I don’t get this entire “Reckoning” piece in today’s NYT.

Somehow, its China’s fault? I need to reread this and put my finger on exactly why this is so off.

Kick in your thoughts below . .  . I may need a day or two to digest this.

More later . . .

Source:
Dollar Shift: Chinese Pockets Filled as Americans’ Emptied
MARK LANDLER
NYT, December 26, 2008

http://www.nytimes.com/2008/12/26/world/asia/26addiction.html

Category: Credit

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “Blame China?”

  1. Steve Barry says:

    Well, when you are an addict, it is quite convenient to blame the guy in the schoolyard who sold you the stuff. Some here are still in the denial phase. We are debt addicts and China was the lastest, greatest pusher of them all. Our parents, the Fed, were a key enabler. Now we are broke, and our parents are trying to bail us out.

  2. bubba says:

    of course it’s China’s fault, Barry. The Chinese did us in — ramming their cheap money down our throats,
    and forcing us to go ever deeper in debt to live the 21st Century American Dream — living beyond our means. We’re AMERICANS, damn it! It’s never our fault!

  3. gloppie says:

    for starter:
    “Chinese leaders chose to park the bulk of that in safe securities backed by the American government, including Treasury bonds and the debt of Fannie Mae and Freddie Mac, which had implicit government backing.”
    The part about the backing is a lie, for starter.
    It feels wrong because it is a piece of agitprop all right.
    The author uses 2 modes, at times, countries are given intentions, and at times, individuals are named. You will learn more by looking at what is said using which of those two mode, instead of what is said alone.
    Nowhere is confidence, trust, or the ratings agencies issue mentioned, that is an interesting detail too.

  4. Transor Z says:

    I don’t think the article pins blame on China. On its face, the article is equivocal. But I do think there are some subtle allusions to the “Red Menace/Yellow Peril” history between the U.S. and China — the “old army helmet” at Treasury, for example. Is that stuff really helpful/enlightening?

    There’s some good stuff there to be strung together. Bernanke’s absurd statement that foreigners save too much. But for me, the “money” statement is that the Chinese did not tell U.S. banks to take the cheap money they were selling and invest it in MBS and other crap investments. So the drug analogy is more like the American school kid turning around and selling prescription ritalin and oxycontin on the playground.

    China stands to gain nothing by beggaring the U.S. economy after propping us up to build production capacity and fuel incredible growth on their end. Take away American consumption and you’ve got excess capacity on a mammoth scale. And for the conspiracy theorists: consumer products don’t retool easily to tanks and aircraft, so chill.

  5. rrgg says:

    The US is to blame for dealing with China in the first place, stupidly bringing them into the WTO/MFNS with no conditions. Meanwhile China has worked around the WTO with a ridiculous currency exchange policy the US should never have tolerated.

  6. rob says:

    Most of the time I watch and listen in amazement to you “traders” to gain a little insight into your thinking. Well to be blunt, this is my arena of specialty, and this issue is one of the things that keeps me up at night. We are China’s bitch! I’m a mechanical engineer by trade but my daily work efforts lie in the military realm. @Transor – if you think consumer product capital can’t translate into military capital overnight, then my friend you are horribly naive. Beside my “day” job, I moonlight using my ME degree. I’ve sent China contacts injection molding prints one day, and by the time I arrived in person they had not only created the molds but had prototypes! Corrections were implemented OVERNIGHT to the molds and prototypes brought the next morning! America no longer has that capability! We now produce empty products (services and “value added” crap), no physical products! Note #1 – We have lost that basis to China and once the horse is out of the barn it’s hard to get it back! They have locked that market up for a minimum of 15-25 years! If you control a country’s economy, you control that country. Note #2 – “What if” tomorrow morning, that 0.5T in Treasuries started getting sold off? Rates would go through the roof and even the Fed/Tres couldn’t buy enough to keep the rates out of the stratosphere! No one else in the world (other than the IMF) would even touch our debt. It would be End Game to the rescue intervention that is going on right now. So forget the tin hat theories and don’t write this off as one, it is unfortunately a very realistic threat to the security of the US. Granted this is a blog entry so a lot of detail is left out but any logical step through can fill in most of the gaps when you reorient your perspective that not everyone is your friend and most of your friends are actually your enemies. We are literally standing on the edge of a cliff, and the final shove would be to piss off China. There’s an old adage in my line of work about China, “Always remember, there are over one billion people that tomorrow can stop their regular work and start making bullets!”

