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Thread: China Autumn’s Ominous Augur Suicide By Trade Sanctions

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    Default China Autumn’s Ominous Augur Suicide By Trade Sanctions

    from http://www.drschoon.com/articles/Chi...inousAugur.pdf

    It seems this summer’s credit crunch and the continuing defaults of US subprime mortgages would be enough. Now, however, the US Federal Reserve has decided to play chicken with inflation. But evidently, even this is not too much.
    This fall, providence is bringing yet another dish of trouble to an already over laden table—China may actually prove good on its threat to dump its $400 billion of US Treasuries and start the long awaited flight from the US dollar.
    China’s threat to sell its US Treasuries—if actually carried out—will be triggered by the US Congress. This fall, the US Congress will vote on a bill that would impose a 20 % across-the-board tariff on all Chinese goods imported into the US. The supporters of the bill describe its passage as “veto-proof”—that they now possess enough votes to override a presidential veto.
    This possibility calls again into question the very efficacy of democracy, to wit the belief that the collective will of the people is preferable to the capricious stupidity of a king or queen or any other selected or self-appointed tyrant, or indeed, virtually any government official.
    Perhaps it should be argued that democracy today is not actually democracy; anymore than Christianity as practiced by the Church during the Inquisition or by Southern Baptists during slavery was actually Christianity. Point taken, but then again, at least for the sake of argument, we need to start somewhere.
    The US representatives voting on the China tariff bill will be responding to the frustrations of those they lead; their constituents, whose bills are mounting while their frustrations are coming to a head and perhaps even incapable of being surmounted.
    Unfortunately, Americans are looking to the very ones that led them into their difficulties to lead them out; for it was their democratically-elected representatives who sold out their interests in order to further their own that caused the trouble America is in.
    Politicians Have Many Masters
    None Of Which Are Themselves
    The vote on China will take place in the US House of Representatives and in the US Senate. Ironically, it will be voted upon by a group of men and women who have already proved incapable of stopping a war the American people recently elected them to end.
    But democracy, as practiced today, democracy de facto, is designed to thwart the will of the people, not to promote it. For example, in the countries that “joined” the war on Iraq (remember the Coalition of the Willing?) the majority of the populace overwhelmingly opposed the invasion. Yet in each country, democratically-elected governments over-rode the will of their own citizens to support America’s need for oil and geopolitical influence.
    This time, however, the representatives of America will likely do the bidding of those who elect them and vote to censure China for its “currency manipulation”. It should be noted that they will not be doing the same with Japan—the world’s largest holder of US Treasuries ($610 billion); for Japan is the perceived ally of the US, not its perceived successor.
    Politics is, and always has been, a dirty business. Money and power is a combustible mix and history is littered with the bodies of those injured in the process. This fall, more gurneys will be needed. Should the US vote to impose tariffs on China, the consequences will be felt globally, in Mumbai, in Budapest, in Sao Paolo, not just in Beijing or Boston.
    “the notorious Smoot-Hawley Tariff Act of 1930 – a policy blunder of monumental proportions.. played a key role in sparking a global trade war and the Great Depression.”
    Stephen Roach, Managing Director Morgan Stanley
    We are again facing the possibility of a Great Depression and history seems intent on repeating itself. The idea held by many that China will not exercise its “nuclear option” by selling US Treasuries and bringing the US economy to its knees by destroying the dollar is hopeful at best and increasingly less believable.
    China is longer dependent on America to buy its goods. The Eurozone now shares the distinction of being China’s largest market. Additionally, when and if the US Congress votes to impose 20 % tariffs on Chinese goods, the damage to China’s economy will be significant.
    China will retaliate; and, dumping US Treasuries on the open market will be an all too easy and accessible option. It would destroy the US dollar and deal the US economy a body blow from which it would take years to recover.
    This autumn, whatever happens in the US Congress will affect the world. For in a very real way, America’s problems are the world’s problems. What happens to the US economy and US dollar will affect global commerce on a scale not experienced since the Great Depression. Hold onto your seats, my friends. Democracy is in the house.

