So when do you think the Titanic will hit the iceberg?
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, August 24, 2009
Wednesday, August 19, 2009
Chinese banks owned by the people
Western people might learn a trick or two from China. That is, when all the propaganda is put aside.
To the extent that China's stimulus plan is working better than in the U.S. and the U.K., this seems to be because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends.
"We now have a situation in the world where we have a global capitalist crisis. Everywhere, consumption is down. Everywhere, people are buying fewer goods, including goods from China. How is it possible that in that society, so dependent on the world economy, they could now have an explosive growth? Their stock market is now 100 percent higher than at its low -- nothing remotely like that hardly anywhere in the world, certainly not in the United States or Europe. How is that possible? In order to believe what the Chinese are saying, you would have to agree that in a matter of months, at most a year, no more, they have been able to transform their economy from an export-based powerhouse to a domestically focused industrial engine. Nowhere in the world has that ever taken less than decades."
How can China's stimulus plan be working so well, when ours is barely working at all? The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse. So says Samah El-Shahat, a presenter for Al Jazeera English who has a doctorate in economics from the University of London. In an August 10 article titled "China Puts People Before Banks," she writes:
"China is the one leading economy where the divide "" the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit "" doesn't exist. Both worlds are booming again and this is due to the way the government handled its banks. China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers."
What Wolff calls a "global capitalist crisis" is actually a credit crisis; and in China, unlike in the U.S., credit has been flowing freely, not just to the financial sector but to industry and local government. State-owned banks have massively increased lending, with local governments and state enterprises borrowing on a huge scale. The People's Bank of China estimates that total loans for the first half of 2009 were $1.08 trillion, 50% more than the amount of loans Chinese banks issued in all of 2008. The U.S. Federal Reserve has also engaged in record levels of lending, but its loans have gone chiefly to bail out the financial sector itself, leaving Main Street high and dry. Writes El-Shahat:
"In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place. Wall Street and Main Street might as well be existing on different planets. And this is in large part because banks are still not lending money to the people. In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen."
Cracks in the Chinese Wall?
The Chinese economy is not perfect. The push to make profits, particularly from foreign investment capital, has encouraged speculative ventures, with a great deal of money going into high-rise apartments and other real estate developments that most people cannot afford. Chinese workers are now complaining of too much capitalism, since they are having to pay for housing, health care and higher education formerly picked up by the State. And while efforts are being made to make more loans available to medium-sized and small businesses, state-owned businesses and large corporations are still getting most of the loans. This is because the banks have been told to tighten their lending standards, and these larger entities are safer credit risks.
Wolff thinks China's "miracle" is a bubble that is about to burst, with catastrophic consequences. Historically, however, when bubbles have collapsed suddenly it has been because they were punctured by speculators. When the Japanese stock market bubble burst in 1990, and when other Asian countries followed in 1998, it was because foreign speculators were able to attack their currencies with exotic derivatives. The victims tried to defend by buying up their own national currencies with their foreign currency reserves, but the reserves were soon exhausted. Today, China has accumulated so much in the way of dollar reserves that it would be very difficult for speculators to do the same thing to the Chinese stock market. A gradual stock market decline due to natural market forces is something an economy can take in stride.
Economic Role Reversal?
For the time being, at least, China's stimulus plan is clearly working better than those of the U.S. and the U.K.; and a chief reason it is working better is that the government has a grip on its banking sector. The government can operate the banks' credit mechanisms in a way that serves public enterprise and trade, because it actually owns the banks, or most of them. Ironically, that feature of China's economy may have allowed it to get closer to the original American capitalist ideal than the United States itself. China is often referred to as communist, but it has never really been communist as defined in the textbooks, and it is far less so now than formerly. Communist Party leader Deng Xiaoping, who opened China to foreign investment after 1978, famously said that it doesn't matter what color the cat is, so long as it catches mice. Whatever the Chinese economy is called, today it provides a framework that effectively encourages entrepreneurs.
Jim Rogers is an expatriate American investor and financial commentator based in Singapore. He wrote in a 2004 article titled "The Rise of Red Capitalism":
"Some of the best capitalists in the world live and work in Communist China. . . . No matter how long China's leaders persist in calling themselves Communists, they seem quite intent on creating the world's dominant capitalist economy."
Meanwhile, the U.S. has sunk into what Rogers calls "socialism for the rich." When ordinary U.S. businesses go bankrupt, they are left to deal with the asphalt jungle on their own; but when banks considered "too big to fail" go bankrupt, we the taxpayers pay the losses while the banks' owners keep the profits and are allowed to continue speculating with them. The bailout of Wall Street with taxpayer money represents a radical departure from capitalist principles, one that has changed the face of the American economy. The capitalism we were taught in school involved Mom and Pop stores, single-family farms, and small entrepreneurs competing on a level playing field. The government's role was to set the rules and make sure everyone played fair. But that is not the sort of capitalism we have today. The Mom and Pop stores have been squeezed out by giant chain stores and mega-industries; the small private farms have been bought up by multinational agribusinesses; and Wall Street banks have gotten so powerful that Congressmen are complaining that the banks now own Congress. Giant banks and corporations have rewritten the rules for their own ends. Healthy competition has been replaced by a form of predator capitalism in which small fish are systematically swallowed up by sharks. The result has been an ever-widening gap between rich and poor that represents the greatest transfer of wealth in history.
