Serious Economic Crisis Looms In Russia, China May Help

jones_supa writes: Russia is facing a "full-blown economic crisis," a former finance minister has warned, as the country is forced to take emergency financial measures. The economy has been battered by a wave of sanctions (set by other countries as a result of tensions over Ukraine), geopolitical uncertainty, and falling oil prices. Analysts have warned that the Russian economy will not improve in the long run until the aforementioned conditions have also improved. The Central Bank of Russia said that a plan to loan Trust bank an amount of up to 30bn rubles ($54m) had been approved. Trust bank has run a series of advertisements featuring actor Bruce Willis in Russia, along with the ironic quote: "When I need money, I just take it." Anna Stupnytska, an economist at Fidelity Solutions, said that "the risk of a sovereign default is low, it's the corporate sector where the main vulnerabilities lie, and banking in particular. Due to sanctions, companies cannot refinance their debt as access to international markets has been essentially cut off." Reader hackingbear adds: Two Chinese ministers offered support for Russia as President Vladimir Putin seeks to shore up the plummeting ruble without depleting foreign-exchange reserves. Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of the yuan for bilateral trade would have the greatest impact in aiding Russia. Western governments and experts have been criticizing China for restricting exchange and suppressing the value of its currency, even though anyone who lived in China during the 1990's knew that the value of the yuan was cut to align with the (vibrant) black market. But as grandma has warned us, we should be careful of what we wish for. China has greatly sped up the relaxation of currency exchange and is promoting the yuan as an alternative to the dollar for global trade and finance. They've signed currency-swap agreements with 28 other central banks to encourage this. Once accomplished, and backed by China's growing military might, Renminbi would be a formidable competitor to U.S. Dollar, which would hamper the U.S's ability to borrow almost freely with banks around the world.

Comments

Re:"Looms" is not a transitive verb

[MarcNicholas]

It Soviet Russia, verbs transitive you!

And all the meantime, we are so worried about...

[davydagger]

And the whole time we are super worried about North Korea, and Russia....

I never have understood

[msobkow]

I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

Re:I never have understood

[bledri]

I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

You can thank Harry Dexter White for that. (And if you're American, you should thank him. Otherwise, maybe not.) See: The Battle of Bretton Woods. It really is pretty fascinating.

Re:I never have understood

[Anonymous Coward]

If you do not understand the world's fetish with the U.S. dollar, you do not understand the state of the world after WWII. The wealth of the U.S. compared to the rest of the world at that time was staggering. Most of the developed world was in ruins. Only the U.S. remained relatively untouched by the war. The U.S. started mortgaging its future during the Reagan era, but it was the two Bush presidencies that did the most damage. Our deficit spending is now coming home to roost.

Re:I never have understood

[lgw]

The dollar is much like capitalism and democracy: it's the worst imaginable choice, except for everything else that's ever been tried. That's really it: the US government is just less effective at ruining the dollar than every other central bank for a major currency. Much of the current value of the euro is simply it's position as "second lest awful currency", a hedge against a reckless Fed.

When the dollar looked rough a few years back, interest in gold perked up, and interest in the Swiss franc bloomed, but the Swiss were apparently uncomfortable with the idea of becoming a reserve currency, and committed explicitly to falling with the euro. Odd choice, but there it was.

If the EU ever finishes collapsing, all the sovereign debt in the region blows up taking the Euro with it (it's only a question of when), and then finally recovers and regains financial credibility, then finally the dollar might be displaced, Or if China has it's inevitable revolution, and happens to emerge as a capitalist democracy, or when India or Brazil finally reach first-world status nation-wide. we might also have other credible currencies. But for now, the dollar is pretty much it.

That's not to say the dollar can't be destroyed if the Fed tries hard enough. But over the past downturn they were actually quite clever: while they were printing ~$2 T in no money via QE, they were removing ~$2T in money supply via bank reserves (while we continue with a 0 reserve banking system, the Fed paid attractive-enough interest that banks voluntarily increased their reserves to unprecedented levels). And the Fed did actually wind down QE. I'm still waiting for the other shoe to drop, when that ~$2T in "Excess reserves" comes back into the money supply and turbo-charges inflation, but hopefully that will just be Carter-like, and not a currency collapse.

Re:I never have understood

[TapeCutter]

I never have understood the world's fetish with the US dollar.

1. Any currency (even gold) works on informed trust, a banknote is a promise, not a gaurentee.
2. The US is the last military superpower.
3. The US has never defaulted on a debt.
Result: US treasury bonds are considered "safer than gold" by international money markets.

Re:I never have understood

[Bill_the_Engineer]

I never have understood the world's fetish with the US dollar.

It's because the US has both a stable government and a large economy.

Re:I never have understood

[Anonymous Coward]

Why not call it the Tip O'Neill era? He was the Speaker of the Democrat controlled house of Representatives -- that's where spending bills originate.

Re:I never have understood

[FooAtWFU]

Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

See, you used two words in that sentence. One of them is economy, the other is currency. They're related, but they're not the same. The thing that matters to most US residents is the economy -- specifically that it will be growing enough that it's possible to find a job in it which will secure a certain amount of output to secure one's well-being. (Residents saving for retirement benefit from both). The thing that matters to someone who borrow or lend or hold dollars isn't the economy per se, it's the fact that he can use that dollar in the future to buy a predictable amount of goods and services: price stability. (Stability is better than an increase in value of those dollars, because borrowing and lending need to balance each other out... besides, if you really wanted returns you'd find a real investment, not cash.)

The US has flirted with price stability issues in the past (look at the 1970s and early 1980s), but not to the extent that Russia is experiencing right now. Russia has issued additional rubles through the state-backed Rosneft bond offering (a bailout averting a bankruptcy for one of Putin's top cronies) which was the proximate cause of the ruble free-fall, and because of sanctions, falling oil prices, and general economic decline outside of the oil sector, the ability of a ruble to purchase valuable goods and services (like oil) in the future is in question. China, meanwhile, has its own set of currency controls (hence a thriving black market in RMB-USD) and central-bank interventions of a scope and magnitude which make QE and QE2 look small.

So what else are you going to use? Euros? No way, I thought you were worried about stagnation and deficits and stuff. Gold? Oh, yeah, obviously it's been an absolute MODEL of price stability lately, hahahahahahahahahaha... Bitcoin? Makes gold look good. Pounds sterling? Mmmaybe, in a pinch. Then most of the other currencies are on the small side, so it's harder to use them in high volumes.

Re:I never have understood

[Hognoxious]

When Russia sells petroleum to Germany, the transaction is completed in USD, ergo both parties need to have USD on-hand in order to trade.

Why does the seller need them on-hand? He's going to get some as payment.

Re:I never have understood

[__aaaipu5720]

Out of curiosity, what sites do you recommend for economics Op-Ed? Thanks

Re:I never have understood

[everett]

The uid's generally identify those.

Re:I never have understood

[jemmyw]

The US is not really much less socialist than the rest of the developed world. It is setup differently, especially around health care. But percentage of GDP spent on welfare, it is well up there among the top European "socialist" countries.

In some areas the US has so overdone drab socialist like bureaucracy, it makes me laugh when American's try to distance themselves from it.

Re:I never have understood

[lgw]

I wish I knew a good one! Most places are as crazy as ZeroHedge, in one direction or another. I read MarketWatch, but more to keep abreast of market fashion than reality (never read a stock market site for economic news).

The most useful stuff I've ever read on economics was the old-school stuff: on the business cycle, not just boom-bust but which sectors recover in which order - what leads recovery, and what's big when the end of the boom is near, and what survives best during the bust. The history of different kinds of currencies and the problems the had. The various big name economists from the first half of the 20th century, now that we can see the actual economic growth in various countries that seem to follow on or another of them. Everything old is new again.

Re:I never have understood

[NotDrWho]

I never have understood the world's fetish with the US dollar.

It stays strong because if anyone is stupid enough to speak out against it, we make them regret it.

Don't fuck with the U.S. Dollar.

Re:I never have understood

[CrimsonAvenger]

I'm still waiting for the other shoe to drop, when that ~$2T in "Excess reserves" comes back into the money supply and turbo-charges inflation, but hopefully that will just be Carter-like, and not a currency collapse.

That $2T "excess reserves" represents between five and ten percent of the money supply. If the Fed can overcome the urge to do QE again until that first $2T works its way through the economy, then it'll represent a couple extra percent inflation for three or four years, and not be much of a problem.

If they decide to be so impressed with how QE worked that they do it whenever the economy stutters, it'll be disastrous....

Re:I never have understood

[quantaman]

I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

Really? In under a year the ruble recently dropped in value by over half, do you really want to tie your economy to that?

As for China I think it's been fairly stable, but China is still an autocratic regime and those aren't typically stable. The US on the other hand is a large healthy democracy and I'm not aware of a single case of a country starting out as a healthy democracy and ending up as something else. Maybe the euro can eventually rival it for stability but for now you'd be a fool to bet on something else.

Re:I never have understood

[fustakrakich]

The president approves budgets, depending what his orders are.

Re:I never have understood

[rtb61]

More accurately those at the top whose power is tied to the US dollar continue to manipulate global capitalism in favour of their choice through global media and government propaganda. Capital is imaginary it's only real value it tied to countries primary resources and how it's currency equates with the value of those primary resources. The US with it currency is largely parasitical falsely tied to many other countries resources which the US forced through with economic and military warfare. The attack on the rouble is already failing which is exactly why corporate media is now hyping up potential collapse, it is simply not real.

