it-often times after periods of great economic fortune-that it just goes to show that history repeats.

In conclusion, if China tried something like a sell-out of the USD (Which as Scott pointed out would mean selling for TONS cheaper than they purchased the debt for; never a sound financial theory, but hey, we're dealing with "Communists") America would be forced to drastic measures whether economically or militarily. If you doubt that the latter option is possible, then you too need to check your (recent) history of US policy makers spinning our country into war. For the moment though, the ball's in China's court, and it never helps in the end to be the aggressor (Or atleast not appear to be ).

[Blue_turnip]

Blue_Turnip, I think I've made it a point in the past not to respond to you, because most of the snide questions/remarks you make could be just as easily answered by a Civics, History, Foriegn relations, or Economic's class which you either never took or didn't pay attention to. Either that or you majored in Liberal Arts.

I'm still in school, and havn't had a chance to major in anything.

Regardless, living in a third world country has made it hard to get education of any sort. The nearest school is 85 kilometres from my village.

China definitely could give the US a run for its money in a war. They have a lot of tricks up their sleeve's which they could use on us if something made them so decide to. What you don't understand though, is that a hypothetical war with China and the war in Iraq have absolutely nothing in common; and that battle between US and China would mean a completely different ballgame. It would effectively be the war the United States had been anticipating in it's military strategy for the last 60 years. The nation building-whatever you want to call it that's going on in Iraq would be out the window against a nation like China.

I mentioned Iraq merely to point out how bad America went compared to how they thought they went. They said it'd be over really quickly, and they thought they'd just storm in and own it up. But they were wrong.

Now explain how China would get fucked over if they were to 'piss the US off in the least'.

I will, but maybe I should've spoken more clearly hear. It is very possible that China could push America very far before the US did anything, but something like the invasion of Taiwan (Which high-level Chinese officials have been muttering about recently) or a sell-out of the US dollar, would be an monumentous aggression.

now this comment led me to exclaim "what the fuck?" out loud. And its really rare for me to talk to myself. You don't run the world, motherfucker. If CHina wants to invade Taiwan (which they WONT) then fine. Eat a dick honestly, America is not in a position to defend Taiwan. Mind your own fucking business. IMHO china has every right to invade Taiwan. Its the 23rd province. If you were China you'd feel the same, you control freaks.

Exactly, America is dependant on China for stuff. America isn't just going to suddenly stop buying clothes.

This is where your faulty understanding of economic's I was talking about earlier comes in. And I could type for hours about it, but I'd rather go see if my hot or not ranking has passed 8.5

So here, http://www.washingtonpost.com/wp-dyn/co ... 01580.html

I do my best to make the most of the education I get. Please do not question my work ethic. I'm not the person who wastes my life on... well other things that I won't mention because I want to maintain relative stability in this thread.

America isn't just gonna suddenly stop buying Chinese products, but if Americans can't afford to 'maintain their current living standard' then they aren't going to be buying as much Chinese made stuff and the Chinese economy will start to suffer. America may not be the only country that is buying from China, but it is still one of the biggest.

This about sums it up. China is more dependent on the US because they need our market, which is why they have so much of our fucking debt to begin with, which is why if one of us goes down as the result of the other, both of us go down. It's one big stupid global catch-22. But what it would then become is a game to see who would out do eachother. In that fight, America is my predicted winner. Anyone who wants to argue the counterpoint has a few valid arguments in my book though.

Firstly I want to make it clear that my arguments havn't said at any point that China will own the US without getting owned themselves if they sold out shiz.

I am, however, arguing against the fact that Americans think they're so pro when they're not.

I don't predict america to be the winner, either.

On the contrary, when the americans can't afford to 'maintain theiir current living standard', they'll be buying less homosexual clothes from big brands and more dirt cheap stuff from China.

While it won't last forever, labour in China is extremely cheap. America, even if their economy suffers, won't stop buying from China.

It makes me smile, because there have been enough examples in US history where American's have proved their ability to rough it-often times after periods of great economic fortune-that it just goes to show that history repeats.

The romans owned for a period far greater than the Americans have, yet they eventually got owned by the Huns because they were too busy sucking each others dicks off just like the US.

You can't just be a powerful nation for a hundred years or so and claim 'because I've owned this long, we can assume that the future will continue thus'.

