Free Trade

Japan Frets About Spreading Chinese Monetary Power

Elaine Meinel Supkis

The Japanese game of weakening the currency of the world's #2 economy and #1 trade surplus is now beginning to backfire thanks to the ever-more powerful euro and the fact that China, by raising the value of the yuan versus the dollar, had made the yuan a popular currency with all countries bordering China and is spreading the yuan further and further while the yen hides in a dark hole and dies slowly. The suicide of the Liberal Party official involves him cheating Chinese peasants. Heh. And Japanese businesses needing to sell to Japanese are struggling to stay alive in a depression economy.

From Asahi:

In East Asia, the cross-border flow of people has been increasing rapidly in recent years, especially out of China. One major driver of the swelling migration of people in the region is the Greater Mekong Subregion (GMS) development program, promoted by the Asian Development Bank (ADB). One key project under the program is aimed at rapidly building a network of roads connecting Myanmar (Burma), Laos, Thailand, Cambodia, Vietnam, Yunnan province and the Guangxi Zhuang Autonomous Region in China.

China has signed free trade agreements with the other countries involved in the GMS program after an aggressive diplomatic campaign. Income gaps between China's booming coastal areas and the less developed inland region are not showing any signs of narrowing, so there are strong incentives for Chinese living inland to move out of their villages and towns in search of better economic fortunes.

All these factors are generating a massive and constant flow of people from inland China into neighboring countries.

Oh ho! I have detailed over the last three years the busy, busy Chinese bees, Hu and Wen. We must pay attention to who is visiting when and where! I track this vital information via Xinhua news. The many trips of this dynamic duo have just begun to pay off as China opens roads and rail services to all its neighbors. They are increasing commerce everywhere and it isn't just governmental or top corporate interests, it is classic merchants doing classic business things: lots and lots of little business people working long hours to open businesses all over the place, frontier towns attracting the most dynamic of the peasant classes as they go forth to conquer capitalism by becoming capitalists!

The ways Japan and China are making inroads into the region are very different. Japanese investment and aid are usually invisible to ordinary people and flow directly into state coffers, banks and factories' vaults. The Chinese yuan, in contrast, is brought by Chinese to people in the region along with merchandise. For ordinary people in the region, settlements in yen or the creation of a yen bloc are more or less abstract concepts, and they probably find it hard to emotionally connect to these ideas. But the yuan is something quite familiar to them, and it is much easier for them to understand the use of the Chinese currency as an international currency like the dollar.

The Chinese currency is gradually penetrating the region as Chinese products and people are increasing their presence.

And wherever they go, they don't seek dollars, they use yuan! And why not? The dollar is WEAKENING vis a vis the yuan so only a very stupid person would want to collect dollars. And where a currency goes, there goes the neigborhood! Namely, the yuan is gaining popularity in lands that used to be filled with people wanting to do business in dollars! And this is important for the US needs to have the world soak up our excess $1.5 trillion in red ink we pour forth every year. If the Chinese decide to be very cruel, they might make the value of the yuan rise 40% versus the dollar. That will teach us a very sharp lesson.

And it will cause problems for Japan. The Japanese had to accept the idea the dollar was the supreme currency of Asia thanks to WWII and the Vietnam war. But now that is fading fast and Japan has been caught flat-footed. The Chinese fury over past insults led to the near destruction of trade just two years ago. Since then, the Japanese try to tone down their tendency to insult but this is barely below the surface if not totally open. The above article accuses the Chinese of being loud and pushy, for example.

Note: HAHAHA. The Japanese are this way, too. They just can't see themselves. Ditto the US population. Or Europeans. Everyone who thinks they are gods are pushy. I'm very pushy. Heh.

The Japanese prefer to use their money to leverage the officials running countries whereas much of the imputus for trade with all of China's neighbors is organic. The people themselves are creating it.

From Asahi:

A slain former executive of a farm association had forced Chinese trainees to pay sizable fees that had already been covered by the farmers who accepted the trainees, sources said.

The funds provided by the trainees remain largely unaccounted for, they added.

Most of about 150 Chinese workers on a farm training program offered by the Chiba Agriculture Association had paid between 40,000 yuan and 110,000 yuan (about 600,000 yen and 1.65 million yen) under the pretext of training fees and travel expenses, according to a survey conducted by the association.

"The system whose initial purpose is to transfer technologies to developing countries is being exploited as a juicy business," Ippei Torii, general secretary of Zentoitsu Workers Union, which supports foreign workers, said of the foreign trainee-intern system.

Why would Chinese workers pay the astonishing amount of $12,000 for a chance of learning Japanese farming methods?

Looking at what the preferred modus operandi of Chinese peasants, it is to open small businesses inside of neighboring countries, isn't it? And so, since Japan is ripe for such business since the Japanese government keeps out competition for the most part, and since wages have suffered hideously the last few years, people rush to stores selling stuff cheap! And Japan is notorious for not letting in anyone at all which is why they are in trouble on so many levels with a dropping population.

The Liberal party is utterly corrupt. It is owned by the businessmen who run Japan and they have only one thing in mind: to extend their financial and industrial empires. But the weakness of the Japanese home base is causing many problems as the other Asian nations rush to undersell Japan and Japanese businessmen are running around, outsourcing like mad because they dare not let even a breath of inflation enter the Japanese economic castle.

The Japanese system is so rotted, they can't even have the fiction of two parties anymore. It is more a one-party state than either China or Russia.

From Asahi:

The consumer price index (CPI) for April, excluding perishable goods, dropped by 0.1 percent from a year ago, marking the third consecutive month of year-on-year decline, internal affairs ministry officials said Friday.

It stood at 99.9 against the base figure of 100 for 2005.

The margin of fall shrunk by 0.2 percentage point from the previous month, when the CPI fell 0.3 percent year on year.

The drop in prices was slowed in part by an end to discount airfare campaigns and a rise in health care costs such as medical fees, officials said.

Why are airlines discounting fares? Can they afford this? No? Heh. In every level, I smell a skunk when it comes to Japanese monetary policies.

From Asahi:

Japan Airlines Corp. has asked its four major creditors to provide hundreds of billions of yen to bolster its capital base, sources said.

The four banks, including the Development Bank of Japan and Mizuho Corporate Bank, may require the struggling airline to carry out further restructuring, for example, by reducing its payroll costs, analysts said.

All over Japan, payrolls are being purged or reduced. Everyone is seeing cut backs and so business within Japan continues to shrink. Eventually, it will vanish, I suppose! If the Bank of Japan made the yen more valuable, Japanese people might be able to afford to fly to China and go shopping! But alas for them, they can't. So the Chinese get richer and the Japanese head towards the poorhouse.

I was chastized at other websites when I talked about the fake depression in Japan. Some writers assured me, things are great in Japan. But when I read the news or look at the data, it looks really bad for anyone who isn't part of the Liberal Party's ruling elites and even they are committing suicide after yenning and yuanning everyone to death.

From Forbes:

Scandal-plagued electronics maker Sanyo said Monday it trimmed its losses for the fiscal year and forecast a return to profit for the current year as it cut costs.

Sanyo Electric Co. (nasdaq: SANYY - news - people ) has undergone a reshuffle at its top management after acknowledging recently it had falsified its fiscal 2003 earnings, in which it had reported a profit but could have been in the red.

With a loss of 45.4 billion yen ($373 million) for the fiscal year through March, Sanyo has now posted losses for the three years running. But that was better than the 205.7 billion yen loss the previous year.

Sanyo sells not only globally but locally. And this is why starving one's homebase is so stupid. The foundation of any business must be their homebase! From that platform, they can move outwards. If having a super-cheap currency were so great, why don't all nations simply charge 0% interest and print money like mad? The Japanese, in chosing this path, have enjoyed significant success but only against one party, the US giant. And the logic of the system is now beginnning to show: the dollar is now becoming as worthless as the stupid yen. The world's two top nations can't both have a dead currency at the same time!

And this is where shifting gears matters. The euro at first wanted to be weak so they could penetrate American markets but now, the European market is big enough, they don't need the dollar or the dumb Americans! The pie charts from the BBC in my earlier posting today shows clearly that the US share of world trade is being squeezed by both the European Union and China.

From Wikipedia:

Since the mid-20th century, the de facto world currency has been the United States dollar. According to Robert Gilpin in Global Political Economy: Understanding the International Economic Order (2001): "Somewhere between 40 and 60 percent of international financial transactions are denominated in dollars. For decades the dollar has also been the world's principle reserve currency; in 1996, the dollar accounted for approximately two-thirds of the world's foreign exchange reserves"
*snip*
As of December 2006, the euro surpassed the dollar in the combined value of cash in circulation. The value of euro notes in circulation has risen to more than €610 billion, equivalent to US$800 billion at the exchange rates at this time.

Funny, isn't it? The euro's growth in circulation echoes the growth in the American trade deficits. I bet this harmonic relationship isn't accidental. The fact that the US has lost control of half of its currency is significant. I know where that money is hiding! Go to the International Monetary Fund and you can see a lot of this is being held in FOREX reserves so big nations can control the fate of the US economy and currency! And suspicions rise rapidly, seeing that Japan is the #2 holder of American script. The US, in turn, holds a mere $12 billion yen to Japan's $900 billions in dollars. This unequal relationship is due to Americans wanting to betray us to the Japanese who still smart from their defeat in WWII.

And how do I know this? Simple. They won't pay reparations to the people they enslaved and murdered and the leaders worship the war criminals we executed. 'Nuff said.

Culture of Life News Main Page

China Boasts of Great International Investment Position

Elaine Meinel Supkis

China publishes a story today, boasting about their great IIP numbers. The international Investment Position data is very important, so important, I spent hours trying to riddle them out. Finding the data for the US was impossible. But I did get the Bank of Japan and talk about an eye-popping report! A must read for anyone who wants to talk about international power politics.

