Australia Worries China Will Dump Dollars

Elaine Meinel Supkis

The Treasurer of Australia wants China to give warning before they dump dollars. The Australians don't give anyone warning when THEY dump something on the world market but then, they don't think about their own actions harming people in other countries.

This is a strange and troubling interview with the Treasurer of Australia.

By John Garnaut
Economics Correspondent

10/19/06 "SMH" -- -- TREASURER Peter Costello has called on East Asia's central bankers to "telegraph" their intentions to diversify out of American investments and ensure an orderly adjustment.

Central banks in China, Japan, Taiwan, South Korea and Hong Kong have channelled immense foreign reserves into American government bonds, helping to prop up the US dollar and hold down American interest rates.

Mr Costello said "the strategy had changed" and Chinese central bankers were now looking for alternative investments.

"Of course you can have an orderly adjustment," he told reporters. "And what I would recommend is that these matters be telegraphed well in advance. I think we should begin preparing ourselves for it."

Mr Costello said the "re-emergence" of China as the world's greatest economy "is not something to be feared".

This is no surprise to me. Of course, Australia would dearly love to have the Chinese leadership call up and tell them all their economic plans! It would be wonderful if all countries held no secrets and gave plenty of warning before pulling the rug out from oneself.

But in the real world, this is childish. I seriously doubt Australia will ring up the Chinese and forewarn them whenever the government plans to change the value of the currency or dump exports into the world markets like they did to ME when they suddenly dumped several year's worth of sheep's wool on the market, destroying the value of my own wool when dropped by over 70% in one year, forcing me to sell off my flock.

I had to weather that storm without any assistance from Australia and I wasn't the only one to get hammered by Australia's draconian government decision.

What all countries have to do is what I do: look at the news carefully and then riddle out what is really going on. One uses pictures, one tracks previous statements and one tracks basic statistics and it helps to draw charts and understand basic mathematical principles. Especially the ancient saying, 'That which goes up must come down' and 'There is no free lunch.'

The day China reached a trillion dollars in their FOREX funds, they became able to control world currency markets. Knowing this, we must now watch them closely for they will now do what they want to do rather than what we want them to do. Understanding their need to make China more powerful means we understand their next moves which will be aimed at this very thing: Chinese strength and power.

Normally, any nation spending as carelessly and futilely as the USA is today, goes belly-up pretty rapidly but thanks to China and Japan, the USA is still sailing blissfully into the iceberg-filled sea.

Last January, US President George W. Bush began his second term in office by declaring foreign policy objectives with clear imperial overtones that seem to promise increasing violence and disruption on a worldwide scale. Aside from the on-going illegal military occupations of Iraq and Afghanistan, we can most certainly expect other major crises and convulsions of a military, political, economic and financial character. One of these has specifically to do with the use and abuse of the US Dollar as an instrument of Imperial World Power by the Bush Administration.

In today’s “globalized” and “interdependent” world, hi-tech applied to geopolitics, economy and finance have transformed all of us into potential victims of a vast number of virtual tsunamis which do not involve oceanic waves but rather waves of technology-driven social catastrophes, financial collapse and artificial crises resulting in civil wars, external invasions, genocides and collective disruption on a scale never seen before. And even though these may be virtual tsunami, the harm and suffering they cause are very real.

The world is on the verge of experiencing the controlled destabilization and collapse of the US Dollar, which will be replaced by a “New Dollar” backed by Official “Good Gold.” The primary driving forces behind this global process are the Bush Administration allied to major private financial-industrial interests in the United States and elsewhere, focused on private Overworld geopolitical planning emanating from a network of think tanks, primarily the New York-based Council on Foreign Relations.

To see if the Chinese intend to upend the USA, we must go to Chinese news media and see what they are saying.

The Chinese have raised interest rates and like I have predicted in the past, the communist Chinese don't want the capitalists to gain too much wealth or political power to challenge them so it is time to clip their wings.

(China Daily)
Updated: 2006-10-20 06:25

As expected, the growth of the Chinese economy apparently stopped gathering speed in the past quarter. However, the possible rebound of investment and lending requires the government to keep its hand firmly on the brake.

The latest statistics point to a desired economic slowdown resulting from enhanced macro controls.

China's gross domestic product (GDP) grew by 10.4 per cent year-on-year in the third quarter, down 0.9 percentage points from the second quarter.

