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The Awakening Dragon

Kevin Rudd’s brother,a Chinabusiness man has written anexcellent article (i.e. thepoints he makes largely confirm my thinking).

The thrust of hisarticle is that we are riding on China’s tail. It is starting tomove forcefully, and as it continues to do so, it is likely to quickly emergeas the world’s largest economy. We can’t afford to not understand the wayChinese think.

It is a verydown-to-earth article that makes a number of different points and is well worth reading infull. One other point, however, is worth repeating. They will act in their ownbest interest, but are not out to overcome or crush us.

There are a couple ofother news items that I think are quite revealing:

·        China’s undervalued currency is creating a lot ofrhetoric. Thisarticle in Time not only provides a more holistic perspective on the issue,but goes on to describe the real coming threat to advanced nations.

·        China’smove to corner rare earth production iswell known,

·        Less well know is it’s investmentsin ports in Burma, Sri Lanka, Pakistan, Africa, Greece, Italy.

These are just random news items, I, who amat best a sporadic amateur Chinawatcher have picked up.

As I said, earlier, China is not working off a sinistermaster plan to own the world. What we have with China is that it’s public andprivate sector work together in a way that is leagues ahead of the way ourswork. The Chinese are intelligent and work extremely hard. They will pay lipservice to western institutions and rules to the extent that it serves theirpurpose. They have studied Western capitalism, digested it, and moved forwardto their own system of wealth creation.

Australiais currently the best country in the world to live in. It offers an excellentlifestyle coupled with an excellent GDP. However, we are too complacent. Wehave no clear strategies. We are saving too little. We are selling ourresources and spending the resultant wealth on consumer goods. We waste ourmoney on useless foreign wars. When we hand over the reins to our children,will it still be the best country in the world?

China has woken up. Australiais asleep.

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Battling for an innovative Australia

Should the ASX and the Singapore exchange merge? We were bloody fools not to have proposed the merger ourselves, on our terms. In any event, we should be aggressively pursuing an Asia policy, helping banks like ANZ expand into Aisa, working with Singapore and China on a supra-currency, much like the Euro.

I did have hopes for the US under Obama, but with the tea party rising, he has his hands full. Or imagine if the Tea party gets into power (the real disaster would be if they start another war and we follow them again) 

We love war

It looks as if I spoke too soon. Don't countries realise any more that while the military used be a profit centre, generating wealth through outright conquest or gunboat diplomacy, it is now simply a cost centre, a drain on the economy. There are much better avenues to  peaceful coexistence. 

Rudd passes the buck

In this article, Rudd takes a swipe at business for not aggressively pursuing business opportunities in China.

 What he fails to articulate is that there is a lot that the Australian government can do to capitalise on the Asia boom, such as what the EU has done. 

Hurled shoe cheapens Australia

Many countries will see the hurled shoe as a sign that Australia is gauche, with an ill-mannered citizenry, unwilling to comprehend the realities of life.

Muntadhar al-Zaiydi's actions were entirely different. His actions were against the head of an invading army. It took real courage. Under the previous regime, his whole village would have disappeared, and the current regime is only somewhat safer.

Should the invasion of Iraq be tested in a world court? Yes. But why scapegoat Howard? We are a democracy. The blood is on all our hands. 

John Howard served his nation in the toughest job his country had to offer. For over a decade. I disagree with his politics. But I have no doubt that he acted with integrity, that he believed he served in the best interests of our country.

He is now an elder statesman. Yes, we have the right to interrogate him: to gain what wisdom we can from him. Even squeeze him dry, drain every last drop of blood. But we need to do so with dignity and respect.

John Howard did not lose face - he gained it by his magnanimous response.. The ABC, the host. lost enormous face. Australia lost face - by the actions of the one citizen, and by our mixed reaction to the event.  When we fail to show respect where respect is due, it is us who lose face.

Follow the leader

In his apologia John Howard expresses contempt for Labor not following the leader into battle   (though I find it telling that the ALP uses the American rather than spelling in its name). 

Stephen Covey talks about a relationship bank account, of making sure that withdrawals equals deposits in relationships. This model fails in relationships of power. In relationships of power, one pays tribute to ones leader (e.g. the leader eats first, and takes the best pieces). In Eastern cultures, this is practised and acknowledged. In Western cultures, it is equally practised, but not acknowledged

John Howard needs to defend the Iraq invasion, even though everybody now recognises it was a horrible idea. Those in the East recognise the importance of saving face and factor it into their equations. We in the west pretend its not important. 

An interesting aside is that both are more masculine than feminine traits. 

Suppressing Dissent

This article, in The Australian, rightly praises those, like China's Nobel Peace prize winning Liu, who voice dissent even when that dissent seriously harms them.