From Xinhua:

Wu said that Washington runs a relatively big trade deficit with Beijing in its trade in goods, which is an objective fact that China has never evaded.

The U.S. trade deficit is the result of multifaceted and complicated factors, but "we believe it is mainly of a shifted and structural nature and is related to U.S. export control against China," she added.

She said that export control applied by the United States against China has constrained the export of internationally competitive U.S. high-technology products to China.

For the period between 2001 and 2006, the proportion of U.S. high-tech export to China's aggregate high-tech imports decreased from 18.3 percent to 9.1 percent. If that ratio was kept at 18.3 percent today, U.S. exports to China would have increased by at least 70 billion dollars, according to the vice premier.

China was blocked out of the market for our top computers and technological stuff. They are correct that they would have bought a lot more stuff if we had an open market. The US loves to pretend our markets are open but this is a fiction. The parts that are open are the parts that affect the American worker: it makes things cheaper for them so our government can produce the effects of depressions instead of inflation. There is, of course, inflation. But the depressed prices of various unimportant items or in one singular case, cars, means the government can pretend there is no inflation.

I was in Home Depot today, looking at the price of building materials. You would think they would be way down since the housing market is dead. Nope! The price of plywoods were from $12 to $45 a sheet! Just 8 years ago, it was from $6 to $25 a sheet. Sheetrock that was $3.50 a sheet was $9+ a sheet. So prices of the basic elements for building houses was much higher. But the price of tiles and toilets and other things were lower...because they were made in China. All the stuff made in China was the same price as several years ago. All the stuff made in America like plywood were much higher than before. So, to keep the illusion there is no inflation, China steps up to the plate and rescues the Federal Reserve.

And they know this! They have us over a big barrel.

From Xinhua:

China's net international investment position (IIP) at the end of 2006 surged 57 percent from a year earlier, according to the State Administration of Foreign Exchange (SAFE).

China's net IIP reached 662.1 billion U.S. dollars as the value of its investments abroad exceeded that of the foreign investments in the country, SAFE said.

Analysts said the growth was boosted by China's rapid rise in foreign exchange reserves and overseas investment.

China's external financial assets rose 33 percent from a year earlier to 1,626.6 billion U.S. dollars by the end of last year, said SAFE.

Among the external financial assets, foreign exchange reserves stood at 1,072.9 billion U.S. dollars, overseas direct investment at 82.4 billion U.S. dollars, securities investment at 229.2 billion U.S. dollars, and 242 billion U.S. dollars in unspecified investments.

Meanwhile, China's liabilities hit 964.5 billion U.S. dollars, up 21 percent from a year earlier. Foreign direct investment reached 544.2 billion U.S. dollars, securities investment hit 120.7 billion U.S. dollars and 299.6 billion U.S. dollars in unspecified investments.

Every time financial data is assembled, the Chinese happily publish it. In the opposite corner, the US ignores all this information because it is very nasty. So we pretend it doesn't matter or exist. We can celebrate our seeming wealth so long as we ignore all the indicators that show relative wealth and value.

From Bloomberg:

Overseas stock exchanges including NYSE Euronext and Nasdaq Stock Market Inc. said they plan to open offices in China for the first time, amid efforts to woo Chinese companies to their bourses.

NYSE Euronext, Nasdaq, London Stock Exchange Plc and Deutsche Boerse AG are all preparing to set up representative offices in China when regulations that take effect on July 1 allow them to do so, said the bourses' executives at a private equity conference in Beijing today.

``Setting up shop locally will allow us to conduct many more promotional activities on the ground, and to be in closer touch with Chinese companies,'' Rainer Reiss, a Frankfurt-based managing director at Deutsche Boerse, said in an interview today.

I am full of admiration for the crafty Chinese. They certainly know how to negotiate as if they were playing poker on a Go board! They withheld goodies they knew our rulers lust for: access to the vital, living, growing Chinese stock and banking markets! Japan, living in this stupid straitjacket economy at home that is a grinding, evil depression, can't attract hardly anyone nor do they want to attract anyone. They have a 'Do Not Enter' sign on the front door to Tokyo. The same one they hung out in the past, the one Perry threw away only they dusted it off and put it back up.

I thought, how darling, how SWEET the Chinese were, talking about their IIP data! The US won't talk about that in the major media. They want us to ignore this and not understand the numbers or the meaning of the universe of money. Well! I decided, it's time to visit the Bank of Japan! Yes, they really do have a web page. But the data is in a really crummy, stupid, hard to use and read format. So I took an hour to untangle it and make it readable. They should pay me for this but looking at the alarming numbers, I suspect they will send ninjas to my mountain to assassinate me. Heh.

Total financing by the Bank of Japan for Asia, in millions of yens:

-------------------Total investments----- Manufacturing investments

1. U.S.A.--------------¥186,004-----------------¥118,679

2. Netherlands -------¥..54,011-----------------¥..40,024

3. U.K.----------------¥..37,594-----------------¥..10,869

4. P.R.China----------¥..36,051-----------------¥..27,993

5. Cayman Islands----¥..25,496-----------------¥......635
(MONEY LAUNDERING, ANYONE???)

6. Thailand------------¥..17,646-----------------¥..14,002

7. Singapore----------¥..16,969-----------------¥..10,863

8. France -------------¥..15,535-----------------¥....9,711

9. R.Korea------------¥..12,687-----------------¥....7,434

10. Belgium-----------¥..11,452-----------------¥....5,121

11. Brazil--------------¥...9,309-----------------¥....5,885

12. Hong Kong--------¥...9,247-----------------¥....2,752

13. Malaysia-----------¥...9,232-----------------¥....8,253

14. Indonesia----- ----¥...8,867-----------------¥...6,810

15. Germany----------¥....8,818-----------------¥...4,429

16. Canada------------¥...8,108------------------¥....4,647

17. Taiwan------------¥....7,524----------------- ¥....5,493

18. Philippines-------¥....5,057------------------¥....4,336

19. India--------------¥...2,753-------------------¥....2,356

20. Mexico -----------¥...2,108-------------------¥....1,595

Total trade
with world:-----------¥534,759-------------------¥ 312,317

OK! Since virtually no one in America is going off to the Bank of Japan to see exactly how the Japanese have run circles around us since 9/11, here are the stark numbers: The total of investments the Japanese are making worldwide is pretty big. But if you subtract the US numbers from the world numbers, it is ¥348,755,000,000 which is 300 trillion yen with the whole world. The Japanese are spending a ton of money in the US: ONE THIRD of their entire investments in the WORLD!

Is this because we are a great country or is it because they need to penetrate our markets and to do this, they must hire a bunch of Americans to work for them so they will be able to slip through our open door? And not suffer political attacks like we are ladling on the Chinese every day? Is it a great thing for all American auto workers to end up working for Japan? We see they are interested in one thing: dominating our domestic markets and reducing wages and benefits of our workers.

The amount spent on manufacturing is grossly greater in the US than any other country or collection of countries, for that matter. Subtract the US factory amounts from the global amounts and it is ¥193,638. NEARLY 1/2 of all of Japanese investments in factories are in the US!!!!! This isn't because American workers are super-cheap and super-good! So let's look at China: Japan spends ¥90 trillion more in the US compared to super-cheap China! Incidentally, China enjoys a trade surplus with Japan! This is why we are whining at China but not Japan. Japan owns us. Japan fears China that is getting super-rich off of trade with their US slaves. That sticks in the Bank of Japan's craw.

Japanese investments in factories in the US are four times greater than in China. I am betting, Japan is scared of strengthening China so they simply refused to do any major business there and focused entirely on dominating and controlling the US. Their success has been nearly total but also fatal. It has weakened the US so significantly, the US let CHINA do the exact same thing! So China is now getting rapidly stronger without Japan having any influence at all. This strategy of Japan's will go down as one of history's biggest blunders next to the American imperial collapse.

Japan also took great delight in colonizing England. They fought this very bitter war against England and the USA called 'WWII'. Most Americans seem to have forgotten what that war was all about. I will give a clue: economic dominance. Banzai! But Japan failed to dominate their nearest neighbor, China. And now the dragon is wide awake and if we forgot what was at stake during WWII, the Chinese dragon has a long, nasty memory. And its eyes are focused on Japan! They have zero desire to rule the US. They actually would rather we stayed a whole nation as a counterbalance to Europe and Russia. But they do want Taiwan, dearly, and they want Japan to be under THEIR wing, not the US!

From an official speech of a Bank of Japan officer, Toshihiko Fukui:

II. Current Situation of Japan's Economy

Against the background of the generally favorable developments in overseas economies, Japan's economy has continued to expand moderately. Although exports to the United States are somewhat weak, overall exports continue to increase steadily reflecting the expansion of overseas economies. Business fixed investment continues to increase as corporate profits remain high. Production decreased in the January-March quarter of 2007 in reaction to the high growth in the previous quarter led by production in automobile-related goods, but it seems to be on a trend of 1 percent quarter-on-quarter growth.

As for the household sector, although growth of wages per worker has been somewhat sluggish due mainly to weak regular payments, employee income has continued to rise moderately supported by the increase in the number of employees. Property income such as dividends is also increasing. In this situation, growth in private consumption has recently resumed its upward movement, after sluggish growth over the summer of 2006 due to unfavorable weather conditions and consumers' reluctance to buy before the introduction of new products.

In sum, although the pace of improvement in the household sector has been somewhat slow relative to the strength in the corporate sector, Japan's economy as a whole is expanding moderately.

Toyota becomes the #1 auto company on earth and JAPAN'S exports are floundering????? HAHAHA. But if we look at the numbers above, it is obvious that this is because the Toyota factories are now in the US which is why they are desperate to drop wages here. This 'weakness' in 'exports' hasn't stopped Japanese powerful industrial giants from getting massively big profits, of course. It is horrible, reading this man's speech. He, like me, knows why Japanese wages are 'sluggish'. He is directly responsible for this! The 'moderate' growth in Japan is in stark contrast with China where growth is racing along at a heedless pace.

