In its present and worsening convulsions, the wild economic beast which we call the global market has a fearful symmetry.
Though the former have much greater resources available to cushion them, both the high flying creators of abstruse financial 'products' - whose nature and function hardly anybody comprehended except that they seemed for several decades to be strikingly successful in their purpose of making money - and the workers who create the material goods and services whose uses are palpable, are being cast out equally as the system is wracked in crisis. With the same proviso, the debacle is felt deeply not only by the laid-off workers and homeless sub-prime mortgage victims in the United States of America but also by the redundant migrant labourers of the opposite pole of world capitalism, who are forced to abandon their temporary homes in Guangdong and the other export manufacturing zones in the People's Republic of China.
USA Today reported on 26th January:
Household names such as Caterpillar, (CAT) Home Depot (HD) and Sprint Nextel (S) said Monday that they are laying off a combined 35,000 workers in moves that stressed the severity of the worldwide recession and kicked off what is likely to be a week of gloomy earnings announcements, further job cuts and dismal data.
The layoffs continued Tuesday as Corning said it is cutting 3,500 jobs, or 13% of its payroll.
The news ratchets up the pressure on the Obama administration and Congress as lawmakers debate an $825 billion stimulus package intended to save or create millions of jobs. Far more job cuts are likely as consumer and business spending tumbles amid what many economists say is the worst recession the USA has seen since the Great Depression.
"Some of the worst job losses are ahead of us, not behind us," says Wells Fargo senior economist Scott Anderson.
He expects 3 million Americans to lose their jobs in 2009 — up from the 2.6 million who were cut last year, which was the most since 1945, the final year of World War II. The layoffs are happening in "all industries in all areas of the world," Anderson says. "This will be one of the worst job markets in the postwar period."
Among these areas of the world, one of the hardest hit is East Asia. The Economist magazine observed on 29th January:
In the fourth quarter of 2008, real GDP fell by an annualised rate of 21% in South Korea and 17% in Singapore, leaving output in both countries 3-4% lower than a year earlier. Singapore’s government has admitted the economy may contract by as much as 5% this year, its deepest recession since independence in 1965. In comparison, China’s growth of 6.8% in the year to the fourth quarter sounds robust, but seasonally adjusted estimates suggest output stagnated during the last three months.
Asia’s richer giant, Japan, has yet to report its GDP figures, but exports fell by 35% in the 12 months to December. In the same period, Taiwan’s dropped by 42% and industrial production was down by a stunning 32%, worse than the biggest annual fall in America during the [1930s] Depression.
Asia’s export-driven economies had benefited more than any other region from America’s consumer boom, so its manufacturers were bound to be hit hard by the sudden downward lurch.
As an article in Money Week on 31st January noted, one of the main reasons for the dreadful plight of the other Asian economies is that China has massively reduced its imports:
Parts of Asia that have relied on rapid Chinese growth are [...] suffering. Japanese exports to China were down 25% year-on-year compared with growth of 16% as recently as July. Taiwanese exports to the Middle Kingdom are down by an annual 40%. What's more, Chinese imports were down by an annual 21% in December, and the three-month moving average of US export growth to China has fallen below the zero line, pointing to slack domestic Chinese demand.
That huge reduction in imports suggests that China's economic problems may be far worse than the 2008 growth figure of 6.8% implies. According to the Money Week article:
Investors could be in for a shock in 2009, says Albert Edwards of Société Générale. The Chinese economy appears to be "imploding". Electric power output, which normally moves up and down with GDP growth, has been declining for the past three months, while the Chinese OECD leading indicator, which GDP growth has followed closely over the past decade, has plummeted, suggesting growth is set to collapse.
And the writer predicted:
With the export-dependent economy slowing fast, the [Chinese] government faces mounting social upheaval and protests could escalate to the point where the regime itself is under threat.
The number of workers in China who have already lost their jobs due to the crisis is conservatively estimated at twenty million.
Sorceror's apprentice
Evidently, it is no longer tenable to speak only or mainly of a financial crisis. Emerging from the banking collapse in the USA and subsequently in the rest of the West, is the collapse of industry worldwide, caused not merely by the inability of companies to obtain loans but by the inability of companies to sell their products; the latter caused by the inability of other companies and the individual consumers to obtain loans with which to buy the products, and, even worse, as the crisis enters its accelerating and self-propelling spiral, by companies becoming bankrupt and workers becoming redundant, therefore ceasing to have an income with which to buy products- thus the companies which had supplied those goods must lay off more workers and/or go bankrupt.
And underlying all of that- though the faint glimmers of an understanding of this have only just begun to emerge- is the fact that the firms, in competing to increase their market share and their profits, have been constantly striving to raise their productivity while cutting or holding down their costs. While common sense would suggest that such improvements in efficiency would be of unmitigated and long-term benefit to everybody, under the capitalist economic system- particularly the privatised, unplanned and lightly-regulated 'free market' version of the system which existed in the 19th and early 20th Centuries, and which then re-established itself and became globalised in the late 20th and early 21st Century- this seemingly beneficial process has some startlingly unwelcome results. Among those is the increasing gap, even in the good times, between rich and poor; another is the inevitability of catastophic economic crises.
Within the costs which the capitalist firms must always strive to reduce or keep down, the primary cost is wages; and if production is increased while the wages of the workers (who are the majority of the final consumers) are held down, how can the rising volume of goods be sold, thus allowing the global capitalist economy keep on expanding by means of the 'consumer boom'? In our recent period, this problem was temporarily solved by allowing and encouraging Western consumers to plunge themselves into an increasing amount of debt; and the banks and the mortgage houses were only too happy to supply the credit, deriving therefrom not only a handsome profit from the interest, but also providing the means by which the arcane and highy lucrative financial instruments of the 'shadow banking system' were constructed. But in the end, most of the consumers had only their wages with which to pay the interest on their debts; wages which were being held down. So, in the end, the enormous bubble had to burst.
The process, by which the very success of the individual firms which comprise the free-market capitalist economy eventually convulses the whole system in a desperate crisis, was described by the most intelligent and knowledgeable analyst of capitalism in the 19th Century. As Karl Marx wrote in 1848:
Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells [...] It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property.
Until the present debacle, the last of these gigantic economic catastrophes was the one which was sparked off by the New York stock exchange crash of 1929, the eventual consequences of which entailed not only unemployment rising to 25% and more in the industrialised capitalist countries, but also World War Two and the aggressive advance of the global movement to overthrow capitalism. The USSR broke out of its isolation, creating allied socialist states in Eastern Europe; and in 1949 China, a country whose population is bigger than that of the USA, Western Europe and Japan combined, fell to the Communist Party.
Very sensibly, though not without dissention- and with the help of the struggle of the left wing and the trade unions- the rich countries shrank the scope of the market, introduced nationalisation, strict regulation and a degree of economic planning, allowed a big increase in wages and social benefits, reduced the gap between the richest and the poorest, and restricted financial speculation. By these social-democratic measures, capitalism- though it was no longer capitalism as we knew it- survived, stabilised itself, saw off the threat that revolution would come to the West, and made itself strong enough to divide and defeat the global socialist forces arrayed against it.
In 1978, after several years of negotiations with the US government, the People's Republic of China began to reform its economic system in a capitalist direction, in return for the phased lifting of most of the US-imposed Cold War trade and investment sanctions.
Though of course there were many other factors involved, it was with that victory against communism achieved that the advanced capitalist countries, led by Reagan in the USA and Thatcher in Britain, proceeded to dismantle the social-democratic structures. Industries were privatised and de-regulated, trade unions were defeated, welfare benefits reduced, market competition revived; and finance was not merely liberated but proclaimed to be the fountain of wealth.
Thus capitalism as previous generations had known it was resurrected, upgraded with the added power of modern technology, and the era which became associated with the word 'globalisation' was initiated; its rampant international penetration assured by the downfall of socialism in Eastern Europe and the USSR after 1989.
Snafu
In the countries whose political authorities are usually referred to in the Western press as democratic governments rather than as regimes, one of the means by which it is ensured that social upheaval and protests do not escalate to the point where the social system itself is under threat is the alternation in office through pluralist elections, between parties which, however genuine or otherwise are their differences, can be relied on to maintain the existing structure of society. Among the recent beneficiaries of this arrangement is Mr Timothy F Geithner, President Barack Obama's new Treasury Secretary.
While it is much too early to tell what precise effect this will have in practice, the statements of the incoming US administration are staying true to the approach of 'change' on international policy which was espoused by the Obama camp during the presidential election campaign: less forces here, more forces there; a softer line on this, a tougher line on that. Possibly Cuba may draw a slight but significant benefit from these changes; but China, if we are to take seriously the statement from Timothy Geithner on the eve of his confirmation as Treasury Secretary, is targeted for economic confrontation. In its 24th January issue, the Economist commented on the salvo fired against China by Mr Geithner in his statement to the US Senate Finance Committee:
Technically, he is not yet treasury secretary, but Tim Geithner has already made waves in financial markets. In a written response to questions from senators debating his confirmation, Mr Geithner accused China of “manipulating” its currency and promised that the Obama team would push “aggressively” for Beijing to change its policies. The sharp tone and use of the legally-loaded term “currency manipulation” ricocheted through financial markets as investors shuddered at the prospect of a Sino-American spat in the midst of a global slump.
Clearly this was not a slip of the tongue. Conceivably it was a bureaucratic snafu. The tough language came in a 102-page document answering numerous questions from senators—an odd place from which to lob a bombshell at Beijing. If so, it speaks poorly of a man who is already in trouble for failing to pay attention to his taxes. Most likely, therefore, Mr Geithner’s language suggests a change in Washington’s tactics towards China.
The use of the acronym snafu by the Economist, a staid and respectable journal in which the commentators do not express their emotions by using explicitly obscene language, and its ad hominem reference to Timothy Geithner's history of alleged tax evasion, may reliably be taken as indications that the feelings of the editors of the house magazine of global high capitalism at this turn in US policy on China went far beyond mere irritation.
Without a doubt, the accusation against China had been authorised by the new President. In the 102 page document which he presented to the Senate Finance Committee, Timothy Geithner used the exact same phrase twice:
President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices.
Geithner also used another formulation in which the threat was more veiled:
In the short term we need coordinated stimulus to strengthen demand here and in China. Once demand is stabilized we need a constructive dialogue with China that focuses on helping China move towards growth that relies more on domestic consumption and less on exports.
It is important to note that the US Treasury Department, to the helm of which Mr Geithner has succeeded, is not merely charged with the responsibility for the domestic economic affairs of the United States. The Treasury Department is also one of the US Government's main vehicles for the furthering of its foreign policy goals, by means which include imposing sanctions and other measures against other countries to achieve political and economic objectives. Among the questions submitted to Geithner by the senators were several which related to possible changes in the conduct of the USA's financial, trade and travel blockade against Cuba- to all of which he avoided giving any definite answers. But on the issue of China, he was not so vague. In his answer to one of the questions, he stated:
While in the U.S. Senate he [Obama] cosponsored tough legislation to overhaul the U.S. process for determining currency manipulation and authorizing new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles. The question is how and when to broach the subject in order to do more good than harm.
Implicit in this remark is the notion that the USA, which despite its current troubles is the world's biggest consumer and still dominates the international trade and financial institutions, is the global economic enforcer; and must therefore debate how to use its power to issue and withdraw passes, free or otherwise, even to nations several times its size in population.
The Economist- an organ whose cosmopolitan viewpoint expresses not only the raw desire for the highest possible corporate profits, but also the fear that the global sum of profits may be reduced by any infringements against de-regulation and 'free trade'- did not, of course, challenge that uncontroversial notion; but it did react with undisguised horror to Timothy Geithner's threat of a forthcoming trade dispute with China:
China’s bilateral trade surplus with America has long been a lightning rod in Congress, and with unemployment up the protectionist pressure is sure to rise. The $800 billion stimulus package making its way through Congress already has dubious “Buy American” measures that demand government spending should be on American goods. By sounding tough up front, the logic goes, the Obama team will be better able to diffuse the more extreme protectionist sentiment.
Unfortunately, this strategy is dangerous on a number of counts. The basic economic analysis—that a stronger yuan [China's currency], on a trade-weighted basis, is necessary to rebalance China’s economy away from exports—is surely right. But the world’s immediate problem is a dramatic shortfall in demand across the globe and that will not be righted by exchange-rate shifts. Currency movements switch demand between countries; they do not create it [...]
More important, the political calculus could easily misfire. Domestically, Mr Geithner’s comments may simply fan congressional flames for tougher action on China. Lindsey Graham, a senator who first pushed for a 27.5% tariff against China in 2005, called the comments “music to my ears”. And Sino-American economic tensions are already rising as Chinese officials hotly dispute the idea that their savings surplus had anything to do with the current global mess. (An official at China’s central bank recently called the idea “ridiculous” and an example of “gangster logic”). Traditionally, Chinese officials do not respond well to public admonition and, given the scale of China’s economic woes, they are likely to be pricklier now.
The stakes are extremely high. Everyone knows that protectionism and beggar-thy-neighbour policies exacerbated the [1930s] Depression. With the global economy in its most dangerous circumstances since the 1930s, rising Sino-American tensions is the last thing anyone needs.
Although he did not say this with specific reference to the likelihood of a US-China trade confrontation, Prime Minister Gordon Brown made clear in his speech at the World Economic Forum on January 30th that he shares the view that the adoption of protectionist policies will worsen the crisis. His opinion was was supported by Pascal Lamy, Director-General of the World Trade Organisation.
Given that this is the prediction of these pro-business luminaries, why has the new President of the United States of America gone much further than the muted anti-China rhetoric of the George W Bush administration, and authorised the threat of a protectionist trade war against the People's Republic of China? To answer that question, we should consider that there are complexities to the interests which Barack Obama must seek to satisfy.