While I agree with the author in principal, it comes across as a bit of China-baiting because he belittles the West's own dissenters.

Dissent is an essential characteristic of a thriving democracy. But China is not a democracy - it is a developing country, and I suspect the majority of the population freedom from hunger is more urgent than freedom of expression.

A Scheme for Embezzlement

 You may appeciate this one Jay:


Floating Exchange Rates: A Scheme for Embezzlement

Milton Friedman’s theory of floating exchange rates, on which the international monetary system has been based since 1971, has given rise to a coercive regime in the sense that IMF statutes forbid member countries to stabilize the value of their currencies. A country attempting to do that is branded “a currency manipulator” and is threatened with trade sanctions. The prohibition is understandable. It is designed to protect the scheme whereby the dollar balances of the surplus countries are stealthily embezzled. It works as follows..

Li Xiangyang - US "tomb maker"

Is Race Baiting Now an Official Policy Tool of US Bankers?

When the momentum of the masses gravitates toward the truth,those that desire to suppress it have always resorted to smoke and mirrors todivert the people’s attention away from the truth and to channel their focusinto avenues that waste their energies. But bankers and politicians have justcrossed the line, specifically Tim Geithner. Tim Geithner is now using morallydisgusting tactics of race baiting to draw attention away from Central Banks’ destructivepolicies of massive currency devaluation as the cause of people’s grief andmisery in an attempt to misdirect the focus of their anger away from the trueculprit of bankers to the convenient scapegoat of “foreigners”.
There has been no greater damage doneto the global economy than the US Federal Reserve’s consistent and artificialdevaluation of the US dollar for 98 years but yet there has not been oneAmerican banker, not one American politician, and not one American mainstreamjournalist that has the balls to tell the truth instead of taking the cowardlyroute of blaming foreigners for our problems (with the exception of Ron Paul).

The complete piece can be read here.


And this: The Donkey in the China Shop


As well, China will be able to off-load even more toxic dollars, by buying gold as a tangible asset instead with her greenbacks. I cannot imagine the look on President Obama's face further down the line when, in complete and utter frustration and consternation, he demands answers as to why this is happening from his scheming economic experts....Better, I would think, to consult Sun Tzu.

After China agrees to raising her Yuan month by month, and if she is indeed playing her own subtle game of "spot the invisible peg", this will be easy to observe and prove. Just watch the gold price go steadily up and up, breaking through all barriers from China's persistent gold purchases.

After this warm-up play, then the desperate American Government will have no other choice but to initiate trade protectionist wars on China. This will probably be much more painful for the US than China, because the American Govt is working against a stacked deck, with a weak and crippled hand to boot. And bluffing wont work either.

Obama has grossly overplayed a very weak hand. The US has never been in a weaker bargaining position - all the trump cards are in the Chinese hand.

Currency wars - the new boogie man-chu

 It is interesting that there has been much attention paid to the renmimbi lately and the current US legislation speaks heaps; especially when the US is in deep financial poo owing to massive fraud and the alphabet soup of bailouts etc.. But Obama doesn't mention that, he claims it's about making exports competitive and the creation of jobs - hahaha.

But is the renmimbi undervalued, or is this just a desperate attempt by the US to coerce China into accepting less dollars in payment of their debt. Besides the biggest US export to China is trash. Anybody holding US debt may be a little concerned with the current devaluation of the dollar.

When one considers the profit margins in China it becomes obvious that an upward revaluation of the renmimbi would be industrial suicide. At best, companies are returning around a 2%  profit; so why would China rob itself of a wafer thin profit.

It has also not been lost on China that one of the contributing factors in Japan's financial demise was the Plaza Accord, a contributing factor to asset inflation and the lost decade. In short the US needed to balance its books so twisted a few arms to get their way - as usual.

China knows perfectly well the US will default on it's debt, one way or the other; that is why they are going hell for leather in converting that debt into material wealth and geopolitical insurance: think Greece for example.

Why would China assist in the bail out of Greece when anybody who has been paying attention knows that Greece can't pay them back. Maybe one day Greece may trade a naval port to retire that debt - the new economic hit men? A new American (military) empire?

Who knows but it seems that the recent US legislation is nothing more than an impotent smoke screen to create a new boogie man, to distract and unite the plebs.

China hasn't caused America's problems - America has.

The reality for Australia is that if China goes down, so will we - big time.

Thanks Jay for your contribution.

Currency Manipulation

It's interesting, my understanding of capitalist economic theory is that it is in the interest of a country not to manipulate a currency, that they will inevitably lose - that it is best for the currency to find its own level. That state manipulation leads to a Black Wednesday.

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