Thursday, August 09, 2007

China Flexes Its Muscles, and Bush Flexes Back (...Sort Of)

Bill Gertz wrote about it years ago in his book, The China Threat. In a nutshell: China is not our friend.

So it was interesting to see in the news yesterdsay that China sent a message, loud and clear, that if the US government keeps pressuring them on trade issues, they have the ability to crash our economny by selling off the $900 billion dollars in US currency reserves it now owns. Whether or not they'll actually do this is an open question, but the fact is , they CAN do it. That by itself, should be a sobering thing for us all, and espcecially our politicians, to consider.

Our politicians have rung up huge budget and trade deficits, which now puts China in the position of being able to crash our economny by simply dumping its huge reserves of US dollars. If it even decided to not buy US Treasury bonds any more, or to buy less, it would send a chilling message to the world finanancial markets, undermine the dollar's position as the world's reserve currency, and possibly trigger a major recesssion here, or worse.

Bush responded a day later (today) by saying it would be "foolhardy" for China to do that; but that by itself shows us the deeper problem. Imagine a home intruder putting a knife to your neck, and your only defense is to tell him thast it would be foolhardy for him to kill you, because he'd get arrested. The fact is, if that's the best defense you have, you're already in trouble , because you've allowed yourself to be vulnerable, and you're totally at the mercy of your attacker. That's how it is with China and the American economy.

We're totally at their mercy, and they know it. Militarily , we still have a sizeable edge, and they know it. But economically, they hold all he cards. Sure, their economy would suffer too, if they triggered a collapse of the dollar and the US economy. But they're now in a position where they have the option to do it if they wanted to... and there's nothing Bush, with all his false bravado, or America as a whole can do about it.

One way or another, I expect the US econony and the dollar to collapse one day. The Euro is already in position to become the world's reserve currency of choice. That would just be one more step in the process of rearranging the current world order, and bringing in the inevitable New World Order.

Sad to say it, but America's best days are behind it, militarily, socially, politically, and even economically. Many Americans dont seem to be aware of this. But without a doubt, China is very aware of it. Watch for China to flex their muscles more and more in the future as they continue to grow stronger.

Bottom line is, China is not our friend. Not even close. And dont let anyone tell you otherwise.

Excerpt from the UK Telegraph article:

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Fistful of dollars - China's trade surplus reached $26.9bn in June

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds

No comments: