January 01, 2007

After all of the hype about Henry Paulson, Bernard Bernanke, and their crew of financial wizards going to China, ostensibly to pressure China to revalue the yuan, what happened? After more than a week of silence you can be certain there's a strong effort to come up with a story the American public will believe.

Let's review a few things:

In early November, Peter Costello, Chairman of Australia's central bank asked Asian countries to "telegraph" their intention to come off the dollar so that other nations would have the chance for an "orderly withdrawal."

Within days, both China and Japan announced that they will "diversify" their investments to other currencies and "emerging" markets. They did not hem and haw about it. This is going to happen. And they each hold about a trillion dollars in U.S. Treasury securities (loaning us money) and cash from our outlandish trade deficits.

Believe me, our Secretary of the Treasury and Chairman of the independent Federal Reserve did not suddenly go to the Orient to do anything more than to try to persuade their counterparts in China not to "come off" the dollar and to continue loaning us money.

On December 10th, World Net Daily published an article titled "U.S. Dollar Faces Imminent Collapse?" because the dollar has been falling in value against other currencies. On the same day, MSNBC told us OPEC was "shunning" the dollar. And on December 12th, ThomasPaine.common sense published "China Has US by the Purse."

For the last year or more, I've been telling you that either China or Japan could bankrupt us overnight if they tire of the Bush crusade for world domination and threats against nations that are their major oil suppliers. United States treasuries are redeemable on demand. And they can only be paid off with taxpayer money. Our not-for-profit government is completely dependent on tax revenue.

What Washington might get for selling off businesses and property that they control such as toll roads, national parks, port authorities, and even states like Hawaii and Alaska does not amount to a hill of beans in comparison to what we owe either China or Japan.

On the other hand, allowing companies like the Louisiana based Shaw Group and Japan owned Westinghouse to sell nuclear technology to China and India has an indirect value to the politicians in the District of Contradictions. And we've already abandoned the Nuclear Nonproliferation Treaty.

On top of that, China itself is one of the largest "emerging markets." Its own population of almost 1.4 billion has a savings rate of about fifty percent while the American people have, for the first time since 1933 and the onslaught of the Great Depression, fallen into a negative savings rate. If you don't think that the Oriental economists understand this and are intensely following our job and wage situation, industrial bankruptcies, lost pensions, rising health care costs, and so forth, then you've got your head in the sand.

You can bet your last dollar that Paulson and Bernanke were on a mission to use every form of persuasion and intimidation and, if necessary, to get down on their knees to beg China to stick with us, at least for the next two years, and to give Bush another chance to come through with - what? - something sensible.

So, where's the report?

The ancient Greeks, particularly the Spartans, had a slogan; "E Tas E Eppi Tan" which, literally translated, meant "on your shield or under it" and in modern jargon would be "come home victorious or don't come home at all."

We haven't seen our heroes raising their shields above their heads in victory, and they did come home didn't they? Were they carried on their shields like dead or wounded Greek soldiers? The news, or lack thereof, would seem to indicate that they were not very successful in either the purported or the real mission.

On Tuesday, December 19th, the Chicago Tribune published an article titled "More Scrutiny Likely on China Trade Imbalance" which didn't cover much good news, but did mention a deal reached with China to allow them to buy nuclear technology secrets from the Shaw Group in Texas and Japan owned Westinghouse. Is that what Paulson and Bernanke accomplished?

On December 22, 2006, TimesOnline issued a report that "Iran Turns from Dollar to Euro in Oil Sales" which is self explanatory and expected from what Bush has called one of the legs of the "Axis of Evil." An enemy we are still pushing Israel to attack so we can follow up.

I also read somewhere (I think it was Bloomberg) that Thailand was "coming off" the dollar after freezing its investments temporarily.

This is just the beginning of nations dropping our currency. And, if you really want to delve in worst case scenarios, take a look at the Economy In Crises article "America Is Preparing Kids For The Future As Servants" or Chris Martenson's "The End of Money."

HAPPY NEW YEAR

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