  7. super_trooper says:

    Add to that cotton, that’s transported to China which adds value by making it into clothes that’s transported back to the US.
    The new urban generation of China is the same as the US. Credit card debt, fashion addicts, internet addicts and computergame addicts. Seems thats where prosperity takes us.

  8. gloppie says:

    @Rob,
    you have a good point. I’m no trader neither, I’m in electronics, and in my field too, almost nothing is build here. Except maybe at Hughes and Raytheon and Harris. …

  9. others make good, and fine, points..Transor’s may be the most telling..

    with this:
    “Moreover, as America becomes an increasingly multi-cultural society, it may find it more difficult to fashion a consensus on foreign policy issues, except in the circumstance of a truly massive and widely perceived direct external threat.” (p. 211)

    Zbigniew Brzezinski’s Background

    According to his resume, Zbigniew Brzezinski lists the following achievements:

    Harvard Ph.D. in 1953

    Counselor, Center for Strategic and International Studies

    Professor of American Foreign Policy, Johns Hopkins University

    National Security Advisor to President Jimmy Carter (1977-81)

    Trustee and founder of the Trilateral Commission

    International advisor of several major US/Global corporations

    Associate of Henry Kissinger

    Under Ronald Reagan – member of NSC-Defense Department Commission on Integrated Long-Term Strategy

    Under Ronald Reagan – member of the President’s Foreign Intelligence Advisory Board

    Past member, Board of Directors, The Council on Foreign Relations

    1988 – Co-chairman of the Bush National Security Advisory Task Force.

    Brzezinski is also a past attendee and presenter at several conferences of the Bilderberger group – a non-partisan affiliation of the wealthiest and most powerful families and corporations on the planet.

    The Grand Chessboard by Zbigniew Brzezinski – More Quotes

    “…The last decade of the twentieth century has witnessed a tectonic shift in world affairs. For the first time ever, a non-Eurasian power has emerged not only as a key arbiter of Eurasian power relations but also as the world’s paramount power. The defeat and collapse of the Soviet Union was the final step in the rapid ascendance of a Western Hemisphere power, the United States, as the sole and, indeed, the first truly global power…” (p. xiii)

    “… But in the meantime, it is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America. The formulation of a comprehensive and integrated Eurasian geostrategy is therefore the purpose of this book.” (p. xiv)
    http://www.wanttoknow.info/brzezinskigrandchessboard
    http://www.nysun.com/national/despite-criticism-obama-stands-by-adviser/62534/

    (D) (R) , (R) or (D), seems Zbig is a constant..

  10. super_trooper says:

    Sounds like China made a mistake feeding the addict and getting too dependent. Lending standards weren’t strict in China and with housing prices dropping in major cities the Chinese will finally face the wonders of capitalism.

  11. DP says:

    One of the videos posted a week or so ago had an anecdote from Schiff. Slightly modified, but same point:

    7 people crash on a desert island, 6 Asians and one American. The 6 Asians are assigned jobs, one fishes, one hunts food, one collects firewood, one grows vegetables, one makes clothes and another builders shelter. The American’s job is to live in the shelter and consume the food and clothes. He feels good about himself – after all, the 6 Asians only have jobs because of him, he gives their day some purpose.

    How long before the 6 realize they are better off kicking him off the island?