Every US President needs to balance the short and medium term desire of the US-based corporations for the highest possible profits, against the strategic requirement for the United States to maintain its role as the dominant global nation- thus assuring, in the long term, the best position for the USA's corporations to make maximum profits.
The industrial rise of China has been exceedingly profitable for many of the biggest US firms- gaining not only by outsourcing production to factories where the workers have much lower wages than in the USA, but also by marketing cheap Chinese-made products to consumers in the US and other Western countries. And, perceived at the time to be an added bonus for the USA, when China needed somewhere to park some of the financial surplus which it accrued as a result of its export earnings, it decided to lend much of that spare cash to the United States of America.
On the other hand, China's economic rise- if it is allowed to continue at the rapid pace of the last thirty years- will eventually, in another three decades or less, unseat the USA from its top dog global position. For the long term strategic thinkers among the US elite, this is an intolerable prospect which must sooner or later be addressed, by whatever means are available.
Further, some US companies have lost rather than gained as China has risen. Those in the paper and steel industries, for example, have been complaining vociferously that their production operations, which have remained based in the USA and cannot be outsourced because they rely on locally extracted raw materials, are unable to compete with the steel and paper exported from China.
Last, and very much least in the priorities of the Bush administration, are the economic interests of the workers in the USA, who have been losing out in competition with the much lower-paid workers of China. Although there are other factors including the introduction of new technology, the weakness of the trade unions and de-regulation within the United States, the international process of globalisation which has entailed the rise of China is one of the main factors which have ensured that the average hourly pay of US workers has not risen for over thirty years.
Therefore the trade unions, supported by many in the Democrat Party, have increasingly been demanding protectionist measures, and during his election campaign Barack Obama promised an end to the prioritisation of free trade over the interests of 'main street'.
Though some commentators remarked that Obama only made such statements in order to get elected- noting that, once in office, the previous Democrat President Bill Clinton was an aggressive promoter of free-market globalisation- Timothy Geithner's 'bombshell' against China may be a sign that the new President intends to put the rhetoric into reality.
The blame-China narrative
In the Washington Post, Geithner's attack on China was more than welcomed. Its columnist Sebastian Mallaby, who is a member of the USA's uber-think tank, the Council on Foreign Relations, took the Obama nominee's accusation as his cue to take the argument to its conclusion- promoting the theory, which was originally put forward by the outgoing US Treasury Secretary Hank Paulson on the eve of his replacement by Tim Geithner, that it is the People's Republic of China which is mainly to blame for the global economic crash. Mallaby claimed:
Geithner is correct that China manipulates its currency. What's more, this manipulation is arguably the most important cause of the financial crisis. Starting around the middle of this decade, China's cheap currency led it to run a massive trade surplus. The earnings from that surplus poured into the United States. The result was the mortgage bubble.
China's leaders protest that they are being unfairly scapegoated. Yet while there are rival accounts of the origins of the crisis, neither has the explanatory force of the blame-China narrative.
This theory, which has an obvious attraction for US politicians and opinion-formers, was also highlighted in a Sky News article on 1st February.
In evaluating the 'blame-China narrative', the accusation of currency manipulation ought first to be scrutinised. The word 'manipulation' suggests that the Chinese have been deliberately changing the exchange rate of their currency in order to gain an unfair advantage. But in fact what China did, a decade and a half ago, was to peg its currency (the renminbi, the main unit of which is the yuan) at a fixed rate relative to the dollar, and after that they kept it at that rate. As the Forbes Investopedia explains, there is a very sound reason for a Third World country to do this:
The reasons to peg a currency are linked to stability. Especially in today's developing nations, a country may decide to peg its currency to create a stable atmosphere for foreign investment. With a peg the investor will always know what his/her investment value is, and therefore will not have to worry about daily fluctuations.
As the USA has the world's preponderant currency, and is moreover the overall leader in cutting-edge technologies and is thus a very important source of high-tech investment- if one is going to choose a foriegn currency on which to peg ones own, it will usually be the US dollar.
The rate at which the Chinese fixed their currency in 1994, at 8.3 yuan per dollar, allowed Chinese-made goods to be sold relatively cheaply abroad but on the other hand made it relatively expensive for the Chinese to import goods from other countries; nevertheless, as the export-focussed industries of the People's Republic bloomed, those industries required fuel, raw materials and production equipment from abroad, and their workers and managers fulfilled some of their wants by means of consumer products from abroad. So not only China, but the suppliers of China, benefited.
However, as was observed in a September 2008 article by the aptly-named David Dollar, who is the World Bank’s Country Director for China and Mongolia, while the yuan was held stable against the US dollar, China's currency therefore moved together with the dollar as the US currency fluctuated against the other major currencies:
...the effect of this choice of "stability" for the currency was to bring about gradual and sustained appreciation of China’s effective exchange rate from then until about 2002. Over that period on average the U.S. dollar was appreciating against China’s other trade partners and China followed the dollar up.
This turned out to be a good exchange rate strategy for China. [...] from 1994-2002, China had a modest current account surplus that did not change very much. As a developing country with rapid productivity growth, China’s external accounts were kept roughly in balance by the gradual appreciation resulting from the link to the dollar.
The problems for China began early in the 2000s, as the dollar began to devalue against other major currencies in the wake of large fiscal stimulus in the U.S.
It should be noted that this fiscal stimulus, which took the form of a cut in the interest rate and which led to a big decline in the value of the US dollar relative to the other major currencies, was the temporarily successful attempt by the US authorities to prevent the 'dot.com' stockmarket crash of 2000 from turning into a serious recession in the United States. What followed can hardly be described as 'manipulation' by the Chinese:
Since China had good results from the peg to the dollar during the 1990s, it was a natural choice for the country to stick with the peg. However, in this new environment, the Chinese yuan then followed the dollar down – the effective depreciation from 2002 until 2005 was nearly 20 percent. Combined with the ongoing productivity growth, this devaluation led to rapid expansion of the export sector and the expansion of the external surplus to a whopping 12 percent of GDP in 2007.
Here it must be pointed out that, because the Chinese currency remained stable against the US dollar, China gained no increased currency-related advantage in its exports to the USA, or in the competition of its manufactured goods againsts US-made products. Any currency-related trade advantage which China gained in this period was in respect of the other countries whose currencies had risen in relative value due to the temporary decline of the US dollar.
The United States Treasury Department made no complaints when the Chinese lent a large part of their surplus funds to the USA, much of it by buying US Treasury bonds- indeed, the finances of the United States of America became dependent on this Chinese money and speculation abounded about the disaster which might result if China were to withdraw this cash. But although the rate of the yuan to the dollar had been the same since 1994, US officials including the incumbent Treasury Secretary Hank Paulson, began to pressurise China to change its exchange rate which, they now alleged, was giving the Chinese an unfair trade advantage in competition with US-made products
In 2005, the Chinese partially acceded to the US demands by allowing their currency to begin rising significantly against the US dollar. Since July 2005, the yuan has risen by 19% in relation to the dollar; and given that one of the effects of the current crisis has been a fall in the value of the other main world currencies vis-a-vis the dollar, the overall result has been a very steep rise of about 30% in the average value of the yuan against the currencies of China's main trading partners.
David Dollar points out:
As a result of the effective [currency] appreciation since 2005 we are now starting to see a decline in China’s external surplus. It is in everyone’s interest for the decline in the surplus to be gradual. Too rapid a decline would be a big shock to China’s real economy and would drastically reduce the financing available for the external deficits of the U.S. and many developing countries. While the U.S. wants to gradually reduce its external deficit, it will need significant financing for the next several years.
In which case, the Economist is surely right to be worried about the implications of Treasury Secretary Geithner’s fusillade, and the Chinese are right in refusing to be intimidated. David Dollar added:
There is a lot of potential for misunderstanding in this area. China feels that it has had a rapid effective [currency] appreciation and now wants to see what the real effects are before going further.
Manipulating the facts
Although he asserts that China caused the global economic crisis, Sebastian Mallaby of the Washington Post and the Council on Foreign Relations does not argue that the means by which China caused the current economic crisis was by successfully penetrating the US consumer market and out-competing US-made goods. Rather, the 'blame China' theory boils down to the claim that the Chinese lent the USA too much money, and that the United States became a passive victim by borrowing all this Chinese cash.
Mallaby adduces in proof of this theory the weakness of what he regards as the only other possible explanations for the present and deepening economic catastrophe. Sebastian Mallaby puts forward two 'rival accounts' and then knocks them down:
The first rival account is that the crisis reflected failings of U.S. financial regulation. Such failings exist, but most have been around for years. The mortgage bubble reached its craziest extremes in 2005-07, when China was flooding the world with cheap capital.
Moreover, regulatory failings exist not just at one regulator but many. The Securities and Exchange Commission failed to check risks at broker-dealers such as Bear Stearns. State insurance regulators failed to prevent the collapse of AIG. The Federal Reserve failed to see that banks were pouring capital into toxic securities that they then held off their balance sheets. European regulators were no better, even though they had adopted a supposedly more up-to-date set of capital standards. The lesson: Faced with a deluge of cheap money, no regulatory regime can be expected to prevent bubbles.
But it was not China, but rather the US authorities who de-regulated the USA's entire financial system, and moreover, encouraged and pressurised other countries to de-regulate theirs; and they did this inspired by their laissez faire ideology and prompted by the demands of the corporations, especially the financial sector. And the cash provided to the USA by China was at least money based on real value, generated by the earnings of its manufacturing industry- as distinct from the scores of trillions of dollars of fictitious values in the form of CDOs, SIVs and the other arcane 'instruments' created by the geniuses of Western finance, all of which are now revealed to have no value whatsoever.
Sebastian Mallaby then gets to grips with the only other explanation for the crisis that he can conceive of:
The second rival account of the crisis accepts that its origins lie less in regulatory failings than in economic pressures. But it blames the bubble on two mistakes at home rather than on the glut of capital from China. Americans should have controlled the urge to splurge, the thinking goes, and borrowed less Chinese money. And the Fed should have shut down the easy-money party by raising interest rates.
If Americans' insatiable appetite for loans explained the flood of Chinese capital into the United States, we would have seen the evidence in a rising price for those loans -- that is, higher interest rates in the bond market. But bond rates were strikingly low at mid-decade. This strongly suggests that it was the supply of lending that went up, not the demand for it. Chinese money flooded into the United States because of the push factor from China, not the pull factor from Americans.
Was China the only push factor, or even the main push factor? It was not Chinese-owned companies but US companies, operating under US (de)regulations, that threw money at US consumers, at interest rates set in New York and Washington, not in Beijing or Shanghai. Those US companies earned increasingly extravagant profits; and the exciting possibilities of the sub-prime and credit card markets, which allowed loans to be offered at enticingly low initial rates, which were later cranked up to highly expolitative rates of re-payment after a few months or years, were not the creation of Chinese minds.
As for the financial bubble- which had been expanding since the early de-regulations of the 1980s, well before China had any surplus cash to lend to the USA- this was not identified as a bubble for three main reasons: firstly, it was making some people very, very rich; secondly, the hubristic ideologists of the free market had dispensed with the old-fashioned notions of the Marxists and other unfashionable analysts that all value is created in what has now been suddenly re-discovered to be the 'real economy' of industrial and recognisably useful service production; and thirdly, that financial bubble, which was then declared to be the result of 'wealth creation' by the hedge-funders and other financiers, was what was keeping the US, British and other Western economies on the road of economic growth, keeping the consumers happy by means of debt-based retail therapy and the illusion of rising property values, although the majority of the workers in the Western countries had not enjoyed a significant rise in their post-inflation wage rates for many years.
But, despite all this, and the despite the fact that the crisis began in the USA, and that the United States, not China, dominates the IMF, the World Bank and the World Trade Organisation, and that China, in order to achieve the easing of the US-imposed Cold War economic sanctions against it, began in 1978 to gradually move away from socialism and towards capitalism, and despite - or rather because - China adopted the only available path to economic success in such circumstances- the path of attracting foriegn investment and exporting cheap manufactured goods to richer countries - China did play its part in creating the conditions for the present economic meltdown.
Irresespective of whether it is rising or falling in value, every coin has two sides; and while the globalised economy boomed the industrialising Chinese were perceived with as much awe as were the bankers and brokers of London and New York; inescapably therefore, China must share in the blame for the current debacle.
The People's Republic of China, in becoming a platform for the combination of its enormous low-paid labour force with modern production technology imported by means of attacting Western investments, and thus developing into a huge exporter of products, contributed to the rising global abundance of manufactured goods; although of course the vast majority of the people of the world could still barely afford to feed, house and clothe themselves and therefore those goods were aimed mainly at the rich consumers of the West and Japan.
Indeed, even the people of the rich countries, the majority of whose workers had not had a significant rise in real hourly pay for many years, could only afford to purchase this annually increasing volume of consumer products by means of accepting the increasingly fervently offered opportunities to deepen their debt, as purveyed by the banks and mortgage companies.
In the conclusion of his article, Sebastian Mallaby makes a remark which contains a grain of truth:
...there is no getting around China's culpability. The country relies on the sort of export-focused growth strategy that other Asian Tigers have pursued, with the difference that China is too big to go this route without destabilizing the world economy.
To the extent that China is guilty, it is because of its enourmous population size and because the USA and the US-controlled international trade and financial institutions would only relax their sanctions against China if it made the transition from socialism to capitalism; in which circumstance, the only available development path for China was that of becoming an export-oriented 'tiger economy'. On taking that path, the People's Republic of China exceeded all expectations.
