Shattered Delusions

Lately, I've been thinking about what a year 2008 was. You think of the monumental years out of the last 100: 1914, 1929, 1939, 1945, 1968, 1989, 2001. You have to agree that 2008 is in that lineup and in my lifetime, could be the most important. What did we find out? Wall Street, and US banks turned out to be a scam run by incompetents. Manufacturing giants like GM and GE weren't making money by producing things but through financial schemes. We were in Afghanistan for seven years and the Taliban were popular again. Pakistan is falling to the "terrorists." Communist China leads the capitalist world. Despite pumping in trillions of dollars and making Iraq a "democracy," the people made a hero of the man who threw the shoe at Bush.

In other words, we woke up to our delusions. I've put many core beliefs that I held under review. I'm trying to view the world with fresh eyes.

On this note, I saw this interview on Charlie Rose, with Joshua Cooper Ramo about his new chaos theory and new way of thinking. I don't agree with everything he says, and I don't agree with some of his "new thinking." But I think he has the germ of an idea here. The world has been turned upside down and our old ideas about analyzing it might be out of date. (Press play to view, it is 16 minutes.)

Thank You For Smoking

In the upside down world of China, the government encourages you to smoke.

Daily Telegraph:

The edict, issued by officials in Hubei province in central China, threatens to fine officials who "fail to meet their targets" or are caught smoking rival brands manufactured in neighbouring provinces.

Even local schools have been issued with a smoking quota for teachers, while one village was ordered to purchase 400 cartons of cigarettes a year for its officials, according to the local government's website.

The move, which flies in the face of national anti-smoking policies set in Beijing, is aimed at boosting tax revenues and protecting local manufacturers from outside competition from China's 100 cigarette makers.

In total, officials have been ordered to puff their way through 230,000 packs of Hubei-branded cigarettes worth £400,000.

All we need now is a higher booze consumption quota and I might start thinking about a new place to live.

China the New Mercantilist Power

While American and western powers are attempting money draining projects like nation building, and Global Warming prevention; the Chinese are gobbling up natural resources. Carl Mortished in The Times Online reports on the shopping spree:

This is the moment that China has been waiting for - global financial mayhem, commodity price weakness, governments in disarray and a war chest of $2trillion in foreign currency reserves. Recession has not distracted the officials who manage China's sovereign wealth funds. Half of China's oil is imported and the need will rise to two thirds by 2020. This is the time to buy cheap reserves of oil, gas, copper and iron ore and they are busy scooping up every spare tonne, ounce, barrel within reach.

In February China propped up the finances of Russia's debt-burdened oil exporters with $25billion in loans secured against 20 years of oil exports. China is promised 300,000 barrels per day and included in the deal is a new pipeline that will deliver crude to China's northern refineries. In the same week, China agreed a similar credit-for-oil deal with Brazil under which Petrobras, the Brazilian state oil company, would receive $10billion in loans in return for delivery of up to 100,000 barrels a day to Sinopec and 60,000 barrels per day to PetroChina.

Every day, by increments, the real power of the world shifts to the east.

Aircraft Carriers Obsolete

The Chinese are developing a new weapon that is causing concern:

The U.S. Naval Institute, a pro-military organization, notes that a post on a Chinese blog considered credible by military analysts provides a description of an anti-ship ballistic missile that could hit U.S. ships from about 1,240 miles.

A senior U.S. Navy official at the Pentagon confirmed to FOX News that such a weapon is a tangible threat from China, but it isn't a new threat. And the U.S. Navy has systems, such as the Aegis missile defense system, that can counter the threat posed by the Chinese missile.

The size of the missile, according to the U.S. Naval Institute, allows a warhead large enough to inflict significant damage on an American super carrier in a single strike, and it raises the chances of evading tracking systems and reaching its moving target unscathed in less than 12 minutes.

I'm not an expert but surely carriers have been obsolete since the development of accurate ballistic missiles in the 60's? They have their use when fighting third world countries like North Vietnam, Panama and Iraq. However, if World War III had have broken out against the Soviets, they would've been sunk within hours. Similar to battleships that were left over from World War I, that were not suited to battle aircraft carriers in World War II.

Anyway, what's the worry? The Chinese are the biggest shareholders in USA Corp., and want to protect their investment.

Solutions to the Women Shortage in China

The Economist reports that gangs are kidnapping Vietnamese women and smuggling them into China to be brides:

The kidnapping has been going on for some time, and locals talk of a number of cases so far this year. The abductions follow a pattern: a Hmong girl is wooed by an out-of-towner—whether from Vietnam or China is not clear—who speaks her language. She is lured to a rendezvous to be drugged and smuggled into China, probably near Lao Cai, about an hour’s drive from Sapa. Tall, pretty girls are said to be particular targets.