You have a group of multi-national corporations who are orchestrating the attack via their puppet the US government. Problem is they are loyal to no one and most certainly not each other. Basically when the opportunity comes to profit by betting the other way, the rouble over the dollar they will break ranks because the know the Russian rouble is backed by primary resources and the US dollar is only backed by propaganda.

Circular reasoning, paying of debt generated by creating more imaginary US dollars where they debt was created by creating imaginary US dollars makes no sense at all outside the sleazy world of the US Federal Reserve. Pointing to the US being the last military superpower as defining the value of it's currency, is a really, really, bad thing. You might as well say, I have a gun and it is pointed at your head, this piece of printed paper can buy your resources because if you do not agree I will kill you and take those resources anyhow. That same gun pointed at your head also applies to paying off debt with more funny money, accept it or die. US exceptionalism always blind to it's own evil actions. A global anti-US coalition is growing and it is as a direct result of US exceptionlism being paraded across the internet and some of the truly awful things some idiotic US politicians say in public that the rest of the world can hear. That 'BRICs' association http://en.wikipedia.org/wiki/B... is going to generate an huge amount of money out of the failing attack on the Russian rouble, it is not like it wasn't expected.

Re:I never have understood

[Cyberax]

That's not to say the dollar can't be destroyed if the Fed tries hard enough. But over the past downturn they were actually quite clever: while they were printing ~$2 T in no money via QE, they were removing ~$2T in money supply via bank reserves (while we continue with a 0 reserve banking system, the Fed paid attractive-enough interest that banks voluntarily increased their reserves to unprecedented levels).

That's not true. While Fed pays some interest on the reserves it also asks to pay interest on the loans. They are pretty much the same.

So no, the other shoe won't drop. The accumulation of reserves is caused by a liquidity trap and in this case monetary base can be expanded pretty much indefinitely. If you want proof then look at Japan - its central bank does not pay interest on the reserves and yet almost 5x increase in the monetary base failed to increase inflation even to 2%.

There are other examples - Switzerland increased its monetary supply by three times also doesn't pay interest on the reserves. And now it actually wants to institute a _negative_ interest rate (i.e. force banks to pay the central bank for holding the reserves). Yet Swiss Frank is still rock-solid.

Re:I never have understood

[fustakrakich]

The currency of note is the petrodollar. Even the US dollar is floated against it, since 1971. Political nation-states don't really exist in this scenario.

Re:I never have understood

[CanadianMacFan]

Only the U.S. remained relatively untouched by the war.

Helps when you stay out of it for half the war.

Re:I never have understood

[ShieldW0lf]

Read up on Henry Kissinger. His conspiracy with the Saudi's created the situation, which really amounted to theft on a global scale by the US.

The war in Iraq happened mostly because they were going to start selling oil for Euro's.

In a nutshell, the reason the world has a fetish for the US dollar is that every time someone offers to sell energy for anything else, the US bomb the shit out of them.

You think we like accepting your funny money in exchange for real world goods, knowing that it will never be redeemed for real world good from the US, but will instead be passed around like a cheque that never gets cashed?

We don't.

Re: I never have understood

[ElitistWhiner]

Nor does it make sense likely the Hapsburg hat that Saddam Hussein flaunted In front of American journalists, his move to value Iraq oil in Euros instead of dollars and now the sanctions against Russia recently effect on the value of the ruble. That is what the Iraq War was about and it is the reason Russia's ruble is losing currency, value as the wealth of its nation drains away.

Re:I never have understood

[lgw]

It seems people don't get this, so let's spell it out:

Inflation requires both demand and supply of money. You can't cause inflation simply by increasing the money supply, unless you go totally crazy with it - however, if that supply is there when the economy heats up and demand appears, look out.

Hpwever, 5-10% inflation during a good economy isn't per se a problem: high inflation is a symptom of a bubble economy but may be there without the bubble. And it's the malinvestment associated with a bubble that hurts everyone - "medium" inflation only really hurts people who made the wrong bet on the future value of the dollar.

As long as you don't actually crater the currency, inflation is merely a warning sign of the real problem, and the real problem is people working on things no one wants: from bubbles to government make-work, the stuff we have is just the stuff we make, and if we're not working to make stuff we want or need, we'll all suffer for it.

Re:I never have understood

[Shoten]

I never have understood the world's fetish with the US dollar. Every nation has a currency. The US economy is just as prone to stagnation, deficit, over, and under valuing as any other currency.

I'd like nothing better than to see the Rothschild's hold on international markets broken. If it takes China to do that, then all power to China in the endeavour.

Oil...no matter where you buy it on the planet, or from whom...is priced in dollars. In no market is the price of a barrel of crude listed in euros, pounds sterling, or any other currency for that matter.

Why does this matter in this case? Because Russia is basically an entire economy propped up solely on oil revenues. If the ruble devalues against the dollar, then essentially they are subjected to a brutal form of arbitrage where oil is cheaper from Russia than other places. So they get less money than the other oil producers do. If they boost production, it drives the cost of oil down even further. If they restrict production, they get less money that way too. Either way, they're fucked.

And you know what? GOOD. Fuck them.

Re:I never have understood

[CrimsonAvenger]

Alas, we weren't tied up in silly alliances with people we detested like most of the European nations in both WW1 and WW2.

It should be noted, though, that the USA provided material and military assistance to the UK & USSR well before Japan attacked us, and in violation of US laws at the time (FDR was many things, including a tyrant who ignored the laws and Constitution when it suited him).

Google Reuben James sometime. Trust me, US Navy ships escorting convoys of war material to a belligerent isn't business as usual. Or wasn't then.

Note also that just because you're at war doesn't actually obligate other people to help you.

Note finally that we remained untouched by the war not because we entered late, but because we had thousands of miles of ocean between us and Japan/Germany - they couldn't REACH us to do much damage, even if they'd wanted to.

Re:I never have understood

[Cyberax]

Ok, agreed.

Except that I think that smallish inflation (around 2-3%) is actually good for the economy - it motivates people to invest the money rather than hoard it on low-interest deposits. And in a growing economy there ALWAYS will be people working on products that are not competitive - because there are companies constantly improving their products, so at any given time there'll be some outcompeted players. And purely from empiric studies it seems impossible to have robust economic growth with low inflation unless you are a resource exporting country.

Re:I never have understood

[MrBigInThePants]

You Americans just crack me up. Always arguing whether the demcratic party (i.e: The big business party) is better than the republicans (i.e. the big business party)

Its like arguing whether Stalin or Hitler were more evil...

Re:I never have understood

[TubeSteak]

See: The Battle of Bretton Woods. It really is pretty fascinating.

A more useful answer is inertia.

After England's Sterling lost its place as reserve currency for the world, the USA's massive gold reserves (>50% of the world's holdings) let the US peg the Dollar to gold and everyone else pegged their currency to the Dollar (aka the Bretton Woods system).

Of course, (puts on flame suit) because gold standards are actually a terrible idea, the USA's overprinting of cash ended up causing exchange rate imbalances and Europeans started cashing in their dollars for gold.

So Nixon ended the gold standard and inertia + economic strength and maneuvering has kept the Dollar as the global reserve currency for 43 years.

Re:I never have understood

[Anonymous Coward]

It has little to nothing to do with usury laws and everything to do with the Jewish diaspora. Jews were not the only lenders. There were and still are banking dynasties that are Christian. Also, just think about it: birth control is also forbidden Catholics but Catholics use birth control nearly as much as any other group.

What's important in banking and finance is connections. Have you ever written a check? Modern checks are nearly identical to the negotiable bills passed around over 500+ years ago. What does it say where you enter the payee? It says "Pay to the order of". That's a command, a command to the drawee (i.e. the bank) to pay whomever the payee/drawer (you) tells them to pay. When somebody cashes your check they don't normally go to _your_ bank. Instead, they endorse the check to somebody else. Usually their bank, but it could be anybody. A check could be endorsed a dozen times before it ever reaches your bank and the monies deducted from your account. (You used to have to sign a check before cashing it--a signature without a "pay to the order of" or other instructions is called open endorsement, which mean anyone who holds the check effectively becomes the payee. But if you were smart you'd write "pay any bank" to make sure if you dropped the check somebody couldn't just pick it up and cash it themselves--it would be illegal but getting your money back meant you had to track them down, whereas a bank who pays a check not in the chain of endorsements is liable themselves. In recent years the law has changed so that an explicit endorsement is not required when handing a check to your bank. Now they just act as your agent.)

Then, as now, it takes an incredible degree of trust to accept a check. You're immediately out a good or service, and all you have is a piece of paper that might eventually put cash in your hand. You want to make sure that the person or entity upon whom the payer is drawing the check is reputable. In other words, if the check is a command to Leroy Thompson to pay you, rather than to the Bank of California, you're not gonna trust it. How easy is it going to be find Leroy Thompson so he can pay your debt. Will somebody else accept a check drawn on Leroy? If not you have to physically track Leroy down yourself to get your money. That sucks if Leroy is 5,000 miles away. Of course, maybe the check is forged and the Bank of California never pays out, either. But fraud is a secondary concern. You just want to make sure that, presuming everything is on the up-and-up, you're gonna get your money without too much hassle.