It was by its very success as a rising capitalist nation, and by its great contribution to the temporary success of the capitalist global economy, that China played its part in creating the conditions which led to the eventual crash.
Confrontation inevitable
While the editors of the Economist are aghast at the prospect of a protectionist trade war by the USA against China, nevertheless they, along with the US Treasury Secretary and the Director of the IMF want the Chinese to change their pattern of economic development, by re-valuing their currency, 'expanding domestic demand' and ending the export-orientation of their industries. In fact, by accelerating the pace of state-led infrastructure projects, China's Communist Party leadership is increasing domestic demand, but that is not what the USA and the IMF, its multilateral proxy, are talking about. The West wants China to get its population of individual consumers to spend more money as a substitute for the earnings that China would lose if it reduced its exports, and the Chinese leaders have very sound reasons for resisting the pressure to do this.
China is a Third World country, and despite its recent decades of rapid growth it has a per-capita GDP, calculated by purchasing power parity, of only one-eighth that of the United States and one-sixth that of the West European countries. Even if each Chinese consumer were to increase their spending in the shops by, say, 25%, they would still, despite their large number, have only a small fraction of the purchasing power of the hundreds of millions of people in the rich countries. As Sebastian Mallaby's reference to the other 'Asian Tiger' economies indicates, history has not shown any other path to rapid economic development for a capitalist Third World country in a capitalist world except that of export-orientation; and by taking this path China has attracted foreign technology, built its industries, kept its unemployment rate relatively low in comparison to other less-developed countries, and delivered steady improvements in material living standards.
China's dynamic development has been temporarily de-railed by the economic crisis, but the Chinese leadership is counting on the global depression bottoming out in the next few years, following which China can resume its rapid export-led growth. Of course, this is a gamble. On the other hand, for China to take the option of ceasing its export-orientation would not be a gamble because the result would be certain- long term economic stagnation, accompanied by even higher unemployment and worse impoverishment than the present crisis will cause, and as a permanent feature.
Therefore the Chinese Communist Party will refuse to accept that option, and therefore we will see if the new US administration is willing to deliver on its threat of protectionist measures against China, despite the predictions that this would deepen and lengthen the current crisis.
Though the signs are not good, perhaps some compromise can be reached which postpones an economic confrontation. But one thing can be predicted with absolute certainty. The USA will not indefinitely continue to accept the gradual but ever-nearing prospect of being usurped from its position as the world's dominant nation, especially by a country whose ruling party- however capitalist its economic policies- is the Communist Party. Eventually, and by whatever means are available to it, the United States will confront China not merely as a competitor but as an enemy.
Though the former have much greater resources available to cushion them, both the high flying creators of abstruse financial 'products' - whose nature and function hardly anybody comprehended except that they seemed for several decades to be strikingly successful in their purpose of making money - and the workers who create the material goods and services whose uses are palpable, are being cast out equally as the system is wracked in crisis. With the same proviso, the debacle is felt deeply not only by the laid-off workers and homeless sub-prime mortgage victims in the United States of America but also by the redundant migrant labourers of the opposite pole of world capitalism, who are forced to abandon their temporary homes in Guangdong and the other export manufacturing zones in the People's Republic of China.
USA Today reported on 26th January:
Household names such as Caterpillar, (CAT) Home Depot (HD) and Sprint Nextel (S) said Monday that they are laying off a combined 35,000 workers in moves that stressed the severity of the worldwide recession and kicked off what is likely to be a week of gloomy earnings announcements, further job cuts and dismal data.
The layoffs continued Tuesday as Corning said it is cutting 3,500 jobs, or 13% of its payroll.
The news ratchets up the pressure on the Obama administration and Congress as lawmakers debate an $825 billion stimulus package intended to save or create millions of jobs. Far more job cuts are likely as consumer and business spending tumbles amid what many economists say is the worst recession the USA has seen since the Great Depression.
"Some of the worst job losses are ahead of us, not behind us," says Wells Fargo senior economist Scott Anderson.
He expects 3 million Americans to lose their jobs in 2009 — up from the 2.6 million who were cut last year, which was the most since 1945, the final year of World War II. The layoffs are happening in "all industries in all areas of the world," Anderson says. "This will be one of the worst job markets in the postwar period."
Among these areas of the world, one of the hardest hit is East Asia. The Economist magazine observed on 29th January:
In the fourth quarter of 2008, real GDP fell by an annualised rate of 21% in South Korea and 17% in Singapore, leaving output in both countries 3-4% lower than a year earlier. Singapore’s government has admitted the economy may contract by as much as 5% this year, its deepest recession since independence in 1965. In comparison, China’s growth of 6.8% in the year to the fourth quarter sounds robust, but seasonally adjusted estimates suggest output stagnated during the last three months.
Asia’s richer giant, Japan, has yet to report its GDP figures, but exports fell by 35% in the 12 months to December. In the same period, Taiwan’s dropped by 42% and industrial production was down by a stunning 32%, worse than the biggest annual fall in America during the [1930s] Depression.
Asia’s export-driven economies had benefited more than any other region from America’s consumer boom, so its manufacturers were bound to be hit hard by the sudden downward lurch.
As an article in Money Week on 31st January noted, one of the main reasons for the dreadful plight of the other Asian economies is that China has massively reduced its imports:
Parts of Asia that have relied on rapid Chinese growth are [...] suffering. Japanese exports to China were down 25% year-on-year compared with growth of 16% as recently as July. Taiwanese exports to the Middle Kingdom are down by an annual 40%. What's more, Chinese imports were down by an annual 21% in December, and the three-month moving average of US export growth to China has fallen below the zero line, pointing to slack domestic Chinese demand.
That huge reduction in imports suggests that China's economic problems may be far worse than the 2008 growth figure of 6.8% implies. According to the Money Week article:
Investors could be in for a shock in 2009, says Albert Edwards of Société Générale. The Chinese economy appears to be "imploding". Electric power output, which normally moves up and down with GDP growth, has been declining for the past three months, while the Chinese OECD leading indicator, which GDP growth has followed closely over the past decade, has plummeted, suggesting growth is set to collapse.
And the writer predicted:
With the export-dependent economy slowing fast, the [Chinese] government faces mounting social upheaval and protests could escalate to the point where the regime itself is under threat.
The number of workers in China who have already lost their jobs due to the crisis is conservatively estimated at twenty million.
Sorceror's apprentice
Evidently, it is no longer tenable to speak only or mainly of a financial crisis. Emerging from the banking collapse in the USA and subsequently in the rest of the West, is the collapse of industry worldwide, caused not merely by the inability of companies to obtain loans but by the inability of companies to sell their products; the latter caused by the inability of other companies and the individual consumers to obtain loans with which to buy the products, and, even worse, as the crisis enters its accelerating and self-propelling spiral, by companies becoming bankrupt and workers becoming redundant, therefore ceasing to have an income with which to buy products- thus the companies which had supplied those goods must lay off more workers and/or go bankrupt.
And underlying all of that- though the faint glimmers of an understanding of this have only just begun to emerge- is the fact that the firms, in competing to increase their market share and their profits, have been constantly striving to raise their productivity while cutting or holding down their costs. While common sense would suggest that such improvements in efficiency would be of unmitigated and long-term benefit to everybody, under the capitalist economic system- particularly the privatised, unplanned and lightly-regulated 'free market' version of the system which existed in the 19th and early 20th Centuries, and which then re-established itself and became globalised in the late 20th and early 21st Century- this seemingly beneficial process has some startlingly unwelcome results. Among those is the increasing gap, even in the good times, between rich and poor; another is the inevitability of catastophic economic crises.
Within the costs which the capitalist firms must always strive to reduce or keep down, the primary cost is wages; and if production is increased while the wages of the workers (who are the majority of the final consumers) are held down, how can the rising volume of goods be sold, thus allowing the global capitalist economy keep on expanding by means of the 'consumer boom'? In our recent period, this problem was temporarily solved by allowing and encouraging Western consumers to plunge themselves into an increasing amount of debt; and the banks and the mortgage houses were only too happy to supply the credit, deriving therefrom not only a handsome profit from the interest, but also providing the means by which the arcane and highy lucrative financial instruments of the 'shadow banking system' were constructed. But in the end, most of the consumers had only their wages with which to pay the interest on their debts; wages which were being held down. So, in the end, the enormous bubble had to burst.
The process, by which the very success of the individual firms which comprise the free-market capitalist economy eventually convulses the whole system in a desperate crisis, was described by the most intelligent and knowledgeable analyst of capitalism in the 19th Century. As Karl Marx wrote in 1848:
Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells [...] It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property.
Until the present debacle, the last of these gigantic economic catastrophes was the one which was sparked off by the New York stock exchange crash of 1929, the eventual consequences of which entailed not only unemployment rising to 25% and more in the industrialised capitalist countries, but also World War Two and the aggressive advance of the global movement to overthrow capitalism. The USSR broke out of its isolation, creating allied socialist states in Eastern Europe; and in 1949 China, a country whose population is bigger than that of the USA, Western Europe and Japan combined, fell to the Communist Party.
Very sensibly, though not without dissention- and with the help of the struggle of the left wing and the trade unions- the rich countries shrank the scope of the market, introduced nationalisation, strict regulation and a degree of economic planning, allowed a big increase in wages and social benefits, reduced the gap between the richest and the poorest, and restricted financial speculation. By these social-democratic measures, capitalism- though it was no longer capitalism as we knew it- survived, stabilised itself, saw off the threat that revolution would come to the West, and made itself strong enough to divide and defeat the global socialist forces arrayed against it.
In 1978, after several years of negotiations with the US government, the People's Republic of China began to reform its economic system in a capitalist direction, in return for the phased lifting of most of the US-imposed Cold War trade and investment sanctions.
Though of course there were many other factors involved, it was with that victory against communism achieved that the advanced capitalist countries, led by Reagan in the USA and Thatcher in Britain, proceeded to dismantle the social-democratic structures. Industries were privatised and de-regulated, trade unions were defeated, welfare benefits reduced, market competition revived; and finance was not merely liberated but proclaimed to be the fountain of wealth.
Thus capitalism as previous generations had known it was resurrected, upgraded with the added power of modern technology, and the era which became associated with the word 'globalisation' was initiated; its rampant international penetration assured by the downfall of socialism in Eastern Europe and the USSR after 1989.
Snafu
In the countries whose political authorities are usually referred to in the Western press as democratic governments rather than as regimes, one of the means by which it is ensured that social upheaval and protests do not escalate to the point where the social system itself is under threat is the alternation in office through pluralist elections, between parties which, however genuine or otherwise are their differences, can be relied on to maintain the existing structure of society. Among the recent beneficiaries of this arrangement is Mr Timothy F Geithner, President Barack Obama's new Treasury Secretary.
While it is much too early to tell what precise effect this will have in practice, the statements of the incoming US administration are staying true to the approach of 'change' on international policy which was espoused by the Obama camp during the presidential election campaign: less forces here, more forces there; a softer line on this, a tougher line on that. Possibly Cuba may draw a slight but significant benefit from these changes; but China, if we are to take seriously the statement from Timothy Geithner on the eve of his confirmation as Treasury Secretary, is targeted for economic confrontation. In its 24th January issue, the Economist commented on the salvo fired against China by Mr Geithner in his statement to the US Senate Finance Committee:
Technically, he is not yet treasury secretary, but Tim Geithner has already made waves in financial markets. In a written response to questions from senators debating his confirmation, Mr Geithner accused China of “manipulating” its currency and promised that the Obama team would push “aggressively” for Beijing to change its policies. The sharp tone and use of the legally-loaded term “currency manipulation” ricocheted through financial markets as investors shuddered at the prospect of a Sino-American spat in the midst of a global slump.
Clearly this was not a slip of the tongue. Conceivably it was a bureaucratic snafu. The tough language came in a 102-page document answering numerous questions from senators—an odd place from which to lob a bombshell at Beijing. If so, it speaks poorly of a man who is already in trouble for failing to pay attention to his taxes. Most likely, therefore, Mr Geithner’s language suggests a change in Washington’s tactics towards China.
The use of the acronym snafu by the Economist, a staid and respectable journal in which the commentators do not express their emotions by using explicitly obscene language, and its ad hominem reference to Timothy Geithner's history of alleged tax evasion, may reliably be taken as indications that the feelings of the editors of the house magazine of global high capitalism at this turn in US policy on China went far beyond mere irritation.
Without a doubt, the accusation against China had been authorised by the new President. In the 102 page document which he presented to the Senate Finance Committee, Timothy Geithner used the exact same phrase twice:
President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices.
Geithner also used another formulation in which the threat was more veiled:
In the short term we need coordinated stimulus to strengthen demand here and in China. Once demand is stabilized we need a constructive dialogue with China that focuses on helping China move towards growth that relies more on domestic consumption and less on exports.
It is important to note that the US Treasury Department, to the helm of which Mr Geithner has succeeded, is not merely charged with the responsibility for the domestic economic affairs of the United States. The Treasury Department is also one of the US Government's main vehicles for the furthering of its foreign policy goals, by means which include imposing sanctions and other measures against other countries to achieve political and economic objectives. Among the questions submitted to Geithner by the senators were several which related to possible changes in the conduct of the USA's financial, trade and travel blockade against Cuba- to all of which he avoided giving any definite answers. But on the issue of China, he was not so vague. In his answer to one of the questions, he stated:
While in the U.S. Senate he [Obama] cosponsored tough legislation to overhaul the U.S. process for determining currency manipulation and authorizing new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles. The question is how and when to broach the subject in order to do more good than harm.
Implicit in this remark is the notion that the USA, which despite its current troubles is the world's biggest consumer and still dominates the international trade and financial institutions, is the global economic enforcer; and must therefore debate how to use its power to issue and withdraw passes, free or otherwise, even to nations several times its size in population.