Now, I am a rather curious person so I went tromping around the US Treasury and the more evil, nasty little realm of Bernanke and his Reservists who have one of the world's most pathetic reserves. All this, seeking the IIP data the Chinese put in their commie newspaper, Xinhua and which the Bank of Japan has in a very difficult to read format. Well! I can't find it! I looked in the realms of Congress, all over, Googled all over and nothing!

What are the numbers???? I'm sure it is ugly.

So here is some stuff from the January Fed meetings:

AUTHORIZATION FOR FOREIGN CURRENCY OPERATIONS
(Reaffirmed January 30, 2007)

1. The Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, for System Open Market Account, to the extent necessary to carry out the Committee's foreign currency directive and express authorizations by the Committee pursuant thereto, and in conformity with such procedural instructions as the Committee may issue from time to time:

A. To purchase and sell the following foreign currencies in the form of cable transfers through spot or forward transactions on the open market at home and abroad, including transactions with the U.S. Treasury, with the U.S. Exchange Stabilization Fund established by Section 10 of the Gold Reserve Act of 1934, with foreign monetary authorities, with the Bank for International Settlements, and with other international financial institutions:

Canadian dollars
Danish kroner
Euro
Pounds sterling
Japanese yen
Mexican pesos
Norwegian kroner
Swedish kronor
Swiss francs

B. To hold balances of, and to have outstanding forward contracts to receive or to deliver, the foreign currencies listed in paragraph A above.

C. To draw foreign currencies and to permit foreign banks to draw dollars under the reciprocal currency arrangements listed in paragraph 2 below, provided that drawings by either party to any such arrangement shall be fully liquidated within 12 months after any amount outstanding at that time was first drawn, unless the Committee, because of exceptional circumstances, specifically authorizes a delay.

D. To maintain an overall open position in all foreign currencies not exceeding $25.0 billion. For this purpose, the overall open position in all foreign currencies is defined as the sum (disregarding signs) of net positions in individual currencies. The net position in a single foreign currency is defined as holdings of balances in that currency, plus outstanding contracts for future receipt, minus outstanding contracts for future delivery of that currency, i.e., as the sum of these elements with due regard to sign.

How on earth can we make the yuan stronger if we won't buy any? Huh? And we are buying yen? True! I looked at the IMF data and there it is: we are holding a whole rice bowl of yen. But no yuan as far as I can tell. I really can't fathom what these guys are up to and this is deliberate on their part. We do know from the results that they are spectacularily incompetent and destructive. Just because they are hiding the hard numbers from us doesn't mean these numbers are kind. I will note the Japanese lords love to talk about our economic destruction, calling for a 'soft landing' which echoes the rants of our idiots running the Reserves and the Treasury.

But Japan put too many eggs in the US basket and if we become a basket case, it won't be China that will be hurting, it will be Japan! Few people recognize this but looking at the news this year and how the Chinese are playing ever-harder ball with Japan and the US, I suspect they are reading the data accurately, they can see the streaming numbers and figured out the meaning of all this. Or maybe they read this blog! Heh.

I wish someone in DC could read this. Maybe someone can give me the IIP numbers for the US. I can't spend half my day, looking for them. I have a horse to feed, chicken eggs to collect, fields to mow!

Culture of Life News Main Page

Time To Visit US Trade Negotiator Traitors

Elaine Meinel Supkis

The United States International Trade Commission is filled with right wing traitors who cheerfully green light the destruction of the American worker, all in the name of reducing 'inflation'. This way, the Reserve can print money and not have it show up as inflation, making all the financiers very, very rich. Which is why they keep on doing this horrible thing! Time to see the raw data, the raw reports.

Click here if you want to read the whole, horrible conspiracy to destroy native industries all in the name of selling things cheaper while flooding the US with imports!

This study made for Bush and the New World Order religious fanatics is full of hellish visions of American workers reduced to welfare in the name of keeping inflation down via heavy imports from cheaper places, particularily China. Not to mention, Mexico.

This document is PROOF the gab about forcing China to reduce its trade surplus with the US is totally fake. They were not twisting arms but rather, pulling legs. Always, one must go to the source for information and the fact that most economic reporters cover the news without ever refering to the core documents or past history is why we are so ill-informed.

But this isn't accidental! This is malicious and deliberate. They don't want anyone to know what the New World Order is up to. The recent deal to increase flights carrying Chinese workers and to increase the penetration of Chinese financial markets by Americans seeking wealth, removing it from the US and investing in China: we were conned, we were betrayed this week. As I expected.

They are expecting more people on welfare, another $3.7 billion worth! Note that these same heartless creatures are also the architects of cutting welfare in the name of moral uplift. These are also the same people who refuse to protect our borders and let a flood of 20 million+ illegal aliens to invade despite the claims that we are at war with terror and must protect our borders.

A sign the clowns writing this report are liars is the last line where they claim that if they 'liberalize' trade in the name of Free Trade, the deficits and surpluses will be totally balanced. At no point in the last 35 years, has that happened. NOT ONE TIME. And if you read this report, even the authors admit in each summary that there will be a huge hit on American businesses and workers.

Each of these summaries of the impact of free trade if we lift the pitiful few last tariffs and barriers is sober reading. Often, it will cause prices to drop to up to 40% and employment to collapse. They don't even dare speculate how badly truck drivers will be hit when they open our borders. They claim, Mexicans will invest in American transport systems. Right. By driving out of business, all American companies.

****************************************************************************************

Since the very creatures writing this report can't paper over the obvious, they simply disregard all of our past experiences with 'free trade' and assume Americans will move to other jobs. Hell, they don't even bother pretending these will be good jobs, they admit the new work will pay less. This is incredible. No other nation wants to do this so why are we? We are the destination of 24% of all world trade and proof of this is our $800+ billion trade deficit with the world.

If one is digging a tunnel to China, the best way to stop it is to throw away the shovel and climb up a rope, out of this hole!

From China. org:

China's trade in goods will surpass US$2.1 trillion in 2007, a 20 percent year-on-year increase, the Ministry of Commerce said in a report yesterday.

Trade will increase in a fast yet stable manner as China optimizes economic structure, improves efficiency and lowers energy consumption, said the report, which is based on a review of China's foreign trade in 2006 and the first quarter of 2007.

China's total import and export volume amounted to US$1.76 trillion in 2006, up 23.8 percent year-on-year. China remains the third-largest country in the world by trade volume, according to the report released by the China Academy of International Trade and Economic Cooperation, a research body under the Ministry of Commerce.

Incredible, isn't it? Most of the stuff in the Trade report was concerning stuff from China...and Mexican workers. This one-two punch is reducing the American work force to the level of peasants and if they want to avoid that fate, time is now running out since the rich Democrats running Congress just betrayed everyone and voted for Bush, the right to sign these very same trade treaties that are killing us.

From the China.org story:

Exports of machinery and electronic products and hi-tech products increased 28.8 percent and 29 percent respectively in 2006.

Cars are next on the long list. And aircraft as well as rockets. Just this week, the Chinese launched a satellite for Nigeria. They intend to take over all these high-tech, high-value added businesses. They aren't going to be selling cheap stuff to Walmart too much longer!

From the Washington Post:

U.S. health officials pummeled the Chinese with questions about contaminated pet food ingredients, blamed for killing scores of pets in the United States. "The Chinese government clearly understands that the world marketplace will swiftly disadvantage any nation or economy or firm that is not able to establish a sense of confidence or reliability or safety," said Mike Leavitt, secretary of health and human services.

Commerce Secretary Carlos M. Gutierrez said the two sides also made progress on one of China's complaints about the United States -- that its controls on high-tech exports are too strict. He said that the Commerce Department explained "the steps we will take" to sell more technology to trusted Chinese customers. He would not elaborate.

What great negotiations...snark. We get better cheap dog food, woof. And China will get the last of our high technology. OK. I think I see where we will win this. We will sell the Chinese our dogs.

From the People's Daily:

Chinese President Hu Jintao held talks with visiting German President Horst Koehler in Beijing on Thursday, exchanging views on bilateral relations and international issues.

Hu hailed the rapid growth of China-German relations since the establishment of diplomatic ties 35 years ago, citing frequent high-level visits, the smooth launch of China-German strategic dialogue mechanism and strong growth of bilateral economic and trade cooperation.

He noted that China and Germany have continued to be the largest trade partners of each other in their respective regions, reached a unprecedented high level for culture, education, science and technology, environmental protection and justice cooperation, and strengthened contacts and coordination in international and regional issues.

He expressed his appreciation for Germany's adherence to the one-China policy.

Hu proposed that the two countries enhance their partnership with global responsibility from four aspects, including deepening political ties featuring equality and mutual trust, expanding win-win economic and trade cooperation, strengthening understanding and friendship between the two peoples and promoting international coordination within multilateral framework.

For years now, Germany has been more liberal than the US over high tech trades with China. German workers are getting agitated about outsourcing, it is just beginning to bite there. This week, telecom workers had a strike over the outsourcing of 50,000 jobs. The number of jobs being outsourced in all the top countries is astronomical. Millions and millions of jobs. But China has a billion workers and this will go on and on. Even Japan is outsourcing jobs to China like mad and their biggest trade deficit on earth is with China. This is why they are so hostile right now.

From Bloomberg:

The Organization for Economic Cooperation and Development raised its forecast for global growth this year, predicting the economies of Europe and Japan will outpace the U.S. for the first time in 16 years.

The economy of the group's 30 members will expand 2.7 percent this year, stronger than the 2.5 percent expected in November, the Paris-based group said in its semi-annual economic outlook. The estimate for 2008 was unchanged at 2.7 percent.

