« Explaining Inflation Statistics And Housing | Main | A Close Look At Fidelity, A Huge Financial Octopus »

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451c0bf69e200e54ed50e588833

Listed below are links to weblogs that reference Bush's Speech Is Meaningless But Hu's Speech Is Scary:

Comments

rousey

"...the fact that the Finance Minister was suddenly demoted and kicked out the door right after the Bank of China opened its vault holding Americans certificates of deposit only to discover these were frauds, China has decided suddenly and unilaterally to change direction."

Sounds like much of their clever investing in US notes has gone up in so much smoke, and some of the leverage that went with it.

John

I really don't understand why you continually champion socialism. Surely you realize that socialism only works in small homogenous populations. Even the much-vaunted socialist system of Norway started having problems when the immigrant population topped 20%. Rather than pull together in a lean year, the ethnic Norwegians fall to blaming "those damn foreigners" for their woes.

In a country as large and diverse as the US, the extremely low levels of shared experience make socialism an almost certain failure. Yet you keep on proclaiming that this is the only good way.

It's not.

Marxism operates on the principle that "the harder I work, the better my neigbor eats." But when my neigbor sleeps all day and still has the exact same standard of living that I do, I get discoraged and stop working hard; I wanna sleep all day and have someone else work to feed me, too! This is human nature. We are apex preditors; the lion sleeps in the shade of a tree when his belly is full, and the gazelles can walk by in complete safety. Lion = person! Gazelles = work!

It is a false dilemma to say that the only two options we have are 1) BushCo fascism or 2) Marxism. I'm frankly not interested in extending the foolish 'Great Society' policies that have filled countless ghettos and trailer parks with a torrential flood of functional idiots. And unless we're going to sterilize the baby-factory fools (of ALL races!!) before we start cutting them checks, socialism will kill us as quick or quicker than crony capitalism.

Elaine Meinel Supkis

The people at the top spend a lot of money teaching others that the ideal is 'pure capitalism' yet the instant the rich need their lovely Nanny State, it appears like magic and saves them.


A world red in tooth and claw is one that is like Iraq and other states we invade: chaoe and death. If people can't be taken care of in one way, they find another. The rich always organize a fascist type state that sends the dissatisfied masses into wars of looting and ethnic cleansing. A social system that takes care of people so there isn't a need to organize into open civil war lasts much longer than tooth and claw capitalism.


I know I have many readers who are conservatives. I am very conservative in many ways which is why I talk about socialism; this grew not out of thin air or even industrialism but it is rather medieval in form. The ideal, that is, where the Church redistributed wealth.

Of course, this didn't happen because of people like my ancestors (nobility) who couldn't help but use the sword to get their own way.

There is no perfect system but in competition with the world, the nations that are cruellest to their people end up in even deeper trouble than ones that mess up by being too nice. Trust me on this, I have witnessed more than one revolt up close. In third world countries as well as Europe.

Canuck

Canadian socialism was born of the harsh climatic conditions that immigrants who were encouraged to repatriate from the old world found after they were dropped off at a rail depot. The sodbusters had no choice but to rely on their neighbors for survival let alone productive success at environmental manipulation with rudimentary hand tools. This neighborliness and friendly concern for fellow people is still commented on to this day as a Canadian trait even though consumerism has tarnished this to a large degree.

“Ethnic Bloc Settlements[8] dotted the prairies, as language groupings settled together on soil types of the Canadian Western prairie similar to agricultural land of their homeland. In this way immigration was successful; new settlements could grow because of common communication and learned agricultural methods.”

http://en.wikipedia.org/wiki/
History_of_immigration_to_Canada

These are grassroots socialist community constructs that formed independent of actions by the state, constructs I might add that were successful for their intended purpose. To say that they are unsuccessful is inaccurate because they’ve never really had a chance to develop beyond a certain level because the means of communications lends power to capitalists, dictators, world improvers or the dreaded land use bylaws which stratify society and force individuals to action for protection or advantage.