The Economist- an organ whose cosmopolitan viewpoint expresses not only the raw desire for the highest possible corporate profits, but also the fear that the global sum of profits may be reduced by any infringements against de-regulation and 'free trade'- did not, of course, challenge that uncontroversial notion; but it did react with undisguised horror to Timothy Geithner's threat of a forthcoming trade dispute with China:
China’s bilateral trade surplus with America has long been a lightning rod in Congress, and with unemployment up the protectionist pressure is sure to rise. The $800 billion stimulus package making its way through Congress already has dubious “Buy American” measures that demand government spending should be on American goods. By sounding tough up front, the logic goes, the Obama team will be better able to diffuse the more extreme protectionist sentiment.
Unfortunately, this strategy is dangerous on a number of counts. The basic economic analysis—that a stronger yuan [China's currency], on a trade-weighted basis, is necessary to rebalance China’s economy away from exports—is surely right. But the world’s immediate problem is a dramatic shortfall in demand across the globe and that will not be righted by exchange-rate shifts. Currency movements switch demand between countries; they do not create it [...]
More important, the political calculus could easily misfire. Domestically, Mr Geithner’s comments may simply fan congressional flames for tougher action on China. Lindsey Graham, a senator who first pushed for a 27.5% tariff against China in 2005, called the comments “music to my ears”. And Sino-American economic tensions are already rising as Chinese officials hotly dispute the idea that their savings surplus had anything to do with the current global mess. (An official at China’s central bank recently called the idea “ridiculous” and an example of “gangster logic”). Traditionally, Chinese officials do not respond well to public admonition and, given the scale of China’s economic woes, they are likely to be pricklier now.
The stakes are extremely high. Everyone knows that protectionism and beggar-thy-neighbour policies exacerbated the [1930s] Depression. With the global economy in its most dangerous circumstances since the 1930s, rising Sino-American tensions is the last thing anyone needs.
Although he did not say this with specific reference to the likelihood of a US-China trade confrontation, Prime Minister Gordon Brown made clear in his speech at the World Economic Forum on January 30th that he shares the view that the adoption of protectionist policies will worsen the crisis. His opinion was was supported by Pascal Lamy, Director-General of the World Trade Organisation.
Given that this is the prediction of these pro-business luminaries, why has the new President of the United States of America gone much further than the muted anti-China rhetoric of the George W Bush administration, and authorised the threat of a protectionist trade war against the People's Republic of China? To answer that question, we should consider that there are complexities to the interests which Barack Obama must seek to satisfy.
Every US President needs to balance the short and medium term desire of the US-based corporations for the highest possible profits, against the strategic requirement for the United States to maintain its role as the dominant global nation- thus assuring, in the long term, the best position for the USA's corporations to make maximum profits.
The industrial rise of China has been exceedingly profitable for many of the biggest US firms- gaining not only by outsourcing production to factories where the workers have much lower wages than in the USA, but also by marketing cheap Chinese-made products to consumers in the US and other Western countries. And, perceived at the time to be an added bonus for the USA, when China needed somewhere to park some of the financial surplus which it accrued as a result of its export earnings, it decided to lend much of that spare cash to the United States of America.
On the other hand, China's economic rise- if it is allowed to continue at the rapid pace of the last thirty years- will eventually, in another three decades or less, unseat the USA from its top dog global position. For the long term strategic thinkers among the US elite, this is an intolerable prospect which must sooner or later be addressed, by whatever means are available.
Further, some US companies have lost rather than gained as China has risen. Those in the paper and steel industries, for example, have been complaining vociferously that their production operations, which have remained based in the USA and cannot be outsourced because they rely on locally extracted raw materials, are unable to compete with the steel and paper exported from China.
Last, and very much least in the priorities of the Bush administration, are the economic interests of the workers in the USA, who have been losing out in competition with the much lower-paid workers of China. Although there are other factors including the introduction of new technology, the weakness of the trade unions and de-regulation within the United States, the international process of globalisation which has entailed the rise of China is one of the main factors which have ensured that the average hourly pay of US workers has not risen for over thirty years.
Therefore the trade unions, supported by many in the Democrat Party, have increasingly been demanding protectionist measures, and during his election campaign Barack Obama promised an end to the prioritisation of free trade over the interests of 'main street'.
Though some commentators remarked that Obama only made such statements in order to get elected- noting that, once in office, the previous Democrat President Bill Clinton was an aggressive promoter of free-market globalisation- Timothy Geithner's 'bombshell' against China may be a sign that the new President intends to put the rhetoric into reality.
The blame-China narrative
In the Washington Post, Geithner's attack on China was more than welcomed. Its columnist Sebastian Mallaby, who is a member of the USA's uber-think tank, the Council on Foreign Relations, took the Obama nominee's accusation as his cue to take the argument to its conclusion- promoting the theory, which was originally put forward by the outgoing US Treasury Secretary Hank Paulson on the eve of his replacement by Tim Geithner, that it is the People's Republic of China which is mainly to blame for the global economic crash. Mallaby claimed:
Geithner is correct that China manipulates its currency. What's more, this manipulation is arguably the most important cause of the financial crisis. Starting around the middle of this decade, China's cheap currency led it to run a massive trade surplus. The earnings from that surplus poured into the United States. The result was the mortgage bubble.
China's leaders protest that they are being unfairly scapegoated. Yet while there are rival accounts of the origins of the crisis, neither has the explanatory force of the blame-China narrative.
This theory, which has an obvious attraction for US politicians and opinion-formers, was also highlighted in a Sky News article on 1st February.
In evaluating the 'blame-China narrative', the accusation of currency manipulation ought first to be scrutinised. The word 'manipulation' suggests that the Chinese have been deliberately changing the exchange rate of their currency in order to gain an unfair advantage. But in fact what China did, a decade and a half ago, was to peg its currency (the renminbi, the main unit of which is the yuan) at a fixed rate relative to the dollar, and after that they kept it at that rate. As the Forbes Investopedia explains, there is a very sound reason for a Third World country to do this:
The reasons to peg a currency are linked to stability. Especially in today's developing nations, a country may decide to peg its currency to create a stable atmosphere for foreign investment. With a peg the investor will always know what his/her investment value is, and therefore will not have to worry about daily fluctuations.
As the USA has the world's preponderant currency, and is moreover the overall leader in cutting-edge technologies and is thus a very important source of high-tech investment- if one is going to choose a foriegn currency on which to peg ones own, it will usually be the US dollar.
The rate at which the Chinese fixed their currency in 1994, at 8.3 yuan per dollar, allowed Chinese-made goods to be sold relatively cheaply abroad but on the other hand made it relatively expensive for the Chinese to import goods from other countries; nevertheless, as the export-focussed industries of the People's Republic bloomed, those industries required fuel, raw materials and production equipment from abroad, and their workers and managers fulfilled some of their wants by means of consumer products from abroad. So not only China, but the suppliers of China, benefited.
However, as was observed in a September 2008 article by the aptly-named David Dollar, who is the World Bank’s Country Director for China and Mongolia, while the yuan was held stable against the US dollar, China's currency therefore moved together with the dollar as the US currency fluctuated against the other major currencies:
...the effect of this choice of "stability" for the currency was to bring about gradual and sustained appreciation of China’s effective exchange rate from then until about 2002. Over that period on average the U.S. dollar was appreciating against China’s other trade partners and China followed the dollar up.
This turned out to be a good exchange rate strategy for China. [...] from 1994-2002, China had a modest current account surplus that did not change very much. As a developing country with rapid productivity growth, China’s external accounts were kept roughly in balance by the gradual appreciation resulting from the link to the dollar.
The problems for China began early in the 2000s, as the dollar began to devalue against other major currencies in the wake of large fiscal stimulus in the U.S.
It should be noted that this fiscal stimulus, which took the form of a cut in the interest rate and which led to a big decline in the value of the US dollar relative to the other major currencies, was the temporarily successful attempt by the US authorities to prevent the 'dot.com' stockmarket crash of 2000 from turning into a serious recession in the United States. What followed can hardly be described as 'manipulation' by the Chinese:
Since China had good results from the peg to the dollar during the 1990s, it was a natural choice for the country to stick with the peg. However, in this new environment, the Chinese yuan then followed the dollar down – the effective depreciation from 2002 until 2005 was nearly 20 percent. Combined with the ongoing productivity growth, this devaluation led to rapid expansion of the export sector and the expansion of the external surplus to a whopping 12 percent of GDP in 2007.
Here it must be pointed out that, because the Chinese currency remained stable against the US dollar, China gained no increased currency-related advantage in its exports to the USA, or in the competition of its manufactured goods againsts US-made products. Any currency-related trade advantage which China gained in this period was in respect of the other countries whose currencies had risen in relative value due to the temporary decline of the US dollar.
The United States Treasury Department made no complaints when the Chinese lent a large part of their surplus funds to the USA, much of it by buying US Treasury bonds- indeed, the finances of the United States of America became dependent on this Chinese money and speculation abounded about the disaster which might result if China were to withdraw this cash. But although the rate of the yuan to the dollar had been the same since 1994, US officials including the incumbent Treasury Secretary Hank Paulson, began to pressurise China to change its exchange rate which, they now alleged, was giving the Chinese an unfair trade advantage in competition with US-made products
In 2005, the Chinese partially acceded to the US demands by allowing their currency to begin rising significantly against the US dollar. Since July 2005, the yuan has risen by 19% in relation to the dollar; and given that one of the effects of the current crisis has been a fall in the value of the other main world currencies vis-a-vis the dollar, the overall result has been a very steep rise of about 30% in the average value of the yuan against the currencies of China's main trading partners.
David Dollar points out:
As a result of the effective [currency] appreciation since 2005 we are now starting to see a decline in China’s external surplus. It is in everyone’s interest for the decline in the surplus to be gradual. Too rapid a decline would be a big shock to China’s real economy and would drastically reduce the financing available for the external deficits of the U.S. and many developing countries. While the U.S. wants to gradually reduce its external deficit, it will need significant financing for the next several years.
In which case, the Economist is surely right to be worried about the implications of Treasury Secretary Geithner’s fusillade, and the Chinese are right in refusing to be intimidated. David Dollar added:
There is a lot of potential for misunderstanding in this area. China feels that it has had a rapid effective [currency] appreciation and now wants to see what the real effects are before going further.
Manipulating the facts
Although he asserts that China caused the global economic crisis, Sebastian Mallaby of the Washington Post and the Council on Foreign Relations does not argue that the means by which China caused the current economic crisis was by successfully penetrating the US consumer market and out-competing US-made goods. Rather, the 'blame China' theory boils down to the claim that the Chinese lent the USA too much money, and that the United States became a passive victim by borrowing all this Chinese cash.
Mallaby adduces in proof of this theory the weakness of what he regards as the only other possible explanations for the present and deepening economic catastrophe. Sebastian Mallaby puts forward two 'rival accounts' and then knocks them down:
The first rival account is that the crisis reflected failings of U.S. financial regulation. Such failings exist, but most have been around for years. The mortgage bubble reached its craziest extremes in 2005-07, when China was flooding the world with cheap capital.
Moreover, regulatory failings exist not just at one regulator but many. The Securities and Exchange Commission failed to check risks at broker-dealers such as Bear Stearns. State insurance regulators failed to prevent the collapse of AIG. The Federal Reserve failed to see that banks were pouring capital into toxic securities that they then held off their balance sheets. European regulators were no better, even though they had adopted a supposedly more up-to-date set of capital standards. The lesson: Faced with a deluge of cheap money, no regulatory regime can be expected to prevent bubbles.
But it was not China, but rather the US authorities who de-regulated the USA's entire financial system, and moreover, encouraged and pressurised other countries to de-regulate theirs; and they did this inspired by their laissez faire ideology and prompted by the demands of the corporations, especially the financial sector. And the cash provided to the USA by China was at least money based on real value, generated by the earnings of its manufacturing industry- as distinct from the scores of trillions of dollars of fictitious values in the form of CDOs, SIVs and the other arcane 'instruments' created by the geniuses of Western finance, all of which are now revealed to have no value whatsoever.
Sebastian Mallaby then gets to grips with the only other explanation for the crisis that he can conceive of:
The second rival account of the crisis accepts that its origins lie less in regulatory failings than in economic pressures. But it blames the bubble on two mistakes at home rather than on the glut of capital from China. Americans should have controlled the urge to splurge, the thinking goes, and borrowed less Chinese money. And the Fed should have shut down the easy-money party by raising interest rates.
If Americans' insatiable appetite for loans explained the flood of Chinese capital into the United States, we would have seen the evidence in a rising price for those loans -- that is, higher interest rates in the bond market. But bond rates were strikingly low at mid-decade. This strongly suggests that it was the supply of lending that went up, not the demand for it. Chinese money flooded into the United States because of the push factor from China, not the pull factor from Americans.
Was China the only push factor, or even the main push factor? It was not Chinese-owned companies but US companies, operating under US (de)regulations, that threw money at US consumers, at interest rates set in New York and Washington, not in Beijing or Shanghai. Those US companies earned increasingly extravagant profits; and the exciting possibilities of the sub-prime and credit card markets, which allowed loans to be offered at enticingly low initial rates, which were later cranked up to highly expolitative rates of re-payment after a few months or years, were not the creation of Chinese minds.
As for the financial bubble- which had been expanding since the early de-regulations of the 1980s, well before China had any surplus cash to lend to the USA- this was not identified as a bubble for three main reasons: firstly, it was making some people very, very rich; secondly, the hubristic ideologists of the free market had dispensed with the old-fashioned notions of the Marxists and other unfashionable analysts that all value is created in what has now been suddenly re-discovered to be the 'real economy' of industrial and recognisably useful service production; and thirdly, that financial bubble, which was then declared to be the result of 'wealth creation' by the hedge-funders and other financiers, was what was keeping the US, British and other Western economies on the road of economic growth, keeping the consumers happy by means of debt-based retail therapy and the illusion of rising property values, although the majority of the workers in the Western countries had not enjoyed a significant rise in their post-inflation wage rates for many years.