That's where the Jewish diaspora comes in. Jews traveled. More importantly, large Jewish families would often spread out. That meant a prominent Jew in London would be familiar with and trust a prominent Jew in Milan and be willing to accept checks from Londoners drawn upon the accounts in Milan, thus providing a way for a London buyer to effectively transfer money to the Milan seller. Long story short, from there emerged a network of Jewish bankers who could facilitate the transfer of money reliably and consistently.

Jews weren't the only ones capable of doing this. Before the Jews it was the Italian Catholics who dominated financing because they had the best business networks around Europe. And in any event no one groups controlled it all, not today, not yesterday. The banking industry is a wonder of decentralization. Somewhat ironically nearly the complete opposite of the investment industry, which is highly centralized. But banking has to be decentralized by it's very nature because the commerce it supports is completely decentralized. Banking is simply the moving around of money necessary for distant buyers and sellers to transact together. Banking cannot be centralized, at least not fundamentally, because there's nothing to prevent some random person or company (Leroy Inc) from taking deposits permitting businesses to drawn those accounts using checks and similar instruments. And if Leroy is trustworthy and makes it quick and easy for a seller to get m

Re:I never have understood

[narf0708]

Japan/Germany - they couldn't REACH us to do much damage, even if they'd wanted to.

That's just not true. The German u-boats in particular were very much able to reach us, and cause significant damage. Operation Drumbeat in particular was able to do a surprising amount of damage. With only 5 u-boats, they were able to sink 25 American ships, many of them within sight of major US cities such as New York and Boston, all in the span of a single month.

Over the next few months, they managed to sink 22% of our tanker capacity, and well more than 2 million tons of cargo shiping.

It got to the point where the u-boat commanders were calling the time from January to August in 1942 the "American Shooting Season," and east coast cities and towns had to be blacked out after dark for most of the remainder of the war.

They couldn't invade, but Germans could certainly reach us all right.

Re:I never have understood

[complete loony]

Our deficit spending is now coming home to roost.

Government spending is only part of the picture, and it isn't the biggest part. Sure debt is a problem, but government debt is no worse than business and household debt.

Re:I never have understood

[jmcvetta]

The most useful stuff I've ever read on economics was the old-school stuff: on the business cycle, not just boom-bust but which sectors recover in which order - what leads recovery, and what's big when the end of the boom is near, and what survives best during the bust.

Any book recommendations?

Re:I never have understood

[Anonymous Coward]

It stays strong because if anyone with the ability to actually do something about it is stupid enough to speak out against it, we make them regret it.

FTFY

Re:I never have understood

[jmcvetta]

The US on the other hand is a large healthy democracy

For certain values of "healthy" that include "largely dysfunctional".

Re:I never have understood

[__aanbvm4272]

Helps when most of it was overseas too. In fact we demand it these days. According to the U.S. "we are the greatest" ... liars. Psssst, wanna refinance your loan? we can save you a lot of money! Ask Greece and a dozen other nations dumb enough to believe the 'world bankers' here. Cities here in the US are falling for Bond packages AGAIN! Didn't they see the expose' on it last year? Didn't they watch PBS enough? Evidently NOT. How do the homeowners receive any of the fines towards the compensation for the crimes against them from Countrywide? Why are the banks STILL allowed the practice, because they have WAY too much money to loan...watch out.

Re:I never have understood

[kwbauer]

Sort of like the current guy then.

Re:I never have understood

[__aanbvm4272]

"but Germans could certainly reach us all right." How many whole cities of ours did they fire bomb? How many of our Jews were killed? Yes an ocean is a big buffer. That's why we insist on one from now on.

Re:I never have understood

[fustakrakich]

Where did I say anything contrary to that? The president has to sign shit to make it look legit. The show must go on. You are only repeating the same stuff I've been saying for 40 years. Obviously I'm just farting into the wind, because people just keep voting for the same crooks anyway. I'm past caring, but I still fart a lot.

Re:I never have understood

[quantaman]

The US on the other hand is a large healthy democracy

For certain values of "healthy" that include "largely dysfunctional".

Every country has is fucked up in its own way.

But the US is part of a group of countries that have regular peaceful and voluntary power transfers.

Countries that have established that pattern tend to keep it.

Re:I never have understood

[Anonymous Coward]

Not really

The debt from the stimulus is similar in comparison to GDP to the debt taken on during the Great Depression/WW2

That was mostly paid off by the late 70's by high taxes on the wealthy

All of the heat and noise that you hear there days is generated by the wealthy people who do not want their taxes raised

If you think that they have your best interests in mind, then you are mistaken

Re: I never have understood

[DigiShaman]

What increasing incomes??! Are we not in a period of stagflation?

Re:I never have understood

[dryeo]

Also look at the fate of Saddam (trying to sell oil for euros) and Kaddafi (trying to trade oil for gold) as well as all the propaganda against Venezuela and Iran who have also been selling oil for Euros.
The Petrol Dollar is backed by military might.

Re: I never have understood

[lgw]

Not where I am - have things not picked up where you are? This is a slow recovery.

Re:I never have understood

[dryeo]

China also has regularly peacefully voluntary power transfers between the conservative and liberal branches of the party every 8 years and probably quicker if a loser gets appointed. A little more closed but not much different as only party members can be appointed and change has to come from inside the party, eg while still called Communist they've slowly changed to Capitalist (Fascist). And in both systems if someone is too radical such as Ron Paul, well they're shut out of the process, eg the media announce 1st, 2nd, and 4th places.

Re:I never have understood

[Anonymous Coward]

He's run up the debt while cutting spending? That's some fucking amazing Kenyan voodoo.

http://www.cbsnews.com/news/is...

Re:I never have understood

[quantaman]

China also has regularly peacefully voluntary power transfers between the conservative and liberal branches of the party every 8 years and probably quicker if a loser gets appointed.

As autocracies go they're surprisingly stable, but the average citizen doesn't have much of a voice.

Even Democracies where public opinion is critical politicians have trouble gauging what the public really wants, in an autocracy they're just guessing. China, just like every country, has a lot of widespread discontent. The difference in China is that's it's hidden because people are afraid to speak out. If something ever happens that people feel empowered to speak out then things could turn very chaotic very quickly. In healthy democracies people aren't afraid to speak out so the discontent never gets bad enough to seriously jeopardize the system.

they've slowly changed to Capitalist (Fascist).

I'm not sure what you're trying to say but I disagree regardless.

Fascist has an actual definition, it doesn't apply to capitalism and I don't think it applies to China.

And in both systems if someone is too radical such as Ron Paul, well they're shut out of the process, eg the media announce 1st, 2nd, and 4th places.

Ron Paul was shut out because his support is deep, but very narrow. The party never took him seriously because they knew his policies were too extreme to survive a general election, and the media didn't take him seriously for the same reason.

Re:I never have understood

[MrBigInThePants]

I congratulate you on you flatulent post. You have demonstrated that your organic hot air knows no bounds.

Regardless of anything else I would say that failing to point out that it does not really matter much which president did what when in the grand scheme of things is proof enough.

A captured democracy is a captured democracy. Change the system or get short changed. Fuck or get fucked.

With any STI-like situation such as commenting on the state of your government, you either go balls deep or you go home with blue balls. No Point just using the tip and hoping you will be ok - you will still be dirty in the end.

Enough with the crude metaphors already people!

Re: I never have understood

[Corbets]

Not really. He clearly fails to understand some key points, as evidenced by his comment on the franc. The Swiss are uncomfortable with losing their already restricted ability to export goods due to an incredibly over-valued franc. Being a "reserve currency" is hardly worth destroying their ability to export!

Re:I never have understood

[fustakrakich]

*dead on balls accurate* - it's an industry term

Re:I never have understood

[musmax]

Actually, the democrats consistently outperforms the republicans as "the big business party" https://plus.google.com/116665...

Re: I never have understood

[Cyberax]

No, we are not in a stagflation. Stagflation is characterized by high inflation and stagnant economy, it happens when the economy is constrained by the external pressure (like high energy price) and does not have enough real resources to support growth.

Right now the US is slowly crawling from a liquidity trap (and Europe actually crawls in the wrong direction), so we have unusually low inflation and low growth.

Re:I never have understood

[nnappe]

This!
And to think that I wasted modpoints yesterday...

Re:I never have understood

[unity]

This is a great informative read: http://archive.lewrockwell.com...

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold. In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets. Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it — not even a pretense of gold convertibility, none whatsoever! Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread. Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

Re:I never have understood

[budgenator]

When Russia sells petroleum to Germany, the transaction is completed in USD, ergo both parties need to have USD on-hand in order to trade. This is true for most commodities trade. ....
  if countries suddenly stopped using USD for commodity transactions, then the global demand for the USD will drop.

I don't agree, in most cases the U$Dollars is a standard measure of value rather than physical thingy like a briefcase full of FeRNs (Federal Reserve Notes). Even at that, when the shit hits the fan, money is only worth what you can buy with it and you can't eat gold or burn it to keep warm. If Russia and Germany are buying and selling from each other in a balanced basis, the amounts of currency in the float will be trivial.
Now what upsets the apple cart is when a Russian President like Vladimir Putin, decides he wants Russia playing its old games and prop up al-Assad in Syria, which pisses off the House of Saud who collapses the Oil market and starts to crush the Russian economy. Russia has enough Islamic countries in it sphere of influence (many on its boarders), that keeping them all from turning on either Russia or each other takes a high level of brinkmanship that's difficult to achieve and more difficult to maintain.

