At 15:07 16/06/2011, Raywrote:
Good job Keith. Do you have anything to say about the migration of
the Wealthy Chinese from China to America as Harry pointed out recently?
My initial reaction to the article was to be a little sceptical
because I haven't noticed much (if any) mention of rich Chinese
immigrants in the US, UK or European press either as businessmen or
moving in select social circles. Very rich Chinese are certainly
starting to buy residential properties in the most expensive parts of
London and may also, as far as I know, be doing so in America but, of
course, very rich Arabs have been doing that for years without
necessarily living here permanently. But those who have more than 100
million yuan (about US$12 million), as mentioned in the statistics by
Bains & Co, etc, may only be middling rich in Chinese terms. There
are several hundred Chinese billionaires and over 300,000 Chinese
millionaires, so I would like to see a further breakdown in the
figures as to the ages of the immigrants and what their mean wealth
is. I suspect what's going on is that the new immigrants are older
people who've now cashed in their family businesses and want to live
out their retirement in a less polluted environment -- and also, in
many cases have children already in America at school, college or
doing research and want to stay permanently afterwards.
KSH
REH
From: [email protected]
[mailto:[email protected]] On Behalf Of Keith Hudson
Sent: Thursday, June 16, 2011 5:25 AM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION; D and N
Subject: [Futurework] China's Emergency Plan C
Natalie,
As you were kind enough to ask me, here are a few more comments for
you to chew over. (I was tired last night and my bed was calling me!)
While Europe and America are proceeding towards their respective
train crashes (unpayable governmental debts) China is now quietly
proceeding with Plan B as fast as it can.
But what was Plan A? This was the naive belief on the part of the
Chinese government in the past few years that they could persuade
America by rational argument to take part in founding a new world
trading currency. I am, of course, not privy to the details of what
the new world currency would be based on. The Chinese Politburo
might have conceived it to be based on the free market price of
gold. Or on the price of grain. Or on the price of energy. Or on a
balanced package of existing national currencies. Who knows? It
scarcely matters, so long as it was on a basis that alters only
slowly from year to year.
No matter. The US Treasury (the true masters of US financial policy)
repeatedly sent the Chinese packing with a flea in their ear. This
has been public knowledge for the past two years or so. (The Chinese
were probably trying privately for several years previously. In my
opinion, ever since Deng Xiaoping's launched China's free-market
reforms in the 1980s.) Anyway, it looks as though the Chinese have
now given up on this hopeless quest. As they watch the printing
presses (or digital keyboards) of the US Federal Reserve or the
European Central Bank -- and many other central banks -- churn out
more of their national currencies they must be saying to themselves:
"Those whom the Gods wish to destroy, They first make mad."
So what is Plan B? It is to promote the renminbi (yuan) to world
class status as a universal trading currency. This would displace
the dollar and the euro from their present 55% and 40%
duopoly. This has been public knowledge (to the observant) for
about two years now, ever since the Chinese government enrolled
about a dozen major Western banks, such as HSBC and JPMorganChase as
their associates. Their job is to acquire enough renminbi in their
cash reserves so they can give credits to any of their customers
which are negotiating trade transactions which could be carried out
in renminbis. At a higher level, the Chinese government are now
making more formal agreements (actual trading floors at both ends)
with other governments so they can more directly exchange their
national currencies with the renminbi, rather than going through the
dollar or the euro as intermediaries (with their risks of daily
fluctuations due to speculators).
So far, at various stages of fruition, these arrangements involve
Russia, Brazil and about a dozen more countries. After about a year
of Plan B, the renminbi accounted for 1% of world trade. A year
later, this reached 7%. By now it's probably at least 10% and
heading towards 20%. Given no financial catastrophes in Europe or
America (on which China still depends as export markets) then the
renminbi will probably reach about 30%, this being the size of the
trading market which Chinese firms (governmental and private)
presently have -- directly -- with other emergent countries.
Overall, this would then approach the "multipolar" trading currency
of something like 30:30:30 (dollars, euros, renminbis) that some
economists are already forecasting.
But this doesn't take into account that the emergent countries
already occupy about 55% of world trade and is still growing
relative to the advanced countries. Within that, the direct trade
between China and the emergent world would also be growing. Within a
few years the multipolar currencies could easily arrive at a
20:20:60 ratio. But this also assumes that there'll be no shocks to
the dollar or the euro along the way. If the US Bond market in
America, or the Eurozone collapses (either would also trip off the
other) then the ratio could become 0:20:80 or 20:0:80 overnight. Or
at least within a few days, depending on whether China decides to
save America or Europe. Either would probably give just enough
export market (in addition to the emergent countries) for China to
barely survive. China would not be able to afford to save both (as
it is helping to do at present by holding a large part of American
government debt) and would have to save one or the other because it,
too, would be in desperate circumstances. (My guess is that China
would save America and also a German-northern European detachment
from the ex-Eurozone.)
I'm sure that China does not have a Plan C as such, any more than
America had in the years before the Bretton Woods 'Agreement' of
1944 when, as a by-product, it displaced the pound as the
predominant world trading currency and replaced it with the dollar.
It was "all for the best in the best possible world" as Dr Pangloss
would have said. So it would be with Emergency Procedure C. The
renminbi would perforce have to take the place of the dollar and/or the euro.
China's Plan B can't be avoided. But what about Emergency Procedure
C? This could be avoided. Western and European governments could do
what the Chinese government always does. This is to establish total
control over its banks by insisting on sufficient reserves. In its
own inflationary difficulties from time to time, the Chinese
government not only adjusts its interest rates but also its banks'
reserves (governmental and private), thus preventing undue credit
expansion. American and European governments haven't done this for
20/30/40 years. They've been running on 0% for several years now
even though the Bank for International Settlements (the central bank
for central banks) has been telling them how foolish they have been.
In effect, the banks and the financial sector have been in control.
No wonder the credit-crunch finally found them out (that is, both
governments and banks). Even now, knowing what must be done, they
are still largely only talking about it, with only feeble nods in
that direction.
Keith
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2011/06/>http://allisstatus.wordpress.com/2011/06/
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/06/
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