Tuesday, February 09, 2010

Keeping an Eye on the Long Game: Part XXIX


UPDATE & BUMP


Though some worry about a couple of Chinese submarines making mischief east of Wake Island - me
notsomuch, notrightnow.

Some fret over cyber attack from armies of Chinese computer geeks who have been sex-selective abortion-ized out of any chance of finding a wife and having a family - me kind of.

What really worries me (mostly because the Chinese know what debt will do to a once strong nation - see the financial source of the Opium Wars) the most is
this;
But many at the Pentagon are starting to realize that, thanks to our growing fiscal irresponsibility, we may be surrendering control of America's destiny to a rival superpower -- and all without a shot being fired.

Consider the scale of the problem.

With President Obama's 2010 budget, 42 cents of every dollar the federal government spends will have to be borrowed. In the last decade, foreign investors have wound up lending us roughly half of all federal debt -- with just two countries, China and Japan, providing nearly half of that sum, or 44 percent, through the purchase of US Treasury securities.
China now tops Japan as our biggest lender by some $30 billion a year, at $789 billion. (By comparison, our No. 3 lender, Great Britain, comes in at a measly $277 billion).

But that's not all. As its booming economy becomes more global, China is also the world's largest holder of foreign-currency reserves. Most of that is in US dollars. Indeed, without most Americans realizing it, China has become the largest foreign holder of US dollars in the world.
...
History shows that nations that can't control their economic fortunes don't control much else. Debt freezes destinies -- as every credit-card holder knows.

Europeans discovered that after World War II, when they lost the power to make major decisions without first checking with their lender-in-chief, the United States.
Bloodless wars can happen too.

One thing that mitigates this danger is something I have long held - China will grow old before she grows rich - so she won't intentionally cut herself off at the knees with such an important trading partner.

That is one view. You also have to remember that the United Kingdom, France, and Germany were all just as interconnected before WWI. No sane person wanted that war.

Often times, sanity and history are in conflict. The more areas of extreme vulnerability you create - the more you are open to insanity.
UPDATE: I told you so.
Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday.

The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.
That is why you read CDRSalamander .... be beat Drudge by a day.

Yep, Galrahn - we need to do a China Midrats soon.

11 comments:

ewok40k said...

definitely "all of your base belongs to us" is quite possible. imagine PRC sending harvard-educated lawyers to officially confiscate US carriers in ports!

DeltaBravo said...

But then again, it also works to their disadvantage.  If anything happens that collapses our economy, our debt-carrier gets left holding the bag.  The rope tied around our neck is tied around theirs too. 

YNSN said...

Our relationship, it's complications and all, rhyme with the Europe that Bismark created, terribly.  I want to believe Mr. Barnett when he espouses that connectivity prevents war.  But, there is just to much that can go wrong to help me find solace in that notion.  The biggest thing I wonder is if China's costal regions and their inland provinces will find themselves in the same relationship that the United Provinces (Netherlands and such) found themselves in back at the turn of the 18th century.  Will China be able to hold together?  Obviously, that is a bigger concern to them than anything external.  Their leaders are constantly stating as such.  Feng over at Information Dissemination had a good post last week, and I asked the question if the only thing that is keeping a bloody mess from evolving from our relationship with China is cool heads at the helm of each Nation. 

Anonymous said...

Timely post...Seems that some in China are not on the Barnett playbook...


While Dr. Batrnett is seriously smart guy, he pretty much lost me when he called the Mumbai massacre a "system perturbation"...

Just a bit too theoretical for the Real World methinks.

Never underestimate the propensity of humans to visit harm upon one another, no matter the consequences to themselves....

sid said...

<span>Timely post...Seems that some in China are <span>not on the Barnett playbook</span>... 
 
While Dr. Batrnett is seriously smart guy, he pretty much lost me when he called the Mumbai massacre a "system perturbation"... 
 
Just a bit too theoretical for the Real World methinks. 
 
Never underestimate the propensity of humans <span>to visit harm upon one another</span>, no matter the </span>

sid said...

<span><span>Timely post...Seems that some in China are <span><span>not on the Barnett playbook</span></span>...  
  
While Dr. Batrnett is seriously smart guy, he pretty much lost me when he called the Mumbai massacre a "system perturbation"...  
  
Just a bit too theoretical for the Real World methinks.  
  
Never underestimate the propensity of humans <span><span>to visit harm upon one another</span></span>, no matter the consequences.</span></span>

AW1 Tim said...

Actually, I can perfectly visualize China telling the US that she is going to forgive our debt, and, in turn, we will surrender all US territory west of California, and that we terminate all relations with Taiwan.

   I can also see China invading north and west into Russia. What would/could Russia do, short of using nukes, to stop China? Not much.

   Of course, China could also waltz in the Treasury Department and demand cash for all those bonds.

ewok40k said...

We accept military bases and equipment, if you are short on cash...
Russia would use nukes indiscriminately in case of Siberia invasion. Their gas and oil fields are there. Without it Russia would be reduced to less than Ukraine, which at least has great bread basket land. Russians explicitly stated a first use policy in latest national strategy document, "in case of existential threat to the Russian state". Chinese may boast great population, but it's vastly concentrated in the arable land, hence more vulnerability than thought to WMD. And Russians are perfectly fine if half of their nuke-capable bombers go through.

AW1 Tim said...

Concur.  That was my point above, in that, Russia would be forced to use nukes because she doesn't have anything else capable of stopping the horde if they decide to cross the border.

Russia may have a lot of stuff in inventory, but a great deal of it was abandoned in place, and with the severe finiancial cuts they've had to absorb, Russian conventional forces are not near what they used to be.

Add to that their transportation network needs a lot of work to, so getting the troops where they need to go, and keeping them in supply would be a rather Herculian tash, in my estimation.

MR T's Haircut said...

Until we quit buying chinese lead products and stop importing everything chinese... we are a debtor nation... we must export and we must manufacture... we do neither...

SCOTTtheBADGER said...

How much better is China's transportation infrastructute?  I have often thought China would not object to taking over ownership of Siberia.  Let them get thier hands on that, with the fuel resrves there, and 20 years of cheap fuel for thier economy, and they will be ready to head Southwest into India.  All we can hope for is the lure of capitalism making them realise that war costs too much, in the long run.