The Best of Both Worlds
The Chinese solution to a failed banking system would be to nationalize the banks themselves, not just their bad debts. If the U.S. were to adopt that approach, we the people would actually get something of value for our investment "" a stable and accountable banking system that belongs to the people. If the word "nationalize" sounds un-American, think "publicly-owned and operated for the benefit of the public," like public libraries, public parks, and public courts. We need to get our dollars out of Wall Street and back on Main Street, and we can do that only by and we can do that only by breaking up our out-of-control private banking monopoly and returning control over money and credit to the people themselves. If the Chinese can have the best of both worlds, so can we.
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust."
THE SECRET OF CHINA'S MIRACLE ECONOMY:
THE GOVERNMENT OWNS THE BANKS RATHER THAN THE REVERSE
by Ellen Brown
SourceTHE GOVERNMENT OWNS THE BANKS RATHER THAN THE REVERSE
by Ellen Brown To the extent that China's stimulus plan is working better than in the U.S. and the U.K., this seems to be because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends.
"The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. They frankly own the place."While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a "miracle economy" that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Economist Richard Wolff skeptically observes:
-- U.S. Senator Dick Durbin, Democratic Party Whip, April 30, 2009
"We now have a situation in the world where we have a global capitalist crisis. Everywhere, consumption is down. Everywhere, people are buying fewer goods, including goods from China. How is it possible that in that society, so dependent on the world economy, they could now have an explosive growth? Their stock market is now 100 percent higher than at its low -- nothing remotely like that hardly anywhere in the world, certainly not in the United States or Europe. How is that possible? In order to believe what the Chinese are saying, you would have to agree that in a matter of months, at most a year, no more, they have been able to transform their economy from an export-based powerhouse to a domestically focused industrial engine. Nowhere in the world has that ever taken less than decades."
How can China's stimulus plan be working so well, when ours is barely working at all? The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse. So says Samah El-Shahat, a presenter for Al Jazeera English who has a doctorate in economics from the University of London. In an August 10 article titled "China Puts People Before Banks," she writes:
"China is the one leading economy where the divide "" the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit "" doesn't exist. Both worlds are booming again and this is due to the way the government handled its banks. China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers."
What Wolff calls a "global capitalist crisis" is actually a credit crisis; and in China, unlike in the U.S., credit has been flowing freely, not just to the financial sector but to industry and local government. State-owned banks have massively increased lending, with local governments and state enterprises borrowing on a huge scale. The People's Bank of China estimates that total loans for the first half of 2009 were $1.08 trillion, 50% more than the amount of loans Chinese banks issued in all of 2008. The U.S. Federal Reserve has also engaged in record levels of lending, but its loans have gone chiefly to bail out the financial sector itself, leaving Main Street high and dry. Writes El-Shahat:
"In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place. Wall Street and Main Street might as well be existing on different planets. And this is in large part because banks are still not lending money to the people. In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen."
Cracks in the Chinese Wall?
The Chinese economy is not perfect. The push to make profits, particularly from foreign investment capital, has encouraged speculative ventures, with a great deal of money going into high-rise apartments and other real estate developments that most people cannot afford. Chinese workers are now complaining of too much capitalism, since they are having to pay for housing, health care and higher education formerly picked up by the State. And while efforts are being made to make more loans available to medium-sized and small businesses, state-owned businesses and large corporations are still getting most of the loans. This is because the banks have been told to tighten their lending standards, and these larger entities are safer credit risks.
Wolff thinks China's "miracle" is a bubble that is about to burst, with catastrophic consequences. Historically, however, when bubbles have collapsed suddenly it has been because they were punctured by speculators. When the Japanese stock market bubble burst in 1990, and when other Asian countries followed in 1998, it was because foreign speculators were able to attack their currencies with exotic derivatives. The victims tried to defend by buying up their own national currencies with their foreign currency reserves, but the reserves were soon exhausted. Today, China has accumulated so much in the way of dollar reserves that it would be very difficult for speculators to do the same thing to the Chinese stock market. A gradual stock market decline due to natural market forces is something an economy can take in stride.
Economic Role Reversal?
For the time being, at least, China's stimulus plan is clearly working better than those of the U.S. and the U.K.; and a chief reason it is working better is that the government has a grip on its banking sector. The government can operate the banks' credit mechanisms in a way that serves public enterprise and trade, because it actually owns the banks, or most of them. Ironically, that feature of China's economy may have allowed it to get closer to the original American capitalist ideal than the United States itself. China is often referred to as communist, but it has never really been communist as defined in the textbooks, and it is far less so now than formerly. Communist Party leader Deng Xiaoping, who opened China to foreign investment after 1978, famously said that it doesn't matter what color the cat is, so long as it catches mice. Whatever the Chinese economy is called, today it provides a framework that effectively encourages entrepreneurs.
