Kinda funny that Capitalism beat Communism back in the 80s but today it is a Communist country telling the Capitalists to sort their houses out. Ooo the irony.
China has called America short-sighted & demanded the United States address its structural debt problems. Things must be in a bad way when the US is now being lectured by China, arguably one of the most corrupt countries on the planet. Seems to me that the Chinese have played a blinder over the past decade or so, keeping quiet while the Westsern Governments, bankers and financial houses have led us down the path of its own decline.
It even, quite sneakily, helped by lending the US the money to do it so American citizens were up to their eyeballs in debt and waited for the whole thing to implode, as it has.
Now they move in and suggest a new reserve currency.
China may yet overthrow the US and do it without a shot being fired. It just gave America enough rope and it did the rest itself. It obviously already runs the World economy now and it isn't America who, bankrupt and careering downhill fast, are today's USSR of the late 80's early 90's.
You had from 1989 to 2011 when you were the unchallenged World leaders, but the worst aspect of Capitalism, greed, has bled you dry.
Now it looks as though China will usurp America but before those who will inevitably be cheering Americas decline, do they really think China will be any better? They will be just as two faced with their friendly dictators, just as ready to fight amoral wars and just as quick to build up their friends and demonise their enemies as America.
The World could be a very different place in a decades time and the side that lost in the 80s and early 90's, could become the eventual winners. Sneaky guys those Commies.
6 comments:
hanz,
good observations except:
> china is kicking ass by being less communist and more capitalistic...
> china still has approx 90% below poverty line
> US economy is still double China's and they make their money by selling stuff to the US... the purchaser always has the choice of not buying.
> china has 3 big shortages that they must import: enery, food, and WATER
q
Yeah, the PRC is communist in name only. Except for the name, their government is "conservative" in just about every possible way. And we've heard this song before with Japan, Russia, and Germany. Ever seen that movie Red Dawn? It's pretty funny.
The way things are set up, India, the PRC, and for that matter Europe won't be able to wean themselves off of exporting to America without unbearable pain for at least the next several decades.
The debt issue is another matter. The heart of the problem isn't the government and it certainly isn't bankers. No amount of political or financial jumbling can fix what's wrong with Europe and America now. But if voters voted to get taxed 100 cents on the dollar, there'd be no problem.
-Nog
Isn't the reserve currency thing a game changer?
It would be. But nobody is going to defect to the Yuan anytime soon, especially since the PRC has been fighting tooth and nail against this for years.
If the Yuan became the reserve currency, it would go up dramatically and they couldn't export anything because Chinese goods would be too expensive. Their manufacturing sector (and entire economy) would crash overnight and you'd have tens if not hundreds of millions of angry unemployed Chinese folks. As soon as they drop the peg they'll fall back to wherever they were in the 70s or 80s. Lots of problems... The Yuan as the reserve currency is exactly what the PRC doesn't want. Maybe things will change in 2050, but it's just as likely that by then India will be the titan and the Rupee will displace the dollar.
The Euro has its own, increasingly dire, problems. Maybe in 2005 it looked like the Euro was going to displace the Dollar. Now everyone is wondering if there'll be a Euro in 2015.
-Nog
It seems it is the Euro becoming the reserve currency that was getting the so-called experts all excited after the downgrade. Disaster for America with prices for everything going through the roof but happy times for Europe. It seems that the guys in Europe WANT it to become the reserve currency. I'm not sure why though but all agreed America as a global power is on the wane and all the economic power is heading East.
China is on a reform path; look out next year. New leaders. Slightly more easy-going than their predecessors. The Party thinks it can control the process. It probably can.
I agree regarding corruption in China. But it's an odd kind of corruption, not like India, where you routinely have to pay a bribe to get such everyday things as a driving licence. You can almost sympathize with the bribe taker, because the chances are he has no choice. In China, it is usually ruthless people who are corrupt, people who have a reckless disregard for public safety, from jerry-built nuclear power stations to schools not built to withstand earthquakes.
By the way, I live in Hong Kong and am a keen China watcher. If you're interested, my general overview of the India/China rivalry (much more significant than the China/US one) is called Comparative Advantage.
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