A Wetmachine Quasi-Editorial Endorsement (speaking for myself only, not all Wetmachiners).
I was talking with my old man last night by telephone. He’s a retired guy, spent his whole life in finance. Was Chief Financial Officer for three different multi-national companies, and at one time president of a national society of CFOs. A depression kid who came from nothing, he was a “Flying Fortress” navigator in 1945, worked his way through college (driving 18-wheelers) and put all seven of his children through college, and several of us through private high school as well. He follows monetary policy as naturally as I follow baseball. He voted for Eisenhower and Nixon, and has always extolled the values of work, private enterprise, and initiative.
My brother Mike and I went to Xavier High School in New York CIty, a Jesuit, military school whose most famous grad is Antonin Scalia. My father’s motto is “a place for everything and everything in its place.”
What do you suppose he thinks about Kerry and Bush?
Because my father’s mother was an immigrant from Ireland, I am entitled to Irish citizenship–which would make it possible for me to get work papers anywhere in the European Union. My cousin Chris got his citizenship a few years ago and now works in Paris.
My father last night was practially pleading with me to get that citizenship. He said, “If Bush gets back in, we’re in for horrible, horrible days ahead.”
“If Bush gets back in, a few years down the road, when they think they’re strong enough, the Chinese are going to stop buying our bonds. And they’re going to dump what they have, flood the market, and buy up oil. And there will be deflation, there will be panic, and all these right-wing, religious nut-jobs will call for a fascist solution.”
“Listen, John, I hate to say it. But you may have to take your family and go. Mother and I are too old, or else we’d be looking at New Zealand. The Jews who could get out of Germany in the thirties were smart to get out. And the Russian aristocrats had to run from the Bolsheviks. And I hate to say it, but you may have to flee this country.”
“Do me a favor. Get that Irish citzenship. And tell your brothers and sisters to get theirs too.”
“I hope you don’t think I’m a crackpot,” he said.
“No, Dad,” I said. I don’t think you’re a crackpot at all.
Asian capitalism is export driven, high risk loans are given to export companies. Japan, China, South Korea and Taiwan wont stop buying tresury bonds until Americans can no longer afford to shop on the credit card.
As much as America needs low interest rates from this influx of outside capital, the Asian nations need a big market to export into that has an insatiable desire for cheap trinkets and baubles.
Since Japan also funds US hegemony by paying for Okinawa, each time the State Dept raises the issue of Japan floating its dollar and opening its markets, the Pentagon intercedes on Japans behalf and tells the other departments to back off.
There is duplicity there and a strange entwinement of US and Asian capitalism. I dont think it will end until American consumers are completely broke, another country overtakes the US desire for consumption of cheap trinkets, or American hegemony is broken.
Yes, but.
My worry (and my father’s) is that the Chinese will do this as an aggressive move to assert parity/break US domination as quote “the sole superpower” unquote. There are political motives as well as economic ones. Demonstrating that they had the USA by the balls might be worth it to them.
I dont think so, China is still a minor weight in the military stakes, Australia could take China on and survive. America is still the worlds R&D engine, China cant compete there.
China at the moment can only export cheap trinkets into the US market, which IIRC is a 1.1 trillion in trade. If they under-cut the US, or even stop buying t-bills to keep interest rates low so Americans can no longer shop on the credit card – then the 400 billion dollars of Chinese exports that go through Walmart wont get bought and China will suffer economically for it.
Recall too that the India/Pakistan face off was stopped by Indian business folks, who told their government to stop it as it was bad for business. US firms were freezing contracts with Indian IT firms for fears of the regions stability.
China has had a taste of wealth now, and Chinese business folks will be saying the same thing to their government. Putin has shown that you can ignore the business folks in a dictatorship, so more than a few Chinese businessmen might get locked up in the process.
I dont think that will last either. South Korea is a good example, it is moving from Asian Capitalism to western consumption. Mainly because of their increased wealth and freedom.
Asian capitalism is predicated on an authoritarian state guiding the investment houses/banks into funding high-risk export businesses. South Korea is changing from that model and I suspect they will eventually end up with a current account deficit as well, like most of the west.