Jim Rogers is an expatriate American investor and financial commentator based in Singapore. He wrote in a 2004 article titled "The Rise of Red Capitalism":
"Some of the best capitalists in the world live and work in Communist China. . . . No matter how long China's leaders persist in calling themselves Communists, they seem quite intent on creating the world's dominant capitalist economy."
Meanwhile, the U.S. has sunk into what Rogers calls "socialism for the rich." When ordinary U.S. businesses go bankrupt, they are left to deal with the asphalt jungle on their own; but when banks considered "too big to fail" go bankrupt, we the taxpayers pay the losses while the banks' owners keep the profits and are allowed to continue speculating with them. The bailout of Wall Street with taxpayer money represents a radical departure from capitalist principles, one that has changed the face of the American economy. The capitalism we were taught in school involved Mom and Pop stores, single-family farms, and small entrepreneurs competing on a level playing field. The government's role was to set the rules and make sure everyone played fair. But that is not the sort of capitalism we have today. The Mom and Pop stores have been squeezed out by giant chain stores and mega-industries; the small private farms have been bought up by multinational agribusinesses; and Wall Street banks have gotten so powerful that Congressmen are complaining that the banks now own Congress. Giant banks and corporations have rewritten the rules for their own ends. Healthy competition has been replaced by a form of predator capitalism in which small fish are systematically swallowed up by sharks. The result has been an ever-widening gap between rich and poor that represents the greatest transfer of wealth in history.
The Best of Both Worlds
The Chinese solution to a failed banking system would be to nationalize the banks themselves, not just their bad debts. If the U.S. were to adopt that approach, we the people would actually get something of value for our investment "" a stable and accountable banking system that belongs to the people. If the word "nationalize" sounds un-American, think "publicly-owned and operated for the benefit of the public," like public libraries, public parks, and public courts. We need to get our dollars out of Wall Street and back on Main Street, and we can do that only by and we can do that only by breaking up our out-of-control private banking monopoly and returning control over money and credit to the people themselves. If the Chinese can have the best of both worlds, so can we.
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust."
Monday, August 17, 2009
US pipeline games with China
I am appalled at the mentality of Americans and the English when they are asked a question about why their countries are sending troups to Afghanistan. It seems that few have even a vague notion of why this expensive military invasion persists. Even more appalling is the Western media reports that purport to explain what is happening in China's Xinjiang province. I refer here to the recent regional disturbance between the Uygurs and Han people in Xinjiang.
Western media would have one believe this civil unrest is the result of Chinese communist dictators squelching the rights of outlying indigenous peoples. Of course, one expects nothing less of Western media journalism which supports the farcical notion of democracy of the West spread to the lucky countries of Asia and the Mideast.
Yet the real story of the conflicts in this outlying area of China may be quite different than the mainstream media insinuates. As with many other sensationalist propaganda from the West, the essential detail of energy pipeline politics is omitted from the front page analysis.
Below, F. William Engdahl, one of my favorite economists, has a more rational explanation for the civil unrest in Xinjiang recently...one that details the energy pipeline concerns of the U.S. in constraining the unstoppable Sino/Soviet alliance of providing energy to Europe and Asia. Indeed, all conflicts now about 'democracy' can be re-interpreted as 'oiligarchic' concerns.
by F. William Engdahl
author of Full Spectrum Dominance: Totalitarian Democracy in the New World Order
July 13, 2009
Source
July 12 —After the tragic events of July 5 in Xinjiang Uyghur Autonomous Region in China, it would be useful to look more closely into the actual role of the US Government’s ”independent“ NGO, the National Endowment for Democracy (NED). All indications are that the US Government, once more acting through its “private” Non-Governmental Organization, the NED, is massively intervening into the internal politics of China.
The reasons for Washington’s intervention into Xinjiang affairs seems to have little to do with concerns over alleged human rights abuses by Beijing authorities against Uyghur people. It seems rather to have very much to do with the strategic geopolitical location of Xinjiang on the Eurasian landmass and its strategic importance for China’s future economic and energy cooperation with Russia, Kazakhastan and other Central Asia states of the Shanghai Cooperation Organization.
The major organization internationally calling for protests in front of Chinese embassies around the world is the Washington, D.C.-based World Uyghur Congress (WUC).
The WUC manages to finance a staff, a very fancy website in English, and has a very close relation to the US Congress-funded NED. According to published reports by the NED itself, the World Uyghur Congress receives $215,000.00 annually from the National Endowment for Democracy for “human rights research and advocacy projects.” The president of the WUC is an exile Uyghur who describes herself as a “laundress turned millionaire,” Rebiya Kadeer, who also serves as president of the Washington D.C.-based Uyghur American Association, another Uyghur human rights organization which receives significant funding from the US Government via the National Endowment for Democracy.