In conclusion, if China tried something like a sell-out of the USD (Which as Scott pointed out would mean selling for TONS cheaper than they purchased the debt for; never a sound financial theory, but hey, we're dealing with "Communists") America would be forced to drastic measures whether economically or militarily. If you doubt that the latter option is possible, then you too need to check your (recent) history of US policy makers spinning our country into war. For the moment though, the ball's in China's court, and it never helps in the end to be the aggressor (Or atleast not appear to be ).

the last clause of your last sentence was extremely hypocritical, and makes me sick.

If what was in the following brackets was alluding to the fact that America is typically the aggressor then at least you realise your wrongs. However if thats the case then I don't get what you mean by 'appearing to be'. Because America always appears to be the aggressor. Hey, you can't judge, you live in the country where their propaganda flows strongest.

May I also just use your 'history repeating itself' joke of a comment to point out that China hasn't actually been 'the aggressor' in the past. So by your rationale, they won't be in the future either.

The only good thing the US has done is come to Australia's aid during world war II. Stopping the dirty war criminals with a couple nukes was bloody tops.

[Blue_turnip]

And you don't have to call me 'Blue_turnip' if you don't want to. 'Oliver' is fine.

[HighDemonslayer]

hmmm, this thread is filled with great stuff so far. I'll have to post, but only when i have more time after Sunday.


tidbit: As a military dictatorship, the standard of living, and/or economic well being of their "useless peasants" is not a priority.

The brutal, economic "hit", from a Chinese -induced dollar crash, for example, will harm the U.S. far worse than it would harm China.

Suffering damage to yourself can be acceptable, if it also results in the near-complete financial ruin of your enemy.


-hds

[BainbridgeShred]

I am, however, arguing against the fact that Americans think they're so pro when they're not.

Oh, is that you're argument? Would you care then, sir, to talk about which of us could piss the furthest?

You're arguing from a pool of angst against America for how much we rock and how we walk around setting shit up and knocking it down. It's a totally seperate argument whether or not America has benefited the world or not, and in my opinion, not one worth getting into when you look aroudn the world and see the other options.

Regardless, living in a third world country has made it hard to get education of any sort. The nearest school is 85 kilometres from my village.

Sucks.

Whatever, I failed out of a lot of classes and just barely got my diploma, so we're kind of in the same boat. I still managed to educate myself in the world though.

I mentioned Iraq merely to point out how bad America went compared to how they thought they went. They said it'd be over really quickly, and they thought they'd just storm in and own it up. But they were wrong.

And again, that doesn't apply in the least to a war with China. Go learn some military history and how armies have been able to bounce back when fighting a war suited to their style. Or duelly you can look at how armies suffer when fighting a war their enemy is accustomed to, whereas they are not.

now this comment led me to exclaim "what the fuck?" out loud. And its really rare for me to talk to myself. You don't run the world, motherfucker. If CHina wants to invade Taiwan (which they WONT) then fine. Eat a dick honestly, America is not in a position to defend Taiwan. Mind your own fucking business. IMHO china has every right to invade Taiwan. Its the 23rd province. If you were China you'd feel the same, you control freaks.

Lol dude. Whatever. You're a fucking nutcase man. I understand that your brain probably isn't working right cause you haven't eaten in days, but Taiwain is a soviergn nation with a people's who lineage (Political/Hereditary) is seperate from the mainland of China. China has made is clear it's desire to take Taiwan back from the 50's up until now, and the only reason you don't know that is because you aren't educated in foriegn relations. Taiwan has been the thorn in Communist China's side since its inception, and nothing will stop China from one day making their move.

Good job though, giving a totalitarian nation clearance to invade a democratically run country. You're a fucking idiot by the way.

I do my best to make the most of the education I get. Please do not question my work ethic. I'm not the person who wastes my life on... well other things that I won't mention because I want to maintain relative stability in this thread.

lol, it took me over a week to respond to your bullshit.

I am, however, arguing against the fact that Americans think they're so pro when they're not.

Whether America is pro or not makes little difference to me. I know I'm pro, and that's what counts.

the last clause of your last sentence was extremely hypocritical, and makes me sick.