One 18-year-old recently managed to get back home to tell her tale after a four-day ordeal. Held captive in China, she escaped through a window and contacted the Chinese police, who returned her to Vietnam. Most do not escape. One of those kidnapped last month was a married woman with a son; friends fear her family may never see her again.

The most ambitious and possibly the most disastrous social engineering policy in the history of humanity was China's "One Child" policy. Because of the preference for male children there is now a shortage of women. There is a reason that nature divides us 50-50 between men and women. Tinkering with that balance is going to cause more and more problems.

US Treasury Bubble Worries Chinese

How strange is it, that a country that is the military enemy of the United States is its biggest creditor?

With the US spending like drunken sailors, the Chinese are starting to wonder if its a safe investment:

March 13 (Bloomberg) -- China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

They are being polite now. Wait until the US have to start making excuses, like a college student behind on his rent. This is going to get very ugly.

All the Trouble in the World

I'm a big fan of Ralph Peters. His manic style makes me think I should consider coke and steroids, grounded with a touch of smooth scotch to be able to write like him. (Talent would help as well.) Here he is in the New York Post about his concerns with the global crisis. (article)

Pakistan? A bad idea in 1947, it's a worse idea now. Home to the Islamic bomb and the world's safest haven for terrorists, this bankrupt, dysfunctional country is the strategic bookie's odds-on favorite to pose the greatest threat to global security in this generation (there's competition, though, so spread your bet - win, place or show).

Don't discount the possibility of a nuclear exchange between India and Pakistan, either. India would win and move on, licking its brutal wounds, but Pakistan would dissolve into an Afghanistan without the charming scenery.

Then there's China, virtually a continent unto itself. For over a decade, I've argued that we should worry more about a failing China than a successful one (although the latter poses problems, too). The speed of China's uneven transformation shattered the age-old architecture of a society once so robust even Mao couldn't break it completely.

If you want a feel for where China could go, re-read "The Grapes Of Wrath," multiply the Okies by many millions, worsen their lot, then take away the Joad Family's jalopy - but give them arms. As a minimum, we'll witness grim repression.

Creditor China Wanting Debtor America to Kowtow

The Chinese invented the word kowtow. Now that they own a disproportional amount of US debt, they are starting let them know that they have a say in operations:

China may voice its concerns over U.S. government finances and the potential for a weaker dollar when Secretary of State Hillary Clinton visits China on Feb. 20, according to He Zhicheng, an economist at Agricultural Bank of China, the nation’s third-largest lender by assets. A People’s Bank of China official, who didn’t wish to be identified, declined to comment on the telephone.

“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,” said He in Beijing. “That would be one of the prerequisites for more purchases.”

(...)

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump.”

The big problem with the average American was that they weren't saving any money and they were over extended on credit. Joe Six Pack had a McMansion, Cherokee and BMW in the driveway. It's a microcosm of what the US government is doing. Instead of cutting up the credit card they are going on the biggest borrowing spree in history.

Watch as those US Treasury securities that the Chinese have go toxic. Imagine if the US have to default?

Annoyingly Naive "Activists"

My eyes rolled as I read this Yahoo News Item: Activists 'shocked' at Clinton stance on China rights

WASHINGTON (AFP) – Amnesty International and a pro-Tibet group voiced shock Friday after US Secretary of State Hillary Clinton vowed not to let human rights concerns hinder cooperation with China.

Paying her first visit to Asia as the top US diplomat, Clinton said the United States would continue to press China on long-standing US concerns over human rights such as its rule over Tibet.

"But our pressing on those issues can't interfere on the global economic crisis, the global climate change crisis and the security crisis," Clinton told reporters in Seoul just before leaving for Beijing.

Why are they shocked? Let me lay it out for them:

1. Hillary Clinton does not have priniciples or ideology. She is a power vessel and will do whatever she thinks the opinion polls, and circumstances dictate. She was for the Iraq War/ she was against the Iraq War. She was pro-Nafta/ Not so pro-Nafta. To name just two. She doesn't care about Tibet, never did.

2. What is the US to do? Full scale invasion? Start World War III over Tibet?

3. The US owes a hell of a lot of money to China and is asking for more. They are in no position to tell China to do anything.

Got that?

India Over China as the Next Rising Power

I've always thought democratic, and property rights respecting India was poised to be the biggest challenger to the USA as the #1 economic power in the world.

China with its flimsy autocratic government, and disastrous male vs. female demographic will not hold up.