The NED was intimately involved in financial support to various organizations behind the Lhasa ”Crimson Revolution“ in March 2008, as well as the Saffron Revolution in Burma/Myanmar and virtually every regime change destabilization in eastern Europe over the past years from Serbia to Georgia to Ukraine to Kyrgystan to Teheran in the aftermath of the recent elections.
Allen Weinstein, who helped draft the legislation establishing NED, was quite candid when he said in a published interview in 1991: "A lot of what we do today was done covertly 25 years ago by the CIA."
The NED is supposedly a private, non-government, non-profit foundation, but it receives a yearly appropriation for its international work from the US Congress. The NED money is channelled through four “core foundations”. These are the National Democratic Institute for International Affairs, linked to Obama’s Democratic Party; the International Republican Institute tied to the Republican Party; the American Center for International Labor Solidarity linked to the AFL-CIO US labor federation as well as the US State Department; and the Center for International Private Enterprise linked to the US Chamber of Commerce.
The salient question is what has the NED been actively doing that might have encouraged the unrest in Xinjiang Uyghur Autonomous Region, and what is the Obama Administration policy in terms of supporting or denouncing such NED-financed intervention into sovereign politics of states which Washington deems a target for pressure? The answers must be found soon, but one major step to help clarify Washington policy under the new Obama Administration would be for a full disclosure by the NED, the US State Department and NGO’s linked to the US Government, of their involvement, if at all, in encouraging Uyghur separatism or unrest. Is it mere coincidence that the Uyghur riots take place only days following the historic meeting of the Shanghai Cooperation Organization?
Uyghur exile organizations, China and Geopolitics
On May 18 this year, the US-government’s in-house “private” NGO, the NED, according to the official WUC website, hosted a seminal human rights conference entitled East Turkestan: 60 Years under Communist Chinese Rule, along with a curious NGO with the name, the Unrepresented Nations and Peoples Organisation (UNPO).
The Honorary President and founder of the UNPO is one Erkin Alptekin, an exile Uyghur who founded UNPO while working for the US Information Agency’s official propaganda organization, Radio Free Europe/Radio Liberty as Director of their Uygur Division and Assistant Director of the Nationalities Services.
Alptekin also founded the World Uyghur Congress at the same time, in 1991, while he was with the US Information Agency. The official mission of the USIA when Alptekin founded the World Uyghur Congress in 1991 was “to understand, inform, and influence foreign publics in promotion of the [USA] national interest…” Alptekin was the first president of WUC, and, according to the official WUC website, is a “close friend of the Dalai Lama.”
Closer examination reveals that UNPO in turn to be an American geopolitical strategist’s dream organization. It was formed, as noted, in 1991 as the Soviet Union was collapsing and most of the land area of Eurasia was in political and economic chaos. Since 2002 its Director General has been Archduke Karl von Habsburg of Austria who lists his (unrecognized by Austria or Hungary) title as “Prince Imperial of Austria and Royal Prince of Hungary.”
Among the UNPO principles is the right to ‘self-determination’ for the 57 diverse population groups who, by some opaque process not made public, have been admitted as official UNPO members with their own distinct flags, with a total population of some 150 million peoples and headquarters in the Hague, Netherlands.
UNPO members range from Kosovo which “joined” when it was fully part of then Yugoslavia in 1991. It includes the “Aboriginals of Australia” who were listed as founding members along with Kosovo. It includes the Buffalo River Dene Nation indians of northern Canada.
The select UNPO members also include Tibet which is listed as a founding member. It also includes other explosive geopolitical areas as the Crimean Tartars, the Greek Minority in Romania, the Chechen Republic of Ichkeria (in Russia), the Democratic Movement of Burma, and the gulf enclave adjacent to Angola and the Democratic Republic of the Congo, and which just happens to hold rights to some of the world’s largest offshore oil fields leased to Condi Rice’s old firm, Chevron Oil. Further geopolitical hotspots which have been granted elite recognition by the UNPO membership include the large section of northern Iran which designates itself as Southern Azerbaijan, as well as something that calls itself Iranian Kurdistan.
In April 2008 according to the website of the UNPO, the US Congress’ NED sponsored a “leadership training” seminar for the World Uyghur Congress (WUC) together with the Unrepresented Nations and Peoples Organization. Over 50 Uyghurs from around the world together with prominent academics, government representatives and members of the civil society gathered in Berlin Germany to discuss “Self-Determination under International Law.” What they discussed privately is not known. Rebiya Kadeer gave the keynote address.
The suspicious timing of the Xinjiang riots
The current outbreak of riots and unrest in Urumqi, the capital of Xinjiang in the northwest part of China, exploded on July 5 local time.