  12. No, Dorothy, China did not put us in this mess. We did it to ourselves, specifically our federal reserve.

    How hard is it to understand that when a country pegs its currency to yours, then you run their monetary policy?

    Had we believed China’s currency peg was making the Yuan too cheap, well, they pegged to us, not the other way around. We (our federal reserve) controlled the value of the Yuan through China’s currency peg.

    Thereby China imported inflation from us, with the inflation-induced demand illusion stoking a massive overbuilding in nearly every Chinese sector. The Chinese are going down with us, as the illusion of demand is stripped away by reality sans inflation. It will likely suffer worse, if only because its institutions were so new to this quasi-capitalist game. China will likely suffer something truly akin to our Great Depression. What that does for its political stability is anybody’s guess.

    No, we can’t blame the Chinese. We have only ourselves to blame, or more specifically, the wildly inflationary policies of Alan Greenspan’s fed. If you have any doubts about its inflationary policy, just look at a graph for commodities for the 00′s, and remember, every increase in the price of oil in dollars was also an increase in the price of oil in Yuan, even after the Chinese drifted away from a strict peg in 2004.

  13. mlomker says:

    It sounds to me like the Chinese were smarter than us (by being investors rather than consumers). The world needs recessionary cycles to skew us back to balance. People will pay down debt and actually save a few percent of their salaries over the next 5 years (those that retain jobs, anyway). No need to point fingers…the Chinese could get hurt by holding our debt if (when) our currency inflates and they’ll certainly be hurting due to the fall in consumption.

  14. Transor Z says:

    @Rob: I’m not a trader either. I’m an attorney in a small litigation practice who stayed at a Holiday Inn once.

    I agree that the U.S. loss of manufacturing base is bad for the fundamental economy and for national security. But I think @ super_trooper summed it up concisely. There is reason to think China made a mistake, plain and simple. A number of analysts have concluded that China is not yet a sophisticated financial player on the world stage — not to say they aren’t learning fast.

    Otherwise the Beware China posts sound like more of the same old, same old: Dubai companies can’t buy U.S. port facilities, and the Arabs and Japanese shouldn’t be able to buy Manhattan. What else is new? Biological warfare on the U.S. via pu pu platters?

  15. Uchicagoman says:

    Aaaa, China. Literally, the biggest story of modern times.

    IMHO, I think the Chinese will be facing a year of reckoning. Just imagine…for every Enron or Madoff over here..how many more are lurking in the sprawling and corrupt econo-landscape over there! I think this will be the story of 2009. It is going to be very messy. (but then again never underestimate the iron grip of a repressive regime)

    Frankly, I think it is a good thing that they are motivated and interested in manufacturing and engineering advanced tech. or whatever. I don’t think their motives are as sinister as we would like to imagine. After over a century of turmoil and oppression they want nothing more than to rise and be respected. I work with many Chinese personally. They are proud of the recent rise, but cautious and forward looking.

    However, without proper political freedoms and gov. transparency I am afraid they will forever be doomed.

    China hosted the best Olympics ever. Impressive, sure.
    We elected Barack Obama as president.

    I would take our position any day over theirs.

  16. VoiceFromTheWilderness says:

    Stop Me before I borrow again!

    It’s tough being the most important, most glorious country in the world, the holy shining beacon of hope to all, the only relevent opinion is your own and yet nothing is ever your fault, perpetually victimized by all the worthless godless heathens as you seek to give them the gift of civilization.