The ballgame is over for Japan with a national debt of 180% to GDP. It is going to be a third world country. (Debts are a bad thing, take note USA.)

Here's an article from the New York Times about the rise of India:

The global financial crisis has definitely affected India’s growth, and it will be down to perhaps 7 percent this year from 8.7 percent in 2007. According to my friend, China is hurting even more. What really perplexes the Chinese, he said, is that scores of nations have engaged in the same sorts of economic reforms as India, so why is it that it’s the Indian economy that has become the developing world’s second best? The speed with which India is creating world-class companies is also a shock to the Chinese, whose corporate structure is based on state-owned and foreign companies.

A Lesson In Humility

It's painful reading this from the creditors of the United States. In the Atlantic, Gao Xiqing, president of the China Investment Corporation, dishes out his opinions and advice to the US. Unfortunately, you have to listen to your meal ticket.

The simple truth today is that your economy is built on the global economy. And it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.

Talk to the Chinese! Talk to the Middle Easterners! And pull your troops back! Take the troops back, demobilize many of the troops, so that you can save some money rather than spending $2 billion every day on them. And then tell your people that you need to save, and come out with a long-term, sustainable financial policy.

...

The current conditions can’t go on. It is time for the new government, under Obama or even McCain, to really tell people: “Look, this is wartime, this is about the survival of our nation. It’s not about our supremacy in the world. Let’s not even talk about that any more. Let’s get down to the very basics of our livelihood.”

These reflections are about as welcome as a kick in the teeth. But this is what happens when the debt piles up. Expect more of this kind of talk.

Can the Chinese Government Withstand the Financial Crisis?

When the Soviet Empire started collapsing in 1989, like everybody else, I remember thinking it was all happening too fast. It was difficult to properly comprehend the situation. The Berlin Wall came down, those pictures of Ceauşescu in Romania with a bullet in his head. It was unimaginable, even a year before. Could we end up seeing this kind of chaos in China?

Marcus Gee takes a look at China and potential trouble for a shaky Communist government.

... But in its transition to the "socialist market economy," China remains in a halfway house, with far too much intervention by government. Beijing still won't allow prices for fuel or power to find their own level, its currency to trade freely on the international market or (despite recent, half-hearted reforms) its farmers to fully own the land they till. Inefficient state enterprises still control too much of the economy and banks are too tethered to Beijing's political aims.

The Communists know that the people relate the prosperity of the last 20 years to their reforms. If the economic crisis hits hard, the people won't have any reason to support them.

Unlike 1989, we don't have an all powerful United States to insure stability. If chaos is unleashed in China, there is little the Superpower can do these days, as worries pile up at home.

We live in interesting times.

Welcome to Canada HBO!!!!

Finally! Home Box Office Network has come to Canada. For some reason the government wouldn't let Canadians get this in their homes, even if they wanted to pay for it. The government wants us to watch such goodies as Corner Gas and the God awful Rick Mercer.

I had discovered HBO when I was in Mexico in the late 90's.

Albeit it's called 'HBO Canada'... And you can't get it as a single channel, only as part of a premium pay package like The Movie Network or Movie Central... And it's required to comply with federal CanCon regulations and devote 25% of overall air time, and 35% of prime time, to Canadian content...

But they promise the schedule will include the full HBO lineup.

So far I'm not dissappointed. We spent Saturday afternoon watching four back-to-back episodes of Real Time With Bill Maher. Great show for the most part. Like the old Politically Incorrect show it's a mixture of pundits, intellectuals and clueless celebrities. (Where else can you see Salman Rushdie trying to make a point and cut off by Hollywood flake and conspiracy theorist Janeane Garofalo.) Maher himself is out there in certain aspects. He thinks the USA is down the toilet. "We don't manufacture anything anymore." He thinks there are too many rich people taking money away from poor people. I find myself shouting at the screen: the fact that Bill Gates has $60 billion doesn't take food out of the mouths of orphans... Anyway. Any show that has you shouting at the screen means you are engaged. (Again, why did the Canadian government block me from watching this?)

Best quote from the block we watched was from Nobel Prize winning economist Paul Krugman. (Editors note: I usually hate Kruggie. Also, I'm paraphrasing, I didn't write down the exact quote.) "We buy lead poison laden toys from China and in return they buy fraud securities from us."

For plain fun, I thought this clip was funny Palin - Mommy & Me. (Keeping in mind that now that I'm not drinking Republican kool-aid, I can enjoy this joke.) This episode aired right after McCain announced Palin as his running mate, so this is joke is a bit old now. And of course it's pre-Tina Fey.