I Must Be Missing Something Here?


(Sub-titled: When is your avowed  enemy no longer your enemy?)

Not that many who read blogs will all that clearly remember, but about 50 or so years ago, and for the better part of the 50’s and 60’s, America had an almost Paranoic Fear of Communist Russia – an ally of theirs throughout World War Two!

(OK, ‘Ally’ might be pushing it a little but both were fighting against fascist Germany and Adolf  Hitler’s War Machine – although for decidedly differing reasons of their own).

Back then America’s leading lights were desperate to warn the populace of the threat of ‘Reds under our Beds’ which lead to the infamous McCarthy Communist witchhunt trials and the Nuclear Arms Race that threatened world-wide mutual annihilation of the planet and gave us the famous ‘Minutes to Midnight’ Atomic War Countdown Clock.

Communism was the greatest threat, not only to the American Way of Life, but also of the freedom of the whole world and  the Commies were showing their desire for world domination through events like a 10 year war against insurgent forces (the Mujahadeen) in Afghanistan who were opposed to the installation of a pro-communist puppet government that was helping keep the Afghanis under their rule.  ( Why does that sound so familiar???) 😉

After the collapse of the Union of Soviet Socialist Republics in the 90’s it seems the US no longer has quite the same fear of the communist agenda – that there is no longer the threat of World Domination (at least not one that America fears but eagerly participates in); Even though Russia, and the Ukraine still have largely the same amount of Nuclear Missiles and warheads as they used to, albeit a small reduction due to SALT agreements from the ridiculous levels they had once reached.

Since the successful attack on ‘Home soil’ by a bunch of Saudi’s with a grudge (and yes – Osama IS also a Saudi – but clearly they are not the source of the ‘Problem’ nor pose the US any threat at all??) America has found a new threat that must be crushed at all costs – That of Islamic Fundamentalist Terrorism and it would seem that not only is Communism no longer a threat – it is their Greatest Ally!!!

Huh? What is he talking about? Has love gone crazy? The US is not ally to Russia?

True – however it appears to have escaped the attetnion of the US leadership that China is actually a Marxist Communist-ruled country.

The fate of the US – through it’s number one consideration, it’s Economy – is now largely, if not dependently, reliant upon China for it’s continued existance.

The amount of wealth Chinese citizens have invested in the US Dollar and economy is frightening – at least it would be frightening to me if  i was American.

There are those who suggest that this is not actually a ‘bad’ thing for America  – that any country that holds large investments in the currency and capital of another country will have less desire to go to war against the second country.

That this would damage their investment.

Coming from a country that has got where it is today largely through the power of the corporate take-over, where one company buys out another’s capital and then makes them an offer to good to refuse, and considering the Chinese Empire has a 5000 year tradition of ruling it’s people and anyone else they go to war with with a ruthless efficiency to one purpose – the Glory of China (and it’s Ruling Class) i can’t help but think this needs further (and quite urgent) thought.



  1. Ed Dyer’s view of America and the world. 🙂

    Through out most of it’s history American had, for the most part, an isolation’s foreign policy. In WWI, then President Woodrow Wilson did not have public support to send US troops Europe. The US did provide Britain with supplies. It was only after the German U boats began sinking American ships that Wilson could get Congress to declare war.

    I think the Japanese attack on Pearl Harbor profoundly changed American foreign policy. Many Americans on the West Coast expected to be invaded by Japan. After WWII the US adopted a more “pro-active” policy. At the end of that war US maintained military bases around the world, in our eyes, to confront “the enemy” aboard, and not on US soil.

    I think the primary problem with US Foreign policy is that “we”, including our military and elected leaders, have never adequately understood the world outside our shores. Americans do seem to have a simplistic view, in general, all communist are the same, all Muslim countries act the same. Also after Pearl Harbor many Americans did develop more of a us vs the world mentality. The events of 9/11 feed this view.

    Many American leaders, like former President Bush, seem to have the idea that it’s the US role to be the Worlds leader, whether, or not, the “world” wants to be lead. 🙂 To spread, and support, “Democracy” around the world,

    I am very interested in following the progress of the China’s version of Communism. The Chinese still do exercise firm political, and military, control over it’s population, but economically they seem to be more capitalistic, than communistic.

    I have great hopes that International trade will fuel more cooperation between countries. China has now invested billions in the US. Though we remain rivals in some respects, we are no linked economically.

    China has the largest population in the world, far more than America. It’s also a very well educated population, for the most part. I think we in the US need to be willing to accept that China likely has more economic potential then we do.


  2. Ed – that appears to be a very well-balanced and reasoned view of US foreign policy and attitudes to the world in general 🙂

    I would be asking myself though – what is the Chinese Government’s intent behind it’s current ‘capitalistic looking’ economy?

    i fear you may also be under-estimating China in another way.