The extreme conditions brought about by the great depression and the dustbowl tragedies brought about by trying to overcome environmental and economic extremes of the time were the genesis of the concepts and proposals of Tommy Douglas (1944 – 1961).

http://en.wikipedia.org/wiki/Tommy_Douglas

“As a child, Douglas injured his leg and developed osteomyelitis. The leg would have been amputated were it not for a doctor who saw the condition as a good subject to teach his students and agreed to help for free. This rooted Douglas's belief that health care should be free to all, as he thought people shouldn't be dependent on generosity in order to get their health in good order”

Tommy Douglass was also present for another defining moment in Canadian Social conciousness;

“They came back to Winnipeg in 1919, in time for Douglas to witness the Winnipeg General Strike. From a rooftop vantage point on Main Street, he witnessed the police charging the strikers with clubs and guns, a streetcar being overturned and set on fire. He also witnessed the RCMP murder two men.[1]”

Tommy Douglas is regarded as the father of Canadian style socialistic health care with good reason, it’s considered he fought the good fight and indeed triumphed over private and governmental obstructions of all kinds to deliver a social contract in the form of an underlying theme that is unspoken and attended to within the population as a whole. This action found it’s culmination in the Canada Health Act, and although it’s government policy now and not without extreme challenges and harsh realities. It’s well to bear in mind that this was championed by one man and changed the face and nature of Canada, so much so that it’s the defining characteristic that a Canadian would first mark this as the differential societal effort from Americans.

So bear in mind that Tommy Douglas’s efforts were successful insofar that he as an individual was uncompromising in his care and faith of his fellow people, unassailable in his posture and purpose, uncorruptable in his approach, cantor and most importantly how he comported himself in his personal life.

So many people can play so easily play the critic over socialist constructs, to far removed from being turned away from a hospital, sick child in hand without proper documentation I say. I’ve got hugely capitalistic tendencies myself, but I was admonished by my Grandfather that I could accelerate my success and prosperity by standing on the necks of other people as a very young boy. It seemed repulsive so this is a path I’ve declined to venture.

The world is awash with moralistic imperatives that can only be addressed in shades of grey, stating absolutes concerning a supposed light of white Capitalism or the darkness of black Socialism only illustrates who you’re most willing to sell out.

Callihan

While skimming through the Wall Street Journal (what a completely parochial and self important outfit!! As bad as The New York Times, in it's own way) one writer stated that the United States has a "financial economy".

Oh, boy. Hubris. The pure thing.

That the United States is a "financial economy" is sure disaster. Even compared to "To each according to his need, and from each according to his ability."

I am a bit familiar with late Medieval European art, have studied images of the cloister capitals at the Abbey of Saint-Pierre at Moissac for instance. I know what you are driving at with your "social" ideas. One sees the same sort of idealism in Plutarch.

Certainly the root of socialism is much more Lycurgus than Marx. One is reminded of the extraordinarily perceptive and dark humor of Plato's "Republic". One wonders if our Pelopponesian War will be fought out here, within the boundaries of what is now the United States.

John

I freely admit that pure capitalism does not work, mainly because of the innate selfishness of man. Only under conditions like those described in Canuck's post (harsh and unforgiving) do people voluntarily work together for the common good.

Socialism fails for the same reason: selfishness. The selfishness under capitalism is displayed when someone finds their way to the top of the economic pile, and immediately uses the wealth and power to not only advance themselves further, but also to victimize anyone beneath them. The selfishness under socialism is displayed by what I've termed the "slacker classes," and if you don't belive those exist, go work in a convenience store for a year! You'll see them on both sides of the counter. These people are always looking for a free ride, for someone else to pay their freight.

Om a related note, it occured to me yesterday afternoon to wonder if slackerism isn't also caused by seeing the people at the top of the capitalist pile continually rig the game to exclude everyone else, as well as by the availability of no-questions-asked/no-effort-required free money. For example, the potential high-tech entrepreneur who thinks "well, why bother? Even if I succeed, Bill Gates or Larry Ellison will just screw me over; they'll break evey law in the book killing my business, and because they're already stupidly rich and connected, they'll get away with it."

On one hand, the idea that some humans think they should be able to tell the rest of us what constitutes "enough" money and then take the rest away is as offensive as it can be. For instance, the guy who founded Hawaiian Tropic is worth nine figures, and he didn't screw anyone to get it, as far as I can tell. Same for the woman who invented "Topsy Tail."