According to the website of the World Uyghur Congress, the “trigger” for the riots was an alleged violent attack on June 26 in China’s southern Guangdong Province at a toy factory where the WUC alleges that Han Chinese workers attacked and beat to death two Uyghur workers for allegedly raping or sexually molesting two Han Chinese women workers in the factory. On July 1, the Munich arm of the WUC issued a worldwide call for protest demonstrations against Chinese embassies and consulates for the alleged Guangdong attack, despite the fact they admitted the details of the incident were unsubstantiated and filled with allegations and dubious reports.
According to a press release they issued, it was that June 26 alleged attack that gave the WUC the grounds to issue their worldwide call to action.
On July 5, a Sunday in Xinjiang but still the USA Independence Day, July 4, in Washington, the WUC in Washington claimed that Han Chinese armed soldiers seized any Uyghur they found on the streets and according to official Chinese news reports, widespread riots and burning of cars along the streets of Urumqi broke out resulting over the following three days in over 140 deaths.
China’s official Xinhua News Agency said that protesters from the Uighur Muslim ethnic minority group began attacking ethnic Han pedestrians, burning vehicles and attacking buses with batons and rocks. "They took to the street...carrying knives, wooden batons, bricks and stones," they cited an eyewitness as saying. The French AFP news agency quoted Alim Seytoff, general secretary of the Uighur American Association in Washington, that according to his information, police had begun shooting "indiscriminately" at protesting crowds.
Two different versions of the same events: The Chinese government and pictures of the riots indicate it was Uyghur riot and attacks on Han Chinese residents that resulted in deaths and destruction. French official reports put the blame on Chinese police “shooting indiscriminately.” Significantly, the French AFP report relies on the NED-funded Uyghur American Association of Rebiya Kadeer for its information. The reader should judge if the AFP account might be motivated by a US geopolitical agenda, a deeper game from the Obama Administration towards China’s economic future.
Is it merely coincidence that the riots in Xinjiang by Uyghur organizations broke out only days after the meeting took place in Yakaterinburg, Russia of the member nations of the Shanghai Cooperation Organization, as well as Iran as official observer guest, represented by President Ahmadinejad?
Over the past few years, in the face of what is seen as an increasingly hostile and incalculable United States foreign policy, the major nations of Eurasia—China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan have increasingly sought ways of direct and more effective cooperation in economic as well as security areas. In addition, formal Observer status within SCO has been given to Iran, Pakistan, India and Mongolia. The SCO defense ministers are in regular and growing consultation on mutual defense needs, as NATO and the US military command continue provocatively to expand across the region wherever it can.
The Strategic Importance of Xinjiang for Eurasian Energy Infrastructure
There is another reason for the nations of the SCO, a vital national security element, to having peace and stability in China’s Xinjiang region. Some of China’s most important oil and gas pipeline routes pass directly through Xinjiang province. Energy relations between Kazkhstan and China are of enormous strategic importance for both countries, and allow China to become less dependent on oil supply sources that can be cut off by possible US interdiction should relations deteriorate to such a point.
Kazak President Nursultan Nazarbayev paid a State visit in April 2009 to Beijing. The talks concerned deepening economic cooperation, above all in the energy area, where Kazkhastan holds huge reserves of oil and likely as well of natural gas. After the talks in Beijing, Chinese media carried articles with such titles as “"Kazakhstani oil to fill in the Great Chinese pipe."
The Atasu-Alashankou pipeline to be completed in 2009 will provide transportation of transit gas to China via Xinjiang. As well Chinese energy companies are involved in construction of a Zhanazholskiy gas processing plant, Pavlodar electrolyze plant and Moynakskaya hydro electric station in Kazakhstan.
According to the US Government’s Energy Information Administration, Kazakhstan’s Kashagan field is the largest oil field outside the Middle East and the fifth largest in the world in terms of reserves, located off the northern shore of the Caspian Sea, near the city of Atyrau. China has built a 613-mile-long pipeline from Atasu, in northwestern Kazakhstan, to Alashankou at the border of China's Xinjiang region which is exporting Caspian oil to China. PetroChina’s ChinaOil is the exclusive buyer of the crude oil on the Chinese side. The pipeline is a joint venture of CNPC and Kaztransoil of Kazkhstan. Some 85,000 bbl/d of Kazakh crude oil flowed through the pipeline during 2007. China’s CNPC is also involved in other major energy projects with Kazkhstan. They all traverse China’s Xinjiang region.
In 2007 CNPC signed an agreement to invest more than $2 billion to construct a natural gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan to China. That pipeline would start at Gedaim on the border of Turkmenistan and Uzbekistan and extend 1,100 miles through Uzbekistan and Kazakhstan to Khorgos in China's Xinjiang region. Turkmenistan and China have signed a 30-year supply agreement for the gas that would fill the pipeline. CNPC has set up two entities to oversee the Turkmen upstream project and the development of a second pipeline that will cross China from the Xinjiang region to southeast China at a cost of some $7 billion.
As well, Russia and China are discussing major natural gas pipelines from eastern Siberia through Xinjiang into China. Eastern Siberia contains around 135 Trillion cubic feet of proven plus probable natural gas reserves. The Kovykta natural gas field could give China with natural gas in the next decade via a proposed pipeline.