    As of 2008 China ‘owns’ US$772 billion dollars of US Government foreign debt. – or putting it another way the Chinese Government is owed loans amounting to $772 billion dollars by your government (actually by you and your fellow tax-payers of whom there are roughly 200 million in the US so you owe the Chinese government some $3800 currently! That figure is rapidly increasing btw).

    Since 1999 China’s ownership of your country’s government debt to foreign countries has risen from 4% to over 25% and is not showing signs of slowing down at all.

    But this is only PART of the story – this is Government debts/loans. Private ownership of your country by the ‘private’ citizens and companies in China (all major corporations in China are actually communist controlled) is increasing as rapidly – possibly even more so than the government ownership is.

    The total investment China now controls in your Country – the Land of the Free – is now well and truly in the Trillions of US Dollars, not mere hundreds of Billions.

    With a government debt exceeding the Country’s Gross Domestic Product over the next few years i’d say America may soon be the land of the no longer free but deep in debt and poverty – if it is not already so.

    And short of going to war against China and Russia there is not a heck of a lot anyone can do about it – but put your trust and faith in two major Communist Countries. 😯


  3. I like the idea of countries becoming economically depend on each other. I believe this will lead to conflicts being more financial in nature than violent. If the current trend continues than China may well be able to put some pressure on the US to balance it’s budget, as any creditor would. I see this as a good thing.

    I seem to have a far more optimistic view of the long term future of the American economy than you do, Surprise!

    I believe US corporations, and citizens, are making the painful adjustments this economic downturn requires. Deep cuts are being made, although mostly by states, and people, the US Government less so as far as I can tell. We do have even members of the Presidents party, the Democrats, question how costly budgets items like the health-care system will be. President Obama may be able to get by one budget without significant cost cutting to reduce the rate of the deficit, but if the economy doesn’t improve my guess is he won’t have any choice next year.

    The US unemployment rate, 9.7% is at it’s highest level since 1982, when it reached 10.8%. If this rate continues to climb to something over 12% then it’s time to panic, which I know a lot of people already have.

    It should not be shocking if a some point the Chinese economy will be greater than the US, given they have a population over 6 times greater than ours, 1.3 billion vs 300 million. That China will continue to be a creditor nation, and the US a debtor, doesn’t bother me that much. as long as the US economy starts to improve over the next two years, our unemployment rate doesn’t go over 12%.


  4. Ed – there is some optimism to be had in a MUTUALLY dependent economic relationship between countries with differing but not opposed ideologies.

    Do you truly see this is the case with US-China?

    China is basically buying up and out America and America is readily acceeding to this because they have no choice – you would literally be bankrupt and forced into Truly Drastic economic, or political (read going to War) action otherwise.

    And i don’t mean war with a pathetic enemy such as Saddam and Iraq who were unable to offer any serious resistance to an invasion. i mean a major nuclear armed Superpower with an army superior in numbers and with about as much firepower as you do.

    When China pulls the plug and says we won’t lend you any more of our money and no US public servant gets paid or when inflation hits over 1000% pa like it has in other bankrupt nations i would not want to be relying on your optimism for my pension TYVM.

    Just what makes you think Communist China is America’s best friend and ally all of a sudden?

    Do you think China’s leaders would be unhappy if they lose a few trillion dollars if it means their main competitor to global supremacy is destroyed from within??

    Their economy is doing just fine and will soon be able to survive very nicely indeed without US consumption of their products.

    Just how well America could survive at that point is what my concern was about.

    Make NO Doubt about it – China has no reason to support the US Government. or their form of democracy.

    An ideology to which Communism is actually opposed – still. Something China does not want widely known in the Western world and is busily engaged in all the propaganda it can to convince them otherwise.

    Don’t forget – any country with over 1.3 thousand million people and insists it’s favourite indoor pastime is ping pong will lie about other things as well! 😉


  5. “When China pulls the plug and says we won’t lend you any more of our money and no US public servant gets paid or when inflation hits over 1000% pa like it has in other bankrupt nations i would not want to be relying on your optimism for my pension TYVM.”

    Finally something we completely disagree on. 🙂

    China will not “pull the plug” on the American economy. China is moving away from communism and become as capitistic as the US. No creditor nation is going to bankrupt a country it has lent billions to. This would make no sense. Financial markets are now gobal. What happens in the US, Europe and Asia is all interconected.

    “Their economy is doing just fine and will soon be able to survive very nicely indeed without US consumption of their products.

    The US market is far to important to China. A large part of their manufacturing goes to America. If an acutal 1930’s style depression hit the US, which there is no chance it will, China would be impacted as well. Such a depression would be world wide. We would all be in the same boat.

    China is adopting Hong Kong’s capitalism more than Hong Kong is becoming communisitic, fiancially.

    Captialism has won, Communism has lost. China has adopted far better than Russia because I believe they accept this, again economically.