On the other hand, one look at that douchebag George H.W. Bush (good ol' "Poppy") is enough to convince any honest person that unfettered capitalism is not the answer, either.

I think the real answer is to quit defining "rich" as making $200K/year. The high taxes need to be on those who make over about $1.5 million, and they ought to probably pay 75% of anything over that. Also, tax-exempt foundations ought to be outlawed, because the super-rich simply set up unpublicized foundations to shelter their wealth. They only pay themselves what they want to pay taxes on, and then use the rest of it to shape the world the way they want it, tax-free, under the guise of philanthropy.

I think the real answer is to take the ruling class out back and shoot them every four to six decades. However, there are some serious ethical problems with such a policy...

blues

THE CODE OF BLUES:

(1) No family business shall own more that ten times the quantity of resources necessary to maintain its own basic requirements of living.

(2) An non-family industries shall be owned and operated by the districts in which they are located and shall hire only people who live within those districts. No unelected boss shall directly or indirectly manage more than ten subordinates.

(3) All local elections shall be held in districts of 800 to 1200 voters drawn up by randomly selected juries and shall be done using the 2-runoff approval method.

See:

((----- Copy & Paste -----))

http://wiki.electorama.com/wiki

/Consecutive_Runoff_Approval_Voting

Elaine Meinel Supkis

I lived outside the system most of my life. I am a real-life survivalist. I am the sort of person who would use a chainsaw to chop off my leg if a tree falls on me and my only tears would be because I would have to clean up the blood before the bears arrive!

Seriously, there are 'slackers' and there are rich 'slackers' and everyone wants a free ride even if they don't realize it. When I used to hike into the woods with the dog pulling a sled in -40 degree weather to saw up dead trees and haul them down because this was the only way to heat the house, I remember the joy of living. The sharp cold air in the nostrils, the sled dog waving his curled tail, ears alert for bears or deer, the snow falling suddenly off of pine tree canopies, sitting on a tree stump, I enjoy the sight of the mountains around me.

Platos's shadow world is TV. Most people live within that realm and can't escape. They think it is more real than life. Yet the smallest things, the hardest tasks in life are exactly the things that are life! We can't live unless we savor that which is, now. This is why I enjoy haying the pastures in summer. Watching the swallows swoop low to eat the bugs I raise, the horse running across the newly mowed grass, neighing, his white mane and tail flying, I do miss my sheep and the ox team...butterflies rise from the wild flowers that grow between the grasses and the great oak trees rustle in the summer's warm wind that rises every afternoon and I take a deep breath and enjoy the smell of the flowers, the cut grasses and the forest that looms to the north, rising up and up the mountainsides.


This is where I do my thinking about what to write, by the way. Thinking is best done when busy doing something physical. And is a major annoyance that I messed up my arthritic old knee. Slows me down, hugely.

Canuck

Canadian socialism is alive and well, the harsh and unforgiving circumstances which were the genesis are well past. Evidence it yet exists and is broadly interwoven in Canadian society is highlighted by Pat Buchanan’s derisive commentary “Soviet Canuckistan”

http://en.wikipedia.org/wiki/
Soviet_Canuckistan#United_States

The main pillars of Canadian socialism which gives right wing fits are not at risk from public rejection. The Canada Health Act, Social Security, welfare programs, unemployment insurance, transfer payments, immigration policies, tax law and rehabilitation centric criminal justice.

These policies have weathered attacks from the right wing demanding opportunity to intercede in the delivery of services (private profit – public risk) and the pressures from the recipients demanding increased services (slackers, freeloaders). The bottom line being that those who are paying the freight, the productive members of society are simply not clamoring for reform or rejection of the principals on which these programs are premised.