But, despite all this, and the despite the fact that the crisis began in the USA, and that the United States, not China, dominates the IMF, the World Bank and the World Trade Organisation, and that China, in order to achieve the easing of the US-imposed Cold War economic sanctions against it, began in 1978 to gradually move away from socialism and towards capitalism, and despite - or rather because - China adopted the only available path to economic success in such circumstances- the path of attracting foriegn investment and exporting cheap manufactured goods to richer countries - China did play its part in creating the conditions for the present economic meltdown.
Irresespective of whether it is rising or falling in value, every coin has two sides; and while the globalised economy boomed the industrialising Chinese were perceived with as much awe as were the bankers and brokers of London and New York; inescapably therefore, China must share in the blame for the current debacle.
The People's Republic of China, in becoming a platform for the combination of its enormous low-paid labour force with modern production technology imported by means of attacting Western investments, and thus developing into a huge exporter of products, contributed to the rising global abundance of manufactured goods; although of course the vast majority of the people of the world could still barely afford to feed, house and clothe themselves and therefore those goods were aimed mainly at the rich consumers of the West and Japan.
Indeed, even the people of the rich countries, the majority of whose workers had not had a significant rise in real hourly pay for many years, could only afford to purchase this annually increasing volume of consumer products by means of accepting the increasingly fervently offered opportunities to deepen their debt, as purveyed by the banks and mortgage companies.
In the conclusion of his article, Sebastian Mallaby makes a remark which contains a grain of truth:
...there is no getting around China's culpability. The country relies on the sort of export-focused growth strategy that other Asian Tigers have pursued, with the difference that China is too big to go this route without destabilizing the world economy.
To the extent that China is guilty, it is because of its enourmous population size and because the USA and the US-controlled international trade and financial institutions would only relax their sanctions against China if it made the transition from socialism to capitalism; in which circumstance, the only available development path for China was that of becoming an export-oriented 'tiger economy'. On taking that path, the People's Republic of China exceeded all expectations.
It was by its very success as a rising capitalist nation, and by its great contribution to the temporary success of the capitalist global economy, that China played its part in creating the conditions which led to the eventual crash.
Confrontation inevitable
While the editors of the Economist are aghast at the prospect of a protectionist trade war by the USA against China, nevertheless they, along with the US Treasury Secretary and the Director of the IMF want the Chinese to change their pattern of economic development, by re-valuing their currency, 'expanding domestic demand' and ending the export-orientation of their industries. In fact, by accelerating the pace of state-led infrastructure projects, China's Communist Party leadership is increasing domestic demand, but that is not what the USA and the IMF, its multilateral proxy, are talking about. The West wants China to get its population of individual consumers to spend more money as a substitute for the earnings that China would lose if it reduced its exports, and the Chinese leaders have very sound reasons for resisting the pressure to do this.
China is a Third World country, and despite its recent decades of rapid growth it has a per-capita GDP, calculated by purchasing power parity, of only one-eighth that of the United States and one-sixth that of the West European countries. Even if each Chinese consumer were to increase their spending in the shops by, say, 25%, they would still, despite their large number, have only a small fraction of the purchasing power of the hundreds of millions of people in the rich countries. As Sebastian Mallaby's reference to the other 'Asian Tiger' economies indicates, history has not shown any other path to rapid economic development for a capitalist Third World country in a capitalist world except that of export-orientation; and by taking this path China has attracted foreign technology, built its industries, kept its unemployment rate relatively low in comparison to other less-developed countries, and delivered steady improvements in material living standards.
China's dynamic development has been temporarily de-railed by the economic crisis, but the Chinese leadership is counting on the global depression bottoming out in the next few years, following which China can resume its rapid export-led growth. Of course, this is a gamble. On the other hand, for China to take the option of ceasing its export-orientation would not be a gamble because the result would be certain- long term economic stagnation, accompanied by even higher unemployment and worse impoverishment than the present crisis will cause, and as a permanent feature.
Therefore the Chinese Communist Party will refuse to accept that option, and therefore we will see if the new US administration is willing to deliver on its threat of protectionist measures against China, despite the predictions that this would deepen and lengthen the current crisis.
Though the signs are not good, perhaps some compromise can be reached which postpones an economic confrontation. But one thing can be predicted with absolute certainty. The USA will not indefinitely continue to accept the gradual but ever-nearing prospect of being usurped from its position as the world's dominant nation, especially by a country whose ruling party- however capitalist its economic policies- is the Communist Party. Eventually, and by whatever means are available to it, the United States will confront China not merely as a competitor but as an enemy.
1 comment:
Sometimes, I wonder why I bother fighting so hard for the little guy. Whats the point if they are too stupid to listen? Say that reminds me.
Amazing. The worst economic and cultural crisis of all time will go down in history horribly misunderstood. What a pathetic bunch of ignorant fools we have become. Consumer junkie credit card morons. Perfect little victims.
Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold ALMOST 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates calculated and spun low by our sold-out government and the greedy pigs they cater to, this includes all stocks, bonds, cash, offshore accounts, and material assets held by America’s richest 1%. Even that filthy pig Oprah Winfrey acknowledged that it was near 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING SELF-CENTERED SELF-PROMOTING HYPOCRITE SLOB. THE RICHEST ONE PERCENT HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their 'good will' ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. THE EQUATION THEY STAND FOR ABSOLUTELY CAN NOT WORK. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. There are serious concequences for doing so. Regardless, there is always a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the currency looses value, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any ‘humanitarian’ progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So don’t fall for any of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. IF IT WEREN’T FOR THE OBSCENE, UNREASONABLE, AND UNJUST DISTRIBUTION OF UNITED STATES WEALTH, THERE NEVER WOULD HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE NEVER WOULD HAVE BEEN A COLLAPSE IN THE HOUSING MARKET. Sub-prime did not cause the problem. It only accelerated the outcome. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah Winfrey, Ellen DeGeneres, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. In fact, they specifically endorsed Countrywide by name. The same Countrywide widely responsible for predatory adjustable rate sub-prime lending and the accelerated collapse of the housing market. ENDORSED BY OPRAH WINFREY, ELLEN DEGENERES, AND DR PHIL. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. It also drives up the cost for nearly every product and service on the market. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. No offense fellow citizens. But we have been mislead by nearly every public figure. We still are. Even now, they claim to be ‘hurting’ right along with the rest of us. As if gas prices actually effect the lifestyle of a millionaire. ITS A LIE. IN 2007, THE RICHEST 1% INCREASED THEIR AVERAGE BOTTOM LINE WEALTH AGAIN. On average, they are now worth over $4,000,000 each. Thats an all time high. As a group, they are now worth well over $17,000,000,000,000. THATS WELL OVER SEVENTEEN TRILLION DOLLARS. Another all time high. Which by the way, is much more than the entire middle and lower classes combined. Also more than enough to pay off our national debt, fund the Iraq war for a decade, repair our infrastructure, and bail out the US housing market. Still think that our biggest problem is China? Think again. Its the one percent club. That means every big name celebrity, athlete, executive, entrepreneur, developer, banker, and lottery winner. Along with many attorneys, doctors, and politicians. If they are rich, then they are part of the problem. Their incredible wealth was not ‘created’, ‘generated’, grown in their back yard, or printed up on their command. It was transfered FROM US TO THEM. Directly and indirectly. Its become near impossible to spend a dollar without making some greedy pig even richer. Don’t be fooled by the occasional loss of a millionaire’s fortune. Overall, they just keep getting richer. They absolutely will not stop. Still, they have the nerve to pretend as if they care about ordinary people. ITS A LIE. NOTHING BUT CALCULATED PR CRAP. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The one percent club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Downsizing. Their idea. Sub-prime. Their idea. High energy prices. Their idea. Oil ‘futures’. Their idea. Obscene health care charges. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. The multi-million dollar endorsement deal. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. $50 event tickets. Their idea. $30 books. Their idea. $400 PC operating systems. Their idea. $60 video games. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea. Vioxx, and Celebrex. Their idea. Excessive medical testing. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, medical testing, love-sick, celebrity junkie. Their idea. IT WAS ALL THEIR IDEA. IT MAKES THEM RICHER. All of the above drive up the cost of living, shrink the middle class, concentrate the world’s wealth and resources, create a domino effect of socio-economic problems, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. In many cases, the ‘charitable’ contribution is almost entirely offset. Not to mention the opportunity to plug their name, image, product, and ‘good will’ all at once. Which is usually done just before or after the release of their latest commercial project. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to ‘federal tax revenue’. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for the majority because the executives, celebrities, athletes, attorneys, politicians, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid. Not to mention the spike in crime because of it. There is a domino effect to consider. IT CAN’T WORK THIS WAY. But our leaders refuse to acknowledge this. Instead they come up with one trick after another to milk the system and screw the majority. These decisions are heavily influensed by the 1% club. Every year, billions of federal tax dollars are diverted behind the scenes back to the rich and their respective industries. Loans from China have been necessary to compensate in part, for the red ink and multi-trillion dollar transfer of wealth to the rich. At the same time, the feds have been pushing more financial burden onto the states who push them lower onto the cities. Again, the hardship is felt more by the majority and less by the 1% club. The rich prefer to live in exclusive areas or upper class communities. They get the best of everything. Reliable city services, new schools, freshly paved roads, upscale parks, ect. The middle and lower class communities get little or nothing without a raise in basic service charges or local tax increase. Which, they usually can’t afford. So the red ink flows followed by service cuts and lay-offs. All because of the OBSCENE distribution of bottom line wealth in this country. Anyway, when you account for all federal, state, local taxes, and fees, the middle class actually pay about the same rate as the rich. The devil is in the details. So when people forgive the rich for their incredible greed and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, bankers, celebrities, athletes, attorneys, doctors, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Strong middle class, free and clear assets, lower crime rate, more widespread prosperity, stable job market, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth and resources than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, credit crunch, weak US dollar, 13 figure national debt, and 12 figure annual shortfall. The cost of living is higher than ever before. Most people can’t even afford basic health care. ALL BECAUSE OF GREED. I really don’t blame the upper class in general. At least not as a group and not without exception. No economy could ever function without some reasonable scale of personal wealth and income. But it can’t be allowed to run wild like a mad dog. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. UNBRIDLED CAPITALISM ABSOLUTELY CAN NOT WORK. TOP HEAVY ECONOMIES CAN NOT BE SUSTAINED. THEY ALWAYS COLLAPSE. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. The American dream will be shattered. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH MAKES WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman. Of course, they will jump to small minded conclusions about ‘jealousy’, ‘envy’, or ’socialism’. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its underlying cause. WE ARE IN BIG TROUBLE.