During the current global economic crisis, Kazakhstan received a major credit from China of $10 billion, half of which is for oil and gas sector. The oil pipeline Atasu-Alashankou and the gas pipeline China-Central Asia, are an instrument of strategic 'linkage' of central Asian countries to the economy China. That Eurasian cohesion from Russia to China across Central Asian countries is the geopolitical cohesion Washington most fears. While they would never say so, growing instability in Xinjiang would be an ideal way for Washington to weaken that growing cohesion of the Shanghai Cooperation Organization nations.
Copyright © 2009 F. William Engdahl
Western media would have one believe this civil unrest is the result of Chinese communist dictators squelching the rights of outlying indigenous peoples. Of course, one expects nothing less of Western media journalism which supports the farcical notion of democracy of the West spread to the lucky countries of Asia and the Mideast.
Yet the real story of the conflicts in this outlying area of China may be quite different than the mainstream media insinuates. As with many other sensationalist propaganda from the West, the essential detail of energy pipeline politics is omitted from the front page analysis.
Below, F. William Engdahl, one of my favorite economists, has a more rational explanation for the civil unrest in Xinjiang recently...one that details the energy pipeline concerns of the U.S. in constraining the unstoppable Sino/Soviet alliance of providing energy to Europe and Asia. Indeed, all conflicts now about 'democracy' can be re-interpreted as 'oiligarchic' concerns.
Is Washington Playing a Deeper Game with China?
by F. William Engdahl
author of Full Spectrum Dominance: Totalitarian Democracy in the New World Order
July 13, 2009
Source
July 12 —After the tragic events of July 5 in Xinjiang Uyghur Autonomous Region in China, it would be useful to look more closely into the actual role of the US Government’s ”independent“ NGO, the National Endowment for Democracy (NED). All indications are that the US Government, once more acting through its “private” Non-Governmental Organization, the NED, is massively intervening into the internal politics of China.
The reasons for Washington’s intervention into Xinjiang affairs seems to have little to do with concerns over alleged human rights abuses by Beijing authorities against Uyghur people. It seems rather to have very much to do with the strategic geopolitical location of Xinjiang on the Eurasian landmass and its strategic importance for China’s future economic and energy cooperation with Russia, Kazakhastan and other Central Asia states of the Shanghai Cooperation Organization.
The major organization internationally calling for protests in front of Chinese embassies around the world is the Washington, D.C.-based World Uyghur Congress (WUC).
The WUC manages to finance a staff, a very fancy website in English, and has a very close relation to the US Congress-funded NED. According to published reports by the NED itself, the World Uyghur Congress receives $215,000.00 annually from the National Endowment for Democracy for “human rights research and advocacy projects.” The president of the WUC is an exile Uyghur who describes herself as a “laundress turned millionaire,” Rebiya Kadeer, who also serves as president of the Washington D.C.-based Uyghur American Association, another Uyghur human rights organization which receives significant funding from the US Government via the National Endowment for Democracy.
The NED was intimately involved in financial support to various organizations behind the Lhasa ”Crimson Revolution“ in March 2008, as well as the Saffron Revolution in Burma/Myanmar and virtually every regime change destabilization in eastern Europe over the past years from Serbia to Georgia to Ukraine to Kyrgystan to Teheran in the aftermath of the recent elections.
Allen Weinstein, who helped draft the legislation establishing NED, was quite candid when he said in a published interview in 1991: "A lot of what we do today was done covertly 25 years ago by the CIA."
The NED is supposedly a private, non-government, non-profit foundation, but it receives a yearly appropriation for its international work from the US Congress. The NED money is channelled through four “core foundations”. These are the National Democratic Institute for International Affairs, linked to Obama’s Democratic Party; the International Republican Institute tied to the Republican Party; the American Center for International Labor Solidarity linked to the AFL-CIO US labor federation as well as the US State Department; and the Center for International Private Enterprise linked to the US Chamber of Commerce.
The salient question is what has the NED been actively doing that might have encouraged the unrest in Xinjiang Uyghur Autonomous Region, and what is the Obama Administration policy in terms of supporting or denouncing such NED-financed intervention into sovereign politics of states which Washington deems a target for pressure? The answers must be found soon, but one major step to help clarify Washington policy under the new Obama Administration would be for a full disclosure by the NED, the US State Department and NGO’s linked to the US Government, of their involvement, if at all, in encouraging Uyghur separatism or unrest. Is it mere coincidence that the Uyghur riots take place only days following the historic meeting of the Shanghai Cooperation Organization?
Uyghur exile organizations, China and Geopolitics
On May 18 this year, the US-government’s in-house “private” NGO, the NED, according to the official WUC website, hosted a seminal human rights conference entitled East Turkestan: 60 Years under Communist Chinese Rule, along with a curious NGO with the name, the Unrepresented Nations and Peoples Organisation (UNPO).