The OECD joins the International Monetary Fund in betting that strong growth in Europe and Japan, along with booming demand in China and India, means the world economy is weathering a U.S. slowdown. The Washington-based IMF, which covers 185 economies, last month left its global growth forecast unchanged at 4.9 percent, even as it cut its outlook for the U.S.

China, the EU and JAPAN willl all grow while we shrink. Are we the Wicked Witch of the West and will shriek, 'I'm shrinking' as the water melts us?

Greenspan, the evilist man on earth, yapped yesterday that China's hot market might tank. This led to panic in the gullible classes. Of course, the Chinese stock market can crash, all markets can do this. Everyone is looking to the dragon of China to see what will happen next because China is now the fulcrum of the world's trade and finances. Whatever China does will cause the whole world to flip out or beg for more.

From Bloomberg:

China needs to ``shock'' the economy with more interest-rate increases because it's too late to use a stronger yuan to cool growth, said Jim Walker, chief economist at CLSA Asia-Pacific Markets.

The Chinese government is too concerned about derailing export growth as the U.S. economy slows to let the yuan rise faster, Hong Kong-based Walker said. Higher borrowing costs would prevent the flood of cheap credit from spurring a stock- market bubble and excessive investment.

``They really just need to take money out of the system,'' Walker said in an interview on May 22. ``China should have let the currency strengthen a long time ago, but it's too late. They're maintaining a very slow-moving appreciation so they can sell the goods they're producing.''

The idea that China just might let the entire world economic system go through a bad spasm doesn't occur to anyone except me. And the fact that China's rulers are communists determined to destroy American hegemony and then take back Taiwan and dominate Asia: this is a fact of life. This is, I assure everyone, their ultimate goal. The US investors are scared, China might hand us our heads.

Trust me, the Dragon will do this! It is the PLAN! We think China doesn't have 5 year plans anymore. They do. China doesn't dominate world auto markets yet. Nor aircraft. So they are patient. But if we want to see our heads spin, all we have to do is strengthen Taiwan. Boom.

China is very annoyed at wasting energy producing cheap stuff in competition with Vietnam and India. They plan to leave all the cheaper stuff to those countries and concentrate on high-value stuff like cars, trains, ships, rockets, nuclear bombs and nuclear power, etc, etc. And this is obvious. They are working frantically at these things. They are setting up one tech institute after another and making deals with all the top generators of modern technologies in preparation for the bankruptcy of the US empire.

And that is our future. Obviously.

Culture of Life News Main Page
Just look at the raw numbers. Gads.

Dancing with the Dragon

Elaine Meinel Supkis

Mike Whitney refers to this blog when talking about the goofy trade talks between the US deadbeats and the Chinese banking dragon. The ruling elites have betrayed us and in turn, the Chinese granted the Wall Street overlords access to the golden, hot Chinese stock markets so long as we don't stop this destructive trade relationship.

From Counterpunch:

By MIKE WHITNEY

Treasury Secretary Henry Paulson wrapped up 2 days of high level talks with the Chinese delegation on Wednesday without any progress on the two issues of central importance to the American people"the massive $230 billion trade deficit and the ongoing manipulation of the Chinese currency, the yuan. As expected, China agreed to allow "more passenger flights between the two countries" and they also approved a plan "to remove a ban on the entry of new foreign brokerages and to allow financial services firms to expand their operations in China". (Marketwatch)

Mike is a marvelous writer who interviewed me last week. I always look forward to his stories and this latest is a good read. He points out a fact that NO major media points out but which I have reported in the past, Paulson works for Wall Street, NOT AMERICA. He is a traitor who makes deals for the super-rich at our expense.

Mike details how and why and I strongly suggest reading his latest article just for that .

But also, he talks about this news service. Heh. Kisses to Mike! Hugs, too.

I am probably the only person outside of the Chinese communist leadership who knows their long, long range plans. This is because my parents were stationed there off and on from 1976 to 1996. The Chinese didn't realize exactly how much a spy I am, I grew up spying on my spy parents, after all. And I got them to tell me what was really on their minds when some of them lived with me or visited me. They all thought they were pumping me for information when all I was doing was teaching them about banking and commerce.

A true story: some of them told me they would become real rich by gambling in Atlantic City. They all knew I got $20 a week and a free ride to the beach as the casinos tried to lure me into gambling only I never ever gamble. Having used up all my chances by being the only person on earth to survive multiple lightning strikes indoors, I literally won't 'push my luck'.

Back to the leaders of China: these people are running the trade with the US today. Back then, 20 years ago, they went happily and very haughtily to Atlantic City. Two days later, the guy who ran Shanghai's export markets since 1990, came to me, very embarrassed. He had lost every penny. None of them had any more money.

They couldn't go to the Consulate in Manhattan for help. Bang. Like, dead career! So I lent him money but he had to sign a little contract. He shovelled snow and moved trash and baby sat my son as well as cooking me lots of great dumplings. Heh.

He then had me teach him how the 'House' always wins. We played 21 which shows that game well. He then said, 'I'll be bank!' when the light turned on. I thought, 'Boy, are we in trouble now!'

Well, they are our bankers. This sucks for the US but then, we chose to go into debt. They didn't force us.

The name the Chinese gave me back then, the one their spy services used to refer to me was 'The White Bone Demon.'

From Cal Polytech:

The monk Xuanzhang , escorted by his disciples Monkey, Pigsy, and Sandy, start out for the Western Paradise in search of Buddhist scriptures. The pilgrims press forward on their long, hard journey. One day they arrive at the White Tiger Mountain. The ever-watchful Monkey senses danger and volunteers to go ahead as a scout. He draws a magic circle around the others and tells them to stay inside it. “Don’t accost anyone while I am away,” he says, “and don’t touch any food.”

Now in this mountain there lives the White-bone Demon, a terror even among demons. Hearing that Xuanzhang has arrived with his disciples, she decides to go down the mountain and capture him. She is delighted to find Xuanzhang in meditation and is about to spring on him when golden rays shoot out from the circle and bar the way.

Unable to enter the magic circle, the demon changes into a coy young maiden and approaches the three with a basket of steamed buns in her hand. Greedy Pigsy smells the fragrant buns and races out of the circle to greet the girl. “I’m going over to the temple to offer sacrifices,” she says invitingly. Pigsy pulls Xuanzhang along to follow her.

I overheard a secret police officer visiting my 'student's' call me that name. I shocked all of them by laughing an evil chortle and showing them my comic book from China that was about this demon. In return, they showed me a Chinese TV show about the monkey king and this demon.

The fact is, I scared them. And the other fact is, I still scare them. They are approaching us as a cute chick, batting eyelashes. But I can see through them because I am a demon, too.

And if the USA wants to be the top dog in 50 years, they better listen to me. Acting like Pigsy is STUPID. Paulson is Pigsty. And Bush is trying to be the Monkey King only he is working for the demons. He belongs to a cult that prays to the Devil that is Death. He loves demons.

From Bloomberg:

U.S. Treasury Secretary Henry Paulson came to Washington with a Wall Street reputation for overcoming all obstacles in the way of a deal. He may have found the one hurdle he can't surmount: George W. Bush's damaged presidency.

On issues ranging from defusing trade tensions with China to overhauling Social Security, the former Goldman Sachs Group Inc. chief executive officer is playing down the notion of breakthroughs. Instead, he's talking about laying foundations for his successors.

None of the challenges ``avail themselves to a quick fix, but all of them we can make progress on,'' Paulson, 61, said in an interview in Washington yesterday after talks with Chinese officials that he conceded resulted in only ``incremental'' gains.

If Bush was more popular than Santa Claus and the Tooth Fairy, the results would be the same. These deals have nothing to do with popularity. And the cure: that will be very unpopular. We must raise the tax on the very rich to 90% of their gross incomes! Then we cut the military budget by 70% and bring home all the troops. Then we put up barriers and impose tariffs. And on top of this, we tax fossil fuels heavily with an energy fund for everyone in the bottom 50% of the nation, pro-rated, so they don't freeze to death or die from lack of energy and can commute.

Then require ALL houses to have solar units installed. And of course, rebuilding our rail roads and our shipping.

But none of this will happen. Americans love the role of Strassbourg Goose. We think we will get fatter and fatter and never face having our livers ripped out and eaten.

Culture of Life News Main Page

History Of Japan's Yen Manipulations

Elaine Meinel Supkis

As Henry Kissinger once noted, "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world." I would say, "Who controls the peasants controls the nation; who controls energy must control their own peasants; who controls buying of loans controls the world." We think that by running the Federal Reserve printing presses, this gives us power. It doesn't in the long run, we lose power as we print money. Time to look backwards at the monetary game between the US and Japan.

From the US Treasury press release for today:

Opening Statement by Secretary Henry M. Paulson, Jr. at the May 2007 Meeting of the U.S.-China Strategic Economic Dialogue

Washington, DC – Good morning. It is with great pleasure that I welcome Vice Premier Wu and your colleagues to Washington, and the second meeting of the Strategic Economic Dialogue.

Your visit is historically unprecedented. Never before have so many Ministers from China gathered in one place in the United States. The number of senior officials who are focusing their time and attention on this effort is a demonstration of our shared and on-going commitment to the vision and purpose of this dialogue. We both recognize how critical it is for our countries that we get our long-term economic relationship right.

Our bankers have arrived. China is by far and away the #1 buyer of our public debt. They also have the largest trade surplus with us and this surplus has filled their coffers in their reserve funds to overflowing. They control our economic fates except in one matter only: we can print or make up as much money as we wish and we have been doing this with a vengence. The #1 buyer of our bonds is our own Treasury which buys them from the Federal Reserve. And this causes inflation. Which is not 3% by any stretch of the imagination. Ask anyone pumping gas into their cars today.