So what can we do about it? Well, not much. Unfortunately, we are stuck on a runaway train. The problem has gone unchecked for too many years. The US/global depression is comming thanks to the 1% club. It would take a massive effort by the vast majority to prevent it. Along with a voluntary sacrifice by the rich. THATS NOT GOING TO HAPPEN. But if you believe in miracles, then spend your money as wisely as possible. Especially in middle and lower class communities. Check the Fortune 500 list and limit your support of high profit/low labor industries (Hollywood, pro sports, energy, credit, pharmaceutical, cable, satelite, internet advertising, video, and music, cell phone, high fashion, jewelry, ect.). Cancel all but one credit card for emergencies only. Call the provider and demand a lower rate. Be persistent. You may get it. If you need a cell phone, then do your homework and find the best deal on a local pre-pay. If you want home internet access, then use the least expensive provider, and share accounts whenever possible. If you need to search, then use the less popular search engines. They usually produce the same results anyway. Don’t click on any internet ad. If you need the product or service, then look up the phone number or address and contact that business directly. Don’t pay to see any blockbuster movie. Instead, wait a few months and rent the DVD from a local store or buy it USED. Then loan it to a friend or family member. If you prefer the outing, then choose a film produced by the lesser known studeos with lower paid actors. If you want to see a big name game or event, then watch it in a local bar, club, or at home on network TV. Don’t buy any high end official merchendise and don’t support the high end sponsors. If its endorsed by a big name celebrity, then don’t buy it. If you can afford a new car, then make an exception for GM, Ford, and Dodge. If they don’t increase their market share soon, then a lot more people are going to get screwed out of their pensions and/or benefits. Of course, you must know by now to avoid those big trucks and SUVs unless you truly need one for its intended purpose. Don’t be ashamed to buy a foreign car if you prefer it. Afterall, those with the most fuel efficient vehicles consume a lot less foreign oil. Which accounts for a pretty big chunk of our trade deficit. Anyway, the global economy is worth supporting to some extent. Its the obscene profit margins, trade deficits, and BS from OPEC that get us into trouble. Otherwise, the global economy would be a good thing for everyone. Just keep in mind that the big 3 are struggling and they do produce a few smaller reliable cars. Don’t frequent any high end department store or any business in a newly developed upper class community. By doing so, you make developers richer and draw support away from industrial areas and away from the middle class communities. Instead, support the local retailer and the less popular shopping centers. Especially in lower or middle class communities. If you can afford to buy a home, then do so. But go smaller and less expensive. Don’t get yourself in too deep and don’t buy into the newly developed condos or gated communities. Instead, find a modest home in a building or neighborhood at least 20 years old. If you live in one of the poorer states, then try to support its economy first and foremost. Be on the lookout for commercial brainwash plots on TV. They are written into nearly every scene of nearly every show. Most cater to network sponsors and parent companies. Especially commercial health care. In particular, high profit pharmaceuticals and excessive medical testing. DON'T FALL FOR IT. Get off the couch and take care of your body the way nature intended. There is no substitute. If you must see a doctor then DEMAND that he/she give you more than 5 minutes of their undivided attention. Otherwise, dispute their unreasonable charges. Be prepared with written questions about your condition and get them answered one at a time. If they refuse, then dispute their unreasonable charges. If they prescribe excessive medical testing and find nothing new or signifigant, then dispute their unreasonable charges. If they prescribe a pharmaceutical, then ask for a generic. Better yet, concider a change in lifestyle or simple tolerance. If they still recommend the name brand pharmaceutical, then ask about any financial ties or conflict of interest. If they get offended, then dispute their unreasonable charges and consider a new doctor. If you must drug away your sniffles, aches, and pains, then at least do your homework. Be aware of the possible side-effects ahead of time. Don't be surprised to find yourself back a week or two later feeling worse. In which case, you should dispute their unreasonable charges. If you are diagnosed with another medical condition, then ask your doctor what he/she has done to rule out those possible side-effects. Otherwise, dispute their unreasonable charges. Don't let any greedy doctor treat you like a number, make you wait an hour, or rush you out of their office. Otherwise, dispute their unreasonable charges. Don't fall for this CRAP that doctors have no choice but to over-book their time or over-charge their patients because of high overhead. ITS A LIE. YOUR DOCTOR IS MOST LIKELY A MULTI-MILLIONAIRE. So don't fall for their CRAP. Demand their undivided attention and respect. Afterall, they took an oath. Do all of the above regardless of your coverage. Don't force your employer to cover the obscene and often fraudulent charges of a corrupt health care industry. Keep your guard up when watching ANY talk show. These people are not your friends. They are paid actors hired for their ability to plug network sponsors, coorporate partners, and parent companies. Nearly every segment is about marketing some over-priced product or service. Big business is fine on occasion depending on their ethics, profit margins, and profit sharing. Do your homework. If you want to support any legitimate charity, then do so directly. Never support any celebrity foundation. They spend most of their funding on PR campaigns, exotic travel, and high end accomodations for themselves. Thats right. Filthy rich public figures have been jet-setting the world in the name of 'humanity' for years. Riding in personal jets, staying in super-exclusive resorts, and living it up in exotic locations around the world the likes of which most people could never afford even if their lives depended on it. They bring along agents, advisors, publicists, hair, make-up, wardrobe, lighting, and photo crews who are also in it for themselves. They are paid six figures for their ability to schedule, manage, document, showcase, praise, and publicize the 'good will' of said public figures and their respective industries. Every possible expense is passed of as 'incidental' or 'necessary' and billed right back to some 'foundation' named after said public figure and/or respective industry. Every possible tax deduction is claimed. Which are incredibly vague and diverse thanks to our sold-out government. Deals are cut with major networks who agree to praise the 'humanitarian' effort of said public figures and plug their latest commercial project. Others from around the world pick up the story and save these industries billions in advertising every year. Resulting in higher profits and paychecks for the 1% club. When its all said and done more wealth is transfered from poor to rich. NOT the other way around. So don't support any charity named after a living celebrity. Don't be fooled by any affiliation or inspired by any short term short sighted progress report. Instead, go to Charitywatch.org and look up a top rated charity to support your favorite cause. Its all there. For example: 'Habitat For Humanity' is a top rated charity. They operate with a low overhead, volunteer workforce, and donated materials. They have built homes for the less fortunate in nearly every city nationwide. Including New Orleans. They do so as we speak. No similar effort can match their progress hour for hour or dollar for dollar. So there is no legitimate reason to support a slower, less efficient effort represented by a filthy rich Hollywood actor who flies in on a personal jet, takes most of the credit, and makes a deal with a major network for plugs just days before the premier of his latest film or DVD release. By doing so, you support not only the effort, but also the filthy rich actor. Concentrating more wealth and dumbing down our society further in the process. Instead, support 'Habitat For Humanity'. Its not perfect. It is affiliated with some big business. However, it is MUCH more efficient, effective, and less corrupt than 'Make It Right'. The difference is profound. In general, support the little guy as much as possible and the big guy as little as possible. Keep your own greed in check. Don't play the lottery and don't invest only for profit. If you do come into a fortune, then give away the bulk of it to others who have far less. Find the courage and do it. STAY OUT OF THE 1% CLUB. Encourage others to do the same. Their standard is obscene, unjust, illogical, and immoral. There is no excuse for it. Do your part to reverse the transfer of wealth away from the rich and back to the middle and lower classes. Otherwise, there will be no economic recovery EVER. Unfortunately, there is no perfect answer. Jobs will be lost either way. Families will go cold and hungry either way. Innocent children will starve and die either way. But we need to support the largest group of workers with the most reasonable profit margins. We need to stand for a more reasonable distribution of income, bottom line wealth, and resources. We also need to support LEGITIMATE charities (Check that list at Charitywatch.org). This is our only chance to limit the severity or duration of the comming US/global depression. In the meantime, don’t listen to Bernanke, Paulson, Bartiromo, Orman, Dobbs, Kramer, Pickens, Larson, OReiley, Bruce, Inghram, or any other public figure with regard to the economy. They are all plenty smart but I swear to you that they will lie right through their rotten teeth. IT MAKES THEM RICHER. These people work for big business. The ‘experts’ they cite also work for big business. They are all motivated by their desire to accumulate more wealth. THEY WILL LIE RIGHT THROUGH THEIR ROTTEN TEETH. So don’t fall for their tricks. Instead, look at the big picture. The economic problems we face have been mounting for well over 20 years. All of them caused or aggrivated by a constant transfer of wealth from poor to rich. Soon, it will cause the first ever GLOBAL DEPRESSION. Its not brain surgery. For the mostpart, Its simple math. Like I said, you are welcome to copy this entry and run it by any professor of economics or socio-economics. If thats not good enough, then look up what Albert Einstein had to say about greed, extreme wealth, and its horrible concequences. I speak the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.
Its already underway. A massive campaign to divert our attention. Trump, Buffet, OReiley, Dobbs, Pickens, Norris, and several other well known filthy rich public figures have been running their mouths about the economy. Finally admitting a hint of severity after almost 2 years of denial. They even have the nerve to acknowledge the possibility of a US/global depression. Still, they refuse to acknowledge the single greatest underlying cause. Instead, they focus on policies, procedures, and circumstances that were born FROM the underlying cause. Dancing their way around the big picture. DON'T FALL FOR IT. Remember: Our national debt was way up BEFORE sub-prime. Consumer debt was way up BEFORE sub-prime. The cost of living was up BEFORE sub-prime. Wall Street profits were obscene BEFORE sub-prime. The middle class were loosing free and clear assets BEFORE sub-prime. Our infrastructure was in bad shape BEFORE sub-prime. Loans from China were taken out BEFORE sub-prime. The dollar was loosing value BEFORE sub-prime. So don’t let these cowardly filthy rich public figures divert your attention or limit your range of thought. THE CURRENT ECONOMIC CRISIS WAS NOT CAUSED BY A SINGLE POLICY OR PROCEDURE. IT WAS CAUSED PRIMARILY BY A MASSIVE TRANSFER OF WEALTH FROM POOR TO RICH. THIS ALSO REPRESENTS A MASSIVE CONCENTRATION OF CAPITAL WORLDWIDE. OTHERWISE, THERE WOULD NOT HAVE BEEN SUCH A MARKET FOR SUB-PRIME AND THERE WOULD NOT HAVE BEEN A GLOBAL CREDIT CRUNCH. MONEY DOES NOT GROW ON TREES AND IT DOES NOT JUST FLOAT AWAY. IT ONLY TRANSFERS FROM ONE PARTY TO ANOTHER. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. GREED KILLS. IT WILL BE OUR DOWNFALL.
A word for those who respond with the usual ‘I know more than you. I spell better than you. I talk like an economist. Look how smart, knowledgable, and articulate I am’ crap. Let me say this in advance. I don’t claim to be an expert in this field. But I did go on record with these predictions long before any public figure uttered the word ‘recession’. I've done so 'on the air' and 'online'. Millions of you already know my voice. My first call was in September of '05'. I tried to explain that we will never have world peace without world prosperity and that we will never have world prosperity without a 'fair and reasonable pay-scale'. I also tried to explain the link between 'extreme wealth' and 'extreme poverty'. My call was immediately followed by attacks from so called 'patriots' who felt that my cause must have been to promote 'socialism' or 'bring down America'. Not warn her citizens. You may also remember me from chat rooms criticizing the 1% club and Hollywood humanitarians in particular. If you search long enough, you will find my early postings online from ‘05' and ‘06'. At first, they were written specifically to fit within a few hundred characters. Including the first draft of this rant. It started with one short paragraph predicting a 'total collapse of the US economy'. Others included phrases like 'game of Monopoly', 'recession is inevitable', 'global recession', 'greed kills', and 'the worst economic and cultural crisis of all time'. Some of which were eventually included here. From day 1, I have tried to explain the link between extreme wealth, poverty, and economic instability. My internet account was eventually cancelled for posting 'spam' in response to articles about the economy. In December of '06', I predicted market instability by spring of the following year. I did so 'on the air'. In January of '07', I called another morning talk show and spoke with a guest host who was filling in for a well known public figure. Again, I specifically predicted growing market instability, the current US recession, and the subsequent US/global depression.Which by the way, will be the worst of all time by far. In February of '07', Allen Greenspan acknowledged a 'one in three' chance of a US recession. I immediately called another talk radio show and guranteed AGAIN that it was iminent. I criticized Greenspan and tried to explain that it was not about 'odds' but instead a very simple equation with regard to distribution of income and wealth. I also gave credit to Albert Einstein who went on record with similar views in 1949. As far as I know, he was the first to do so. By late spring of '07', the market was rattled and the economic 'stimulus' in the works. Which turned out to be around $160,000,000,000. THATS ONE HUNDRED AND SIXTY BILLION DOLLARS. Well over 1% of our GDP. Deemed appropriate at the time by our leaders. In fact, Bush went on record with a claim that it was based on a mathematical formula and proven strategy. They said it would work. I immediately predicted that it would have little or no effect. By summer of '07' the stock market was more unstable. The housing market in decline. Again, I predicted that it would get MUCH worse. In September of '07', I predicted that our government would have no choice but to acknowledge a US recession by October of '08'. I also assured the audiance that our economy would "go down in a ball of flames" because of greed and that no recovery would EVER take place without a more reasonable distribution of wealth and resources. I have made these predictions 'on air' and 'online' literally hundreds of times. The first call was in September of '05'. Made to a well known public figure with a large audiance. The first blog post a month or so later. Prior to that, I had never even seen one. In fact, my very first post to a blog was written specifically to warn my fellow citizens about the comming US/global depression. Which I was already convinced at the time would be SEVERE within a decade. That was in October of '05'. At the time, there were literally only a few of us worldwide posting any such prediction online. I'm talking maybe a dozen searchable links. This particular rant began with one short paragraph in '06'. Like the others, it was originally intended to fit within a few hundred characters. At the time, I was unaware of any blogs which allowed for longer entries to be posted anonymously. This paragraph was first written in early-mid '08'. Its been updated several times. There has also been a running debate on iVillage.com which began in October of '07' (don't click on their ads). In February or March of '08', I refered specifically to the bank failures of the Great Depression and predicted that it was about to happen again. At the time, I was one of only a few worldwide to go on record with any such prediction. This was still several weeks to months before Greenspan, Paulson, Bartiromo, Orman, Kramer, O'Reiley, Larson, Bohanen, Dobbs, Celeste or any other well known public figure had acknowledged even a hint of severity. It was also several weeks before Fanny May and Freddie Mac made the news. I also predicted in March that our markets would end the year much lower than they began. Which was still contrary to what we were being told by any public figure. I was allowed to post but when my predictions came true, the site operators went back all the way to October of '07' and deleted nearly every one of my previous entries (they missed a few.). Their motive was obvious. They wanted to 'erase' my credibility. IVillage.com is directly affiliated with NBC, GE, Universal Studeos, Countrywide, CityBank, Capital One, Oprah Winfrey, Angelina Jolie, Brad Pitt, Ellen Degeneres, Dr Phil, and others who I persecute by name. All of which depend on the constant dumbing down of society. All of whom are partially responsible for the current economic crisis. None of which or whom have the GUTS to acknowledge the single greatest underlying cause. GREED. In fact, those who epitomoze it (all of the above) want my big mouth SHUT. For 3 solid years, I have been ripping on the 1% club for their incredible greed and hypocrisy. From day 1, my call has been for a more reasonable distribution of income, wealth, and resources. My warning that without it, we would face the worst economic and cultural crisis of all time. Since then, I’ve gone on record against people like Greenspan, Bernanke, Paulson, Laffer, O'Reiley, Bartiromo, Orman, Kramer, Larson, and Dobbs. So far, my predictions have been accurate. The public figures DEAD WRONG. Afterall, not one of them acknowledged even a hint of severity in '05', '06', or '07'. When they FINALLY did this year, they all said something to the effect of "None of us saw this comming.". LIARS. There were a few of us typing our fingers to the bone trying to warn people. There were a few of us calling talk radio shows almost daily trying to warn people. I was one of them. Again, I don't claim to be an expert in this field. But I do understand simple equations, basic economics, and cultural trends. I also realize that mainstream views are DEAD WRONG and based on LIES told by filthy rich public figures who will say whatever it takes to serve their own interests. GREED. Afterall, what kind of incredible MORON could even glance at the numbers and somehow think the equation could work? What kind of incredible MORON could possibly hope to sustain an economy based on a constant transfer of wealth from poor to rich? What the hell did they expect to happen when the middle class finally ran low on money to spend on over-priced crap like everything that I mentioned in that first long paragraph? What the hell were they thinking of? I'll tell you what. RICHES. FILTHY STINKING RICHES. Thats what. Now, they are spinning themselves dizzy trying to divert our attention. Mark my words: They will never acknowledge the downside of their own incredible greed. They will all come up with one campaign after another to blame the other guy, the other administration, the other politician, the other party, the other policy, the other industry, the other country, ect. Whatever it takes to dumb down our society. They will NEVER have the GUTS to acknowledge the single greatest underlying cause for this global economic crisis. GREED. Its not their knowledge I question. Its their character. GREED. Like I said. This is not brain surgery. For the mostpart, its simple math. When you concentrate the world’s wealth, you also concentrate its capital, and shrink the middle class along with the potential market for every major industry. Homes go unsold. Bills go unpaid. Jobs are lost. Banks fail. More products go unsold. More jobs are lost. More banks fail. and so on. and so on. and so on. It happened 80 years ago. It will happen again. This time on a catastrophic global scale. Throughout the cycle, the filthy rich will panic and tighten their grip. Concentrating the world’s wealth and resources even further, getting richer in the process, and ensuring the collapse of every major economy worldwide. Think it can’t happen? Think again. GREED KILLS. IT WILL BE OUR DOWNFALL.