The Honorary President and founder of the UNPO is one Erkin Alptekin, an exile Uyghur who founded UNPO while working for the US Information Agency’s official propaganda organization, Radio Free Europe/Radio Liberty as Director of their Uygur Division and Assistant Director of the Nationalities Services.
Alptekin also founded the World Uyghur Congress at the same time, in 1991, while he was with the US Information Agency. The official mission of the USIA when Alptekin founded the World Uyghur Congress in 1991 was “to understand, inform, and influence foreign publics in promotion of the [USA] national interest…” Alptekin was the first president of WUC, and, according to the official WUC website, is a “close friend of the Dalai Lama.”
Closer examination reveals that UNPO in turn to be an American geopolitical strategist’s dream organization. It was formed, as noted, in 1991 as the Soviet Union was collapsing and most of the land area of Eurasia was in political and economic chaos. Since 2002 its Director General has been Archduke Karl von Habsburg of Austria who lists his (unrecognized by Austria or Hungary) title as “Prince Imperial of Austria and Royal Prince of Hungary.”
Among the UNPO principles is the right to ‘self-determination’ for the 57 diverse population groups who, by some opaque process not made public, have been admitted as official UNPO members with their own distinct flags, with a total population of some 150 million peoples and headquarters in the Hague, Netherlands.
UNPO members range from Kosovo which “joined” when it was fully part of then Yugoslavia in 1991. It includes the “Aboriginals of Australia” who were listed as founding members along with Kosovo. It includes the Buffalo River Dene Nation indians of northern Canada.
The select UNPO members also include Tibet which is listed as a founding member. It also includes other explosive geopolitical areas as the Crimean Tartars, the Greek Minority in Romania, the Chechen Republic of Ichkeria (in Russia), the Democratic Movement of Burma, and the gulf enclave adjacent to Angola and the Democratic Republic of the Congo, and which just happens to hold rights to some of the world’s largest offshore oil fields leased to Condi Rice’s old firm, Chevron Oil. Further geopolitical hotspots which have been granted elite recognition by the UNPO membership include the large section of northern Iran which designates itself as Southern Azerbaijan, as well as something that calls itself Iranian Kurdistan.
In April 2008 according to the website of the UNPO, the US Congress’ NED sponsored a “leadership training” seminar for the World Uyghur Congress (WUC) together with the Unrepresented Nations and Peoples Organization. Over 50 Uyghurs from around the world together with prominent academics, government representatives and members of the civil society gathered in Berlin Germany to discuss “Self-Determination under International Law.” What they discussed privately is not known. Rebiya Kadeer gave the keynote address.
The suspicious timing of the Xinjiang riots
The current outbreak of riots and unrest in Urumqi, the capital of Xinjiang in the northwest part of China, exploded on July 5 local time.
According to the website of the World Uyghur Congress, the “trigger” for the riots was an alleged violent attack on June 26 in China’s southern Guangdong Province at a toy factory where the WUC alleges that Han Chinese workers attacked and beat to death two Uyghur workers for allegedly raping or sexually molesting two Han Chinese women workers in the factory. On July 1, the Munich arm of the WUC issued a worldwide call for protest demonstrations against Chinese embassies and consulates for the alleged Guangdong attack, despite the fact they admitted the details of the incident were unsubstantiated and filled with allegations and dubious reports.
According to a press release they issued, it was that June 26 alleged attack that gave the WUC the grounds to issue their worldwide call to action.
On July 5, a Sunday in Xinjiang but still the USA Independence Day, July 4, in Washington, the WUC in Washington claimed that Han Chinese armed soldiers seized any Uyghur they found on the streets and according to official Chinese news reports, widespread riots and burning of cars along the streets of Urumqi broke out resulting over the following three days in over 140 deaths.
China’s official Xinhua News Agency said that protesters from the Uighur Muslim ethnic minority group began attacking ethnic Han pedestrians, burning vehicles and attacking buses with batons and rocks. "They took to the street...carrying knives, wooden batons, bricks and stones," they cited an eyewitness as saying. The French AFP news agency quoted Alim Seytoff, general secretary of the Uighur American Association in Washington, that according to his information, police had begun shooting "indiscriminately" at protesting crowds.
Two different versions of the same events: The Chinese government and pictures of the riots indicate it was Uyghur riot and attacks on Han Chinese residents that resulted in deaths and destruction. French official reports put the blame on Chinese police “shooting indiscriminately.” Significantly, the French AFP report relies on the NED-funded Uyghur American Association of Rebiya Kadeer for its information. The reader should judge if the AFP account might be motivated by a US geopolitical agenda, a deeper game from the Obama Administration towards China’s economic future.
Is it merely coincidence that the riots in Xinjiang by Uyghur organizations broke out only days after the meeting took place in Yakaterinburg, Russia of the member nations of the Shanghai Cooperation Organization, as well as Iran as official observer guest, represented by President Ahmadinejad?