The Chinese intend to get our long-term economic relationships straight, all right! That is, the US will eventually cease consuming 24% of world resources and be reduced to only 10%. This means we cut back on many, many things and the #1 item on that list is oil. This is why we were so anxious to invade Iraq and Iran: we need to secure their oil for ourselves as well as Canada and Mexico's oil.

From the Treasury press release:

When President Bush and President Hu created the SED last August, their leadership set us on a course that led to our inaugural December meeting in Beijing, has continued through a series of meetings among Chinese and U.S. officials since then, to this Washington gathering, and will continue after we leave here. An open, honest economic relationship between our two countries is pivotal to the future of the global economy. The SED is a forum to manage that relationship on a long-term strategic basis, for our mutual benefit, and to work towards near-term agreements that build confidence on both sides.

My god. I still remember when Hu visited Bush. Every possible insult and slur was heaped upon him.
Here is an old cartoon I did showing Bush's childish behavior vis a vis Hu. Click here for my story last year about Bush insulting Hu repeatedly.

Since that disaster, China has carefully set up things so this time, we will be obedient and well-behaved. Of course, this will all fall apart as we bluster yet again at China.

We should stop this and simply set up our trade barriers and bite the bullet by raising taxes, cutting spending and eliminating all our foreign military obligations. China will love that last item and will then consolidate power in Asia but then, they will anyway. We should understand, we can't do this anymore and stop trying. For if China ousts us from Asia ten years from now with us bankrupt and in very bad condition versus doing it now and having some hope for the future...we should do it now.

When playing the ancient game of Go, when one side surrounds the area of another's side's stones, if one keeps adding stones to the area that is surrounded, this simply means you lose really badly because the winner is the one controlling the most territory WITHOUT occupying it! This is why giving up and reorganizing outside of a danger zone is life and death. Retreats don't mean routs if they are strategic or tactically correct. Clinging to an untenable situation is stupid.

From the Treasury press release:

Our task is not an easy one. We must address the immediate concerns that are impacting our industries and citizens and simultaneously identify tomorrow's issues. We must maintain a partnership, and engage in this process to solve what may seem unsolvable. We conduct our talks under the wary eyes of politicians, business leaders and workers in both of our countries.

We both face challenges of domestic protectionism and questions about the merits of trade and globalization. There is a growing skepticism in each country about the others' intentions. Unfortunately, in America this is manifesting itself as anti-China sentiment as China becomes a symbol of the real and imagined downside of global competition. That argument is fueled by the evidence of persistent trade and financial imbalances. China has its own opposition, with its own set of arguments. The purpose of this on-going dialogue is to have candid discussions and find ways to ease, rather than increase, these tensions.

The only reason the US doesn't have riots whenever world leaders meet is due entirely to the fact that our police state will kill anyone who dares to show up and make any racket. Just this month, the Democrats once again betrayed the workers voting for them by extending 'free trade.' The insanity of all this is obvious. Our trade statistics have stunk since 1970 and they stink worse and worse and all the trade remedies set up by the financiers and leaders makes this worse and worse and blaming China is stupid since they didn't even begin to import anything into our nation until very recently.

Treasury again:

A look back demonstrates, of course, that increasing our ties has benefited both our people. China's presence in the global economy has raised living standards in China and fueled growth around the world. Ten years ago, China was an outsider in the global marketplace; other countries set the rules and China was expected to abide by them. Now, China is a member of the WTO, a dynamic economic force and a model for other developing countries. China is able to help lead and define the rules. Neither America nor China can shrink from the role we have carved for ourselves in the world. We both must exercise leadership, in positive and productive ways. I have no doubt that our proud, strong countries can fulfill this responsibility.

The United States is supportive of a stable and prosperous China. We are not afraid of the competition. We welcome it, because competition makes us stronger. It is therefore in our interest to support China's continuing efforts to open its economy. As I have said before, our policy disagreements are not about the direction of change, but about the pace of change. Americans have many virtues ---we are a hard-working, innovative people---but we are also impatient. Even the notion of a "dialogue" may seem too passive for America's action-oriented ethic. It is up to us, over these two days and in the work that follows, to show that words are precursors to action.

The SED allows us to look forward, together, and define our future bilateral economic relationship. We are creating a roadmap for the future. So, welcome again, Madame Wu, distinguished Ministers and colleagues. Let's get to work.

China can clearly see 'competition' with Asia is weakening the US. They track this deteriorating situation closely. The plan is for them to assist us in this trajectory that we set up way back in 1970. When they first began to figure out this business we have trapped ourselves in, it was partially due to myself for I was raging about this back in the mid-1980's. While the Chinese trade officials living with me watched open-mouthed.

Since then, they have applied themselves to working out what is going on and how the Japanese and Germans won WWII after 30 years of trade with the US. They now understand the underpinnings of this new international world order and intend to be the masters of it and I can't blame them: I would do the same thing if I were them!

From Forbes:

05.22.07, 12:03 AM ET

Japanese government bond prices ended the morning session broadly higher, after a turnaround overnight in US Treasury bond prices fueled buying interest here, dealers said.

HAHAHA. I know Asian powers read my blog. As well as people in our own government. Hello! I broke the news that Japan was selling off US bonds to CHINA and they were not supporting the dollar at all, CHINA was doing this! Well, the Japanese rushed out and bought American bonds. Oopsie. Their latest trick has been uncovered. I do hope our own government's negotiators figured this out. They should read this blog more often. Japan's perfidy here is obvious. The system is so rigged at this point thanks to their use of the .5% interest scheme, they didn't need to buy and hide our bonds to keep the dollar stronger than the yen!

But their sales of our bonds weakened the dollar compared to all other currencies including the yuan. And now they have been bested by the Chinese who have a stronger currency than the yen AND the dollar even as both the yen and dollar fall! So Japan has to make the dollar stronger versus the YUAN and this three-way game will continue to roil the currency markets and lots of hedge funds using derivatives will get very rich while this destructive game continues.

Time to look into the past!

From Gold Eagle, 1997:

JAPAN BETWEEN A ROCK AND A HARD SPOT

The T-Bomb detonated on June 23, 1997 at Columbia University by Japan's Prime Minster, Ryutaro Hashimoto, has motivated me to 'rehash' a series I started many months ago - when conventional wisdom felt it was an absurd idea to think the Land of the Rising Sun would dare unload it burgeoning burden of U.S. T-Bonds, INDEED even contemplate the 'ridiculous' notion. However, Mr. Hashimoto has dispelled all these naive and credulous opinions, when he publicly and candidly confessed:

"I hope the U.S. will engage in efforts and in cooperation to maintain exchange stability so we will not succumb to the temptation to sell off Treasury bills and switch our funds to gold,..."

"We were tempted to sell off... It is true we have not really made the advantageous choice."

"I believe the U.S. economy has the strength to absorb (a bond sell off) "but the effects could be enormous. ... It is because ... countries are holding onto the T-bills that the U.S. economy is being maintained."

"I hope the United States may engage in efforts to maintain exchange stability."

Right before that speech filled with dire warnings and I would say, great arrogance, the yen was very strong, nearly 100 to the dollar. Right after that speech, all of Asia had a terrible currency collapse and the yen happily floated downwards along with all the ruined economies in Asia. Just as they wished.

Another thing began, very slowly in 1999 and then picking up speed: the value of gold began to climb rapidly. It's climb seems to have paused right now as everyone waits to see how this latest merry-go-round currency game is played by China. Yesterday, China made good on last week's pledge that they would cease buying our bonds and begin to use their massive inflow of dollars to return in the form of hedge fund purchases of American companies. OUCH. The pretense of our media is, this is good news for we will then take over China's finances. Talk about stupid.

China is taking over OUR finances! Hence, the Japanese fear and the sudden rush to buy our bonds after selling them to the Chinese for nearly a year!

Japan is literally awash in US dollars - which puts it into a very precarious position. One possible solution to their economic dilemma is to carefully sell-off their U.S. Treasuries for conversion into other investment vehicles. Following are the pros and cons of alternative actions. Whatever steps taken by the BOJ, the limiting parameters must ensure: 1) a weak, but stable Yen versus the dollar to protect their export markets; 2) low Yen interest rates to reflate the economy; 3) diversification of BOJ's foreign reserves base

In 1997, Japan couldn't sell off our bonds but by 2005, they could and they did.
This chart clearly shows how this shift happened. This data is from our own government's financial reports to Congress! Last year! They knew this information but for some reason, refused to understand the implications of all this. Of course, if we never ran any deficits in the first place, we wouldn't have handed this financial weapon to a bunch of crazed Asians seeking power and domination, right?

From my own blog:

First: the USA buys the most bonds it issues. No one else comes even close. Second, if you add up all the bonds sold the last 30 years, it is over $8 trillion and rising fast.

Second: it helps to color things in. When I put the countries that are selling off US bonds in red and the ones buying in green, a pretty nasty picture emerges: our allies who we spend half a trillion protecting every year are SELLING and the countries that harbor some need to control our empire are BUYING. Rapidly. This is a STRATEGIC DISASATER. And we should be seeing hearings about this and there should be demands our allies support our red ink, not make it worse. Certainly, this is a stab in the back.

Right! So always, the blame comes back home to roost. Whenever we beg Japan or China to save us from our own follies, things get worse. We lose face, we lose power, we look stupid and worse, if they DO save us from ourselves like they did in the past, we run off and make things worse by cutting taxes and overspending like crazy.

The only way to stop this attitude problem in our own country is for Asia to hammer us on the economic front. Which they will in due time, just not yet.

From the article about that Hard Place:

The BOJ will have diversified its foreign reserves' base out of its heavy dollar concentration into the most universally accepted hard currency: GOLD.

