Monday, 17 September 2007

China has America by the balls

As my avid readers will know, your Savant has a low opinion of the mainstream media (MSM), who display an uncanny knack for missing the important issues and focusing on the dross. Thus it was to be expected that they largely missed out on one of the most significant occurrences this year.

A few weeks ago senior Chinese Finance Ministry officials announced that if the US didn’t stop pissing them off and threatening them with trade sanctions, they’d dump a large swadge of their dollar reserves on the market. China holds $1 trillion worth of US bonds and bills. Dumping them would bring the dollar crashing down unless the Fed hiked interest rates, which in turn would drive the US economy into deep recession.

Will they do it? Unlikely, as they’d suffer greatly themselves. Could they? Absolutely. And there’s no saying that some less pragmatic leaders might do so in the near future. In any event they’re bound to slow down their purchase of such assets, which pay a relatively low premium. What this means is that the American economy is now utterly dependent on the Chinese, and gets ever more so as the country borrows $15 billion a week to sustain its budget deficits.

America is on the way down, slowly but surely. Swamped by borrowings and drained by military adventures abroad. This then is the legacy of the tough-guy Bush administration, the dream team of chicken hawks who claimed that they were so powerful ‘we create our own reality’.

Hasta la vista, guys!


Anonymous said...

Great - fuck the yanks, they've been acting the prick for long enough.

SAVANT said...

Some truth in that, but do you really think the Chinese would be any better?

Jungle Jim said...

Yes, the Chinese could sell their US Treasury securities and that would cause the exhange rate of the dollar to drop, at least temporarily. But it would not have any significant effect on the US economy, other than to make our imports more expensive and our exports less expensive to foreigners, and thus more conpetitive. The net effect would be stimulative to the US economy.

The USA could easily do harm to the chinese economy by slapping tariffs or quotas on imporrts from China.

If anyone has anyone by the balls, it is the USA who has China's.

The Neutralist said...

We Yanks may be swine, but we are probably more affable swine than Les Chinois. When our lads go overseas, many if not most actually believe they are going to help. No Chinese would ever believe such drivel.

I've heard, and have no way of verifying it, that every manufacturing job in the world could move to China and they would still have hundreds of millions needing jobs. Long term, being a Central Committee member don't look like such a secure job no matter how many near worthless greenbacks they have in the vault down in the cellar.

SAVANT said...

Joseph, in my view Yanks, far from being swine, are, along with the Aussies, the most sympatico of peoples. The problem is there seems to be a chasm between the ordinary pleasant, likeable American and the way America as a country behaves. Unfortunately, people around the world equate the two.

The Neutralist said...

Mon Savant,

Well, yes. You are right. If we would bring our fleet and air force and troops home, we would be beloved,

Look at Iran. The people hate that government and love us. The only thing that could unify them against us is us.

The leadership here would love to embark on an adventure in Iran. Unfortunately, there are all to many of my likeable countrymen who think it is a spiffy idea.

I am very sorry about the loss of your laptop.

SAVANT said...

Thanks for the expression of sympathy on the laptop, Joseph - not like these other bastards.

Re Americans abroad, it's the essence of my case that if the US withdrew all of its forces the US and the rest of us would be 100% better off. Sure there are lots of people who'd still wish you harm, but they'd have miniscule popular support, and hence would be powerless.

Unknown said...

Hi Savant

what is you take on the Abiru role in founding and current 'communist china'..

ie i found Robert Thompsons hints in Shanghai Fury curious and interesting for eg..
and do ponder the overlapping connections tween turkic chinese judaic leadership etc..

kind regards Mick McLennan proud and thoughtful anglo australian .