    So, um, like, lets see, where exactly did the ‘American borrowing’ come from (Thanks NYT for reminding us that what the government does is in the name of the people). Why, it came from ‘the evil government’ of course. Ok, now, get ready, why did the evil government borrow money from the chinese? Well, see we have this thing called a budget, and if we don’t take in enough money to pay our bills, well, see we have to borrow money. Oh, okay, well, why don’t we take in enough money? Taxes are evil, it’s much better to pay interest to the wealthy as a way of financing public activity. But, you mean the ‘the wealthy’ aren’t americans, so the Republican fantasy that ‘cutting taxes’ == reducing the size of the government, tried in a trial balloon, to great success in the 1980′s (no one ever had to deal with the consequences of that little experiment, it was a rousing… uh, well it gave us a lock on popularity). You mean using a financial trick to break the US governments budget as a political weapon to enact an agenda that the population knows is not only not in their interest, but really isn’t even in the interests of those advocating it, isn’t a sound and wise principle with which to lead a country? You mean conning foreigners into lending you money so you can continue to fantasize that you are the center of the Universe isn’t a tactic that has ever been tried before? Like by the British? Well, we could always adopt the roman model: outright conquest and forced resource allocation to the center (coming to a theater near you). Nobody could have seen this coming.

    What a stunningly stupid article: oh the poor americans victimized by those evil chinese. Oh the glory of that is us, so unique that no parallels exist with which we might understand what happens when the power begins to fade.

    One thing it is fabulously good for however is making sure that we continue to believe that we are right, and that our views are sacred. The obvious consequence: There must be someone to blame.

  17. VoiceFromTheWilderness says:

    oh, one more thought:

    It is so hilarious to see right wing pundits, and right wing politicians, complain about a lack of international cooperation. Oh those evil barbarians, you just can’t get them to cooperate on anything. They are just so inscrutable those crazy commies.

    Um, yeah.

    Nobody Ever Could Have Forseen This

  18. sinomania says:

    That article is more proof of the NYT’s decline. Firstly, it’s old material as the ‘argument’ (if there is one) has long been used to explain away the USA’s lopsided current account. But we can continue to feel good about ourselves though because we have real democracy, right? LOL. As for the comment about use letting China into the WTO with no conditions – not true. Just look at the actual details of the 1999 trade agreement put into law by the China Trade Relations Act. It features unprecedented market access including services (logistics, distribution), 100% foreign ownership of many business sectors. Billions are being made by American companies and people in China. To blame China for this mess while we award failed bank execs with giant bonuses and spends a trillion a year on a war machine is just pathetic.

  19. KJ Foehr says:

    One major thing wrong with this article is Bernanke’s underlying premise that Asia / China saves too much. This is absurd on the face of it. How can the poor become wealthy without saving? And Niall Ferguson’s quote that “Usually it’s the rich country lending to the poor. This time, it’s the poor country lending to the rich” is equally absurd. How can the rich be the one in debt and the poor the one with savings? Perhaps we are not as rich as we once were?

    Wealth is calculated by subtracting debt from assets owned; the difference is equity or net worth. And if our collective net worth is so low that we must borrow from other nations to sustain ourselves, then we are no longer rich.

    There seems to be some serious Kenyesian stuff at work in Bernanke’s thinking here. Essentially he is saying everybody (us and the Chinese) need to spend rather than save. Thus spending is the goal rather than accumulating wealth. Well I’m not buying that one; maximum personal spending (consumption) is good for GM and GE, but building my equity / increasing my personal net worth is good for me.

    In summary, Bernanke’s argument seems to be just a continuation of the credit / consumption driven false economy that we have been engaged in for the past 20 years or so. And just because the Chinese aren’t playing by our absurd rules, that certainly does not make them wrong; to the contrary it makes them smart.

    As to the military threat, IMO, China is relatively passive. Their testosterone level does not match that of Caucasian hairy beasts. They will not bang their shoe on the table declaring they will bury us. Instead they will non-aggressively surpass us.

    China seeks to restore the Middle Kingdom to its self-perceived status as the World’s greatest culture. And they will do it economically and culturally, not militarily. They will use us and any other nation they can in their own self-interest, but they do not seek to dominate us, only to better themselves and exceed us.

    They see themselves as smarter than Americans and more hard working (and in many respects they are right). They realize they have fallen behind in recent centuries due to foreign exploitation and then by communism. Now they are making up for lost time.