I don't think the Chinese leadership can control declines all that well since there is a strong emotional element in all recessions. Namely, panic. The GOP in America is trying as hard as possible to stampede everyone into a panic because they think this will give them power. This is suicidal but then, they are suicidal.

The difference between China slowing down and the USA slowing down is stark: China has a trillion dollar kitty as a cushion and the USA has less than $300 billion and a tidal wave of debt. Most nations caught up in a recession prevent collapse by deficit spending. But the USA has insisted on tax cuts for trivial reasons so there is no fund to draw on and if the government ceases getting lots of Social Security tax funds from employed workers and instead, have people drawing on unemployment insurance, this is very bad if we are also locked out of world currency investment markets.

Bush and his yokels were all celebrating a budget deficit of 'only' $260 billion but they and the media neglected to note this was due to confiscating all the excess Social Security funds and putting it into the budget. The true deficit is really $500 billion a year or more.

China has played our game with North Korea up to the point they figure it extends their own power and influence and now they are going back to what they consider the really important issues: getting the USA to stop blocking Chinese purchases of high quality, high technology equipment and military hardware.

(Xinhua)
Updated: 2006-10-20 21:44

Chinese Premier Wen Jiabao said on Friday that China hopes the United States would take concrete measures to relax its export restrictions and remove trade protectionism.

China certainly doesn't want to decapitate America right now. They don't want war. They don't want even small conflicts, they want to grow stronger and to basically absorb the USA into their system. I don't think Condi is up to dealing with this, subtlety isn't her strong suit. Heck, she is a moron on nearly every level.

The USA is losing control of nearly everything. When the Chinese who have a trade imbalance with us that is now an astonishing $150+ billion a year, tells us to NOT have trade barriers you can bet, a smart person would immediately build the biggest barriers on earth. A veritable Chinese Wall of tariffs. Instead, our resident idiots cooperate with this program of destroying our economy.

And OPEC wants to stop the slide in oil prices.

By AP
Updated: 2006-10-20 14:07
DOHA, Qatar - Oil cartel OPEC decided to cut production by a greater-than-expected 1.2 million barrels a day on Friday, and some members indicated it was open to further cuts.

United Arab Emirates oil minister Mohammed bin Dhaen al-Hamili made the announcement at a news conference after OPEC's oil ministers held an emergency meeting in the capital of Qatar.

"This was a surprise, and gave the market an impression they are serious," said Ken Hasegawa, a broker at Himawari CX in Tokyo.

The price of oil still is due to politics rather than simple capitalist principles. This means we are still just shy of the Hubbert Oil Peak. Most scientists who have talked about this peg it happening between 2010 and 2050. The controlling factor is again, China. The USA wastes a lot of energy and can cut back easily. China is growing energy use and they have no plans to cut back but the government doesn't want rampant energy use or it will drive China into a trade deficit. Japan worries alot about this, too.

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Comments

[CK]

Asymetry at work, China is our largest trading partner, We are not their largest trading partner. A few weeks ago Xinhua noted quietly and en passant that the EU was. As you have noted, the stuff we buy from china is the "nuts and bolts" not cheap goods so much as goods with low unit prices. Add to that that china has much newer factories and machinery than the US has.
And as always the old dream of "Oil for the lamps of china" the huge population which could have been a market for goods is finally coming true, but the goods are all made in china for the chinese home market.
We may sell them hides and soybeans and coal, but we don't sell them a whole lot of machine tools or prime movers because we no longer make those items well enough to compete.
Our export profile is rapidly taking on the appearance of an old colonial outpost. Raw materials, foodstuffs, high volume low unit value goods. Meanwhile we are importing a peasant class of workers. Not engineers, not doctors, not educated workers but uneducated hard working peasants. A strange thing indeed. I am old enough to remember the europeans kvetching about the "brain drain" as their best scientists and engineers came to the US in droves. Now the best and brightest no longer come here in droves but in dribbles. Ah well every empire has its bad decades.

[Paris_ib]

Australia should be worried. Economic policy has been run for short term electoral gains for far too long. Australia has a massive external deficit and the upside from commodities from here is limited, particularly if, as it seems, we are headed towards a global economic slowdown. Morgan Stanley is forecasting a slowdown in China, an economic recession seems all but certain in the U.S. and high domestic interest rates are probably NOT going to be enough to save the AUD.