    The idea that any nation could try to takeover the world is gone. China must operate in the internation markete place just like every other country. If China’s economy became #1, and the US was #2, or even #3, this would not bother me at all.


  6. Captialism has won, Communism has lost. China has adopted far better than Russia because I believe they accept this, again economically.

    You are completely correct – finally something we totally disagree upon 😉

    Only a Supreme optimist could look at the current world economic situation and believe that Communism has ‘lost’???

    i am more than a little tempted to suggest it may not be so much optimism as sticking one’s head in the sand, Ostrich-like. Of course what happens when one does that is they leave their ass completely open to being attacked by any with the will to do so. 😯

    The most powerful ‘tool’ in this world is money – what should be painfuly obvious to any reasonable and rational observer at present is the incredibly strong grwoth of Communistic controlled money and the rapidly declining ability of the US to produce enough of it to ensure it’s continued growth is strong enough to have any ‘say’ in world politics in future. basically, your army and weapons are the only thing keeping you afloat at the moment – what will hapen once china starts to demand that the US sell it some of your weapons manufacturing companies to repay it’s debt obligations?

    Or don’t you think China wants a return on it’s multi-trillion investment in US assets which are currently degrading in money terms?

    Please understand one thing – China is NOT a democracy – Capitalism does not equate to US-style government or ideology. China does not have any desire to see the US continue it’s world wide domination of foreign markets and governments and simply by adopting a more finacially affluent economy it is in no way losing control of it’s people – or the desire to ensure it becomes the dominant force world-wide.

    China is still completely committed to doing everything it possibly can to ensure it gets it’s way and what is best for it – and no-one else.

    And while it is doing that Russia is once again building up it’s economic power also.

    The US has taken it’s eye off the ball with the ‘War of Error’

    Islam is a mere distraction – the old foe is alive and well and doing better than ever before while the US is actually actively engaged in ensuring it’s own demise.

    I firmly believe you as a citizen of the US have real reasons to be very concerned – and yet the almost complete lack of knowlege of what is happening all around the world outside your country, combined with a supremely self-assured sense of it’s own supremacy seems to lead Americans into a deluded state of disbelief that anything really ‘bad’ can happen and there will still be a ‘Happy Ending’ a-la-Hollywood.

    I can see a VERY rude awakening coming the way of the US and some 300 million people. Probably within the next decade.

    Considering our friendship i would like to be proven wrong but the facts seem to be on my side of the argument.


  7. Too much of a discussion for me…but I will leave this link for your consideration.


    Really good movie!

    My Chinese friends tell me that China could care less what the world thinks of her. She will do what she wants, when she wants, regardless of all other peoples. Their matter-of-fact analysis was a bit chilling to me.


  8. “i am more than a little tempted to suggest it may not be so much optimism as sticking one’s head in the sand, Ostrich-like. Of course what happens when one does that is they leave their ass completely open to being attacked by any with the will to do so. ”

    What I see is more like chicken little running around screaming, “The sky is falling. The sky is falling.” 🙂

    That is a refrain I have been hearing all my life. The red menace was engulfing the world, Ronald Regan told me in politcal TV add. I seem to recall something called the “Iron Curtain” and the Berlin Wall. Communnism was taking over all of Asia. That one got 50,000 of my brothers killed in Viet Nam. The Arabs were going to control the world’s economy with all that oil money. Now it’s the Chinese.

    To guage the all mighty power of China just look at a little island just off the Chinese coast, Taiwan. China would love to gobble up that little morsel, but that don’t. Why, a little thing called US air power, that a few aircraft carriers. China can’t even completely control it’s own people, as evidenced by the recent riorts between Uigurs and Han Chinese.

    China couldn’t take control Viet Nam, a little country on it’s door steps. They tried, in 1979, and learned the same lesson the US did.

    “China is still completely committed to doing everything it possibly can to ensure it gets it’s way and what is best for it – and no-one else.” Which makes it different from the US, Europe and every other country, in which way?

    China is learning to play the capitialistic game very well. They do have one of the higher economic growth rates in the world. They may even make it to #1. That is a very far cry from being able to “dictate” policy to America, Europe, or even Japan.


  9. Hey Sis! So good to see you here – How’s the fishin’ going?

    I’ll keep an eye out for that movie. i believe that that kind of mentality ( fatalism of sorts -whatever the leaders want they will get and i have to go along with it or be punished) is the product of several thousand years ‘conditioning’ Just as America, China well understands that the greatest threat to their ‘way of life’ is a powerful group of people who hold dissent to the leader’s opinions and they are very good at crushing dissent and retaining power. China has been at war with relatively few countries in recent centuries – directly, however the greater her world wide strength becomes the less she will care what other countries can do to stop her doing what she wants.

    Until the last decade or so America has been a threat too great to consider openly defying face to face with the present situation and future trend not reversing or nomalising that will soon no longer be the case.