    Lastly, if we didn’t want China to rise, to be able to save money, and to become a more wealthy nation, then why did we give them Most Favored Nation trading status? Why did we let them into the WTO in 2001? Why do Wal-Mart and nearly every other retailer in the country import from China? I remember when Wal-Mart used to advertise that most, if not all, of it’s products were “Made in America”; what happened to that commitment? Why do all manner of US corporations do business in China, taking advantage of the wage differential? Did the Chinese force us to do so?

    We are joined at the hip with China, but it is us, not them, who has sewn the stitches. To blame them for acting in their own self-interest by buying US Treasures and other US debt to please / support their primary trading partner (the goose who was laying their golden egg) is another absurd conclusion.

    Have we as a nation not acted in our own self-interest in our foreign affairs? How can we expect others to not do the same or the blame them for doing so.

    No, there is no way around the conclusion,

    “We have met the enemy and he is us” …Walt Kelly

  20. Terrier says:

    There’s a disturbing equivalence between this story, (“China, some economists say, lulled American consumers, and their leaders, into complacency about their spendthrift ways”), and an earlier one in which Keith Bradsher quotes Victor Shih saying that many Chinese officials blamed the United States for deliberately luring China into buying US securities knowing that they would later plunge in value. http://www.nytimes.com/2008/09/05/business/worldbusiness/05yuan.html
    When two nuclear super powers are each convinced they have been swindled by the other, the rest of the world sleeps a little less easily in its bed.
    Let’s hope for peace, if not prosperity, in 2009.

  21. donna says:

    Overextended empires always end up borrowing and going into debt. See “Rise and Fall of the Great Powers”, which also predicted China’s rise way back in the late eighties.

    Honestly we’ve seen this coming for 20 years and did nothing to stop it.

  22. @ donna…

    “Overextended empires always end up borrowing and going into debt.”

    Indeed. And when, eventually, the overextended empire can’t impose its will across its empire because it is reliant on ever-more massive infusions of foreign capital, it collapses. As I’ve said before, you’ll know the end of the American empire is upon us when we can’t force people to take our dollars for oil or other things we need–not even at the point of a nuclear-tipped warhead.

  23. Transor Z says:

    @ Curmudgeon: liked your comments on this thread very much.

    I think the U.S. is more of a hegemony whose influence is waning than an old-fashioned empire.

  24. Mike in Nola says:

    I don’t see that it’s a badly done story. Comports with my understanding.

    China’s eagerness to expand and its willingness to lend us money to fulfill the desire fit the crazy ideas of Greenspan and his proteges like a glove and the U.S. Greenie’s group believed that easy money in the US andour consumerism were the future and played the Chinese with greats skill.

    The Chinese leadership were certainly no babes in the woods and used us as we used them.

    I recommend Michael Pettis blog at http://mpettis.com/ which he writes from Bejing and provides a window into one of the other big players in this mess.

    Pettis’ theory is that this is something of a replay of the 1920-30′s with China in the role of the US and the US in the role of Europe. (I think we were selling to Latin America also.) Back then, the US was the world’s biggest creditor and we were supporting the European economy’s with our lending. The US back then had developed a huge manufacturing overcapacity. The overcapacity became apparent when the rest of the world could no longer absorb our manufactured products. Overseas sales plummetted, our factories closed, and many were thrown out of work. Sounds just like what is happening now to China.

    I’m no authority, but Pettis says that the US suffered much more than Europe and that the solution at that point was for the US to use economic stimulus to increase domestic consumption to absorb the excess supply since the foreign economies could no longer absorb it. The old merry go round would no longer work. Instead, we wound up with a trade war after trying to continue to push goods overseas.

