Adonis Diaries

Posts Tagged ‘crash

China: the main Capitalist partner to the US (January 11, 2009)

 

            “Communist” China is the largest accumulator of dollars with a reserve of two trillions or two third of its GNP. With such a reserve China is currently the main capitalist partner to the USA; China has interest that the dollar does not devalue, that its currency the Yuan does not increase in value which would make Chinese products less competitive, and that the financial system does not break down.  “Communist” China is catching up quickly on Japan for the purchase of Treasury Bonds, a way of lending the US the needed cash to resume a Capitalist financial policy.  China is not only the factory of the world but also the prime banker to the US.

 

            The Chinese Wen Jiabao PM stated after the financial crash of Wall Street: “We have got to unite. In these difficult times, China has joined the USA.  We believe that our financial rescue will aid at stabilizing the economy and world financial system and thus, preventing a major chaos.  I believe that cooperation is indispensable”.   China is expecting full cooperation of the US in erecting a new Capitalist system and it has more muscles than the European Union in enforcing the re-structuring of the financial system that would guarantee its investments in the USA that amount by the trillions of dollars.

 

            Many of Chinese investments in the USA are in the red after the crash.  The US multinationals that China invested heavily in have been saved with Chinese influx; Fannie Mae and Freddie Mac were saved too.  Lehman Brothers was not spared for reasons.  The Bush Junior Administration had selected Lehman Brothers to artificially increase oil prices to $150 through speculation in order to hurt the ever voracious China in oil demands.  China reacted vigorously.  The world financial system was rotten and China demanded to cooperate in the timing of the crash if the US wanted China to stabilize the financial system after the crash.  Lehman Brothers was the sacrificial messenger of the impending financial crash.

 

            The financial strength of the US was based on the dollars as the universal currency in world economical exchange.  Bretton Woods (in New Hampshire) agreements in 1944 on the financial rules consecrated the pivotal power of the dollars; the British economist John Maynard Keynes tried hard during this conference to create a new world currency the “Bancor” but the US imposed its hegemony. Since then “the US administrators could decide what they wanted and it was up to the rest of the world to pay up the deficit”; Treasury Secretary John Connally stated it clearly “The dollar is our currency, but it is your problem”. 

 

            In 1960, the French President De Gaulle denounced the “exorbitant privilege of the dollars”.  Since the 1980’s investment capitals have been going into the USA and then the US multinationals would re-invest the borrowed capitals wherever they desired; 90% of US Treasury Bonds are purchased by foreign States. Nixon was very comfortable de-linking the dollars from the value of gold and the world had to go along with whatever the US Administrations thought was beneficial to the US regardless of the ultimate danger that exposed the world financial system.

 

            Consequently, States opted to save the surpluses of their dollar in “Sovereign Funds” meant to purchase foreign companies and enhance the flux of technology and know how and the latest management and financial methods.  In one decade, the weight of the dollars in the reserve of world exchange has decreased from 71% to less than 61%. Still, the currencies of the EU, China, and Japan are not that widely used and adopted to counterweight the power of the dollar in trade exchange; but the center of gravity is clearly shifting toward China.

 

            President Elect Barak Obama wants to re-invigorate US economy with major State investment (with Chinese cash); he must be closely cooperating with the Chinese on the amount and ways of re-launching the US economy.

 

Note: The Chinese regime was mute on the atrocities committed in Gaza; apparently, China is not hot on matter of human rights and crimes of wars and does not want to open the Pandora Box of its own horror stories.

Code name for the timing of the Wall Street crash: rule China (part 2, November 23, 2008)

The code name for the precise timing of the financial crisis was:

 Artificial oil price increases or (AOPI) and the messenger was the multinational financial brokerage firm Lehman Brothers.

All the members in the cartel of the financial multinationals received the order to activate the countdown for the Wall Street crash: they sold out their shares to invest in anything that has real value.  The little people who invested their life savings in stocks paid the price.