Most of the western industrial nations implement these types of social polices to some degree. I don’t see how this degree of influence and permanence can be construed as a failure. The policies continue even though the social conditions that spawned them have been alleviated and despite pressures from ”selfish” members of society. The fact that these policies continue lends credence to the idea that society is rather more unselfish than selfish, these policies are manifest of societies concern for itself and it’s weaker members.

http://www.canadiansocialresearch.net/
welref.htm

Cato

John, maybe it's the other way around. Perhaps its pure capitalism that's better executed in small homogenous populations. Adam Smith's capitalism was best for merchants and small enterprises in Britain during his lifetime until the large stock companies came on the scene and grew predatory. Laisse faire capitalism especially left in the hands of multi-nation corporations and coupled with intrusive technologies invites totalitarianism.

We've all been indoctrinated in the virtues of capitalism. I think most in this large nation are ours have been open-minded about the benefits. That doesn't mean there aren't risks in going too far. Now it's time to mitigate the damage caused by a system run amuck and begin to operate like the concerned and intelligent society we claim to be.

blues

Yet the smallest things, the hardest tasks in life are exactly the things that are life! We can't live unless we savor that which is, now. This is why I enjoy haying the pastures in summer. Watching the swallows swoop low to eat the bugs I raise, the horse running across the newly mowed grass, neighing, his white mane and tail flying, I do miss my sheep and the ox team...butterflies rise from the wild flowers that grow between the grasses and the great oak trees rustle in the summer's warm wind that rises every afternoon and I take a deep breath and enjoy the smell of the flowers, the cut grasses and the forest that looms to the north, rising up and up the mountainsides. — Elaine

You have no idea how long I have waited for you to become a poet.

John

The problem facing all systems, capitalist or socialist or whatever, is basically the same: how do we ensure the honor and honesty of those in charge? My basic problem with socialism is that all some clod has to do is get elected, and poof! S/he's in charge of the lives of others, backed up by cops who have guns and the authority to use them. As bad as people like Gates are, nobody hold a gun on you to force you to buy MicroSoft products. But try refusing to pay an unreasonable tax, and see how far you get with that. Thus, between the two, I prefer my government to be as limited as possible.

I favor capitalism with strict controls to ensure that the top .01% don't run rough-shod over eveyone else, and swift, PUBLIC execution for officials who look the other way when such laws are broken.

John

Yes, that was a nice bit of prose, Elaine.

Elaine Meinel Supkis

There is high volcanic dust in the stratosphere. We will have a hard winter. Will write about that later (my leg really hurts right now).


Canuck

John you’re first premise has you fall in the category of a libertarian your second premise for controls negates that standing.

Overall I think you’re desires could be adequately met by dissolving the legal status of the corporate “person” and through hard application of direct democracy. Of course everything the elite and their power ensconced minions tell us is that the hoi poli will run amok and minorities will be at unprecedented risk.

I don’t agree. If at that stage it’s decided that political transgressions require a capital solution so be it.

John

I am a libertarian at heart. But I also deal with reality. And reality is that shitty people always manage to get themselves into positions of power—be it political, social or economic—and thus must be policed vigorously, and without remorse.

"It is not that power corrupts, it's that it is magnetic to the corruptable. Power draws pathological personalities like moths to a candle flame." - Frank Herbert, Dune

Sub-Optimus Prime

The US Congress is currently contemplating critical legislation aimed at remedying the huge US-China trade deficit. China and businesses that benefit from Chinese imports oppose this legislation, and to discourage action China has hinted at retaliation - including possibly selling its US treasury bond holdings. That threat has prompted some to argue against legislative action on grounds that risks of a trade war are too large and costly. Such thinking is mistaken. The reality is China's threats are empty, whereas its currency manipulation is wreaking significant, real damage on the US economy.

The Ryan-Hunter bill (HR 1498), now before the Congress, proposes treating currency manipulation as a form of illegal subsidy that would be subject to countervailing duties. In this fashion, Ryan-Hunter aims to offset China's undervalued currency and circumvent China's refusal to meaningfully revalue its exchange rate.

There is widespread agreement that China's currency is under-valued and harming the US economy. This harm works through the trade deficit and imports that displace spending on domestically produced goods, thereby injuring manufacturers. Additionally, the undervalued currency displaces investment by encouraging business to invest in China rather than the US. The challenge for the US is how to respond in light of China's exchange-rate intransigence.