Re:I never have understood

[digsbo]

It's because of the following: 1) The economic center of the world moved to New York City after the Pound Sterling failed and Britain was impoverished by WWI and WWII. 2) The US agreed to support the Saudi regime in exchange for the privilege of having OPEC oil priced in dollars even when Nixon cut the dollar's tie to gold for foreign reserves.

Re:I never have understood

[eric_harris_76]

Hey! Leave me out of it! I'm no Democrat, and I'm not a Republican.

There's a lot of that going around these days.

Most folks are not on Team Donkey or Team Elephant, though they don't go so far as to support some other party (like I do). (My electronic ballot thingus when I went to vote absentee was marked with a purple band, not red, not blue.)

On issue after issue that matters to me, the Blue Team and the Red Team just about always agree with each other -- and disagree with me.

Re:I never have understood

[MrBigInThePants]

The problem is that the size of the compliment is based on the size of the target.

Hitting a man with huge balls is much less impressive than a man with no balls.....or is that the other way around?

Re:I never have understood

[Fire_Wraith]

Stability and confidence is what keeps it going. Stability and Confidence in the US economy. For all the USA's faults, it is a technologically advanced nation with a skilled workforce, infrastructure, and abundant natural resources, protected by a strong military. It also has a pretty strong legal tradition and rule of law. Now, it's certainly not perfect in all these areas, but overall it's better than anyone else. If you have to ask yourself, "What currency is least likely to completely implode in the next X years", your answer is going to be the US Dollar. You would certainly be wise to hedge your bets, and I'm certainly not saying it can't - but that's the core of why the international reserve currency remains the US Dollar.

Re:I never have understood

[Lotana]

That is very insightful and eye opening.

Thank you for posting this. It is rare gems like these that make this site worthwhile.

Re:I never have understood

[NewYork]

Short Answer:
USA can PRINT dollars to buy OPEC Oil.
Rest have to EARN dollars to buy OPEC Oil.
https://en.wikipedia.org/wiki/Petrocurrency#Currencies_used_to_trade_oil

Long Answer:
It all started in 1971 when USA unilaterally cancelled the direct convertibility of the dollar to gold and 'persuaded' Saudi sell oil only in US dollars.
Until 15th August 1971, the US dollar was backed by gold. The US was fighting the Vietnam war and spent all the gold paying for the war. Nixon broke the link between the dollar and gold because they couldn't pay the bills in gold any more, they didn't have any.
The dollar was then simply being printed, unbacked by anything. This increases the supply of dollars and the value falls massively. Huge inflation.
1972-3 Nixon or someone went to the Saudis and "persuaded" them somehow to remain only US dollars in return for oil. No idea what they promised, but it was big. From that point, the US dollar is pretty much backed by OPEC oil. It was denominated in dollars before, but the dollar had been backed by gold, so basically the oil price was based on gold. Not so after 1971.
So. All oil all over the world has to be bought in US dollars... The demand for US dollars (not gold) rockets, all the central banks across the world have to keep reserves on hand so the countries can buy oil. Billions of them. Trillions in total.
Do you see what this does? It does 2 things.
1: America gets paid first for any oil which other countries want to buy. They have to get the requisite number of dollars. And they get paid simply for running a printing press.
2: It allows the USA to print and spend as many dollars as they want to. The demand from outside the country means that inflation can't take off. The entire world is subsidising the US economy.
Now... 35 years later, there are trillions of US dollars out there sitting in central banks waiting to be spent on mostly oil. If oil were to be available in Euros, the dollars would be useless. They would come back to the USA.
Ask yourself what a million dollars would be worth if everyone had a million. ok, imagine what a trillion dollars or so would do coming back into the country. The value of the dollar would fall and as the value of the currency falls, the price of everything else increases.
As to the size of the effect... who knows.
SOURCE http://news.slashdot.org/comments.pl?sid=308999&cid=20762065

Re:I never have understood

[MrBigInThePants]

You are seriously deluded.

The wealthy elite are paying millions to both sides.

Wake up sheep person.

Re:I never have understood

[MrBigInThePants]

lol.

Depends which big business you are talking about. The donation levels change per term and per party but the basic rule is the same.

I at no time said that their policies WORKED. Short-sighted greed rarely works in the long term when talking about countries and company strategy.

Re:I never have understood

[MrBigInThePants]

lol.

I at not time said they were the SAME. Hitler and Stalin were VASTLY different characters.

You are a the fraud, sir coward.

Re:I never have understood

[eric_harris_76]

It's not clear (at least to me) what you mean by the petrodollar, as distinct from the US dollar.

The Wikipedia article was no help clarifying your meaning.

Could you mean what the article referred to as "petrocurrencies"? https://en.wikipedia.org/wiki/...

Re:I never have understood

[guacamole]

Why fetish? Would you rather hold Mexican peso, Turkish lira or something else? People obsess about US dollar as a reserve currency because they know that they, or someone else, could go into US and spend the money to buy real stuff. They also expect low and manageable rate of inflation, as it was observed for more than one hundred years in the US.

The US economy may be prone to inflation, but the inflation has been mild since the 80s. I am also curious about the "deficit" you're mentioning. Being a market economy, there can't be a deficit in the US. If there is an excess demand for any good at a given price, the price will rise until the quality demanded equals the quantity supplied. The deficit happens when the price of a good is set artificially below its market price, like it happens in communist economy or in places where a totalitarian government attempts to fix a price.

So why else people prefer the dollar? The exchange rate does not fluctuate as wildly as that of other, lesser economies. A run out of the mill hedge fund can probably collapse the exchange rage of Ukraine hrivna or Turkish lira, if they feel like it, but attacking a US dollar on exchange markets is something no one can afford.

What else is there? It's a huge economy, one of the biggest in the world, and just like most of the first world economies, the US government has no problems collecting the income and sales tax. This means that the debt of the US government is always guaranteed by the affluence of the economy and the taxes collected.

Move over USA, it's China's time to shine now...

[bogaboga]

Yes, you read it correctly. It's now China's time. to shine.

As we debate the real meaning of these numbers, let's remember that our economy is mostly financed by debt. We're indebted to those nations we despise.

Sadly, the ordinary American just doesn't get it.

Re:Do as others do

[halivar]

Naw, they did ok on that score right near home.

Re:Move over USA, it's China's time to shine now..

[wiggles]

Most of our debt is owned not by foreign governments but by the federal government itself, mostly between the Fed and Social Security - we've been dumping surplus receipts from the payroll tax into T-bills for years.

Actual debt owned by foreign governments - combined - is only about a third of the total debt.

Re:"Looms" is not a transitive verb

[pla]

It can, however, stand on its own, making the "Hamming-correct" headline read as follows:

"Serious Economic Crisis Looms; Russian China May Help".

So clearly, flatware manufactured in Russia might just save us all from the looming non-specific economic crisis. Time to open a Pottery Barn in Moscow!

Re:Move over USA, it's China's time to shine now..

[wiggles]

Source here:

http://www.factcheck.org/2013/...

Re:"Looms" is not a transitive verb

[pla]

Hmm, I just can't see it. How do plant stems help parse that particular turd?

China has to buy US bonds ...

[drnb]

China has to buy US bonds. They mangage/manipulate their currency so that there is effectively a huge discount to all products and services in China. This discount on *everything* is what really drives relocating manufacturing to China not so much wages.

To force the exchange rate to a level that provides this effective discount they need to control the US dollars in their economy. So all the merchants/suppliers being paid is US dollars need to sell those dollars to the gov't and then the gov't needs to remove these dollars from the economy. Buying US bonds does this through the magic of international accounting.

Yes, this is an accounting trick but this is how the calculation of exchange rates work. At least that's how our macro econ professor explained things a few years ago. China can't stop buying US Bonds because then it would lose control of the exchange rate and lose its primary competitive advantage.

Re:China has to buy US bonds ...

[Hognoxious]

Off the top of my head, they'd buy them on the secondary market, and via proxies or other intermediaries.

I'm sure there are other ways.

Re:China has to buy US bonds ...

[Trachman]

Same thing that will happen if China will stop buying US debt.

Re:China has to buy US bonds ...

[sysrammer]

What happened when the US decided to not sell oil to Japan?

They invaded countries that had oil. Can China invade a country that has dollars and basically say "gimme your dough?" Would not that act of invasion itself destroy the target's economy (and dollars)?

Re:China has to buy US bonds ...

[hackingbear]

They mangage/manipulate their currency so that there is effectively a huge discount to all products and services in China.

That's a myth as pointed out in my summary. Back in early 1990's the official rate was something like 1 USD to 3 RMB but the black market rate was 1:8. Nobody would bring their USDs to the bank to get Yuan; instead they all found black market source to get more Yuan. Eventually, the Chinese government realized they couldn't pop up the Yuan and so let it fall to the black market rate. Currently, the black market rate is the same as the official rate. If it is really undervalued, I would think the black market would reflect that. In China, always look at the black market first.

Re:China has to buy US bonds ...

[Cyberax]

It cannot. T-bonds are commodities traded on multiple open markets, so China could easily buy them there. Closing all the loopholes would be theoretically possible, but it would also mean the end of the dollar as a freely convertible currency.