The FED, the Treasury and all the US multinational financial institutions knew the theory of Money Trade Cycle that when the trend of inflation is continuously on the rise then the outcome is a financial crisis.

The theory established that businesses and economy follow a pattern of upswings and downturns, and if the government refrains from meddling with the normal interest rates of doing business then the market economy based on real value-added economy will adjust to the changes.

The problem was that the USA was no longer producing any real value-added economy for decades: the US consumers were enjoying low priced items imported from China and the manufacturing bases were exported overseas to benefit from cheap manpower and limited legal constraints.

The world had already experienced a vivid advance taste of financial crisis in 1989 in the south-east Asian markets, Japan and Latin America.

The fundamental problem was tackled by the Asian States and they worked harder to produce value-added economy.

The successive US Administrations and politicians had no guts to tell the American people the hard facts, that a recession is as sure as the sun rises, and that getting back to work harder on producing what people need to buy is a must.  Instead, the US multinationals resorted to creative embezzlement fiduciary schemes (secondary and tertiary worthless paper money gimmicks) to resume world financial market hegemony

The FED knowingly, through political pressures, kept lowering the interest rates below the healthy level of a normal market economy which overextended credits for a decade and thus generated inflation rates that could no longer be controlled or stabilized.

The US Bush Jr. Administration decided, unilaterally and without a UN resolution, for a pre-emptive war on Iraq.  The US Administration invaded Iraq on the basis that the military expense will generate many folds in profit through the control of oil distribution and blackmailing the neighboring Arab rich sovereign funds of the potential threat of Iran.

The Arab rich States were no fouls of that strategy but they went along.  They are mere small States of oligarchies and monarchies with no national identity. If these States were nations then the citizens would have taken stands; any stand would have cost much less than the trillions of dollars injected for the US citizens to resume their lavish spending on consumerism, new gas guzzling cars, stocks, and overvalued Real Estates.

The FED, the Treasury and the cartel of multinational financial institutions knew that the normal scheme of siphoning in the sovereign funds of the oil rich States and the small stock investors had reached a plateau.

It reached a plateau because the investors realized that a crisis is in the offing and the scheme could not function normally unless the same level of increase in junk paper investment is maintained.

Since the scheme reached a plateau then it was time to decide on the appropriate timing to activate the financial crisis: it was much better for the crash to take place at the very end of an administration and then to pressure the politicians to agree on a financial rescue package.

The timing was perfect: since no more foreign financial rescue is coming in then the financial rescue will happen under duress from all rich States.

The motto was: either you caught up under duress or you will all have to suffer a global economic recession.

The world lauded the US for its timely energetic reaction of rounding up 700 billion dollars to rescue the failing commercial banks.

Wrong; the package was already decided upon before the crash and the bold figure of 700 billions dollars was psychologically marketed as covering the 60% of the unsolvable Real Estates: the US people would gladly preserve its homes and pay for it.  The trick: this package is a first installment and other packages are waiting in the queue pending the appropriate political conditions.

Well, financial rescue came from everywhere but this didn’t stop recession anyway. How can you stop recession when the USA is not producing any value that people are ready to purchase?

The worst part is that President Obama is not willing to challenge the US citizens with the hash facts, at least not for a long time to come.

The US people has preferred the lax attitude since the Reagan Administrations: most of the US citizens wanted to believe in an illusory wealth assuming that the worldwide acceptance of the dollars as the currency of choice is more than sufficient to keeping the illusion alive and kicking.

The hard facts are in; tackling decades of myopia and dependence on the hard work of the other people has to be grabbed by the horns.

The world recession is the making of the lazy, faint hearted US people who failed, in their cockiness, to recall what made them a great nation!

Only one giant Nation is winning: China.

China got the USA by the throat. The US is totally dependent on China in cheap import products and the purchase of US treasury bonds for many decades to come. China can direct the US financial policies and foreign policies. It had done it already. The US had been doing it with the Latin American States and everywhere else for decades. Rule China, rule!


adonis49

adonis49

adonis49

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