If what was in the following brackets was alluding to the fact that America is typically the aggressor then at least you realise your wrongs. However if thats the case then I don't get what you mean by 'appearing to be'. Because America always appears to be the aggressor. Hey, you can't judge, you live in the country where their propaganda flows strongest.

You know the difference between me and you Blue_Turnip? I'm a realist, and you're a pussy.

America has occasionally played the aggressor for economic reasons in the past. Overall, this has benefited the world at large because in any case when considering governments, it's always a choice between worse and less worse.

And don't try to paint me as your typical flag waving American. Fuck American domestic and international policies. Most of them are bunk. I just like pissing off Singaporesean retards such as yourself who think China has the right to invade Taiwan, while shedding tears over American's being in Iraq. IT'S THE WAY THE WORLD WORKS. Go read a fucking book.

[Blue_turnip]

I am, however, arguing against the fact that Americans think they're so pro when they're not.

Oh, is that you're argument? Would you care then, sir, to talk about which of us could piss the furthest?

You're arguing from a pool of angst against America for how much we rock and how we walk around setting shit up and knocking it down. It's a totally seperate argument whether or not America has benefited the world or not, and in my opinion, not one worth getting into when you look aroudn the world and see the other options.

Yes, I want to move to Scandinavia as well.

Regardless, living in a third world country has made it hard to get education of any sort. The nearest school is 85 kilometres from my village.

Sucks.

Whatever, I failed out of a lot of classes and just barely got my diploma, so we're kind of in the same boat. I still managed to educate myself in the world though.

"Educate yourself in the World". Well then you shouldn't be the dumbfuck who thought my comment was serious. Look up Singapore in an Atlas, you person-who-is-so-knowledgable-about-the-world. Regardless, I'm Australian.

I mentioned Iraq merely to point out how bad America went compared to how they thought they went. They said it'd be over really quickly, and they thought they'd just storm in and own it up. But they were wrong.

And again, that doesn't apply in the least to a war with China. Go learn some military history and how armies have been able to bounce back when fighting a war suited to their style. Or duelly you can look at how armies suffer when fighting a war their enemy is accustomed to, whereas they are not.

You don't get it, that is irrelevant. Don't you see?! America thought they were going to own, and they didn't. And now, you think America would own China... are you starting to get my gist?

now this comment led me to exclaim "what the fuck?" out loud. And its really rare for me to talk to myself. You don't run the world, motherfucker. If CHina wants to invade Taiwan (which they WONT) then fine. Eat a dick honestly, America is not in a position to defend Taiwan. Mind your own fucking business. IMHO china has every right to invade Taiwan. Its the 23rd province. If you were China you'd feel the same, you control freaks.

Lol dude. Whatever. You're a fucking nutcase man. I understand that your brain probably isn't working right cause you haven't eaten in days,[Insert by oliver: LOL] but Taiwain is a soviergn nation with a people's who lineage (Political/Hereditary) is seperate from the mainland of China. China has made is clear it's desire to take Taiwan back from the 50's up until now, and the only reason you don't know that is because you aren't educated in foriegn relations. Taiwan has been the thorn in Communist China's side since its inception, and nothing will stop China from one day making their move.

Good job though, giving a totalitarian nation clearance to invade a democratically run country. You're a fucking idiot by the way.

I never said they didn't have a desire to take back Taiwan. OF course they do, you dumb fuck. I just said they weren't going to attack Taiwan, thats all. China is pissed of at Taiwan, not because it is a democratic nation but because Taiwan took so much away from China when they moved to that island hole. So explain how America will take military action against China if China pulled out the act of 'momentous aggression' and attacked Taiwan? I find it amusing that when you see a war that is unjust, you seek to create your own unjust one.

I do my best to make the most of the education I get. Please do not question my work ethic. I'm not the person who wastes my life on... well other things that I won't mention because I want to maintain relative stability in this thread.

lol, it took me over a week to respond to your bullshit.

I wasn't talking about the time it took for you to respond to my post. You're obviously a slow one.

I am, however, arguing against the fact that Americans think they're so pro when they're not.

Whether America is pro or not makes little difference to me. I know I'm pro, and that's what counts.

the last clause of your last sentence was extremely hypocritical, and makes me sick.

How was what I said hypocritical?