Re:China has to buy US bonds ...

[Tablizer]

a strange co-dependent relationship

Yes, they manufacture products and we manufacture debt. A match made in.....well...

Re:China has to buy US bonds ...

[drnb]

They mangage/manipulate their currency so that there is effectively a huge discount to all products and services in China.

That's a myth as pointed out in my summary ... Currently, the black market rate is the same as the official rate. If it is really undervalued, I would think the black market would reflect that.

Sorry, your hypothesis is simply mistaken.

The US Treasury department says the RMB is significantly undervalued and that this is primarily due to government intervention. That the value is *not* a market determined rate. However they then play the political game and say this is not "manipulation". Note I used "mangage/manipulate" to reflect this political game of words. The simple truth remains, the rate is government engineered not market determined.

Economists outside of government and those in business and finance tend to refer to the rate as manipulated. Tend to quantify that undervaluation in the 10% range, giving every product and service an instant 10% discount just by purchasing in China. Again, this 10% is purely from the currency manipulation; externalization of environmental and other costs, lower labor costs, etc are *not* included in this 10%.

By what terminology would refer to the process I described in my first post?

Re:China has to buy US bonds ...

[aliquis]

And what if the US government chose not to sell bonds to them?

In case you haven't noticed the US government always run on a deficit and have loans of 18 trillions.

(I guess they could monetize it all by selling to the FED who just burned them or whatever to push down the dollar. I don't know whatever that accomplish much. I assume Americans want to buy foreign products.)

Re:China has to buy US bonds ...

[aliquis]

Why actually want DOLLARS?!

What you want is products and services.

The actual dough just help it happen. (Guess that answer the question somewhat, it's may be the best intermediate.)

Re:China has to buy US bonds ...

[Tablizer]

Just start between recessions, not during.

MOD PARENT DOWN

[Anonymous Coward]

Noone cares about stupid grammer anymore. We get the point regardless of you telling us about transient verbs

Re:MOD PARENT DOWN

[228e2]

No one*
grammar*
And you forgot to end your last sentence with a period.

Morons should read some economic history

[mveloso]

Actually, you really don't get it.

The financial system is fundamentally held together by one thing: trust. The US Dollar isn't the key currency because the US was the largest economy, or because we have the most weapons - although those things factor into it. The US Dollar is where it is because the US has the political will and ability to support the world financial system when things go bad, even though those actions may cause severe short-term problems in its own economy.

Do you trust China to manage your currency? Even the Chinese don't trust their government when it comes to money. Russia? The EU?

Good luck with that.

Re:Morons should read some economic history

[Rei]

China's in this thing with Russia for precisely one thing: China. They're taking advantage of a weakened Russia to strike deals that they never would have gotten before. A good example is the "Power of Siberia" gas pipeline deal that they signed for a few years back. China's been trying for years to get Russia to bite at bargain-basement prices that leave almost no profit for Gazprom (perhaps even a slight negative that would have to be somewhat subsidized by the government's gas royalties), and Russia had been refusing. Then they sign the exact same deal they'd been refusing a few months ago and herald it as a great victory.

China has Russia in an excellent position and is going to squeeze every drop of potential profit out of their bad situation that they can. And Russia will herald it as a glorious blow to the west all the way down.

That said - even China's GDP doesn't compare to the sanction imposers (US + Europe + Japan + misc), all the leverage multipliers of global banking and fiat currency that the sanction imposers have aside. Even if China's goal was to break sanctions - which it's not - it's just not big enough, it's a third their size. And Russia a trivial fraction of that. And the multipliers of controlling the banking system and a fiat currency are very real. Throw trade into the picture, forget it - Moscow is closer to Newfoundland and Liberia than it is to Beijing. There's a giant barren wasteland between the two. They have a border but it's more of a barrier than a facilitator for trade.

As the very article linked by Slashdot put it:

"In the current conditions, any help is very welcome," Vladimir Miklashevsky, a strategist at Danske Bank A/S, said by e-mail. "Yet, it can't substitute the losses of the Russian banking system and economy from western sanctions."

Re:Morons should read some economic history

[ancientt]

Could we maybe buy some more of Russia? It worked out pretty well last time.

Re:Morons should read some economic history

[ninjagin]

My kingdom for insightful mod points to hurl at you!

Re:Morons should read some economic history

[rahvin112]

I agree with you about trust but don't about the reasons why.

The US dollar has several important advantages.

1. Trust as you said, but encompasses several factors. The first is that the US's separation of powers provides a guarantee that no matter what is politically expedient or the people want without concurrence by all three branches it won't happen. Two the independence of the US court system is very powerful and the laws and case law that governs financial transactions is highly defined and well understood. This results in a system where foreigners are treated the same in financial transaction as US citizens and corporations. This is emboldened by the restraint congress shows towards the financial system, and the unwillingness of our politicians to slaughter the golden goose under any circumstance. The final component of the trust lies with the much maligned US federal reserve system. The US has basically put the private banking system in charge of the economy and they are chartered to maintain inflation between 1 and 2%. They have demonstrated this several times by slaughtering the late 1970's economy to halt inflation that was higher than 3%, even against the complaints and maneuvering of president Carter and again under the second Regan administration and most recently with QE1, 2 and 3.

2. The trust in the system builds in another important factor and that is the transparency of our system. Almost everything is done in the open, the Fed doesn't make a move without warning about it for weeks or more frequently months and years. There are only one or two other systems which even have this.

3. Trust combined with Transparency yields Stability. Behind the Fed's primary mandate on inflation their second most important objective is stability. They've demonstrated absolute devotion that they will do whatever it takes to maintain stability in the system. This was demonstrated most recently with the QE's. The Fed basically created more than 4 trillion dollars out of thin air and gave it to the banks to do with whatever they wanted. This injected massive liquidity into the system at its most broken point and restarted lending because the banks were handed all that money and weren't charged any interest for it. Many people (particularly Edrogan of Turkey) don't realize the boom in the BRICS group was a direct result of all this free money. The banks took those trillions and invested it in systems that offered the highest possible return and this made massive dollars available in those markets propelling their economies forward. But the end of QE means the end of free money and a return of the slow growth to these nations along with all those trillions being pulled bank into the US system. Stability is one of the Dollars most important attributes. It's why it's the currency of choice in dozens of nations around the world, from countries like Zimbabwe that have no local currency to countries like Venezuela that are seeing hyper inflation to Argentina who has a love affair with the stability of the dollar.

4. Is the most complicated attribute, it ties two concepts together and that is the US governments willingness to run massive trade deficits to allow enough dollars to flow outward to satisfy demand and the Feds willingness to flood the market with dollars if they are needed to maintain that inflation mandate. This allows the dollar to have trillions of dollars floating all around the world completely out of US control.

The UK is the only nation I'm aware of that met conditions 1-3. The pound would likely still be a major player but for two reasons. The first is that at the end of the war the UK government was leveraged (indebted) to 250% of GDP (the Tea Party was created out of the idea of 100% of GDP). They were also severely economically damaged during the war. London had massive infrastructure (capital) damage and the UK had lost billions of pounds. Not the least of which was the several billion pounds (2014 pound) of equipment lost during the Dunkirk evacuation. But most importa

Re:Morons should read some economic history

[Maxo-Texas]

Wish I could mod you up.

Informative, interesting, insightful.

Re:Morons should read some economic history

[ebusinessmedia1]

Well said, and right on target. Wish I had mod points.

Re:Morons should read some economic history

[NewYork]

Since 1971 OPEC Oil is exclusively sold in US dollars.
https://en.wikipedia.org/wiki/Petrocurrency#Currencies_used_to_trade_oil

Re:and that's how we got the world of FIREFLY

[wiggles]

Actually, no. Their GDP per capita is still very low. Their GDP hasn't eclipsed ours despite some funky figures produced by marketwatch.org.

Thinking they can really hurt us with economic measures belies the damage they'd do to their own economy with said measures. They need us more than we need them.

Oil prices loom is more like it...

[Bob_Who]

Too bad we're not big importers of Borscht.

Its interesting how "economic sanctions" are no match for an OPEC decision to increase production. Even at lower prices with increased U.S. production and fracking, they did not waiver at market price. This will eventually hurt everyone who invested in shale, back when the market was twice the price. The middle east continues to be able to pull oil from the ground for about one half the cost...maybe even less. Of course, nothing lasts forever, but it seems the oil has been the biggest stick there is when it comes to economic pressures. It sure is a lot easier to shoot down air traffic over the Ukraine when oil is pegged at $120 a barrel. Now Putin is gonna be happy just sipping the borscht and saving the warfare for summertime, perhaps.

Re:Oil prices loom is more like it...

[140Mandak262Jamuna]

The Middle 'East oil cost of production is quite low, and they turn a profit at very low prices, as low as 5$ a barrel for some Saudi fields. But their economy can not survive at these low prices. The government is subsidizing so much, and they are committed to spending so much, merely turning a profit is not enough. I read in Wall St Journal (curiously in a Qatar Aiways flight) the oil price needed to sustain the Arab economies. Saudi need it at 105$. Iran, Iraq above 120$. Only Qatar and another minor player would survive at 60$.

Saudi Arabia planned for this low oil price for two years, accumulated enough reserves and has indicated that it could survive for two years at 60$. Other Arab nations are not prepared. Russia certainly is not prepared and it can not survive for two years if the oil stays below 60 for two years.