Another thing. I don’t want credit for any of this. Otherwise, I would have given my full name a long time ago. I havn't. IT DOESN'T MATTER. I'm not selling a book and I'm not looking for any notoriety. At least not yet. I do have a plan to go public when my parents die. In fact, I have BIG plans for my inheritence. Every single penny of it. In the meantime, I don't want them to know about it. I also don't want them punished for my big mouth. Which is why I've gone out of my way to remain anonymous for 3 solid years. When I do go public, it won't be for profit and it won't be for popularity. It will be for a legitimate cause and NOTHING ELSE. In fact, I hope to be just one of many. In the meantime, I don't care who gets to say "I told you so." IT DOESN'T MATTER. As far as I’m concerned, you can put this entire rant in your own words and take credit for all of it. I don’t care. Just spread the word. Otherwise, the greatest injustice of all time will go down in history unchecked.
By the way. The bailout won’t work. IT WON’T WORK. The plan fails to address the fundamental problem. The middle class don’t need more credit. They need a reasonable share of the economic pie. They also need a lower cost of living and a chance to catch their breath. They need a break from all of the psychological marketing tricks and mass market BS. Most of all, they need to wake up and see the truth. GREED KILLS. IT WILL BE OUR DOWNFALL.
10.01.08
To my surprise, two public figures have found the courage to acknowledge this problem to some degree. On 11.07.07 former presidential candidate Ron Paul mentioned the massive transfer of wealth from poor to rich. He also hinted at the possibility of economic collapse. He did so on 'Face the Nation'. He was blacklisted almost immediately for doing so. On 9.28.08 former secretary of labor Robert Reich refered to the obscene levels of income inequality as part of a "recipe for disaster". He mentioned the richest one percent in particular. He did so on 'Late Night With Conan O'Brien'. As far as I know, Albert Einstein was the first to explain the link between extreme wealth and economic instability. He did so in 1949. He explained how the first Great Depression was actually caused by a massive transfer of wealth from poor to rich. He predicted that it would happen again. He also predicted much greater levels of economic instability proportional to much greater levels of income and wealth inequality. He was right. Amazing. The prosperity of an entire world is about to be compromised. Almost entirely because of greed. IT WILL BE OUR DOWNFALL.
Another word about the Great Depression. It really was a perfect storm. First, there was unprecidented economic growth. There was a massive building spree. There was a growing sense of optimism. There was a growing obsession for celebrities. The average American became a pathetic, brainwshed, consumer junkie, moron. All of this represented a MASSIVE transfer of wealth from poor to rich. Executives, entrepreneurs, celebrities, and share holders. When the middle class ran low on money to spend UP, DOWN, and ACROSS, the rich did what they felt necessary to maintain their disgusting profit margins and ill-gotten obscene levels of wealth as long as possible. They cut jobs. The small business owners did what they felt necessary to survive. They cut jobs. The losses were felt primarily by the little guy. This created a domino effect. The middle class shrunk and the lower class expanded. With less wealth in active circulation, banks failed by the hundreds. More jobs were lost. Unemployment reached 25% in 1933. The worst year of the Great Depression. The recovery involved a World War and higher taxes on the rich. With so many men in the service, so many women on the production line, and those higher taxes to help pay for it, the lions share of United States wealth was gradually transfered back to the middle class. This redistribution of wealth continued until the late seventies. At the time, the richest 1% reaped about 10% of all private income and held about 20% of all United States wealth. Far less than previous levels. The middle class had home equity, free and clear assets, and money in the bank. The tide began to change. Jimmy Carter was blamed for a recession that was caused by a number of global circumstances including greed. Then a short sighted pig by the name of Arthur Laffer came along. He convinced Ronald Reagan to grant massive tax breaks to the rich and their respective industries. His half-baked theory was that by doing so, unprecidented levels of economic growth could be achieved. He was right. Unfortunately, he failed to see or acknowledge the big picture. That 'economic growth' and 'actual prosperity' are two different things. Jobs don't 'create' wealth. They only transfer it from one party to another. The devil is in the details. Reaganomics, gave the rich and their respective industries the incentive to 'expand' and 'create jobs'. But those products and services were over-priced and then sold or billed right back to the people. Often, without their knowledge, understanding, or consent. Certainly without a clue about how the economy REALLY works. All of this resulted in higher profits for those at the top and stagnant wages for everyone else. So with Reaganomics, the transfer of wealth from poor to rich was kicked back into high gear. Here we are 27 years later. Another perfect storm. The big one. Not only have we become a nation of consumer junkie credit card morons. But we have also become fat, stupid, and programmed to live by drug and doctor. We spend most of our spare time on the couch getting brainwashed by public figures. Even worse, those public figures have re-defined any logical standard we ever had for 'good will'. Mother Teresa is dead. America's favorite 'humanitarian' is now a filthy rich multi-media pig who reaped a billion dollar fortune from the middle class by making damn sure they stay on that couch long enough to watch her show and read her magazine. Transforming them into pathetic, naive, love-sick fools who turn around and buy any product or service endorsed by their idol. The same goes for Ellen Degeneres and her respective audiance. In fact, every filthy rich well known public figure and every major industry have followed suit with a similar marketing strategy. Dumbing down our society and cashing in on bogus promises to make the world a better place. Amazing. EVERY big business, EVERY big celebrity, EVERY billionaire, and damn near every multi-millionaire on the planet have all taken up 'phylanthropy' or 'good will'. Those with the most money, also have the most power, and influense by far. They own or influense every government, manage every major industry, and the lion's share of life sustaining resources. They literally rule our world. Still, every major problem of modern society gets worse by the day. The world's wealth is more concentrated than ever before. Her life sustaining resources are in high demand, more expensive than ever, and squandered by the rich on extravogant living. Meanwhile, families loose their homes, retirees loose their pensions, heroes loose their lives, crime is up, and red ink flows in nearly every community. The global economy is in a state of crisis. The prosperity of an entire world is about to be compromised. Still, those with the most power, money, influense, and 'good will'. promise to make it all better. If only we continue to support them and buy any product or service with their name on it. IT IS A SHAM. GOOD WILL HAS BECOME BIG BUSINESS.
The point about our government printing up more money was that it can't be done "on a whim" and that there are serious concequences for doing so (weak dollar, higher gas prices, inflation). I never said that it can't be or hasn't been done at all. Afterall, those loans from China weren't infused in the form of Chinese currency. They were infused in the form of our own. Not given to the middle or lower classes but instead to the banks in the form of credit. Its done nothing but perpetuate the problem. It never has been and never will be the answer. Sorry if I wasn't explicit enough the first time. The original draft of this particular rant was written 2 years ago and intended to fit within 300 characters. Anyway, I'm no English major. So if any of you want to re-word this post, feel free to do so. Whatever it takes to make people understand.
11/05/08
A new president will be taking office soon. Backed up by a heavily democratic congress who have all campaigned on a promise to raise taxes on the rich. Unfortunately, this will be too little too late. Nowhere near enough to compensate for the incredible corruption of both major parties. Nowhere near enough to pay for the bailout. Nowhere near enough to stop that runaway train. There will be no change for the better. Obama's financial advisers are pigs. Warren Buffet is a pig. Oprah Winfrey is a pig. Obama himself is a multi-millionaire politician married to a multi-millionaire attorney. He has already run the most expensive political campaign in history. Some of it squandered on a $400 lobster feast for his wife. Financed for the mostpart by ordinary people who can't even afford a $400 lobster feast. It happened on Obama's watch. Probably more than once. He even had the nerve to ask those ordinary people to help pay off the campaign debt of another filthy rich multi-millionaire politician PIG (Hilary Clinton). I will admit that Barack Obama seems to have more character than most of his colleagues. Certainly more than Clinton, Gore, McCain, Palin, Bush, Cheney, Romney, Schwarznenager, Palosi, Kerry, Guliani, Kennedy, Bloomberg, or Edwards. He was probably a very good down to earth man at one time. The same goes for Joe Biden. Not anymore. Afterall, John McCain was also a very good down to earth man at one time. A true American hero. NOT ANYMORE. Now, he is a filthy rich politician pig married to a filthy rich big business pig. SOLD OUT. Mark my words: Obama and Biden will do the same. Whatever moral character they may have left, will be lost or heavily compromised while in office. Like the others, their administration will be riddled with scandals of greed and corruption. Like the others, they will succumb to the greatest epidemic ever faced by modern man. By far, the most intoxicating element of modern society. Greed. Simply the desire to get as rich as possible. It has the potential to blacken any heart. Break the will of any human being. Influense any government. Corrupt any society. Those who succumb to it are lost forever. You can not get through to these people. You can not make them understand. No matter how bad it gets for the little guy. No matter how many families loose their homes. No matter how many people go cold and hungry. No matter how many innocent children starve and die. No matter how much blood is shed. NO MATTER WHAT HAPPENS. The rich will ALWAYS blame the other guy. They will ALWAYS say or do whatever it takes to secure their own extreme personal wealth. When they 'give back', its only because they expect more in return. They will NEVER compromise their own bottom line. They will NEVER jeapordize their position in the 1% club. They will NEVER stand for a more reasonable distribution of wealth and resources. They will NEVER acknowledge greed as a form of evil. They will NEVER acknolwedge the potential it has to ruin EVERYTHING. They will NEVER admit the simple truth. GREED KILLS. IT WILL BE OUR DOWNFALL.
Ford, GM, and Dodge are begging the current admistration for some type of 'bridge loan' in order to avoid bankruptcy. The unions are begging for it. The people are divided. All because of a LIE. Again, we have been mislead. I'm not disputing their need. Its legit. I'm disputing the underlying cause. Competition my ass. China my ass. Japan my ass. Those factors are real but not fatal. They are also concequential. Not primary. Again, its GREED and CORRUPTION. Not only that of the auto executives and celebrities who demand millions to endorse the product but also within the health care industry. Thats right. Health care. The average doctor is a millionaire several times over. The average health care executive many times over. Both on average, are members of the 1% club. AGAIN, ITS THEIR FAULT. If it weren't for the OBSCENE health care charges, brainwash plots, and artificially inflated market, then the financial burden placed on Ford, GM, and Dodge wouldn't be anywhere near as high. They could easily match the labor of Honda, Toyota, and Hyndai who's workers are younger on average and not so demanding when it comes to 'health care'. In this case, the little guy is partly to blame for their incredible ignorance. They smoke, drink, get fat, fall for the most OBVIOUS health care scams, live by drug and doctor, kiss greedy doctor ass, drive up the cost of their own health care, demand full coverage, and then strike if they don't get it. Retired US auto workers on average are now causing their former employers to incur an additional $500,000 PER RETIREE in health care expenses over the span of their retirement. Those in the current workforce are partly to blame as well. Not for greed. Their wages are reasonable. But their health care demands are well in excess. If they would simply open their eyes, acknowledge the incredible greed and corruption within the health care industry, get off the couch, get off the pharmaceuticals, and take care of their own bodies, then their own cost of living would be lower, their health would be better, the market for their product would be higher, and the financial burden placed on Ford, GM, and Dodge would be MUCH lower. I'm not discounting other factors like gas prices, competition, and the US product line. But greed and ignorance wreak havok like no other elements of our society. They cause or allow the cost of living to rise and the middle class to shrink along with the potential market for every major industry. In this case, they also raise the financial burden placed on US auto makers. Mark my words: One or two US automakers will go bankrupt. They will do so regardless of any 'bridge loan'. Other well known foreign auto makers will follow. The entire manufacturing industry will become a shell of its former self. Millions of retirees will be cut off entirely. ALL BECAUSE OF GREED, CORRUPTION, AND IGNORANCE. The ripple effect is profound. IT WILL BE OUR DOWNFALL.