  10. Ed, first off let me assure you – for most of my life i have been of the same opinion as you concerning the ‘fear’ of the threat of America’s ‘enemies’. i have long believed it was far more about propaganda designed to make your politicians look good while instilling a little (too much) fear into the home population – and to support the production/manufacturers of weapons that so boosts your economy and always has.

    Russia was a ‘Real’ threat to your country – the nuclear arms race was but a small fraction of what was going on between the two ‘super-power’ nations and She suffered a significant period of destabilisation through a very poor collapsing economy and political upheaval as a result in the 80’s that lead to glasnost and the ‘collapse’ of the USSR ’empire’ in the 90’s.

    Russia is now building itself back up to a point where it may be able to exceed the power it had in the middle of last century pretty soon after 2010! It is doing vastly better in percentage terms with it’s economy than is the US right now! It has not lost it’s primary form of government (communism) and as it’s recent invasion of Georgia – a western backed democratic nation shows it is by no means willing to put up with any threat to it’s control over it’s citizens by such western democracy – it is by no means a friendly capitalist nation.

    Europe is not a country! 😉 The US and China (and previously and potentially soon) Russia all share the ability to ensure as far as they are ‘allowed’ by each other to agressively persue, by economic and or military means, what they consider best for them.

    They are different to every other country by means of their size ( you can start to throw India into the mix too as she manages to engage more with other nations and not spend all her time bickering in internal politics and border disputes with Pakistan) Poiltically and now economically. which gives them the power to affect (control) every other nation to some significant degree. It often saddens me to see just how much like any US city my city has become – the things that were once considered quintessentially ‘Australian’ are becoming far less and what is American people here begin to believe is ‘normal Aussie’. In thrity years time i may well be saying the same thing about China/Aus. Already over 60% of products purchased here come from China. (and that is including some food products like garlic, vegetables and tinned goods).

    These four nations are now jostling on a relatively ‘friendly’ level for world domination of the Economy. Once this is determined the political power battles can begin in earnest – if there is any ‘resistance’ left in anythin other than name only.

    The us’s position as the dominant player by reason of it’s wealth and consumer demand is decreasing while those other nations it is only increasing – and increasing rapidly.

    The REAL problem as i see it presently is the dual combination of a decreasing US production and decreasing consumerism ( owing to their reducing wealth/value) and the increasing buy out of US funds and property/capital by a Nation that is diammetrically opposed to it politically.

    That is NOT a formula for US ‘success’.

    You rightly point out the situation with (Chinese) Taipei. So far China has not had the guts to do to it what it has done to Tibet and the Uighur province in the west of China by reson of the power of US armed forces who have made it clear to China they won’t tollerate a take-over of Taiwan’s ‘democratic’ society. China HAS taken over Hong Kong but for economic reasons it has not instituted massive changes of the kind it has in other ‘non-chinese’ controlled provinces as the wealth of the Chinese citizens in Hong Kong holds considerable power in the Communist Party. It suits their needs to keep it as is – for the moment.

    The brutal repression of the ‘foreign’ ( non-chinese behaving) Uighurs and the attempts to suppress their actions from being widely known outside and especially inside their own country show how far their government is prepared to go to defend and maintain their control.

    Here in Australia i have seen first hand the power, influence and intent of Chinese citizens working under the Communist governments control. i recognise very well the ‘long term plan’ and it is not one of peaceful co-operation and tollerance of non-Chinese policy/politics in other nations – it is one designed to get all other people to think like and agree with the Chinese – or suffer the consequences. China does not rest satisfied with strongly telling ‘opposing’ governemtns what to do in their own country’s if it is contrary to what China wants – they organise their many foreign-based citizens in the country to instigate actions against whatever ‘oppostion’ they find objectionable.

    As their economic power grows and the opposition’s fails we will see more and more of China ensuring her policies are brought to bear world wide.

    That is not a prospect i am in any way looking forward to and i am serisously concerned at the US China economic relative situations.

    If China can ensure the US goes through something similar to what Russia is only now coming out of some twenty years later – severe economic and political collapse i have no doubt she will do all she can to ensure she benefits from your ‘losses’. You have far more to lose than the Russians had. China is currently ( and has for over a decade now) building up economic ties to dozens of countries world wide so that the collapse of US consumerism is not going to hurt her when it inevitably happens as she will have significant places to sell her products ( and politics) to.

    Please don’t do what America has always done and failed to see or understand what is happening to the rest of the world – because your place as the ‘centre’ of it is rapidly changing today.

    Sticking your head in the sand and believing that you’ have always survived in the past so that means you will always survive in the future is a very unwise tactic.

    The bigger they are the harder they fall.


  11. “The bigger they are the harder they fall.”

    Every country that has reached #1 does fall, sooner or later, as the British found out. The question is how fast, and hard, will that fall be.

    That is why I am less concerned about American dropping off it’s pedestal, it is inevitable. As long as the US is able to provide it’s citizens with the quality of life they need, it doesn’t matter if some other country is richer.