Re:"Looms" is not a transitive verb

[jones_supa]

My original title was "Serious Economic Crisis Looms Russia". Would that have been correct?

Re:Except that they have no debts

[jeffmflanagan]

>then Obama gave in to Castro, basically ending another "cold war" but this time with USA's political defeat,

That's absurd propaganda from the ignorant conservatives. They hate all progress, and are learning-disabled due to preferring dogma over evidence, so it's best to ignore them.

Re:Move over USA, it's China's time to shine now..

[halivar]

Wait until China's property bubble bursts. It's happening and it ain't gonna be pretty for anyone (us included).

As Russian

[Anonymous Coward]

As Russian, I might add that if China will help Russia, it will simply absorb Russian, digest it, and in not far near distant future, we might see China expanding its territories a bit close to Europe. To be honest, I am highly pessimistic about future of my country at this point.

Unless Europe and US will try to integrate Russia into "West", China will take over. China is more dynamic, more capable and way way less corrupt. No way country with population of 140 million(and rapidly declining) can reside on 1/6 earth's land territory. I am hoping Putin's will be squashed (and I dough it will happened), and Europe and US will go through painful, long integration process.

Saddest part of all, country is becoming a European "Hamas".

Re:As Russian

[Hognoxious]

I saw a TV program some time ago about how depopulated some parts of Eastern Russia are. There was a village that looked like it had 300 people in it; there was just an old couple.

If that's typical the Chinese could simply walk into half the country and it'd be months before anybody even noticed.

Re:As Russian

[Fire_Wraith]

Based on my understanding of history, I don't think China will ever wipe out Russia. Russia (and Russians) are simply too tough and stubborn. You've survived and fought off all comers for centuries - Mongols, French, Germans, etc. (Though China will probably try and buy up the rights to much of the material resources, much as they do in Africa and elsewhere)

That said, I do think it would be better for everyone involved if Russia was better integrated with Europe/USA. I think Russian Culture/Russians are pretty cool, and it saddens me the way things have gone recently. I wish humanity would realize that we have better things to do than kill each other over land and nationality.

Re:As Russian

[Cyberax]

There's a reason why Eastern territories of Russia are sparsely populated. The chief reason is that it simply makes no sense to live there. Just look at Canada - it has huge tracts of land, yet almost nobody lives north of Edmonton.

Re:As Russian

[ElusiveJoe]

China invasion is a popular scarecrow in Russia, but it will not happen. Thinking anyone is envy of big Russian territories boosts the Russian self-esteem, but it is a lie. Rarely anyone thinks what will China actually do after it had sucessfully invaded Siberia.

The Siberian lands are hostile. Both Tsarist Russia and USSR managed to set up cities there only by propaganda and forced relocation. It's better to set up a puppet government and suck out all resources than to actually invade a country. Which is what is happening right now.

The only thing that might happen is that some China leaders will try to gain a small territory in order to earn political points at home. But that can happen only after Taiwan has been be conquered, which is still a big problem for them.

The future of Siberia is grim, it will probably continue to collapse into a No man's land, scarcely populated territory without any laws, ruled by local mafia leaders. Something like Libya is today. And no one will really care about it, other than buying oil from whoever sells it. Again, like Libya.

Re:As Russian

[Guspaz]

90% of Canada's population is within 160KM of the southern US border. Add the Calgary and Edmonton metro areas and you're up to 97% of the population.

Re:As Russian

[Guspaz]

Nobody would invade Siberia to colonize it. They'd invade Siberia for things like its $5 trillion USD in remaining proven oil reserves. Russia is the largest producer/exporter of oil in the world, and the vast majority of it comes from Siberia.

Re:As Russian

[fonos]

When is the last time you heard of China invading a foreign country without being asked by that country's government for help?

Re:As Russian

[aralin]

This guy is not Russian. First of all, he is using the propaganda points that US is spreading in Russia, the fear that China will take part of their territory. It is one of the talking points. Second, he is making homophone mistakes (doubt -> dough) that only native speakers make or sometimes people who use english for 10-20 years or so and he is not making any of the grammar and preposition mistakes common for foreign speakers. It is sad to see our discussion here on slashdot tainted by spooks.

Re:As Russian

[Anonymous Coward]

Vietnam, Philippines, Tibet

Re:As Russian

[aliquis]

What do you mean with the European Hamas part?

I think all of west is open to have Russia join them.

The thing just is that Putin say "NATO moves close" and Russians on RT always trash talk especially people in Poland saying how they are whores to the Europeans.

And then there's the military spending, increases, exercises, "oups I lost my ... in your territory" and flat out denying everything though no-one believes that anyway.

Russia is a bully and try to scare people to like him ..

That obviously doesn't work very well.

You can't convince Finland that "Oh joining NATO would be bad for you and destabilize this region!" but at the same time joke about how Finland is next.

Or tell Estonia and Latvia that that there wouldn't be much left of their countries if a major conflict broke out in the area and then assume that they will be like "Great my Soviet over lord!

All of them want to join EU and NATO.

None of them seem to beg for joining the Soviet union.

I wonder why that is ..

Painful integration for whom? For Russia or Europe? Don't you mean for Russia?

But Russia isn't all that far from Europe anyway. Here in Sweden we import a crap-load of people from for instance Somalia and well.. A crap-load of Russians would be a major upgrade.

You're at least well educated and come from a real working country.

Re:As Russian

[aliquis]

Of course in the case of the Russians I mean without the tanks.

Also please act civilized and don't bring corruption / mafia way of doing things.

But yeah, regular business and workers and regular people just living minding their own business no problem whatsoever of course.

Re:As Russian

[ub3r n3u7r4l1st]

Lastly, real Russians will not post on Slashdot.

Re:As Russian

[Maxo-Texas]

Don't like Canada? What's wrong with it? Its's beautiful, it's rich, it's got huge... tracts of land.

Re:As Russian

[Maxo-Texas]

I agree completely.

Russia has a long heritage of eating up invaders. I think it is solid and will be stable as a state.

It has a problem with crony capitalism and it's first attempt to throw off fascism failed. But I think it will eventually gain the same corrupted kind of hybrid self government the rest of the world has. Essentially, the people will have some actual say in local, territorial, and national government while the corporations will have too much sway.

But the russian people must become intolerant of corruption. Bribery and graft are tolerable in small doses but they destroy your economy and your government when they become an accepted way of doing business.

I wish russia and the russian people success in getting over this obstacle on their path to being a modern state with relatively free people and less hostility and phobia of other countries.

And seriously- any attempt by china to take over russia would be the largest mistake they ever made.

Re:As Russian

[Evtim]

It is a general trend of the Slavic peoples. There is only one way to "deal" with us --> total extermination. Either you kill us all, or you the invader, will become like us or we will just sit and take it until the invader is no more. I mean my country survived 482 years of ottoman occupation combined with systematic extermination of our culture, history and our gene pool [That's a horrific but fascinating story --> every few years they took one child from every family; refusal was punished by death; to be indoctrinated and raised as servants of the Empire. However, because they selected the brightest and best this special corp of mostly officers became so powerful that they started changing sultans and play the real politic. Turks would bribe officials so that their children would be accepted in the corp as christian kids --> it gave very good career prospects. At the end it was that corp that was the strongest opponent of the reformation of Turkey and Ataturk had to extinguish them. Anyway, it is estimated that 3-4 million children were collected from my country alone; this procedure was going on for hundreds of years].

Now, if you want to harm the Slavs the best thing to do [this is one of the biggest revelations of global politics] is.........leave us alone!! The greatest enemy of the Slavs is us. Leave Russia alone and they will keep the endless circle of extremely poor governing they have enjoyed always. But threaten us or try to conquer and subjugate us and we will stubbornly dig our heels and you will loose. As one of the fabulous modern day Russian writers [Victor Pelevin] said in one of his books "Of course there is an anti-Russian conspiracy. The problem is that all the adult population of Russia is participating in it"

Re:As Russian

[Hognoxious]

There's a reason why Eastern territories of Russia are sparsely populated. The chief reason is that it simply makes no sense to live there.

Presumably that wasn't case until fairly recently, or there'd be one hut instead of a few hundred.

Are these sparsely populated areas of Canada (which we all knew about, thanks) full of formerly thriving ghost towns? Outside of areas where there were gold rushes the answer is "no".

Did you actually read my post before replying?

Re:As Russian

[Cyberax]

Yes, the USSR tried to populate the Eastern territories by giving incentives to move (in some cases incentives included such things as 'not being shot'). After the USSR collapse people started moving back to more hospitable regions. There is also a large number of mine towns that are now depopulating because the mines are either downsized or not profitable enough to support the infrastructure around them.

I don't know about Canada, but the same processes happened in the US quite often. Just look at abandoned coal mining towns in Virginia as an example.

Re:As Russian

[burbilog]

Lastly, real Russians will not post on Slashdot.

I do, sometimes.

Re:Except that they have no debts

[Anonymous Coward]

Except that I'm a european socialist, and I actually like Cuba. Are these guys ignorant conservatives too?
http://www.washingtonpost.com/...

Not that I agree with the WaPo's ideas that much, they say that the cuban "regime" was falling before Obama "bailed it out", but that's just false, it wasn't going to fall anytime soon, and Castro's successor has already been picked. Obama simply realized that the US strategy failed.

