USA. POPULATION: ONE BILLION

rough draft

f i c t i o n a l i z e d

DISCLAIMER:

Since I don’t have an editor I can let my pen roam. So don’t rely on my analysis, especially on financial matters and, as in the piece below, political economy matters. Enjoy!

NOTE:

Some approach me with veiled requests to have this newsletter lean this-or-that way. I’m old enough to judge that my forte - - and this blog’s - - is independent analysis. For instance, I’m a big fan of President Obama. But that will not influence my assessment of his team’s U.S. foreign policy. If you look to your right on the screen you’d have a fairly clear idea about my background. I’ve forfeited a couple of plum job opportunities to continue on with this newsletter, and have voiced false excuses to do the same. With that in mind, I and this blog shall remain independent.

THE BIG PICTURE: SCUTTLING CHINA’S COURSE TO SUPERPOWER STATUS

ZEI: The big picture first.

SPC: The Strategists are waiting on China to spend its $2 trillion in foreign reserves, to clip it to size as not-a-superpower - - not yet, anyway. Had the financial meltdown not taken place, the two trillion in foreign currency reserves would’ve become four, and China would’ve become a superpower.

Z: How long will it take for China to spend the $2 trillion?

SPC: I have no idea. But I bet you the Strategists are thinking through the same question.

Z: Are we at war with China?

SPC: No. Not really. We’re competitors for control-of-and-access-to-oil-and-gas-and-pipelines. But, with the financial meltdown and its repercussions, I have a mild suspicion - - and it’s only a mild suspicion - - that the Chinese are so angry at us that they’ve unleashed their brat - - North Korea. Desperation and sheer anger. They likely suspect that Greenspan and Crusader were working in cahoots to bring down the temple - - engineer a recession, that is - - and deny the Chinese superpower status. (That wouldn't be the work of Greenspan and Crusader; that would be the work of the Strategists. Greenspan and Crusader were only acting out the roles.)

(I, too, strongly suspect that Crusader’s profligate spending-on-an-oil-grab-he-called-war-without-taxing was orchestrated with Alan Greenspan - - orchestrated by the Strategists. Mr Greenspan’s role in this was to turn a blind eye to the coming meltdown set off by the sub-prime mortgage schemes. In other words, the Strategists had the two men do what they did with the idea of setting off a recession at home to cut short China’s ascent to superpower status.)

The anger of the Chinese likely is fueled by yet more suspicion - - that the Strategists will bring up short-term interest rates to something higher than that paid by the ten-year notes the Chinese hold, lowering the value of their Treasury Notes and speeding up as a consequence the thinning of their reserves.

THE NO-PLAN: PLAY FINANCIAL ACROBATICS

Z: Do the Strategists have a plan?

SPC: I don’t see one. It could be that now that the federal government owns so much of private industry and banks - - which lend money to these - - it could be that the new paradigm will be one where the federal government-as-majority-owner-of-industry-and-banks will force management to keep manufacturing n the United States - - to prevent manufacturing from moving to China.

I’m unclear as to how this fits in with the rules of the ITO. (I know little about it.) But China and the other export-driven industrial economies (e.g., Germany) can’t complain since they would hope that the U.S. would cross that undefined threshold beyond the crisis (a threshold defined in part by the Strategists) - - and only then would they complain. For now, all they can do is pray that the U.S. comes out of this fast and re-starts the much-adored expansion towards the one-billion population mark (see below) and the concomitant blind and voracious construction and consumption.

In the medium term, it’ll be extremely difficult to compete with China. China has hundreds of millions of people who are either waiting to enter the manufacturing sector or are in it but not in full. In the long term, they’ll be ahead of us on that - - cheaper production costs, that is - - no question about it. Unless we reach one billion in population fairly fast, which is unrealistic. So, in essenve, what the Strategists are doing is ad hoc, episodically temporary, with no certainty.

What’s odd about this financial crisis is that the players have now learned their lesson, more so than they had learned it from the Asian crisis years ago. (Was it in 1997?) All now should be stashing away reserves and gold, while awaiting the next American financial meltdown, engineered by the strategists. But here, they may not be fully successful because - -

Z: Because?

SPC: Because the strategists will raise the short-term interest rates so high - - high enough not to syphon off money out of the stock market, but certainly higher than the interest paid by ten-year notes - - that a majority of the money will find its way to this country’s Treasury notes, short-term this time, not the ten-year notes, and would quit (maybe not fully since they'd need to stash away) such investments as gold and other metals and oil. The ten-year notes will be next-to-worthless, for a while.

Still, the Chinese model will endure: stash away as much as you can - - at whatever rate - - while awaiting the next financial meltdown.

USA. POPULATION: ONE BILLION

Z: So the dollar isn’t dead.

SPC: It’s not. I suspect that a good part of what underlies the dollar’s strength in the long term - - a factor which customarily goes unstated - - is the fact that this country is heading towards a population of one billion- plus. Think about all the construction and the consumption! This country has its own reasons to add to its population: it forever needs a working tax base that is wider than that part of the population which is aging (think of a pyramid) which needs the money from taxes to attend to its old age as it quits the work force. My father recently returned from Australia, brought there by his siblings, and was awed by the fact that Sydney was so chock full of immigrants. As he walked street-upon-street in the city and outside, he would see very large numbers of Chinese immigrants and , in lesser numbers, but large nonetheless, Indian and Pakistani immigrants. (His generation of relatives, including his brothers and sisters, in Australia, are themselves Lebanese immigrants.)


The Australian, Canadian, and U.S. models of capitalism cannot survive without expansion. Iraq has shown that expansion overseas isn’t as feasible as first dreamt. The cost certainly has outweighed the benefit. (France is collecting the benefits, but that’s to be expected since France had been there before Crusader had acted on Bald Samson AKA Israel’s Boys’ pestering to invade. And, my hat off to Sarkozi - - since he hyper-actively markets France under the NATO umbrella. ) Meaning: the hope to gobble up Iraq and its oil-and-gas-and-population didn’t work according to the plans drawn by the right-wing boys of the Diaspora. Safer bet: expansion at home.

I can almost see the one-billion.

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Note:

I’ve deleted a second part which was titled, “Saudi Arabia’s Wealth v. Iran.” That part addressed the steps taken by the elite of both countries in facing off with each other, and about (I’ll tease you) Iran’s likely next move to alleviate the pressures from the U.S./Israel/Turkey/Saudi Arabia-led blockade.

Why did I delete the second part? Because , upon reading it, I realized that I needed to make significant changes. And I was too tired and busy to do that. So sorry. Not. I don’t care.