Japan didn't go off and buy lots of gold back in 1997. That would tip their hand, first of all. Instead, I would propose they helped trigger that nasty currency crisis a few months later. The Japanese discovered that 2.7% interest which was their rate in 1997 when they made that open threat was the key. They used the currency crisis as a cover for dropping rates to the insane amount of 0%. That is unheard of. Governments collapse and economies fail long before one resorts to that! Indeed, the common response to a currency crisis is to RAISE INTEREST RATES which the other nations did but Japan moved in the opposite direction, claiming they alone have a depression. No inflation.

So they did not buy gold and the price of gold stagnated until the US started raising interest rates. Then inflation and gold values took off in tandem.

From Seeking Alpha, one year ago:

May 12, 2006

After Friday's sell-off in Tokyo I feel that the "house of pain" is the appropriate phrase to describe the current situation for Japanese stocks. Among all Japanese stocks with ADRs listed on the NYSE (NYX) or NASDAQ (NDAQ) only two managed to gain, doing so nicely.

There are a number of factors at play putting downward pressure on Japanese stocks. The biggest issue right now has to be the strong yen which I last saw at Y109.5/US$1. After the big sell-off overnight in Tokyo that sent the Nikkei 225 Stock Average down -1.54% and as much as -2.61% intra-day, the exchange rate is about the only place foreign investors in Japan can find solace (that is unless your short Japan).

In the last 10 years Japan has soaked up over half a trillion in US bonds. They did this in order to make the dollar much stronger. And to keep American dollars out of circulation, they hoarded them until it got to a trillion then they began to drop some of this loot in 2006. Oops. The dollar weakened against the yen.

Thanks to China, Japan no longer can single-handedly manipulate our currency at will. They lost control of the puppet's strings. China's hoard of US bonds is nearly as big as Japan's stash. On top of this, the Chinese did this while running a trade surplus with not only the US but significantly, WITH JAPAN! The world's #1 and #2 economies have played the weak currency game too well. They both ended up open for Chinese exploitation. Congratulations, Hu and Wen and the Chinese communist cadres. Gads. Fine students.

One problem Japan is facing now is the yen is cut off from all other things including their stock markets so the yen isn't wrecking them but it is definitely weakening their own stock market. So China and the US see their stocks rise while Japan's stock holders are the motley fools who are mighty big dupes here. Want to buy on the Nikkei? HAHAHA.

How long will Japan feed all that American loot into China's stock markets? Will their starvation diet for Japanese workers turn into famine for Japanese investors? You bet.

From Seeking Alpha, Japan:

March 12, 2007

Data compiled by the US CFTC shows a 56% contraction in the short positions in Japanese yen for large speculators between February 13, 2007 (when short positions hit a new record high) to a March 6, 2007 low. This was the source of a JPY6.83 reversal in the yen.

However, the capital flowing out of Japan last week to the tune of JPY 1,117.8 billion, compared to a JPY1,112.7 billion inflow in the week prior to the sell-off, helped to limit the yen’s sharp swing and means Japanese investors are still strongly disposed to buying higher yielding overseas assets, which will continue to exert downward pressure on the yen.

Problem #2 with a weak currency: money that should stay home, leaves. And as I pointed out, Japanese investors are being looted just as much as Japanese workers and savers. If the government of Japan thinks starving the Japanese in order to over-feed Toyota, Sony and Nintendo, they will end up all the poorer and with a bunch of hedge funds filled up with Chinese dollars, buying out all the stocks of any functional Japanese company.

I would strongly suggest Japan switch gears and begin to match China's yuan getting stronger. Raise those interest rates, guys!

From 3 years ago, Time Magazine:

Asia's Burden
Monday, Jun. 21, 2004 By ARAVIND ADIGA

Even by the buttoned-up standards of central bankers, Alan Greenspan is not an effusive man. But one economic phenomenon has driven the U.S. Federal Reserve Board Chairman to reach for the superlatives: in March, he marveled at the "extraordinary" efforts of China and Japan to prop up the dollar by pumping money into U.S. bonds. Japan's accumulation of U.S. securities, he declared, was "awesome." Indeed, in the first three months of this year, China and Hong Kong bought $167 billion of American securities (primarily U.S. treasuries and corporate bonds), while Japan bought $336 billion worth, according to the Asian Development Bank. Greenspan isn't the only one doing a double take. Last week Bill Gross, America's most influential bond investor, warned that the dollar could plunge by 20% if China and Japan stop supporting it by buying U.S. bonds. "Japan and China will change their stance," Gross told the Financial Times. "We don't know when, but we know they will." By investing in American assets on such a massive scale, Japan and China have undertaken one of the biggest financial experiments in history. Why on earth are they doing it, and how worried should we be?
*snip*
Already, Asia's willingness to bankroll America's debts may be starting to wane. David Wyss, chief economist at ratings agency Standard & Poor's, says anecdotal evidence from bond traders suggests that China's purchases of American securities are slowing. Japan's appetite for U.S. bonds might also begin to ease, if its own economy continues to recover, making domestic investments more attractive than buying American debt. If China and Japan lose their hunger for American assets, the dollar will slide. The question is: how far and how fast? A gradual drop would boost U.S. exports, cut its trade deficit, and help silence protectionist American politicians who demand that trade barriers be raised against Asian countries. But a free fall in the dollar would trigger panic throughout the world's financial system�and remind America's protectionists of the startling new truth of international economics: that the billions of dollars that Asian bankers have parked on Wall Street are now as crucial to America's financial security as America's military power may be to Asia's political security.

And this is why we must arrest Greenspan and hang him in front of the Treasury or the Reserve's headquarters in DC. Mount his head! What insanity!!! He marvels at how China and Japan are manipulating our currency! I didn't find this 'awesome' at the time, I thought this meant we lost control of our own money. Well, we did deserve this! The Reserves saved no reserves and our printing presses were roaring ahead like mad and the US government was overspending and interest rates were near 1% thanks to Greenspan and this launched all those bubbles we see busting all over the place today.

How can anyone admire Greenspan? Ech. And we now can see the dying dollar isn't working for us, it is making our trade deficit much worse. Raise the cost of Chinese goods means they charge us more and our trade deficit with them gets worse. Drop the value of the dollar while importing tons of oil means our trade deficit with Canada and Mexico gets much worse. The only way to cut back is to literally cut back. I would suggest we do it with the oil first.

From Global Research over 10 years ago:

This Dollar System is the real source of a global inflation which we have witnessed in Europe and worldwide since 1971. In the years between 1945 and 1965, total supply of dollars grew a total of only some 55%. Those were the golden years of low inflation and stable growth. After Nixon's break with gold, dollars expanded by more than 2,000% between 1970 and 2001!

The dollar is still the only global reserve currency. This means other central banks must hold dollars as reserve to guarantee against currency crises, to back their export trade, to finance oil imports and such. Today, some 67% of all central bank reserves are dollars. Gold is but a tiny share now, and Euros only about 15%. Until creation of the Euro, there was not even a theoretical rival to the dollar reserve currency role.

What is little understood, is how the role of US trade deficits and the Dollar System are connected. The United States has followed a deliberate policy of trade deficits and budget deficits for most of the past two decades, so-called benign neglect, in effect, to lock the rest of the world into dependence on a US money system. So long as the world accepts US dollars as money value, the US enjoys unique advantage as the sole printer of those dollars. The trick is to get the world to accept. The history of the past 30 years is about how this was done, using WTO, IMF, World Bank and George Soros to name a few.

This wasn't benign neglect, this was our collective criminal intent to flood the world with dollars and then dare them to send it back home. They paused for only a short while before figuring out they could flood this increasingly valueless currency back here in the form of IOUs and the Japanese went one step further and charged themselves 0% interest so they could flood us with money and have prime differentials even if we dared to drop our interest rates to 1%! Now we are being forced to rapidly raise rates while the Japanese sit on their near zero rates like a hen on a golden egg.

Only the Chinese fox will take the egg and probably kill the hen, too.

Culture of Life News Main Page

China Finally Gets To Build Most Of Boeing Jet Parts!

Elaine Meinel Supkis

Years ago, I wrote a prescient article called 'Boing Boing Boeing' and it was all about the attempts by the Chinese communists to force the US which used Boeing sales to counterbalance the trade imbalances with China, the plan of the Chinese was to force Boeing to relocate most of the work in China because China would go to Airbus if they didn't hand over the factories. Well, starting this week, the newest Boeing jets will all be manufactured in...CHINA and 'assembled' here just like Toyotas. The Dragon wins another round.

From Yahoo:

Instead of hundreds of panels of aluminum, the 787's major components are being built mostly or entirely of carbon-fiber composite materials that are essentially baked in giant pressure cookers, flown in from faraway factories, then fastened together.

In the past, workers at Boeing plants have stuffed the electrical wiring, hydraulic systems and other innards into planes as they got assembled here, but with the 787, suppliers scattered all over the globe are doing that work.

"Basically ... we're snapping it together," said Tom Wroblewski, president of the union representing Boeing production workers in the Seattle area. "This is a whole new way of assembling an aircraft."

Scattered all over the globe where people speak Chinese. I love how Boeing hides the fact that they no longer make the important parts of these jets! There are a trillion harsh economic, political and diplomatic matters in this news. Basically, we already lost WWIII. We can't build ships and soon we will be unable to build simple transport jets too. And this is part of the long range Chinese plans. I remember very clearly, they discussed how they could tease out of the USA, the manufacturing of jets! 20 years ago.

From the AP article:

Boeing hasn't said how much money it has saved by having suppliers take on various development costs, but industry analyst Scott Hamilton said it's bound to be substantial.

"That kind of risk-sharing, which in the aggregate runs in the billions of dollars, is money that Boeing doesn't have to front," he said.