Re:Except that they have no debts

[TapeCutter]

It's not the size of the debt that counts, it's your ability to make the next repayment.

Re:"Looms" is not a transitive verb

[radarskiy]

That is correct in the sense of "correctly demonstrating that the AC doesn't know what a transitive verb is".

Re:Move over USA, it's China's time to shine now..

[Anonymous Coward]

We're #2, We're #2, We're #2! USA USA USA!

Re:"Looms" is not a transitive verb

[jones_supa]

Right, I see it now.

Economic crisis is peanuts vs Crimean gem trophy

[Trachman]

This economic crisis can be comparable to the fever that occurred after annexing significant piece of land in a prime location. If Russia will survive it, they will be stronger, meaner, richer, better diversified. Russia for more than a decade have been preparing for this scenario.

Occupied Crimea and Donbass represent an area of approximately 42 thousand square meters and had a population of approximately 6 million people (actual number will be lower due to the war). The area is larger than Switzerland and population is comparable to Austria. The Crimea is a prime sub-tropic location, a desirable trophy to Russia who has abundance of land in cold climate. Crimean peninsula is surrounded by sea and has significant untapped oil and gas reserves. To summarized, this is an incredibly valuable piece of land and Russia will not give it up at any cost even if they need to wage a nuclear war.

For Russia adding Switzerland size country economic crisis is an incredibly low price to pay. Russians have stashed away significant foreign currency reserves and have been waiting for this precise reaction from the west.

It is time for the west to impose a reverse Iron curtain on Russia so that Russians could enjoy and continue their relationship with China and North Korea.

West lost the moment Russia wiped their arse with 1994 Budapest memorandum which had to guarantee territorial integrity of Ukraine.

Re:and that's how we got the world of FIREFLY

[MightyMartian]

And what happens to the Chinese economy when US orders suddenly dry up.

China is in a position to do the US significant harm, but in the process utterly devastating its own economy.

We can destroy China the same way.

[Brannon]

Who do you think buys their products?

Re:We can destroy China the same way.

[reikae]

On the other hand, who do you think will stop buying their products? I doubt anyone can arrange a boycott on that scale, even if everything made in China is outlawed.

Re:We can destroy China the same way.

[Maxo-Texas]

Most of their products are "nice to haves" not "must haves".

Do I need a new TV when mine isn't broken? Nope.
Do I need a new computer this year instead of two or three years from now? Not really.

Meanwhile, the loss of income would be immediate and lead to social unrest which they really try hard to avoid.

What's coming?

[PacRim Jim]

Here's what's coming: After assuring China's oil supply, Russia will instigate war in the Middle East, to disrupt the supply of oil therefrom. This will raise the price of Russia's oil, and hence its geopolitical influence. It's how dictators think. Count on it.

Re:and that's how we got the world of FIREFLY

[Rei]

GDP comparisons:

Major pro-sanctions players:
US: 16,8T
EU: 17,5T
Japan: 4,9T

Major anti-sanctions players:
Russia: 2,1T
China: 9,5T

Just ignoring the whole fiat currency issue and controlling the global banking system which act as large multipliers, China is simply not comparable to the economic pressure being levied against Russia.

Re:Sovereign default

[Rei]

If it comes down to military force stopping loss of assets for failure to pay debt, then you're saying "stop all international trade with me this instant".

Russia imports nearly 40% of its food. So, say hello to the largest famine of this century.

Re:Except that they have no debts

[mlts]

Actually, it has been a good month for the US, other than the DPRK fiasco:

1: Cuba opening up (assuming Congress lifts the trade embargo) is only going to improve the economy of both places. The Cold War-era foreign policies that were in place in the US past had to get tossed. This isn't a defeat... it is a move forward. Calling it a "defeat" would be calling the fact that a good number of nukes were removed from service as part of a treaty, a "defeat".

2: The CIA torture reports were a festering boil, and it had to be lanced sooner or later, and now was probably one of the better times. The fact that it was made public and made known that this is not how the US handles itself these days is quite important. It only goes up from here. The days of torture are behind now.

As for Russia, they are down, but definitely not out. If push came to shove and China didn't lend money, the US would. The reason is that Putin is nowhere near a saint, but a power vacuum in the largest country in the world is the stuff of nightmares. If Russia collapsed, every single country in the world would either be going for a part of that carcass or jumping in the fray to keep their enemies from doing that.

Overall, Russia will emerge stronger. The low oil/gas prices are quite temporary. The profit may be less this quarter... but give it six months to a year, plus one incident in the Middle East... and oil will be back up to $150 a barrel and stay there for good. People know this, and nobody here in the US is going out and buying SUVs due to these temporary low prices. Solar might have slowed down slightly, but it is still progressing, mainly because virtually everyone knows that high gas prices will be back eventually.

Re:Move over USA, it's China's time to shine now..

[LessThanObvious]

The West is never going to let that happen. It may lead to World War III, but China will never going be allowed to take the dominant position in the world. I really hope it doesn't come to that in my lifetime.

Trust Bank

[nitehawk214]

I mean, if there was ever a bank not to trust... it's the one with Trust in their name.

Re:and that's how we got the world of FIREFLY

[sysrammer]

And what happens to the Chinese economy when US orders suddenly dry up.

China is in a position to do the US significant harm, but in the process utterly devastating its own economy.

And if in the position of securing a political goal the dictators decide that the gain outweighs the damage to their economy, they will--in glowing, happy, joyful terms--tell their population to go ahead and suck it up.

Counting on self-interest to stop bad actors is no guarantee.

sr

Re:"Looms" is not a transitive verb

[fustakrakich]

...'Serious Economic Crisis Looms over Russia' might be more correct, sure sounds cool, but I really don't know much

Re:Move over USA, it's China's time to shine now..

[Cyberax]

This is deal is actually really great for China. Think about it - the only thing that Russia can sell to China is oil (and gas) and Russia will get paid for it in Renminbi. And the only place it can spend those Renminbi is... China! In this way there'll be no additional pressure on Yuan.

Re:Where did the China meme come from?

[Fire_Wraith]

It's uncanny just how bad we as humans can be at predicting the future. We fixate on the way things are, and suffer massive failures of imagination that the current situation could fundamentally change. You can easily see evidence of this by looking back at how people in the past thought their world was and where it was going. Even people whose job it is to try and predict the future never saw the fall of the Soviet Union, the Japanese economic malaise, or any number of other major shifts in the course of world events coming. Certainly there were rumblings, and some who pointed to the signposts, but it never changed the general perception until after it had happened.

It certainly could happen to China. China has experienced massive growth for decades now, but is starting to run into trouble. Its growth, while still impressive, is noticeably slowing. If China runs into a major economic crisis, things could get very uncertain, very quickly.

Re:Sovereign default

[Cyberax]

Russia has enough locally produced food to not actually _starve_. There would be problems with fruit and meat, but you can live without them.

Petrostates

[Tailhook]

China is going to prop up Venezuela. China is going to prop up Russia. Will China also prop up Iran when the price of oil pulls the rug out from under that bunch of fundies?

I know China is all productive and stuff, not fighting self-inflicted headwinds of OSHA NLRA EPA etc., and having been fully exempted from any concern for carbon emissions for another three decades by Obama, but they can't actually afford to fully float all these fucked up petrostate kleptocracies. And what support they do offer will be highly conditional and hard to accept by these client states.

Russia had a chance. Western money was pouring into Russia; places like Magnitogorsk have had huge investments from Europe and the US to build out decrepit steel works into some of the best specialty metal sites in the world. They could have seen 5% GDP growth for the next two decades.

But they couldn't help themselves; Putin took off his shirt, said nasty things about 'Murica and the the Russian people made him dictator for life. So now, rather than emerging from a century of self-inflicted fail, they're making themselves into a European pariah state.

Enjoy, Russia. You deserve it. Be nice to the Chinese I guess.

Re:Petrostates

[140Mandak262Jamuna]

There was a time USA did not have EPA, NLRB and OSHA.

Rivers caught fires then. . The value of real estate with clean river front property dwarfs by orders of magnitude any industrial production that came of those fatories run by dimwitted idiots who could not make anything without crapping all over the country.

You can see what happens without OSHA in India where the workers are still making asbestos sheets or in china where they are melting used electronic plastic or in Bangladesh where the break down ships with bare hands and a welding torch. The value provide by these agencies are subtle, hidden and never fully appreciated or articulated. But those crappy executives who think they can't make this quarters number because they have to provide masks for workers shoveling coal ash, they aggressively paint the picture that all the woes of America are due to these agencies.

Added property value due to clean waterfront is never accounted for. Increased real estate value on properties adjacent to tax funded highways is never recognized when people blindly "government never creates value". All the agricultural output from deserts watered by the big dams built by the government is never recognized. Government by its mere existence creates value. Our founding fathers realized it and gave the Government the power to tax anything without providing any justification whatsoever. If the government decides to tax bandwidth of internet connections or financial transactions, it can, it is constitutional. You might question the wisdom of it, or the political expediency, but it would be constitutional.

Remember the day you make the government weaker than the strongest person, that person will drown it in the bath tub and that person will rule you as a tyrant. Courts have ruled corporations are persons, endowed with religious beliefs and all the rights of citizens. Be afraid, my friend, be very afraid. Not of the government, but the corporation that is going to rule you as a tyrant.