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    Default Re: China Autumn’s Ominous Augur Suicide By Trade Sanctions

    Not to sound like a looney, but sometimes I wonder just how much of a democracy this country really is.

    Why are the same people always re-elected year over year over year over year?

    Example:

    We all know there are people stepping up to the plate to put out their ideas - yet they are denied access to the various "debates" unless they belong to the proper party. These days, the "debates" are being pressured to not include people of the same "party."

    Example:

    Ridiculous campaign requirements that basically serve as a barrier to entry for new people and new ideas.

    And as the article says - how can there be more than 200,000,000 people raising their voice about the war and those who are in power still choose to ignore things? Is that really a democracy and can the people who are in such straits really be held accountable?

    Anyhow, yea, China doesn't need us. Two fucking billion people between themselves and India and a lot of them moving up the ladder of wealth. Throw in Europe and the US looks pretty small. I firmly believe there is an attitude adjustment coming our way. Sad, but true.

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    Default Re: China Autumn’s Ominous Augur Suicide By Trade Sanctions

    and the real truth is that the Chinese aren't alone in being on the verge of abandoning the US dollar peg ...



    (snip)"Saudi Arabia appears poised to make a major break with the United States by moving the riyal away from the United States dollar.

    Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

    “This is a very dangerous situation for the dollar,” said Hans Redeker, currency chief at BNP Paribas.

    “Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States,” he said.

    The Telegraph focsues on a very serious threat to the Saudi and US Economy. Saudi Arabia seems poised to re-peg (currently 1 USD = 3.75 Riyal) its currency to avoid inflationary pressure caused by the weakening American Dollar. This move would have serious effects on the United States.

    Any change in the Riyal to the Dollar would significantly impact the cost of oil. By increasing the value of the Riyal relative to the value of the dollar, the cost to produce and transport oil within Saudi Arabia would increase (from the US perspective) overnight. Nearly all of the oil traded in the Middle East is done so using the Riyal pegged to the dollar. Naturally when the cost of production increase we can anticipate significant market movement.

    The second consequence is that Saudi Arabia, our close friend and ally, holds a significant number of US Bonds and other public and private securities. As the dollar weakens against other international markets, investing in the United States becomes less attractive. The only way to make US Treasuries more attractive is to increase the interest rate, the anthisis of the Fed’s recent decision to cut interest rates to spur the stagnating economy."(snip)


    Not to sound like a looney, but sometimes I wonder just how much of a democracy this country really is.

    Why are the same people always re-elected year over year over year over year?
    A. because a near majority of American voters have a vested interest in assuring that their gov't benefit checks / gov't subsidies / gov't tariff protections will continue - and voting in a 'stranger' constitutes taking a personal risk along these lines.

    B. because 'directly communicating with' American voters is no longer possible. Too many Americans are conditioned to receive their ration of information from the 'Ministry of Truth' i.e. George Soros, a handful of mainstream media outlets, a handful of broadcast networks etc. This 'Ministry of Truth' chooses which news stories to report, and which not to report. This 'Ministry of Truth chooses how much or how little accurate and complete factual content will be included in reports, versus spun toward drawing a particular conclusion. Your own "And as the article says - how can there be more than 200,000,000 people raising their voice about the war and those who are in power still choose to ignore things?" is a perfect example. If there actually WERE 200 million registered American voters raising their voice against the war, as the news outlet implies, those in power would / could NOT ignore them. On the other hand, if the factual number of highly vocal registered American voters against the war number 200,000 instead of 200 million, our lawmakers have a constitutional duty to 'ignore' them !

    C. because an appalling percentage of American voters have essentially no understanding of world affairs / global economy / the law of unintended consequences. If you can't write this off to naivete, it has to be written off to stupidity instead, and I hesitate to go there !

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