If what was in the following brackets was alluding to the fact that America is typically the aggressor then at least you realise your wrongs. However if thats the case then I don't get what you mean by 'appearing to be'. Because America always appears to be the aggressor. Hey, you can't judge, you live in the country where their propaganda flows strongest.

You know the difference between me and you Blue_Turnip? I'm a realist, and you're a pussy.

America has occasionally played the aggressor for economic reasons in the past. Overall, this has benefited the world at large because in any case when considering governments, it's always a choice between worse and less worse.

And don't try to paint me as your typical flag waving American. Fuck American domestic and international policies. Most of them are bunk. I just like pissing off Singaporesean retards such as yourself who think China has the right to invade Taiwan, while shedding tears over American's being in Iraq. IT'S THE WAY THE WORLD WORKS. Go read a fucking book.

How has any of your aggression benefitted the world at large? (except for dropping the nukes)

I want you to understand that I don't WANT China to invade Taiwan, but I'd be lying if I said I didn't think they have the right to.

NO, I find it funny that YOU can say China doesn't have the right to invade Taiwan, and claim that would be a 'monumentous aggression' towards the US. Yet you felt the right to invade Iraq. My god, its rediculous.

You like pissing off Singaporean retards? Thats cool, I do too.

I think its just to shed tears over America being in Iraq.
The way the world works? This is the way the world works? You're a sick motherfucker:








I WENT TO GOOGLE TO FIND PHOTOS LIKE THESE, BUT THE FIRST LINK I GOT WAS "Army Investigating Web Postings of Grisly War Photos". Rediculous.

[HighDemonslayer]

What a mess. I think ill post another Econ. article from Paul C Roberts.

Even though I had a year or two where I misrusted his writings, and thought he was anti-semetic (among other things) He's got some good ones.


China is not the Problem

Counterpunch | August 18, 2007
Paul Craig Roberts

At a time when even the Wall Street Journal has disappeared into the maw of a huge media conglomerate, the New York Times remains an independent newspaper. But it doesn't show any independence in reporting or in thought.


The Times issued a mea culpa for letting its reporter, Judith Miller, misinform readers about Iraq, thus helping the neoconservatives set the stage for their invasion. Now the Times' reporting on Iran seems to be repeating the mistake. After the US commits another act of naked aggression by bombing Iran, will the Times publish another mea culpa?

The Times editorials also serve as conduits for propaganda. On August 13, a Times editorial jumped on China for "irresponsible threats" that threaten free trade. The Times' editorialists do not understand that the offshoring of American jobs, which the Times mistakenly thinks is free trade, is a far greater threat to America than a reminder from the Chinese, who are tired of US bullying, that China is America's banker.

Let's briefly review the "China threat" and then turn to the real problem.

Members of the US government believe, as do many Americans, that the Chinese currency is undervalued relative to the US dollar and that this is the reason for America's large trade deficit with China. Pressure continues to be applied to China to revalue its currency in order to reduce its trade advantage over goods made in the US.

The pressure put on China is misdirected. The exchange rate is not the main cause of the US trade deficit with China. The costs of labor, regulation and harassment are far lower in China, and US corporations have offshored their production to China in order to benefit from these lower costs. When a company shifts its production from the US to a foreign country, it transforms US Fross Domestic Product (GDP) into imports. Every time a US company offshores goods and services, it adds to the US trade deficit.

Clearly, it is a mistake for the US government and economists to think of the imbalance as if it were produced by Chinese companies underselling goods produced by US companies in America. The imbalance is the result of US companies producing their goods in China and selling them in America.
Many believe the solution is to force China to revalue its currency, thereby driving up the prices of 70 per cent of the goods on Wal-Mart shelves.

Mysteriously, members of the US government believe that it would help US consumers, who are as dependent on imported manufactured goods as they are on imported energy, to be charged higher prices.

China believes that the exchange rate is not the cause of US offshoring and opposes any rapid change in its currency's value. In a message issued in order to tell the US to ease off the public bullying, China reminded Washington that the US doesn't hold all the cards.

The NYT editorial expresses the concern that China's "threat" will cause protectionist US lawmakers to stick on tariffs and start a trade war. "Free trade, free market" economists rush to tell us how bad this would be for US consumers: A tariff would raise the price of consumer goods.