Through its persistent trade surpluses China has accumulated over $400bn of treasury securities and it is now the second-largest foreign holder (after Japan) of government bonds. The fear is that China may retaliate against the US by selling bonds, causing the price of treasuries to fall and interest rates to rise. That in turn could trigger financial disruption, which in conjunction with higher rates could topple the economy into recession.

Such reasoning is deeply flawed for several reasons. First, China has little incentive to engage in such tactics. If it starts selling bonds that will drive prices down, causing large capital losses on its holdings. More importantly, China has no interest in playing Russian roulette with the US economy as that threatens its own economy. The reason China refuses to revalue its exchange rate is because it wants to retain a competitive advantage enabling it to sell in US markets. Causing a US recession would destroy the very market in which it wants to sell. Worse than that, a US recession could trigger a global recession, thereby undermining markets in Europe and elsewhere that China also relies on.

Second, the Federal Reserve can always intervene to mitigate the effect of any Chinese selling. Thus, were China to irrationally start selling, the Fed could step in and buy those bonds in so-called "sterilising operations". China would then be left holding lower-yielding bank deposits supplied by the Fed, and the Fed would hold the bonds sold by China. This would prevent interest rates from spiking and US taxpayers would actually benefit by saving the interest that would have been paid to China.

Thereafter, China could decide to sell its bank deposits and buy foreign currency. If it were to buy renminbi and repatriate its dollar holdings, that would cause China's exchange rate to rise, which is exactly what US policymakers desire. Alternatively, China could buy yen and euros, which would cause the dollar to depreciate against these currencies. That too would benefit the US, especially if the yen were to appreciate, as this would make US producers more competitive versus European and Japanese companies.

Appreciation of the euro and the yen would then shift America's exchange rate dispute with China to Europe and Japan. This would expose China to risk of retaliatory action from these countries, which are much more administratively aggressive in protecting their markets than is the US As a result, China could find itself at loggerheads with all its major customers (the US, Japan, and the EU), suggesting it will not go this route.

Meanwhile, passage of Ryan-Hunter would enable US manufacturers to seek countervailing duties offsetting the subsidy implicit in China's currency manipulation. That would raise Chinese product prices in the US and reduce Chinese imports, yet the benefit of higher prices would go to the US government rather than Chinese manufacturers. That again makes no sense for China, suggesting that Chinese policymakers would prefer exchange rate revaluation to tariffs. That way China at least gets the benefit of higher prices.

In sum, the US and China are currently engaged in a policy struggle that resembles the game of "chicken". Policy analysis can help disentangle the likely outcome of such a game by examining the credibility of each country's postures. Such analysis shows China's threats are empty. China relies on export-led growth to provide demand for its products and attract foreign direct investment. That means it cannot afford to destabilise the US economy or the global economy. And if it irrationally tries to do so, the Federal Reserve has the means to neutralise its actions.

Elaine Meinel Supkis

Oh my god. This is too funny, Sub-Opt.


Pray tell, who is the biggest currency manipulator on earth?


China's interest rates is the same as ours. But Japan has it set at an insane .5%! Ever wonder why? And why does Japan, a small country, have the world's #2 FOREX reserves and the world's #1 trade surplus? Eh? How did this miracle in the midst of a supposed 'depression' happen?


If the US plays hardball with China, China will play hard ball with a bad with a nail in it and they won't throw balls, they will assail us with said bat.


On top of all this, the US is going bankrupt and has very greatly irritated China's biggest neighbor, Russia, who is now very friendly with China.

We better take China's threats very seriously. And the fix? We got to stop importing energy products. And Toyotas. Ain't gonna happen. So I expect WWIII or we disarm and give up control of the planet and live within our means.

DJ

Thank you for the enlightening articles. They have been very educational. I feel the best defense is a small homestead/farm where a family can provide most of their food and heating. I see very dark days ahead similar to New Orleans after the flood.

Where can a wise squirrel put some money? Canadian currency CDs, gold, silver YEN ETFs, Euro ETFs, gold/silver ETFs. I feel this government will confiscate at least gold.
Outside the USA???

Elaine

Alas, all the safe shores are out of the US. I have a small farm now, by the way. My own forest, my own heat, my own food.

The comments to this entry are closed.

Blog powered by Typepad