Once production hits full speed, it will take roughly 700 to 800 machinists to run the 787's final assembly line, Bair said. That's substantially less than the work force needed for Boeing's other jets, though Connie Kelliher, spokeswoman for the International Association of Machinists and Aerospace Workers District 751, said she couldn't offer a hard number as a comparison because the company doesn't break out employee totals by production line.

Instead of Americans toiling on building these machines, Chinese will do it. Cheaper. And this was inevitable. When Hu visted the US last year, he first went to visit the Boeing executives to offer them a deal they could not refuse. Either they play it his way or they will lose the biggest jet purchase contracts on earth. Quietly, Boeing's executives signed on board and why not? This is making them much, much richer.

The Chinese leaders know that if they didn't enrich the bosses, owners and other dying capitalists, these people would fight off Chinese penetration of their production methods and markets! So a feather bed of easy money was offered to these clowns who signed away our national security and wealth.

From the same article:

Boeing has said the outsourcing was crucial to keeping development and production costs low enough to make the 787 a good enough bargain that airlines would buy it.

Keep costs going to American workers LOW!!! Ha! No matter how far the dollar drops as a currency, China will always undersell the US workers. They have a huge population that is well-educated, easy to marshal for industrial use and eager to work. We keep forgetting that China has one of the oldest and most sophisticated imperial cultures, one that pratically invented government bureaucracies and certainly, paper money.

This is not some stone-age society suddenly in 'civilization': they are one of the great homelands of great cultures, great civilizations! Misunderstanding this is key to American weakness which the Chinese cheerfully exploit.

Now that they have their dragon paws on the technology, methodology and systems for making the innards and vital cores of our jets, they have the whole thing. Since our people are merely popping the parts together, they will forget how to make or use these processes while the Chinese will not only know all this and use this but will take over designing newer and better systems! So their technology and culture will rise and ours will turn into third world status. We will be the ones amazed at the sight of things. 'How do they do that?' we will stupidly ask.

GADS. Can't anyone see the obvious future? I rail about this a lot but look! Every blasted thing the leadership told me back in the mid-1980's is coming true, one after the other. Taking over Boeing was one of these important things they intended to grab and they have.

Well, congratulations. You beat us, Hu, Wen. You won yet anther round.

Here is my old story talking about this with due sarcasm and annoyance.

Friday, July 29, 2005

Boeing, which this year won orders from Chinese airlines for 60 of its new 787 Dreamliner jets, said in June that it would use about $600 million in parts from Chinese companies.

The Bush Administration is still debating the details of the new regulations, and an intense lobbying campaign is being waged to influence the outcome, Bloomberg report

The ultimate plan is to get Boeing into a large enough contract and then wait a while and then make a nifty deal: they transfer the factories wholesale to China and get the planes cheap and can keep the profits of this contract while it is finished by Chinese workers. This has to be introduced very slyly, at least, they hope.

I have chatted about this plan before. It is very obvious now. Note this article:

Seeing the future isn't very hard if one has wide open eyes and the help of creatures that are a form of psychic vultures that are attracted to dead things.

And one dead thing in our future is our economy! The Chinese are not stupid. This should be tattooed on every trade negotiator's palms. The Chinese are playing a dangerous game and are winning. The plan is to get our final, most developed industries into China and one of the key industries is....Boeing.

From Bloomberg:

China's spending on factories and real estate grew 25.5 percent in the first four months of the year from a year earlier, a government report showed today, beating the 25.3 percent median estimate of 19 economists surveyed by Bloomberg News.

``It was strong growth and may support the case for the central bank to keep raising interest rates,'' which will hurt bonds, said Li Huiyong, an economist at Shenyin Wanguo Research and Consulting Co. in Shanghai.

In the US we just went through a gigantic building boom. And how many Boeing factories did we build? None? Har. We spent the money on decorating and building zillions of suburban houses, that's what we did. And this is why we will live many years, filled with regrets. We acted like aristocrats who built palaces and hunting lodges only to lose to anyone who practiced capitalism, building businesses and factories and to this day, the fundamental basis of all capitalist cultures still is the spending of money on factories that add value to raw materials.

Maybe some day the Chinese will teach us all this interesting stuff. Starting with Karl Marx. Labor is wealth.

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Congress Passes Free Trade Bill Behind Our Backs

Elaine Meinel Supkis

Congress continues to slit our collective throats. The just have to have more 'free trade'. Anyone looking at the statistics can see as plain as day. More free trade=more trade deficits. Since free trade has not only not cured our trade deficit with the world, why are we going over and over to that same poisoned well? Meanwhile, China, flush with American red ink, is running wild, it is now a total gold rush. And few Chinese are saving money in bank accounts (neither are the Japanese, by the way). Time to rethink everything, I would suspect.

From CNN Money:

As the capital's attention fixed on congressional maneuvering over Iraq war spending, a different drama was playing out in the offices of leading House members - one that would determine the nation's free trade path at a critical juncture.

The question: Would Democrats - much of their party wary of free trade agreements and, more generally, the costs of globalization - sign off on a deal with Republicans that would pave the way for key free trade pacts to move forward?

After a months-long dance, the answer emerged as "yes" Thursday night, thanks to a handful of men, and one woman, determined to move past the poisonous atmosphere that still stews between the two parties.

Indeed. The reason this bill was passed under cover of all the hoo-haw about funding our continuing defeat in Iraq was because this is the best time to slip a knife in our ribs. Naturally, all magicians like to use the distraction tool. 'Watch my hands,' they say as they move something with their feet. For weeks and weeks, the reporters and the media owners worked hard with the Democrats to insure few people would notice the negotiations on this bill. The unions noticed but they have been defanged. Even if they get 100 Democrats to back them, they won't get the leadership.

And every time 'free trade' raises its dragon's head, enough Democrats run off to the Republicans and this includes Democratic Presidents, they always use just enough Democrats to pass free trade. In the Cloak Room, the leaders count heads and insure just enough, by one vote, is available. They let off the hook the members representing states with lots of union votes. So over and over, the unions are betrayed but not by all the Democrats.

But they are. For you see, it is possible to fight this by blowing the whistle. Yelling and screaming, running onto the floor and throwing oneself upon it, tearing the hair. Yes. Throwing a huge snit and naming names. Break up these two parties. Both are working for the ruling elites, the people with money who make money by deliberately running everything in the red. This is....TREASON.

People screwing up this way in Japan or China would be either bumped into by the Yakuza and shot or taken to a rehabilitation camp on the border of Outer Mongolia and given a shovel to dig his own grave.

From the article above:

While a couple dozen Democratic House members are free-trade advocates, the majority are far more skeptical - a sentiment fed by labor leaders closely aligned with the party. Last year's congressional races showcased growing public concern about the costs of globalization, and Americans increasingly equate open trading borders with U.S. job losses.

Even for Rangel, who stood ready to make a deal, the negotiations with his party colleagues proved delicate - with labor leaders objecting at key moments. Rangel now predicts he can pull "more than 100" Democratic votes to his side, more than enough when combined with Republican votes to move important trade accords forward.

Rangel is from NYC. And NYC loves free trade. The great ports love and need it. I once worked for a German corporation in Manhattan, my husband worked in shipping and this meant all his bosses were foreigners who all gave heavily to NYC politicians and this means mostly Democrats.

The betrayal of the working class by either party is a long, ugly history. The one thing both parties fear is a Socialist party of any sort. To this day, despite all the data showing that all industrial countries like Canada or Germany that have national health insurance are better than our own nation's insurance, thanks to both parties betraying the people, we get nothing of the sort here. It is the same deal: the guys making money don't want any socialism that stops the money stream so they buy the politicians.

Years ago, around 1950, if the unions could have formed a party and then let the Dems or Repubs jockey for favor, the death of the unions and the loss of worker power would possibly not have happened. But the entire 'Red Scare' which peaked in 1925 and in 1950, both five years after a World War, we now see unions toothless and helpless, they let propaganda intended to cut their own balls off flow freely over the nation. They became more anti-socialist than the fascist capitalists.

They thought they would be richly rewarded for this. Instead, they were enslaved. I hope all other workers of the world look really carefully at this and learn. And of course, the stupidity of destroying the unions, making workers poorer and letting capitalists do their worst is obvious. Our trade deficit this year is the biggest in history, over $800 billion. Astonishing. Fatal. STUPID. It will be worse next year.

From Bloomberg:

China's money supply growth exceeded the government target for a third month and lending accelerated, adding pressure on the central bank to raise interest rates.

M2, which includes cash and all deposits, rose 17.1 percent in April from a year earlier, the People's Bank of China said on its Web site today, after gaining 17.3 percent in March. That beat the 17 percent median estimate of 19 economists surveyed by Bloomberg News and the central bank's 2007 target of 16 percent.

Outstanding yuan loans also rose more quickly last month than in March as tighter lending rules and higher borrowing costs failed to curb investments in factories and real estate. The People's Bank of China has raised interest rates three times since April 2006, as well as increasing the amount lenders must set aside as reserves seven times, in a bid to slow asset bubbles and accelerating inflation.

The flood of money flowing into Japan is reentering the financial dark pools and bloating our stock market and the value of the euro. The flood of trade flowing from China to the US, over $200 billion a year, is causing financial chaos in China. Obviously, the Chinese workers are trying to get as rich as fast as possible and this is an explosive situation. The open doors in the Golden West is causing all that gold to flow into China.

From Xinhua:

More than 70 billion yuan (9.1 billion U.S. dollars) was transferred from savings accounts in Shanghai to stock trading accounts in the first four months of this year, the Shanghai branch of the People's Bank of China estimated on Saturday.

In April alone, RMB-denominated savings deposits with Chinese banking institutions decreased by 8.5 billion yuan (1.1 billion dollars).

"Given the continuous bullish stock market, the diversion of savings deposits will persist for a good while yet," said an official with the Shanghai branch of the Industrial and Commercial Bank of China.