The free market economists don't tell us that dollar depreciation would have the same effect. Goods made in China would go up 30 per cent in price if a 30 per cent tariff was placed on them, and the goods would go up 30 percent in price if the value of the Chinese currency rises 30 per cent against the dollar.

So, why all the fuss about tariffs?

The fuss about tariffs makes even less sense once one realizes that the purpose of tariffs is to protect domestically produced goods from cheaper imports. However, US tariffs today would be imposed on the offshored production of US firms. In the era of offshoring, corporations are not a constituency for tariffs.

Tariffs would benefit American labor, something that the US Chamber of Commerce, the National Association of Manufacturers, and the Republican Party would strongly oppose. A wage equalization tariff would wipe out much of the advantage of offshoring. Profits would come down, and with lower profits would come lower CEO compensation and shareholder returns.
Obviously, the corporate interests and Wall Street do not want any tariffs.

The NYT and "free trade" economists haven't caught on, because they mistakenly think that offshoring is trade. In fact, offshoring is labor arbitrage. US labor is simply removed from production functions that produce goods and services for US markets and replaced with foreign labor. No trade is involved. Instead of being produced in America, US brand names sold in America are produced in China.

It is not China's fault that American corporations have so little regard for their employees and fellow citizens that they destroy their economic opportunities and give them to foreigners instead.

It is paradoxical that everyone is blaming China for the behavior of American firms. What is China supposed to do, close its borders to foreign capital?

When free market economists align, as they have done, with foreigners against American citizens, they destroy their credibility and the future of economic freedom. Recently the Independent Institute, with which I am associated, stressed that free market associations "have defended completely open immigration and free markets in labor," emphasizing that 500 economists signed the Independent Institute's Open Letter on Immigration in behalf of open immigration.

Such a policy is satisfying to some in its ideological purity. But what it means in practice is that the Americans, who are displaced in their professional and manufacturing jobs by offshoring and work visas for foreigners, also cannot find work in the unskilled and semi-skilled jobs taken over by illegal immigrants. A free market policy that gives the bird to American labor is not going to win acceptance by the population. Such a policy serves only the owners of capital and its senior managers.

Free market economists will dispute this conclusion. They claim that offshoring and unrestricted immigration provide consumers with cheaper prices in the market place. What the free market economists do not say is that offshoring and unrestricted immigration also provide US citizens with lower incomes, fewer job opportunities, and less satisfying jobs. There is no evidence that consumer prices fall by more than incomes so that US citizens can be said to benefit materially. The psychological experience of a citizen losing his career to a foreigner is alienating.

The free market economists ignore the fact that a country that offshores its production also offshores its jobs. It becomes dependent on goods and services made in foreign countries, but lacks sufficient export earnings with which to pay for them. A country whose workforce is being reallocated, under pressure of offshoring, to domestic services has nothing to trade for its imports. That is why the US trade deficit has exploded to over $800 billion annually.

Among all the countries of the world, only the US can get away with exploding trade deficits. The reason is that the US inherited from Great Britain, exhausted by two world wars, the reserve currency role. To be the reserve currency country means that your currency is the accepted means of payment to settle international accounts. Countries pay their oil import bills in dollars and settle the deficits in their trade accounts in dollars.

The enormous and continuing US deficits are wearing out the US dollar as reserve currency. A time will come when the US cannot pay for the imports, on which it has become ever more dependent, by flooding the world with ever more dollars.

Offshoring and free market ideology are turning the US into a third world country. According to the Bureau of Labor Statistics, one-quarter of all new US jobs created between June 2006 and June 2007 were for waitresses and bartenders. Almost all of the net new US jobs in the 21st century have been in domestic services.

Free market economists simply ignore the facts and proceed with their ideological justifications of open borders, a policy that is rapidly destroying the ladders of upward mobility for the US population.

[HighDemonslayer]

Oh yeah, and Taiwan is there for the taking.

Is Taiwan worth a nuclear exchange with China? No

Can America ignore that treaty that requires them to come to the aid of Taiwan? Yes

Will China wisely wait for a time when the U.S. is too broke, or to committed elsewhere, to seize Taiwan? Probably


Pardon my musings.


-hds

[crazylegs32]

Those pics are nasty. War sux