    This certainly sounds like a good analogy to today’s situation. If it’s valid, then China is the place for economic stimulus to be applied, since they have all the money and we don’t. There is the problem that the Chinese are not as stupid as we are and save their money. Layoffs are increasing over there as factories close and they do not have the safety nets we do, so getting them to consume more will be tough. I think Pettis is right in thinking working class Chinese will suffer greatly. And, it is just human nature for the Chinese bureaucrats to try to continue what has worked in the past. So we have them trying to keep the value of the Yuan down, in effect subsidizing exports and resulting in what is an informal trade war.

    I’m probably not summarizing Pettis views correctly, but he looks at the situation as growing out of the huge dislocations in the balance of payments. Americans need to save and stop buying as much Chinese stuff; the Chinese have to start saving less and buying their own stuff as well as ours.

  25. Gabriel says:


    Indeed. And when, eventually, the overextended empire can’t impose its will across its empire because it is reliant on ever-more massive infusions of foreign capital, it collapses. As I’ve said before, you’ll know the end of the American empire is upon us when we can’t force people to take our dollars for oil or other things we need–not even at the point of a nuclear-tipped warhead.

    And, this phenomenon may take another decade or two (perhaps, a bit more) before we reach that point. Right now, we’re able to attack weak countries, such as Iraq, and be able to force them to feed our troops for the next few years. We do not have the balls to attack Russia (think our response in the context of Georgia), or China. As China and Russia join forces to expand their influence in Europe and expand their market in that region, dollar will collapse with either Euro taking on the new world currency, or perhaps a new currency which includes Europe and China (as China has voiced recently). Russia is rich with minerals but their manufacturing base is not as strong as China, hence they’ll probably have lesser say in the matter. Since dollar has already started to roll down the hill, it will struggle for its stranglehold for a few more years, as I don’t see a cliff roll for the dollar. Anyone who thinks China made a mistake is probably ignoring that China was developing a long term strategy. We may have entered the end game now, after seeing a loss of some pawns and bishops.

  26. Transor Z says:

    @ Mike in Nola: good link. Pettis points out that there are competing constituencies w/i China’s governing elite. It’s a mistake to assume monolithic thinking, even though they do a good job of presenting a unified front. China is not culturally or ethnically homogeneous (e.g. Tibet). China’s unification is a 20th century phenomenon. So there are a lot of questions about what happens as prosperity grows and the government relaxes its grip. Balkanization? Ten thousand political parties? I agree with Uchicagoman above: centralized economies can’t compete. We all know the Chinese govt can put the genie back in the bottle if they have to — brutally if necessary– but that will also be the end of their economic charge and foreign capital will leave.

    How would people feel if in 15 years the Chinese premier is a former student leader of the Tianamen Square demonstrations?

  27. Mike in Nola says:

    Transor:

    Re: Tianamen Sq. Would be an interesting development, but unlikely. The leaders were a bit naive in thinking that some new day was dawning. The new boss is the same as the old boss. Same with Obama fanatics: they will be disappointed.

    Interesting statement showing the opposing view to “Blame China?” further back in the Pettis blog back at: http://mpettis.com/2008/12/dani-rodrik-is-letting-the-cat-out-of-the-bag/

    “Yesterday’s People’s Daily, for example, reported the following comments by Governor Zhou of the PBoC:

    ‘Zhou said excessive U.S. consumption and over-reliance on debt were key reasons for the crisis, and he urged the United States to raise its savings rate and reduce its budget and trade deficits.’ “

  28. KJ Foehr says:

    Transor Z Says:

    “It’s a mistake to assume monolithic thinking, even though they do a good job of presenting a unified front. China is not culturally or ethnically homogeneous (e.g. Tibet). China’s unification is a 20th century phenomenon. So there are a lot of questions about what happens as prosperity grows and the government relaxes its grip. Balkanization?”

    I am not an expert in culture or anthropology, so I may be mistaken, but personally I have never known such a homogenous group of people. I am aware of the ethnic differences, but excluding Xinjiang an Tibet, they all seem to have the same national pride, even superiority. Even the Taiwanese believe they should be / want to be part of mainland China despite our view that they should be kept independent and democratic. They are all Chinese and seem to love their Chineseness.