    Remember China’s Gross National Product is still less then 1/3rd that of the US, and also that of the European Union. Even Japan still has a higher GNP than China.

    The US GNP growth rate is at a low, China’s at a high. Looking into my crystal bowl 🙂 I think the US economy will get better, probably in two to three years, maybe less. I think it is very unlikely that China’s GNP can catchup with the US in the next 10 years.

    The test will be how high will the US unemployment rate go. If it gets over 12%, it’s now around 9.7, then I will start to worry. Remember the US unemployment rate reached over 25% in the 1930’s. We survived that very well. The US stock market has already begun to rebound, to over 9,000 from the low of 6,500. If that average drops below 7,000 again then I will start to worry.

    Economic conditions change, they always will. The countries that survive the best are those that are the most adoptable. The US is be better able to adopt, in the long run, than most other countries. China’s problem in the long term future is it’s power structure is more fixed. That is why “communism” fails, and why Capitalism succeeds. Capitalism is far more adoptable.

    China is unlikely to suffer the kind of breakdown Russia has because it has a 5,000(?) year history of centralized government. There is probably not much difference between the Chinese emperors of the past, the communist rulers of today.

    China does have the vast human resource of 1.3 billion people. Their businesses however are still not anywhere near as efficient as those in the US, Japan, or Europe. China will have to become far more efficient if they hope to maintain their growth rate. I personally doubt they will, as least as long as their power structure remains as centralized as it is.


  12. Ed – one of the differences between us, and between most of my readers and those bloggers i read is that i have never lived my life in a country ( two of them so far) that has never in anyone’s memory been anything less than ‘Number One Top Economy or military world power.

    That is very rapidly (at most a decade or so if nothing is ‘done’) about to change – and trust me – you won’t like much that happens as a result.

    About the ‘worst’ thing – apart from two Gas Price crises in thirty years you may have had to endure is perhaps a local Chrysler car dealership becoming a Toyota or Honda ( or Daimler or Fiat??) dealership. Maybe an increasing number of Mexican based theme restaurants or possibly Japanese ones – Is’nt Sushi such a delight? 🙂

    Now i am not saying there is anything really wrong about introducing samples of a new culture into a well-established one of our own making.. but when you culture is forced into a domination of another country’s policies and lifestyle that supercedes your own prviously cherished and established one to the extent that your unique identity is lost is not something i believe in.

    Unlike you (so far) i have been forced into accepting it however – First in the Former, once Glorious, British Empire that stretched so far around the world it was rightly said the Sun never set upon the British Empire. And then again when my parents left their homeland in an attempt to find a better culture and life in a far flung corner of that Empire – Australia – that first was predominantly British, became predominantly American – and now is in severe danger of becoming predominantly Chinese – and That thought DOES concern me more than a little.

    While your economic view is factually correct i wonder if you are looking very carefully at the trends – and what they imply for the World’s Future?

    China in the last decade has never had a GNP increase of less than 6% – in 2007 the last year before the world recession America lead their increase in GNP was 12% and had climbed EVERY year since 1999 ( as far back as i looked). In the recesion the WORST increase over a quarter ot year is 6% – the average is closer to 8% – and is once again increasing.

    meanwhile in the last ten years before the reccesion the US GNP averaged under 3% increase each year and during a recession GNP decreases not increases from the previous data sample.

    The US may be able to drag iteslf out of recession – possibly in as little as a year – but there is no hope in hell it has of catching up with China’s economic growth.. Just one reason is that it is estimated so far – as rapidly as China has been growing richer ‘Only’ some 300 million Chinese are enjoying the benefits of a better lifestyle.. that means there are still a BILLION local citizens who are yet to participate in the sharing of the wealth China is producing at it’s current astronomic levels so it has little chance of ‘slowing down in the foreseeable future – America however has almost total saturation of it’s consumer market so has little local chance of growing fast and it’s opportunites overseas are rapidly being overtaken by Indian, Russian and Chinese economic priorities.

    China can easily return to annual GNP growth of 10% and higher while the US will likely struggle to once again reach the 3% mark. at a difference of 7% per annum there is a doubling effect every ten years so by 2020 China’s GNP will be at least 2/3rds of the US and by 2050 it will be more than double that of the US. Just how much of the US economy China and Chinese communist controlled companies will own by then is anyone’s guess.

    Are you really happy to let that happen without speaking out against it?

    it may be inevitable but i don’t think you really want to support it and let it happen without ‘warning’.your fellow citizens that you once offered your life up to defend?


  13. Wow. What a dialog.

    The crazy thing is that there is a ton of valid points on both sides here.

    One thing that has to be remembered (coming from my International Economics Degree (I actually learned something Love:))) is that the United States along with only a handful of other countries is a self sustaining economy meaning that if push comes to shove no outside resources would be needed to sustain and thrive. Much as the US did back in the good ole days.