Re:Move over USA, it's China's time to shine now..

[Sir_Eptishous]

Yea, I love it when people throw that "China owns us" bullshit.
Look closely at China and you will see they are barely in control of their own situation...

Re:and that's how we got the world of FIREFLY

[Sir_Eptishous]

It wouldn't just devastate their economy, it would dislodge the Chinese Communist Party from power. They are in a precarious situation already... If the boat got rocked too hard China would be in much deeper shit than the US.

China playing for the long-term

[Anonymous Coward]

Don't think China is doing this to be kind. They are trying to make the Yuan a replacement for the Greenback. And they are buying gold to partially back it. They are playing for a century+ of domination and the US is play for 60 minutes.

Re:and that's how we got the world of FIREFLY

[Ash Vince]

seriously though, the Chinese can destroy our country without setting a single boot on the ground simply through economic measures.

The problem is that would also destroy them economically at the same time as they require US consumers to buy all the crap they produce. China keep their own currency artificially low just to keep their exports going.

Re:and that's how we got the world of FIREFLY

[ColdWetDog]

Or not. The Chinese leadership isn't as all powerful as some make it out to be. They are skating a very fine line between their own interests and the goals and aspirations of an enormous population. Right now, they are keeping the population relatively comfortable and happy by reasonable economic growth. That llows them to continue their current attempts at World Domination. If that falters, then so does most of the goodwill and support the Chinese population gives to the government.

In that sense, it may be more representative that the situation in the US.

Re:Russia was always a red herring

[theronb]

Agreed, and that was fairly obvious if you spin checked US media by listening to some from other countries.

Re:"Looms" is not a transitive verb

[mi]

If for one stopped caring, when "RSVP" became not only a verb, but a noun too!...

I call bullshit

[Anonymous Coward]

When the USA had a financial crisis, TRILLIONS were required from the government (taxpayers) to fix the problem. Here we are talking about a few tens of millions - this fake news about Russia being 'on the financial ropes' is the purest bullshit designed to stultify.

Re:Move over USA, it's China's time to shine now..

[Anonymous Coward]

I am in China right now. They have BIG problems ahead of them. I literally have seen thousands of apartment towers on hold, half built. Dormant cranes for miles. This is everywhere, from Beijing and Shanghai to third and fourth tier cities.
And the ones that are brand new already look 20 years old, with quite appalling build quality inside. Imagine soviet apartment blocks with a cheap veneer of luxury over the top, and duck tape plumbing and exposed wires behind

Re:Move over USA, it's China's time to shine now..

[jmcvetta]

the only thing that Russia can sell to China is oil (and gas)

and military equipment

Re:Move over USA, it's China's time to shine now..

[Cyberax]

That's a fairly insignificant amount for the economic purposes. Yearly exports of military equipment amount to less than 1% of total Russian exports while natural resources amount to about 80%.

Re:Except that they have no debts

[jmcvetta]

The profit may be less this quarter... but give it six months to a year, plus one incident in the Middle East... and oil will be back up to $150 a barrel and stay there for good.

I wouldn't be too surprised if there were some Ruskie military intelligence types working overtime to stir up some new troubles in the Middle East. The Saudi gub'mint isn't exactly popular with their subjects, are they?

Re:and that's how we got the world of FIREFLY

[Solandri]

seriously though, the Chinese can destroy our country without setting a single boot on the ground simply through economic measures.

*Poof* You have your wish. China ceases all trade with the U.S. The $122 billion in stuff going to China, and $440 billion in stuff coming from China vanishes.

The U.S. economy has a GDP of $16.8 trillion. Trade with China was equivalent to 3.3% of that. And in fact since the U.S. runs a trade deficit, the cessation of trade with China actually increases its GDP to $17.1 trillion.

China's economy has a GDP of $6.8 trillion. The vanished trade was equivalent to 8.3% of that. And since they ran a trade surplus, their GDP shrinks to $6.5 trillion.

So China's GDP is hurt more and they lose a bigger chunk of their economy from these "economic measures." And you somehow interpret this as China having the power to destroy the U.S. economically?

Here's what people like you don't get - China needs the U.S. more than the U.S. needs China. The U.S. buys manufactured goods from China. It doesn't have to buy from China. If China boycotted us, we could pay for manufacturing in Vietnam, Thailand, Indonesia, or one of a hundred other developing countries eager for the business. OTOH, where is China going to sell the stuff they manufacture? If the U.S. doesn't buy it, who else will? There just aren't that many first world customers willing to fork over cash for merchandise. China already sells to all the first world customers willing to buy. The U.S. doesn't buy from all the developing nations willing to manufacture.

Re: Except that they have no debts

[DigiShaman]

To the victor goes the spoils, as they say.

Castro's revolution was predicated on creating a New democratic government; instead he shut the door behind him with communism. Fact is, reality isn't a morality tale. Often the bad guys really do win.

Re:Except that they have no debts

[ub3r n3u7r4l1st]

and for that, load up on some Tesla Motor's stock...... it will rebound.....

Siberia is quite rich in resources

[drnb]

Thinking anyone is envy of big Russian territories boosts the Russian self-esteem, but it is a lie. Rarely anyone thinks what will China actually do after it had sucessfully invaded Siberia.

Harvest the resources of the region. Siberia is quite rich in minerals, oil and natural gas, timber and fisheries. And technology is making "harvesting" more and more practical in hostile environments.

You might also notice that China is going to great lengths to secure resources around the world.

You may like to joke now ...

[Taco Cowboy]

Watch out for the boomerang, man !

Whatever the West is doing to Russia now it will ricochet and the amplified effect will eventually land on the lap of the West

Re: "Looms" is not a transitive verb

[jones_supa]

Huh? Please educate me then.

Not everyone was worshipping Japan

[Taco Cowboy]

Back in the 1980's when anything Japan, including the stinky sushi was the in thing, I shook my head in disbelieve

At that time I was still relatively new in America, and the "blindly following the trend" thing that was happening in the US of A was in some way, comparable to what happened in China back in the "culture revolution"

We human beings supposed to have enough brain power to think, but looking at how people were/are behaving, no matter if it's in the US of A or in China, sometimes I have to wonder if that defect in the human beings would one day cause our own downfall

Re:Sovereign default

[dunkelfalke]

Mostly processed food. Russia is one of the largest producers of staple foods like wheat, rye, potato, buckwheat, milk, eggs. A famine won't happen.

Re:Sovereign default

[Rei]

Russia imports processed foods *and* staples. Just because there's some products that they're net positive on doesn't change that picture, their food imports are about 6x larger than their exports. And even some of your examples are off. For example, Russia exports a couple hundred million dollars of milk every year but imports 1 1/2 *billion* worth.

Russia's top ag imports are beef, beverges, pork, milk, tobacco, sugar and honey, poultry, and cheese. Beverages is mainly alcohol. So take beverages and tobacco out of the picture, you've still got mostly staples. And the funny thing is, see the milk and all that meat on the list? Russia's biggest subsidies to its ag industry are *already* on its meat and dairy production, and it still vastly underproduces.

It should also be noted that the very thing that keeps Russia's ag industry competitive at all has been its steady shift from lousy Soviet-era farm equipment to modern equipment. The vast majority of which (and spare parts to keep current systems operational) are imported.

Re:Russia was always a red herring

[davydagger]

and we needed the Military Industrial Complex to keep wealth inequality from tanking our economy again

I think you have it rather backwards, wealth inequality is what is tanking our economy, and the Military Industrial Complex is a big part of the problem, not the solution. We could easily either spend most of the excessive budget on either social welfare programs, give the money back to the people in tax cuts, or cut down the deficit(depending on your political views, pick one, all are fine with me), with no real lapse in defense, as most of it is wildly uneccary and exists because of defense industry lobying.

Re:And all the meantime, we are so worried about..

[dj245]

And the whole time we are super worried about North Korea, and Russia....

No informed person is worried about the DPRK. As for ISIS- if they want to be a state, I say let them be one. The USA is great at breaking states. Its literally the only thing we can do correctly in international diplomacy. In about 3 months we changed the tone in Russia from "lol these sanctions are a joke" to "These Rubles are worthless so we're going to price everything in Euro with an exchange rate to rubles which changes hourly"

Chinese regime != Chinese people

[NewYork]

GDP (USD)...population...per-capita GDP
US.........15.68T....313M.....$49,965
UK.........2.44T.....63M.....$38,514
Russia.....2.55T.....143M.....$18,514
China......8.23T.....1,351M.......$6,091
Nigeria....262b......168M......$1,555
India.....1.82T.....1,237M......$1,489

http://www.chacha.com/gallery/6490/15-things-china-doesn-t-want-you-to-know

Since 1971 OPEC Oil is exclusively sold in Dollars

[NewYork]

USA can PRINT dollars to buy OPEC Oil.
http://www.moneymeters.org/
Rest have to EARN dollars to buy OPEC Oil.
http://en.wikipedia.org/wiki/File:Oil_Balance.png

Re:Move over USA, it's China's time to shine now..

[cant_get_a_good_nick]

As an economy that is 70% consumer based, I'm not sure how much consumer debt is from China.

China needs to buy our debt more than we need to sell it. They need to convert yuan to dollars to maintain a favorable exchange rate. How's that go? If you borrow $1000 from a bank, the bank owns you. If you borrow, say, several trillion dollars from a bank, you own the bank.