Walt Patrick wrote:
That's part of what makes the half trillion dollars held in
China's hands so problematic since Japan holds about the same amount of
US paper. If China dumps the dollar, that move will likely crash the
Japanese economy as well.
In short, from the Chinese perspective, it's a two-fer.
Wouldn't that strategy be detrimental to the Chinese? Would it
be wise to make such a tremendous investment only to watch its value
evaporate? What of the Chinese economy in that case?
The Chinese are clever people. (There are, in fact, clever
people all over the world.) Why would they seek the demise of their
largest market?
I absolutely agree that the Chinese are clever people. I would
also add that I believe they're deadly serious about what they're doing.
CS would evidently have us believe that the Chinese didn't
understand what they were doing when they devalued their currency and then
pegged it to the dollar. Perhaps, but I don't buy it. I think they had a
plan and were acting in accordance with that plan. I may not know what
their plan was, but I'm confident that they acted reasonably and in
accordance with their traditions and world view.
Politics at that level is a multi-track affair, and some of the
tracks contradict other tracks. For example, one might was well ask why the
US, or Russia, or China would build nuclear arsenals capable of blowing
their customers back into the Stone Age? Destroying one's customers is
obviously not good for business, but there are certain geopolitical
advantages to be had from possessing the ability to do that. Just as there
are advantages to be gained from _being able_ to "nuke" the other side's
economy, which you'll please note, is a different thing from actually doing
it.
Within living memory, China has taken economic steps which
resulted in the deaths of millions of their own citizens; I therefore
conclude that they wouldn't blush at taking steps which diminished the
quality of life for Americans or Japanese.
For example, their ability to throw the US economy into a tailspin
by dumping dollars makes for an interesting non-nuclear option for them to
threaten deploy when they decide to resolve the Taiwan problem.
I'm happy that CS trusts the Chinese government and it's
intentions. I don't. Heck, I don't trust the intentions of the US
government, or the French government, or the German government (I trust you
get the pattern here). About the best I can hope for is that they are
acting in their reasonable self interest - i.e. that the folks in charge
are not fools.
My position would be that the folks in charge in China are not
fools, and neither are they stooges for Wal-Mart. My guess is that they
have a plan to convert the US into a colony exporting food and raw
materials to China; I could be wrong, but that's the way the future looks
to me.
Walt
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