    So China using the influx of the US capital and currency as a way to bring the US to its knees would be pretty hard pressed.

    Reality is though, China has a very very fragile economy. It appears on paper to be one of the strongest in the world currently but there are factors that are not being looked at.
    1) Wages of workers are really really low and at some point your economy will begin to falter based on increased prices vs. wages. When that happens manufacturing lessens and unemployment rises weakening the economy.
    2) Social media is becoming more prevalent in China. The workers, youth and just about anyone can see what is happening elsewhere and that movement is beginning to have an impact on China’s Government as witnessed during the Olympics. It is not much but something and I do think it will grow.
    3) The US is the largest purchaser of goods from China. Thus, if the US begins to pull back it has huge implications to China’s economy.
    4) China’s economy grew too fast. This is probably the biggest of them all. When economies of scale grow to rapidly bad things can happen and a house of cards effect can happen. This was seen in the US on a smaller scale during the tech boom. Insane growth, un-justified investment, then crash. Look at China’s economy very close and you will see some of these same concepts going on. Their auto industry is a prime example. Huge growth in the past few years. What happens if they used lead paint in these cars? (hahahah) My point though…it could be a huge blow to just that component.

    My point in all of this is that yes, I think we are becoming heavily reliant on each other…China and the US. But, I think there are far to many factors for China to become a dominant force in the US. Pull one plug and BOTH economies go into a tailspin. Example, the housing crisis in the US like everywhere had a massive impact of manufacturing in China….

    We are in bed together and even though there are big differences in type of government, middle ground has to be kept.

    Great conversation Love….

    I hope something of mine made sense….not sure it does in my head 🙂


  14. Joseph – your input is always valued friend!

    i acknowledge freely that there is a great deal of inter-dependence of world economies (large and small) in the world today.

    i fear however that the American (as shown in your and Ed’s) view of what that interdependence means other economies will do is hopeful in the extreme and is fraught with considerable danger if that is the actual US ‘Foreign’ and Domestic (as it applies to production of US currency, Treasury bonds, and goods) Policy as opposed to what they want country’s such as China India, Japan and Russia to think.,

    America has held it’s position a major economic nation for the best part of living memory which means no-one alive today can conceive much of what life could be like if it were not – especially those within the country.

    But as Bob Dylan sung: the times they are a-changing.

    And they are changing at a remarkably rapid pace in global economic terms and i don’t see many long term trends that are going in the favour of the US. Whether or not the short term trend of a Democrat lead government under Obama (if he survives for 4 years – desperate times result in individuals doing desperate deeds) can turn things around remains to be seen – i hope he can, but the current ten year predictions for US debt/China Ownership in the US are not all that promising.

    I think your first three points – while valid as far as US and ‘western’ economies go are not as applicable as you believe to China’s situation. She still has (after almost two decades unprecedented growth rates) over one BILLION people who are basically living in a peasant economy growing sustenance food for the Communist state. This is a massive area for growth and resource for continued cheap labour rates. Something almost no other significant economy has had for over a hundred years or more. (and on nothing like this ‘scale’ – one sixth of the world’s current total population still to ‘exploit’ to say nothing of the Indian and other nations buying power).

    As more Chinese travel overseas they may become more educated about how the rest of the world ‘works’ but China today has unprecedented control over the internet, newspapers and all sources of public information – despite how wonderfully everything went in Beijing in 2008 when China marketed herself to the World. The Communist system relies upon it’s authoritarian total control of the population and the Chinese psyche seems after five milllenia to accept this willingly – mostly. 🙂

    The US may be the largest purchaser of Chinese Goods CURRENTLY – however you can bet your last buck they are working on that and it won’t be long before america is not ‘needed to keep their economy afloat.

    Finally – while i’m sure your economics professors were good at their game and you were an admirable student also, i cannot believe that today in 2009 the US is anything like ‘self-reliant’ in terms of Gasoline production, steel and iron ore materials and production, Sugar production or coffee production to name but four major ‘must-haves’ of your population.

    I’m sure some of your countrymen could manage to live for a day or two without those necessities of life or would be happy to pay more to ensure they got the available production/reserves in your economy of those materials, but i think the rebellion and subsequent destruction of your nation as those scarce commodities prices skyrocketed would not take long to come into being!

    Self-sufficient economy? give me a break! 😉

    If China one day (soon) says to your government we want payment NOW on the trillion or more US dollar treasury debt they have bought out as an ‘investment’ just what exactly do you see the US doing about paying them back?

    This is my concern – China is not a friendly investor seeking to improve your economy and lifestyle of your country’s citizens. Large investors frequently seek to make Hostile take-overs – particularly when a company finds itself in massive debt and has leadership problems but is rich in assets.

    See my point?