The numbers are very astonishing. The US workers are banking very little, certainly as a whole, even with the 401k plans and other schemes, the debt side of the ledger is overwhelming. As soon as any asset value rises on properties, it is tapped. Even today when it is obviously false, people pretend that this tsunami of wealth that is being loaned to us comes from workers in Asia saving yen and yuan and accepting no interest accrued. This stupid lie is a baby bedtime story to keep Americans from questioning what is causing all this.

So this week's negotiations to continue this game, to enlarge this game, to make the red ink flowing like our life blood, worse, should trigger a reaction. Workers should be flooding into DC, yelling. But there is silence. We gave up. Our only hope is for the red ink to flow back here in the form of loans that charge below the rate of inflation.

From Xinhua:

A new power transmission line designed to send electricity from Wenshan in southwest China to HaGiang in Vietnam has been completed and put into service, reported the Yunnan Power Grid.

It is the fifth power line to transfer electricity from China to Vietnam.

The newly completed line is also the second 220-kilovolt-power line to be constructed between China and Vietnam. The first one runs between Honghe in Yunnan and Lao Cai of Vietnam.

This is NOT free trade. This is China extending its infrastructure and tying in neighbors. We see this here in the US, too. Only the reverse. We are NOT selling energy to neighbors, they, like everyone trading with us, are selling US energy! So the ties are not making our empire stronger, it is yet another gaping wound that is bleeding red ink. Mexico, a poor nation, is selling us oil. Canada, a much wealthier nation, is selling us every possible form of energy including uranium as well as water-generated energy and even bio-fuels.

This is making Canada richer and stronger and the US weaker and poorer.

From Mainichi Japan:

Concerns have also been rife about Japan's falling birth rate. Earlier this month, the government said that Japan's child population has fallen to a record low since the end of World War II.
To encourage more couples to have children, Abe's government has adopted plans for increasing child care, promoting gender equality and encouraging companies to allow staff more time for family responsibilities.

But many opt to have few or no children because of the high cost of raising children and the persisting social expectations for women to quit their jobs after giving birth.

Earlier this year, the education reform panel recommended that Japanese schools need to step up their measures to crack down on bullying and should rethink a decades-old ban on physical punishment for students who repeatedly ignore the rules.

I thought I would throw this in. Japan's inflation is as terrible as everyone else. But they have novel ways of fixing it and note that one thing they are using is, eliminating the cost of having children by not having children. The US tried to hide the deterioration of the working class by having all the mothers work. This allowed families to feel as if they were not losing gound but they are and only the underclass is having many children.

The other tool is to have everyone work to death on top of not having children. This fabulous idea runs in tandem with the idea that science will remove the need for most humans anyway so the robots will be nice slaves for the rulers who will sit on a pile of gold and this is a great long-range plan to depopulate the earth so the rulers can enjoy the Empire without troublesome peasants.

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Bernanke Continues Free Trade Madness

Elaine Meinel Supkis

Understanding all the economic and political forces at work means understanding the looming crisis which is the collapse of American imperial power. As the signs of economic distress grow bigger by the day, the media and pundits strive to find the silver lining of the clouds of imperial rot. Just this week, the frontiers of free trade have been greatly extended by the dying USA. Why are we committing suicide? Alas, all empires commit suicide.

From Xinhua:

A retreat into protectionism and isolationism would be self-defeating and harm U.S. economy, Federal Reserve Chairman Ben Bernanke said Tuesday.

"Restricting trade by imposing tariffs, quotas, or other barriers is exactly the wrong thing to do," said the Federal Reserve chief in a speech addressing the Montana Economic Development summit 2007.

"Such solutions might temporarily slow job loss in affected industries, but the benefits would be outweighed, typically many times over, by the costs, which would include higher prices for consumers and increased costs, and thus reduced competitiveness for U.S. firms," said Bernanke.

He said the better approach to mitigating the disruptive effects of trade is to adopt policies and programs aimed at easing the transition of displaced workers into new jobs and increasing the adaptability and skills of the labor force more generally.

I will note that this stupid Bernanke story appears in communist China. They are laughing and celebrating this stupidity. The dumber the Americans, the smarter the Chinese. The Chinese know that the key elements in international trade are cost of labor and cost of borrowing. Since the US is the fulcrum of world trade, we continue to go bankrupt and lose industries whether we have a strong dollar or a weak dollar, a high interest rate or a low interest rate.

In other words, we can't imitate any of our trade rivals because they will simply shift tactics to do the opposite. Like any balanced system, we are the point of reference, pin us down and we can't move. In other words, even if we do move, the whole system resets around us and we remain the fulcrum point.

This is the fate of all empires. Stuck in the middle, we can't exploit differentials in value or mass. There is only one way out of this trap: to shut down all our thousands of military bases across the planet and to mothball most of our navy. Then we spend our tax dollars rebuilding our own defense systems at home. On top of this, we erect barriers so the whole world can't use our markets as a reference base.

This also requires the US reviving all our industries: ship building, steel making, rail systems, etc. We went the opposite direction this last 20 years, destroying our industrial and rail systems while building goofy, big houses with all sorts of goodies and with that, zillions of big box stores selling foreign goods to fill these bigger houses.

This wasn't an investment, it was on par with the palace building of previous empires. And worse, unlike them, these suburban McMansions are not going to be tourist destinations after the ruling elites are killed in some uprising.

From Big Picture:

We haven't look at this in a while: Since March, the Baltic Dry Index keeps making new highs: This is reflecting in large the global growth, especially Asia and to a lesser degree, Europe.

Minyanville points to this FT article, that posits the growth in the BDI reflects a shortage of shipping vessels as much as it does demand for shipping:

The Chinese are ruthlessly stripping profit values from nearly everything. Thanks to their super-low labor rates coupled with a system run by communist Chinese officials who keep everything running on their long-range 50 year plan to decimate the American and Japanese empires, the cost of shipping is dropping, the size of ships is rising and these are being built not in Japan or the USA but in China. I recall WWI and WWII: the Brits and especially the Americans won these wars thanks to endless ships built mostly in the USA. This made the USA much stronger and we became the world's biggest empire.

Now, we can't build tugboats successfully and they cost a fortune. Just this last year, there has been a huge financial scandal concerning the last ship building yards in the US. The Coast Guard tubs were unseaworthy and cost an arm and a leg. The Chinese read about this and laugh with scorn. They plan to rule the Seven Seas and are taking all the appropriate measures to do so.

Back in the 1980's, at my urging, some of the Chinese from Singapore carefully read, nay, memorized Prof. Kennedy's 'The Rise and Fall of Great Powers.' This book basically lays out the premise that nations that focus on naval power and building up ship-related industries always end up ruling the planet. This is why the two island kingdoms of Japan and England were able to grow so powerful. This has always been Germany's Achilles heel and has kept Russia from world domination. The lack of year-round useable ports.

With global warming, Russia's troubles are melting away. Germany has solved its problems by creating the European Union and thus, gaining access to all the northern Mediterranean ports as well as France and Spain's ports!

From the BBC:

The United States and the European Union have signed up to a new transatlantic economic partnership at a summit in Washington.
The pact is designed to boost trade and investment by harmonising regulatory standards, laying the basis for a US-EU single market.

The two sides also signed an Open Skies deal, designed to reduce fares and boost traffic on transatlantic flights. But little of substance was agreed on climate change.

Everyone is certain they can have open trade with the US because the clever Europeans as well as the clever Asians have figured out how this fulcrum business works. The Europeans are not worried the dying dollar will create inroads into Europe because at the other side of this see-saw, Asia is undercutting American industry and ability to export so the US will continue to be unable to run a trade surplus with Europe!

This paradox is easy to understand: we can't export, say, shoes to Europe because China can undersell us not just in Europe but also IN THE USA ITSELF! So we basically lost our entire shoe making industry! This is true with virtually anything we can export to Europe! The more the dollar weakens, the more Asia debases their own currency and the champion debasers are Japan. They are the hyper-weight on this see saw from hell. For unlike China, they can pretend they have no inflation and ergo, near zero interest rates.

On the other hand, China is exploiting Japan's game with the US and is biting deeply into Japan's trade statistics. Namely, they are making and selling more steel, ships and trains. They are just now taking on the automotive industry and thanks to China's size and their communist leaders, the chances of beating Japan at their own game is very high.

From Bloomberg:

U.S. worker productivity last quarter grew faster than forecast and labor costs moderated, raising speculation the labor market won't fuel inflation.

Productivity, a measure of how much an employee produces for each hour of work, rose at an annual rate of 1.7 percent, compared with a 2.1 percent increase in the fourth quarter, the Labor Department reported today in Washington. Labor costs, adjusted for productivity, rose at a lower-than-forecast 0.6 percent pace after jumping 6.2 percent in the fourth quarter.

The fulcrum of world trade isn't just the USA---it is the American consumer. And who is this person?

Traditionally, the American Worker. And this personage has been losing financial power rapidly. Wages dropping year by year. This is what 'productivity' means: the profit capitalists make off of workers. And to make a profit means depressing wages as much as possible. But the well-paid American worker is also the Golden Goose here and slaying it for the gold inside means no more eggs.

For the last 7 years, the GOP has cut taxes and given away loans and has worked with Japan to make things even worse as well as opening the floodgates for Chinese goods that undercut American wages. This has kept inflation at bay and everyone was still able to go shopping because Asia recycled all this money back into the USA as high interest loans. And so we are now deep in debt and our over-extended empire is costing us more each year and the ridiculous wars we are waging and losing are adding to our debts and this makes our ability to escape the status as world trade fulcrum even harder! We have to change our domestic dynamics if we want to escape this trap.

And that means dumping our empire. We are still a very big nation. We can exert power if we regain our own industrial base and cease being a debtor nation.

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