08-12-2008, 04:20 PM
Myra Bronstein Wrote:http://www.dailykos.com/story/2008/12/7/...936/670294
Day of Infamy: The Economic China Syndrome
by M Komoroski
Sun Dec 07, 2008 at 05:43:08 AM PST
It's before 8:00 am on December 7, 67 years after the Japanese bombed Pearl Harbor. It has taken almost that long for Japan's vision of an 'Asian Co-Prosperity Sphere' to take form and beat the Americans at their own game, economic imperialism.
These days Americans are counting on the government to take over and run major businesses, a scheme that is necessary to keep public confidence in the government, but resting on deeply unsound assumptions about economics. And while the Americans are looking to the US government, the US government is looking to Red China as a lender of last resort, surpassing even Japan in buying US government paper with the dollars we have given them.
The 'American Way of Life' hangs by the thread of Red China continuing to throw dollars at the US government. Why should China do this? First, if the US collapses any further, the Chinese lose a major buyer for their 'goods,' produced by slave labor and environmental rape. "Business as Usual" requires the US be kept afloat as long as China does not recognize the need to produce stuff for itself or other emerging markets (like Africa). Secondly, there are the dollars themselves. If the US collapses further, the dollars China holds will be as worthless. So they may as well help hold up the collapsing Imperial giant of the past century, rather than take a bath on all that worthless paper.
We in the US are remiss if we do not recognize that we are no longer running the show. We are just like any other country now. We are at the mercy of a global system where few have sentimental attachments to the US and many would like to see the US brought low, after behaving the way it has since WWII. They say one should be careful of the toes one steps on while on the way up, since many of them may be connected to the asses one will have to kiss on the way back down. The US had better be prepared to kiss ass like an Army whore.
I see no sign the US is ready at any level to deal with these realities. The US has its head jammed into its rectum and keeps blabbering about the breath-taking view. For starters, USers are convinced the Wall Street Investment Community actually makes investments. Economists define investments as money made available to firms to buy machinery or other things they need to produce their product. This only happens when a company issues stocks or bonds, or sells its own stocks or bonds. That is not what most of the 'Investment Community' does. What they actually do is bet on things, like whether a company or a sector or an entire nation is going to 'go up or down' in the next minute, hour, day, week or two. More than two weeks is considered 'long term' to these people, and so their constant focus is making the most from gambling in the next few days. The state of American companies reflects this. When news heads speak of 'investing,' what they really mean is 'gambling.'
On a side note, everyone knows 'derivitives' and other 'financial instruments' are way too complicated for any normal person to understand. They are complicated, like a shell game. The actual ins and outs of just how they take the mark for his money are quite byzantine indeed. But take a step away from the table and it's clear: greedy people are convinced they are going to gamble and win because they are so smart and they have a 'system,' but in truth the games are all rigged so the 'house' gets its margin before the game even starts. The 'winners' take the 'suckers' for what's left. And if you are an ordinary person with a 401k, you are the prey in this food chain, and anything they offer you is bait.
The 'solutions' that get rolled out over the next year or two will be complicated as well, and pundits will have their usual inane fake arguments about minutiae. But these 'solutions' will all be efforts to 'restore investor confidence,' which translates into plain language as 'get more suckers on the line.' The goal, NO MATTER WHAT THEY SAY, is to bring back Business as Usual, and restore the House's cut. When they say 'we've reformed the rules, so now you can trust your banker or your broker again,' don't believe it. When they say, 'it was just a few bad apples but the system is basicly sound,' don't believe it. The system is basicly Unsound. And it's not a few bad apples, it's the whole culture of bankers skimming the cream off of our lives in exchange for nothing, nothing but being gate-keepers of our wealth, and periodically squeezing us for even more, like they are doing right now.
Things are not going to get better until after they have gotten a lot worse. Not just one but several schemes to restore business as usual will be tried, and will fail, with the well connected high rollers somehow making off with the money. It may be less obvious than it is in the current 'bailout' atmosphere. (A Pinata party where blindfolded bigwigs wack away at our future in the hopes that when it breaks, they can grab more than the next one.) But really, it will be more like a person squeezing a grapefruit this way and that in the hopes of getting that last drop.
Wonderful. Two failed economic systems on mutually dependent life support.
The Governments of both China and the US must also be worried about the fate of their political systems at this stage. Fully justified worry, imo.