  15. Thanks for very instructive post Joseph. That is what I love about the Internet, I learn something new everyday.

    “Finally – while i’m sure your economics professors were good at their game and you were an admirable student also, i cannot believe that today in 2009 the US is anything like ’self-reliant’ in terms of Gasoline production, steel and iron ore materials and production, Sugar production or coffee production to name but four major ‘must-haves’ of your population.”

    Back in 1973 the Arab nations imposed an embargo on the US, which lasted until March 1974. This created some hardship on US citzens.

    Sound familiar? From Wikipedia – “The 1973 “oil price shock”, along with the 1973–1974 stock market crash, have been regarded as the first event since the Great Depression to have a persistent economic effect.”


    I am sure you will get a chukle of of this – “February 11, 1974 —United States Secretary of State Henry Kissinger unveils the Project Independence plan to make U.S. energy independent”

    The US did make short term adjustments to deal with this crisis, unfortunately that was what they were, short term. My main point is that the US did survive this crisis, as it is in the process of surviving the current on.

    The US does have the energy resources, primarily our huge coal reserves, untapped oil fields in Alaska, to replace foreign oil. It would take time to time to make any required change over, I have no clue how long. The US also has the optioned of building nuclear power plants, this might take 10 – 15(?) years to build and put online. Also technology that will untimately result in relatively cheap energy, wind farms, solar powered batteries, battery powered cars, etc, is rapidy advancing. No clue as to how long this will take, at the current pace, 10 – 20 years(?).

    We have the resources, what we lack is sufficient will. If any foreign government tries to “bring the US to it’s knees” that will provided the motivation to make whatever adjustments to our lifestyle we need to make. Of course once the crisis passes we will likely go back to 250 HP cars again. 🙂

    A recent article in the NYT points to how much, economically, China is moving to capitalism:

    “In the months leading up to his college graduation in June, Yang Fugang spent most of his days away from campus, managing an online store that sells cosmetics, shampoo and other goods he often buys from local factories.

    Today, his store on Taobao.com — China’s fast-growing online shopping bazaar — has 14 employees, two warehouses and piles of cash.

    “I never thought I could do this well,” said Mr. Yang, 23, who earned $75,000 last year. “I started out selling yoga mats and now I’m selling a lot of makeup and cosmetics. The profit margins are higher.”

    This ain’t communism baby. 🙂

    China may well someday replace the US as the world’s #1 economy. To do that they must continue to embrace capitalism. They must continue to change.

    I am very encourage by growing International trade. All the countries of the world are becoming more interdepant on each other. That is my great hope for the future.

    I don’t really care if the US is #1, #2 or whatever. Our vast untapped resources, and increasing pace of technology, means the US has a greater ability to adapt to change than any other country.


  16. By 1990 no Australian child will be living in Poverty – Aus Prime Minister Bob Hawke in 1986.

    Politicians are very good at making statements or starting projects that have no prospect of attaining a reality – particularly once they lose government.

    Needless to say Australian kids today are as poverty free as America is energy self-reliant. 😉

    Having the reserves is one thing – building up the infrastructure and investment to put four ( the examples i suggested) production facilities into place all at the same time and in time to prevent total economic meltdown is quite another all-together, particularly after two very costly and poor-returning wars that have both lasted longer than WW2 and the biggest government bailout in history and the worst debt to GDP ratio in your history and you might take your head out of those rose coloured glasses long enough to glimpse how deep the effluent America is in currently really is. 8)

    There may be millions of Chinese today running their own successful businesses; numbers of them may now own ferraris’s and a summer house in Miami.

    There are still however more than 1/6th of the worlds population there who are living in poverty and depend upon a very powerful and intollerant of any form of dissent or revolt against the ruling Communist ideology and Party and their power and influence in the US is growing far beyond the point the US government is able to get itself out of peacefully.

    Seriously your government NEEDS to recognise this and start doing what it can to reverse it and if they won’t your fellow citizens need to demand they do or your life could soon be on par with that of the Russian citizens in the 1990’s.

    Believe me – you would not enjoy that one bit.

    Do you know how close America came to destroying the world’s economy last year? That was basically from factors that were totally under US control (or SHOULD have been had the Bush Government and leadership had even a rabbit’s economic responsibility)… Should an unfriendly nation decide to put pressure on your economy that is out of US contro,l things could be VERY bleak for all 300 million who live there and the vast majority of the Western Culture that largely depends upon the US $ for their survival/lifestyle.

    The Communist Chinese government will still have total control over a billion plus peasants no matter what. They have little to actually lose – apart from a couple of hundred million yuppies – and who is going to shed a tear for them really??

    That’s Communism taking advantage of dumb capitalists for their own purposes, baby! 😉 ( or do you believe America is really running a cunning plan to steal all of China’s money and so bankrupt the largest (‘home’ consumer based) and fastest growth economy in the world?).

