Slashdot Mirror
China's State Press Calls For 'Building a De-Americanized World'
Hugh Pickens DOT Com writes "Businessweek reports on some not-so-subtle commentary from China's official Xinhua News Agency on the U.S. budget showdown: 'It is perhaps a good time for the befuddled world to start considering building a de-Americanized world.' Key among its proposals: the creation of a new international reserve currency to replace the present reliance on U.S. dollars. 'The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising the debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized,' the authors write. 'The world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites.' The commentary calls for a greater role for developing-market economies in both the World Bank and the International Monetary Fund, adding 'the authority of the United Nations in handling global hot-spot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.' The commentary concludes that 'the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.'"
Meanwhile, U.S. Senate Leaders are claiming a deal is close to reopen the federal government until mid-January and defer the debt ceiling debate until mid-February.
The bottom line here is, the US owes-- as my economics professors (Reagan advisers) pointed out 25 years ago-- the one thing it can produce infinitely and with no cost: US dollars.
What happens in a meltdown? Well, if I ran the Fed along the principles my advisers taught me-- I'd pour payments to my allies (Europe, etc.); then I'd devalue the currency-- meaning, the creditors I didn't pay, now are owed much less. That's China, primarily, which, after all, has played quite a currency game with the US, and who's debt is quite arguably overvalued due to cheating on exchange rates.
Would China like the world to adopt the RMB as a default currency? Sure. Obvious. It's in their self-interest, at least. If everyone owes RMB, then they have to accept the global exchange rates.... they can't print or otherwise acquire USD, and pay off debts to China with the new currency.
Guess what? In short: no one's going to trust China as the global standard, as much as they aspire to it. If you're Switzerland, you know, that in a pinch, the US is going to pay off its debts to you-- not to China-- and give you a lot of notice, that it's going to devalue the dollar, so you can take advantage of the opportunity to erase 15% or 20% of your net debt to China, as well.
What's this called? Global political economics. China knows the game; it knows that it played the game to dump cheap labour and goods on the US, and accumulate capital debts (loans); and it knows, if the US reaches debt ceiling, it's China's debts that are going to get radically devalued to balance the sheets.
And good that. Unless, of course, you'd prefer that the Central Party, and not the US Treasury, is the final guarantor of the money you've loaned. A risk, I doubt, many of you (and many Central Banks) wish to take.
Or in short: the US will fulfill its obligations to allies and creditors who've played the game in good faith. To China and others who've gamed the system-- well, that's another story, and in the next days and weeks, we may very well see, what action the US can use, to re-balance the sheets.
They are right, the world needs a better currency. Preferably one not regulated by nation states or corporations: maybe bitcoin or a descendant with its flaws fixed. Also certainly the `voracious Wall Street elites have their role in the current crises (plural).
However, the real problem is all of us: run-away consumerism. The masses who took irresponsible mortgages. The `need to replace a perfectly good smartphone every two years. The throw-away society.
The economy is based on debt, and every nation is either involved in the race to the bottom for all the planet's natural resources, or they want to get into the race.
China is _not_ going to be the saviour though, also not Russia, India, Europe, South-America or the USA.
It is time to face the truth: this system cannot be saved, it can only collapse.
The quicker it goes, the better, because every day that goes by the damage caused grows bigger. There is no point in trying to hasten it (like Anonymous does sometimes), all energy should go into prepare for a rebuild.
If there is to be a new world order, whatever shape it might take, it must be build bottom up, by the people.
Capitalist-alike, but without the corporations.
Socialist-like, but not with the top-down planning and represssion.
Open sourced and based on spontaneous collaboration, but without the hippy navel gazing.
Therefore it is essential to keep the Internet free, and running whatever else in the world may go down.
It is the major advantage the world has to prepare for a soft landing, when the world order crashes.
-- a PIrate Party member who wishes to stay anonymous.
The institutions that emerged (world bank, IMF, UN) were really just codified the result of WWII. The likely reason nothing has emerged to replace it is that we haven't had WWIII yet.
It might be interesting to speculate how all this could change w/o fighting another world war, but it seems unlikely given the inertia of the current institutions.
On the currency issue, I think most of the people that talk about a non-us-dollar reserve currency are totally unaware of the history of the Bank for International Settlement and the IMF which denominates their reserves in SDRs (special drawing rights) which is a weighted basket of currency (USD, Euro, Yen, and British Pound).
The problem with any kind of currency reserves, is that countries need to be willing to put up significant assets to back up any denomination of wealth (or you might find them being attacked like George Soros once attacked the British Pound). The one thing about the USD that's hard to substitute is that it's really hard to attack it now as there are many greenbacks out there and many contracts are denominated in USD. Any transition to an alternate reserve is likely to be attackable which means it must be very quick or as part of a big movement (perhaps even war-like).
The idea of a love analogy is good, but in reality it is the rest of the Western world that has opened its eyes to the abusive relationship with the USA it is in.
The once present blind love for everything 'USA' (a lot of clothes sporting American text or imagery were made and worn in the rest of the world) has turned into a palpable disdain for the same. The more apt analogy for the current feelings would be: 'How can we get out of this relationship without that asshole going psycho on us?'
I wish it were different.
The bit where the Chinese are IMHO wrong is that it will need any sort of centralised planning to achieve this replacement of the U.S. as hub of the global economy. That will just happen, inevitably.
Except the new hub will go to somewhere like London, Brussels or even Singapore. Delhi/Mumbai has an outside chance. Pretty much anywhere but China. Beijing simply doesn't have the trust from global businesses, of course they're all happy to take Chinese money, just not Chinese politics/philosophy. Maybe they'll go nowhere, the worlds economies are sufficiently distributed and communication is sufficiently fast that there isn't really a need to centralise it in a single location. Something happens in Bangkok, 30 seconds later Paris, Dubai, Vancouver and Adelaide know all about it.
The US is acting a lot like England of the 1960's and 70's. A waning empire still trying to convince itself of it's importance by talking about the good old days. The really bad part is, unless you change the road you're on you've got your own version of Thacherism to come.
Calling someone a "hater" only means you can not rationally rebut their argument.
I recommend we shave a little off of the golden calf, AKA the military.
Do we really need to have troops stationed in as many places as we do?
Ohh and in case you were thinking of calling me unpatriotic or anything, I served and deployed.
Because the media doesn't care.
I live in a very gerrrymandered "safe" Republican district. My town is a liberal blue dot swimming in a sea of conservatives in the rural areas. Our state districts literally slice our town in half to cut our influence in elections in half. Our federal districts have us cut off cleanly from the nearest fellow blue metro area. Our voices are silence - our representative is nothing like anyone in our city. He's also batshit insane.
Occasionally living proof of the Ballmer peak.