12/16/08
The feds have reduced their interest rate to an all time low. IT WON'T WORK. The same goes for any potential bailout for the US auto industry or any other. IT WON'T WORK. IT ABSOLUTELY POSITIVELY WILL NOT WORK. I would bet my life on it a hundred times over. Again, our own leaders refuse to acknowledge the single greatest drag on our economy. The single greatest underlying cause for the global economic crisis. GREED. They all refuse to acknowledge the downside. That idiot pig Arthur Laffer refuses to acknowledge it. Greenspan, Bernanke, and Paulson refuse to acknowledge it. Bush, Clinton, Kerry, Gore, Obama, and Kennedy refuse to acknowledge it. Lars Larson, Tammy Bruce, Lou Dobbs, Mike Gallagher, Suze Orman, Bill O'Reiley, Maria Bartiromo, Jim Kramer, Rush Limbaugh, and Jim Bohanan refuse to acknowledge it. Bill Gates, Warren Buffet, Oprah Winfrey, Richard Branson, and T-Boone Pickens refuse to acknowledge it. The same goes for all of their filthy-rich billionaire friends. All of the above are hypocrite pigs who don't have the guts to admit the simple truth. This is not brain surgery. For the mostpart, its simple math. WE ARE IN THIS MESS BECAUSE OF GREED. The world's richest one percent are now so incredibly rich that there simply isn't enough wealth circulating beneath them to sustain the global economy. Its on the brink of collapse. IT WILL COLLAPSE. We are now entering what will go down in history as the worst economic and cultural crisis of all time by far. You think its bad now? YOU AIN'T SEEN NOTHING YET. NOTHING. Trillions more in wealth/capital will be concentrated (Not lost. Concentrated.). Many more banks large and small will fail. Tens of millions will loose their savings (Transfered from poor to rich.). Even FDIC accounts will be forfeited (Yes they will. Yes they will. Yes they will.). Every major industry will become a shell of its former self. Unemployment will reach unprecidented levels. Millions of retirees will be cut off entirely. The lower class will become dominant. The financial aid system will fail miserably. The vast majority of those in need will have no access. Crime, poverty, and suicide will skyrocket. There will be riots and random acts of violence at banks, hospitals, and government buildings. The next generation will be left to fight in the crumbling streets over a shattered American dream. The rest of the world will have it even worse. So don't blame innocent people from other countries you idiots. Blame the rich. Blame the government. Blame the health care industry. Then blame yourselves for being so stupid for so many years. We have allowed a particular form of evil to grow out of control, intoxicate our society, consume our government, wreak havok on our own economy and culture, RUIN any chance we ever had at world prosperity, and jeapordize the very foundation of modern society. At the same time, we have allowed those who epitomize it to get away with calling themselves 'heroes' or 'humanitarians'. Putting a happy face on greed and dumbing down our society further in the process. THAT MEANS YOU. So wake up fellow citizens. Grow a spine. Don't fall for all of this 'good will' 'humanitarian' BS from the rich. IT IS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. Instead, look at the bottom line. IT'S F#@&#%$ OBSCENE. NOW GET IT THROUGH YOUR THICK SKULLS YOU IDIOTS. WE ARE IN THIS MESS BECAUSE OF GREED. AMERICA'S RICHEST ONE PERCENT NOW OWN ALMOST 1/2 OF ALL UNITED STATES WEALTH. THE WORLD'S RICHEST ONE PERCENT NOW OWN OVER 40% OF ALL WORLD WEALTH. THATS WAY TOO MUCH. THESE PEOPLE ARE NOT HEROES. THEY ARE NOT HUMANITARIANS. THEY ARE DISGUSTING HYPOCRITE SLOBS. IT DOES NOT MATTER HOW MUCH THEY GIVE BACK. THEY STILL KEEP WAY TOO MUCH. IT CAN'T WORK THIS WAY. IT ABSOLUTELY POSITIVELY CAN NOT WORK THIS WAY. IT NEVER HAS AND IT NEVER WILL. GREED KILLS. IT WILL BE OUR DOWNFALL.
1% CLUB PIGS: I've said it many times and I will say it many more. Greed is not the desire to break the law or intentionally oppress another human being. Greed is simply the desire to take more than your reasonable share of wealth or any limited resource. By doing so, you reduce the value of currency and raise the cost of living worldwide. You cause a domino-effect of socio-economic problems. You literally cause innocent people to suffer and die. YOU MAKE WORLD PROSPERITY MATHEMATICALLY AND PHYSICALLY IMPOSSIBLE. It does not matter how much you 'give back'. It matters how much you KEEP. This is why I will go to my grave with nothing but bleeding and burning hatred for all of you. Thats right. I hate you and I'm not afraid to admit it. Afterall, its OK to hate a rapist. Its OK to hate a terrorist. I do. But I also hate wolves in sheep's clothing. THAT MEANS YOU. In fact, I consider the equation you stand for to be the greatest injustice of all time. It makes my f$#@&$# blood boil. Jealosy my ass. Low self-esteem my ass. Self-pity my ass. Anyone who still thinks that after reading all of this is a F&#@%$# MORON. You disgusting hypocrite pigs. I've noticed the little shots you've been taking at me, a few others, and the cause we stand for. The psychological stunts. Thats right Will Smith, Angelina Jolie, Brad Pitt, Today Show pigs, Regis and Kelly, Ellen DeGeneres, Dr Phil, Oprah Winfrey, Lars Larson, Bill O'Reiley, Lou Dobbs, Ann Coulter, Tammy Bruce, Laura Inghram. I've noticed the crafty elusive statements you've been making about greed and subtle insults directed at those very few of us who stand against it. I also know that you're well aware of this campaign and that you're trying to shut it down. You've even gone out of your way to specifically attack 'anonymous' bloggers in general. As if we are somehow less credible without a registered account. I'm not the slightest bit intimidated by any of it. YOUR TRICKS WILL NEVER WORK ON ME. Mark my words: No matter what you say or do, I will spend the rest of my life persecuting all of you for the disgusting, obscene, unjust, illogical, and immoral equation you stand for. I won't break any laws. I won't harm one hair on your rotten heads. Its not that I don't wish you were gone. I do. But I would never jeapordize such an important cause with a criminal act. NEVER. My only realistic goal is to make as many people as possible understand. Including future generations. I hope they look back on these words and spit on your graves. Afterall, they won't achieve any degree of world peace or prosperity until after they acknowledge GREED as a form of EVIL. NEVER. Not until they acknowledge it with a number or some type of material standard. In the unlikely event they ever do, I hope they FINALLY come up with a system that works for the vast majority. One with a reasonable pay scale and caps on personal wealth. Otherwise, their system will fail over and over again. Just like the one you stand for. It can't work this way. It never has and it never will. NEVER. NO WAY IN HELL. So mark my words: I will not make excuses for a single one of you. I don't care how smart you think you are. I don't care how talented you think you are. I don't care how pretty you think you are. I don't care what you think you've done to earn twenty to fourty thousand times the pay (Yes. I did the math.) of a firefighter, soldier, farmer, teacher, cop, truck driver, or garbageman. You're not worth it. I don't even care if your personal fortune fell out of the sky. If you're rich, I hate you. I don't care how much you 'give back'. I care how much you keep. Therefore, I will do everything within my power and within the law to expose your incredible greed and hypocrisy. If you want to break my will, then you're going to have to break my neck first. and if you pull a stunt like that, then a lot of people will know what happened to me and why. I've planned in detail for it. You have no idea. Regardless, you pigs will not go down in history as 'heroes' or 'humanitarians'. Not if I can help it. We're in this mess primarily because of you. Its going to get MUCH worse primarily because of you. Thats what I believe and thats the message I intend to spread for the rest of my life. DEAL WITH IT.
1.21.09
A few more words about our new president and how certain public figures are using him to divert our attention, dumb down our society, shut my big mouth, and discredit the cause I stand for. I said it during the presidential campaign, I said it again in November, and I will say it again now. Our new president has more character than most of his colleagues. Much more. In fact, he puts Bush, Cheney, Rice, Clinton, Gore, Palosi, Reagan, Carter, Romney, Schwarzenegger, Bloomberg, and Kennedy to shame. He also puts nearly every living public figure to shame. Including those who claim to support him. By politician, public figure, and 1% club standards, he is an angel. That being said, he is still a politician. Still a public figure. Still a member of the one percent club. Just a man. Like any other, he is a product not only of genetics but also of his environment. Like any other, he is intoxicated by certain elements of modern society. Including three of the worst. Fame, fortune, and power. All three have the potential to corrupt the mind, the heart, and the will of any human being. I can name only one who resisted the influense of all three. Mother Teresa died in 1998. The amazing standard she set died with her. Since then, an army of public figures and false heroes have sold out the very concept of 'good will'. Capitalizing on bogus promises to make the world a better place. The vast majority, on day one. The rest, along the way. Obama will do the same. Its just pathetic human nature. Put any man or woman on a stage or throne and something about them is different. Make any man or woman rich and something about them is different. I said it in November and I will say it again. Barack Obama was probably a very good down to earth man at one time. That was before the corrupt influense of fame, fortune, and power. Now, something about him is different. The same goes for Michelle Obama. They have already begun to sell out. Not only as necessary during the campaign because of our ignorant society and the fact that we won't elect ANYONE unless they look a certain way, dress a certain way, talk a certain way, kiss our babies, cut our taxes, tell us what we want to hear no matter how unrealistic, believe in God, follow a certain religion, support a certain industry, and show up on our favorite talk show with a fake smile, stupid jokes, and lame dance moves. That was bad enough. A sell-out necessary to get elected by a pathetic, ignorant, naive, short sighted, half-wit, couch potatoe, love-sick, celebrity junkie society. But also for profit before, during, and after the election. I already mentioned the $400 lunchtime lobster feast. Paid for mostly by ordinary people who were willing to cut into their modest bottom lines in order to help get their hero elected. That was bad enough. Another sign of the times. As expected, its already getting worse. I have no problem with the armor plated presidential limo, the extra security, the inauguration, or the speech. I have no problem with the concept of a public celebration. But I do have a problem with the $35,000 ring, the $150,000 dress, the exotic crystal, the exotic food, the coorporate plugs, NBC, MTV, BET, Beyonce, LL Cool J, Miley Cyrus, and every other filthy rich big business/big money/big celebrity hypocrite pig who had the nerve to fly in on their personal jets, stand there lavished in gold, and jewels, and fur, and $10,000 suits and pretend as if they and Obama share a desire to make the country and our world a better, more stable, more peaceful, and more 'just' place for all its people. Once again, promoting their own interests, dumbing down our society, and dancing their way around the single greatest underlying cause for the global economic crisis. GREED. The single greatest threat to modern society. GREED. Filthy, rotten, disgusting, self-centered, self-serving, black-hearted, hypocritical GREED. By doing so, they divert our attention AGAIN at a crucial time when we need more than ever to finally acknowledge GREED as a form of EVIL. At a time when we need more than ever to understand how it burns through moral character, spreads like wildfire, jumps from one industry to another, one person to another, and wreaks havok on society worldwide. IT ABSOLUTELY POSITIVELY BEYOND ANY SHADOW OF A DOUBT WILL BE OUR DOWNFALL. All of this happened on Obama's watch. I understand that he didn't plan most of the details. But he did know about many. He stood by and watched that event sell out to the highest bidder. He also bought the ring. He didn't even have a word to say about the double standards or many ethical contradictions. Afterall, he got elected. It was no longer necessary to kiss so much big business, big money, big celebrity, 1% club ass. SELL-OUT. Now, that army of filthy-rich, self-centered, self-serving, self-promoting, hypocrite pigs are using Obama's hopefull words against those very few of us who know better. They even have the nerve to belittle and villianize people like me simply because we don't float around with happy uplifting thoughts and a smile on our face. They pretend as if our message can't possibly be legitimate if its expressed with anger, contempt, hatred, or fear. As if a 'positive' attitude is any match for that domino-effect of socio-economic problems caused almost entirely by GREED. I understand that Obama could never go on record with views anything like mine. He has no choice but to be tolerant of other filthy-rich and powerful public figures. I can even forgive the affiliation to some extent. I also believe that he truly does want some degree of government reform, ethics, accountability, peace, prosperity, stability, opportunity, and economic justice for all people. Like I said, by politician standards he is an angel. Which is probably the nicest thing I will ever say or even think about a rich and powerful public figure. I find it near impossible to hate the man. I even catch myself on occasion making excuses for him. He is literally the only rich and powerful public figure on this planet that I don't hate. I also understand why he gave the uplifting speech. I really don't blame him for a single word of it. But I will not pretend as if a smile or 'positive' attitude is any match for that particular form of evil consuming our world. I will not choose 'hope' over 'fear' just because it feels nice. Of course, I want things to get better. Of course, I will try in vain to help make things better. Of course, I want something legitimate to celebrate. Something that we could all be a part of. Of course, I desperately want Obama to succeed. Of course, I desperately want all of my predictions to be proven wrong. I just don't see it happening. With or without Obama, we are still stuck on that runaway train. Its not going to be any better. Its not going to be alright. Not for the vast majority. Its going to get much worse and stay that way for a very long time. I fully expect to die knowing that I devoted myself to a cause which was lost from day one. Greed will always triumph over good will. The people will never take any real stand against it. The vast majority are pathetic, ignorant, naive, short sighted, brainwashed, pharmameutical, medical-testing, couch potatoe, credit card, love-sick, celebrity junkie, powderpuffs. Perfect little victims. I hate to say that about my fellow citizens but its the truth. Afterall, they didn't see this comming. I tried to warn them and they still didn't see it. Others tried to warn them and they didn't see it. Albert Einstein tried to warn them SIXTY F$#&#$# YEARS AGO. They didn't listen. They didn't see it. They did NOTHING to stop this or even slow it down. Even now, when the problem is so much more obvious. Even now, when the futures of their children are at stake. Still, they do NOTHING. Sometimes, I wonder if they are even worth fighting for. What the hell is the point? They will never listen. They will never wake up. They will never do simple math. They will never take a stand. There will never be economic justice. There will never be a more reasonable distribution of wealth and resources. Therefore, there will never be any degree of world peace or prosperity. Never. Its only going to get worse. A LOT WORSE. GREED KILLS. IT WILL BE OUR DOWNFALL.
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