    Yes there are questions as to what will happen if the government relaxes its grip further, or perhaps more importantly, if they don’t relax it; but Balkanization? I don’t see it. These people are like ants, working together to achieve group and individual goals.

    And

    “How would people feel if in 15 years the Chinese premier is a former student leader of the Tianamen Square demonstrations?”

    I don’t know how they would feel, but I think such a thing is possible. And it is likely that is how China’s one party system will end – from within. Just as the Soviet Union changed when Gorbachev came to power, China will change too when some enlightened person takes power and decides that competition among political parties is beneficial to the country.

    I think a likely scenario is for the Chinese Communist Party to eventually split itself into two parties, perhaps with minimal differences in political philosophy at the beginning, but the differences between them growing over time.

  29. Mike in Nola says:

    KJ Foehr:

    Re: Soviet Union. I think the fact that Russia is being run by ex(?)-KGB shows what we can expect.

  30. KJ Foehr says:

    Mike in Nola Says:

    “Re: Soviet Union. I think the fact that Russia is being run by ex(?)-KGB shows what we can expect.”

    Yes, perhaps if Yeltsin hadn’t been hitting the bottle so hard he would have picked a more democratic successor.

    But your point is well taken; they are certainly not out of the totalitarian woods yet, and China’s path will be probably be long and circuitous as well.

  31. philipat says:

    Blaming China is a little like blaming borrowers for the morgage crisis?

    China did all of the US’s manufacturing and kept very little of the value added, most of which accrues to US Corporations and was manifested in the best profit margins ever. This is typical of the short-term myopic thinking which overtook the whole system. There were three related problems with this as a sustainable model. First, many US manufacturing jobs were exported to China to take advantage of the lower labour costs and higher margins. Second, Americans can’t consume if they don’t have work. Third, it would inevitable result in an enormous trade defecit because America doesn’t have much to offer that the world wants to buy, except Boeings and food.

    China did its part by recycling all the accumulated green paper into Treasuries, helping to sustain the unsustainable a little longer.

    Now, I need help understanding how the inevitable outcomes can be blamed on China.

  32. philipat says:

    Having lived in Asia for over 30 years, allow me to contribute to the (Off-topic) China discussion.

    China will, IMHO, remain a one party state but will morph into something more “Acceptable” on the surface, like Singapore. Singapore is actually (In reality) a one party state with no freedom of speech and state controlled media. It’s totalitarian control os more subtle and more financial than in China, but fundamentally they are identical. Yet Singapore is portrayed as, and perceived by the West as a modern democracy.

    In fact, Chinese totalitarianism has managed to renew and refresh itself periodically, unlike in Russia and the other SE Asian regimens where family/military dynasties have controlled (Again including Singapore) and stifled creative change.

    China will become the major world power over the next quarter century, surpassing the US. The people are very hard working (Most only take a vacation at New Year), very attuned to business and favour saving/investment over instant gratification and needless consumption. Using the technology kindly provided by the West, China will build on this and take a quantum leap forward.

  33. bondjel says:

    Come on Barry, one of the things I like most about you is you are not simply a know-nothing Wall St. knee-jerk pro-capitalist type–obviously different from being discerningly pro-capitalist, the latter is respectable. There is TREMENDOUS knee-jerk anti-communism in this country and much of it falls on China. My observations tell me that much of this is spewed out by the NY Times. One of the things this country most needs is discerning, intelligent understanding of foreign countries and we’ve just been through 8 years of the stupidest hard-right ideological drivel. Stay as open as you’ve been.

  34. danm says:

    The Chinese are going down with us
    ——————-
    Even with a huge US dollar devaluation, they will still have enough billions to buy a huge amount of mines and oil fields…. not exactly in the Americans best interest!