Tuesday, January 18, 2011

Losing Leverage With China

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Hu Jintao is in Washington and discussing issues with Obama. Obama, of course, bowed to him as he probably should have because it was Mr. Hu's largess that allowed Obama to drastically expand the deficit to otherwordly levels that will haunt us for decades--but I digress.

China has to be handled with a certain tact that they didn't deserve previously since they now have effectively displaced us (and our proxy, Japan) as the power in Asia and have been gearing up to take us out militarily for the last 20-years. Hu arrives as an equal--a position that is new. It's also a position of real strength that could have been blunted just 20-years ago after the ruling Communist party let loose with a barrage of gunfire and murdered a still unknown number of Chinese citizens in Tienanmen Square. They've continued their internal crackdowns since then without a second thought. Instead, George H.W. Bush demurred as did Clinton when it came to calling them out on it.

So now we are stuck with a regime that is effectively our banker, the major exporter to our nation, taker of our jobs and one that will not allow anyone to set up shop anywhere in the nation unless they play it by commie rules. Just ask Google. They've even grown so bold as to scold us on our spending. The Chinese don't play by the rules and the world keeps bending over to appease them so we now have a nation visiting us as equals that has a human rights record somewhere just around Yemen and Cuba. Yet, we have to make nice because we need their yuan to keep paying for stupid bailout programs and Obamacare.

We'll be in a shooting war with them within 25-years unless we get stuck with another four years of Obama and our military is depleted beyond quick repair. At that point, we just surrender Taiwan.

1 comment:

Anonymous said...

>> Obama, of course, bowed to him as he probably should have because it was Mr. Hu's largess that allowed Obama to drastically expand the deficit to otherwordly levels that will haunt us for decades--but I digress.

Picking a nit here, but this is not accurate. China's treasury holdings have been flat for a long time and are now declining.

The largess of which you write has been provided almost entirely by the Fed and by mysterious anonymous buyers from the UK banking centers, rumored to be proxies for the Fed.

Virtually all additional credit consumed by the US Government has been created from thin air.