    Please don’t be like American Foreign policy ‘experts’ of the past 100 years who believe that everyone thinks the same way as they do basically (or they should!) and that Capitalism is bulletproof. That could well prove fatal.



  17. “There are still however more than 1/6th of the worlds population there who are living in poverty and depend upon a very powerful and intollerant of any form of dissent or revolt against the ruling Communist ideology and Party and their power and influence in the US is growing far beyond the point the US government is able to get itself out of peacefully.”

    The best supported information concerning poverty in China I found was on Wikipedia. Do you have a better source?

    I know it is hard to get completely reliable information from China, but this is the best I have to go on. The article documents many problems, but also shows a declining rate of poverty, from 64% in the 1970’s to 10 in 2004.

    Economic disparities between poor rural areas and cities still exist. If the article is a reasonably accurate depiction of China today, than the Government does appear to recognize the problem. It would not surprise me if China is devoting a greater percentage of its spending on reducing poverty than the US is.


    Poverty in China refers to people whose income is less than a poverty line of $1.25 per day (PPP) set by the World Bank benchmark (see Measuring poverty). Poverty has affected all aspects of the nation’s life, including the environment, health, education, housing, nutrition and agriculture to name but a few. It has distorted the individual’s value, disrupted families and communities, and sent millions from the poorer regions to the cities in a desperate search for work.

    Since the far changing economic reforms were made in the late 1970s, the growth fueled a remarkable increase in per capita income and a decline in the poverty rate from 64% at the beginning of reform to 10% in 2004. At the same time, however, different kinds of disparities have increased. Income inequality has risen, propelled by the rural-urban income gap and by the growing disparity between highly educated urban professionals and the urban working class. There have also been increases in inequality of health and education outcomes.

    Some rise in inequality was inevitable as China introduced a market system, but inequality may have been exacerbated rather than mitigated by a number of policy features. Restrictions on rural-urban migration have limited opportunities for the relatively poor rural population. The inability to sell or mortgage rural land has further reduced opportunities. China has a uniquely decentralized fiscal system that has relied on local government to fund basic health and education. The result has been that poor villages could not afford to provide good services, and poor households could not afford the high private costs of basic public services. Ironically, the large trade surplus that China has built up in recent years is a further problem, in that it stimulates an urban industrial sector that no longer creates many jobs while restricting the government’s ability to increase spending to improve services and address disparities. The government has recently shifted its policy to encourage migration, fund education and health for poor areas and poor households, and rebalance the economy away from investment and exports toward domestic consumption and public services, to help reduce social disparities.


  18. When it comes to ‘official’ government statistics i tend to take all of them with a large dose of scepticism 😉

    It is all very well for the World Bank to put a single figure benchmark to determine the world wide ‘poverty line’ but in each country with it’s massive variations between the wealthy, average and typical family earnings it is a ludicrous and virtually meaningless figure. You can’t compare the incomes of those living in poverty in Somalia with those of Zimbabwe ( where a loaf of bread may cost hundereds of thousands of dollars) or those of The US or of China or say Burma or Brazil.

    The extremely rapid rise in GDP of China over the last half a century has ensured that both average wages and what is considered a ‘poverty-line’ has risen exponentially . Moreso when compared with all other economies.

    Here are a couple of sources of information ( like i said ALL ‘information’ from China i would say has already been viewed with the most rosy of rose-coloured glasses because the Party will not allow anything less than the best view to be put on their performance.) that can give some idea of the size of what i was saying concerning the ‘unused’ labour force in comparison with the US.

    Note the 27% unemployment rate ( probably an underestimate to favour Government ‘success’) and compare it to the 10% or so in the US at the moment.



    Note that in the second link the percentage of people in urban/manufacturing areas has grown rapidly over 24 years – BUT the total number of people in rural/agricultural areas (basically largely poor chinese society) remains unchanged at some 800 million over a quarter of a century!

    Remember also thata Communist society does not believe it’s people are to be kept in poverty – that their wealth is to be shared ‘equally’ for the benefit of all.

    Like all ideologies however this rarely applies to those in charge having the same sized houses or incomes as the ‘workers’.

    I’m not trying to say China is not attempting to improve the overall lifestyle of it’s population, just that at the same time as it does that it can happily destroy the power of it’s enemies economically using their own weapon against them.

    Then when those economies ‘fail’ they can point out to their ‘capitalist’ population that the Communist way is the better one and return to a more ‘controlled’ way of life.


  19. Thanks for taking the time to post the links.

    I found enough background on Dr. Judith Bannister, who wrote the Mfg. Employment & Compensation report for the US Dept of Labor, to see is she is well qualified as a expert on China. Of course the report is 106 pages long so I will have to get back to you tomorrow after I get a chance to read it.

    Thanks again for the links. In following them I found the Stanford Uninversity Asian-Pacific Research Center site, were Dr. Bannister gave a presentation, which I have added to my fav links page, and will use to follow events in Asia.


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