Over the past few years, in the face of what is seen as an increasingly hostile and incalculable United States foreign policy, the major nations of Eurasia—China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan have increasingly sought ways of direct and more effective cooperation in economic as well as security areas. In addition, formal Observer status within SCO has been given to Iran, Pakistan, India and Mongolia. The SCO defense ministers are in regular and growing consultation on mutual defense needs, as NATO and the US military command continue provocatively to expand across the region wherever it can.
The Strategic Importance of Xinjiang for Eurasian Energy Infrastructure
There is another reason for the nations of the SCO, a vital national security element, to having peace and stability in China’s Xinjiang region. Some of China’s most important oil and gas pipeline routes pass directly through Xinjiang province. Energy relations between Kazkhstan and China are of enormous strategic importance for both countries, and allow China to become less dependent on oil supply sources that can be cut off by possible US interdiction should relations deteriorate to such a point.
Kazak President Nursultan Nazarbayev paid a State visit in April 2009 to Beijing. The talks concerned deepening economic cooperation, above all in the energy area, where Kazkhastan holds huge reserves of oil and likely as well of natural gas. After the talks in Beijing, Chinese media carried articles with such titles as “"Kazakhstani oil to fill in the Great Chinese pipe."
The Atasu-Alashankou pipeline to be completed in 2009 will provide transportation of transit gas to China via Xinjiang. As well Chinese energy companies are involved in construction of a Zhanazholskiy gas processing plant, Pavlodar electrolyze plant and Moynakskaya hydro electric station in Kazakhstan.
According to the US Government’s Energy Information Administration, Kazakhstan’s Kashagan field is the largest oil field outside the Middle East and the fifth largest in the world in terms of reserves, located off the northern shore of the Caspian Sea, near the city of Atyrau. China has built a 613-mile-long pipeline from Atasu, in northwestern Kazakhstan, to Alashankou at the border of China's Xinjiang region which is exporting Caspian oil to China. PetroChina’s ChinaOil is the exclusive buyer of the crude oil on the Chinese side. The pipeline is a joint venture of CNPC and Kaztransoil of Kazkhstan. Some 85,000 bbl/d of Kazakh crude oil flowed through the pipeline during 2007. China’s CNPC is also involved in other major energy projects with Kazkhstan. They all traverse China’s Xinjiang region.In 2007 CNPC signed an agreement to invest more than $2 billion to construct a natural gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan to China. That pipeline would start at Gedaim on the border of Turkmenistan and Uzbekistan and extend 1,100 miles through Uzbekistan and Kazakhstan to Khorgos in China's Xinjiang region. Turkmenistan and China have signed a 30-year supply agreement for the gas that would fill the pipeline. CNPC has set up two entities to oversee the Turkmen upstream project and the development of a second pipeline that will cross China from the Xinjiang region to southeast China at a cost of some $7 billion.
As well, Russia and China are discussing major natural gas pipelines from eastern Siberia through Xinjiang into China. Eastern Siberia contains around 135 Trillion cubic feet of proven plus probable natural gas reserves. The Kovykta natural gas field could give China with natural gas in the next decade via a proposed pipeline.During the current global economic crisis, Kazakhstan received a major credit from China of $10 billion, half of which is for oil and gas sector. The oil pipeline Atasu-Alashankou and the gas pipeline China-Central Asia, are an instrument of strategic 'linkage' of central Asian countries to the economy China. That Eurasian cohesion from Russia to China across Central Asian countries is the geopolitical cohesion Washington most fears. While they would never say so, growing instability in Xinjiang would be an ideal way for Washington to weaken that growing cohesion of the Shanghai Cooperation Organization nations.
Copyright © 2009 F. William Engdahl
Sunday, August 16, 2009
Why China will rule: trading instead of invading
Figuring out why China is the new superpower is not rocket science. You get more flies with honey than with vinegar. Harmony is preferable to perpetual warfare.
China seeks to add to its development and power through a win-win strategy; it identifies the advantages of those countries it does business with, makes promises it keeps and strives for a harmonious relationship. Compare this to the US and Great Britain's strategy of bombs, bullets, invasion, proxy wars and lies to maintain their hegemonic goals alienating the entire world.
Another reason why China will rule the world is its policy of keeping multinational corporations on a short lease with the government maintaining 51% of any corporation operating in China. This short circuits the type of fascist corporate strategy that turns governments into big business puppets, as in the US and UK.
More reasons why China will emerge as top dog in world development:
1) It has the economic resources to provide loans to developing countries without the strangulation of regulations the World Bank and IMF imposes on its clients.
2) It strives for a multipolar world governance to the benefit of all countries and,
3) It has within its power to change the reserve currency, along with its allies in BRIC and SCO, from the dollar to a more acceptable unit for all nations.
Those who delude themselves that those dirty Chinese are the bad guys probably need to pull their heads out of the propaganda sandbox, and at the very least, look in a mirror.
China is one economy where there is no disconnect
between the financial and normal world [GETTY]
Source
Samah El-Shahat, Al Jazeera's resident economist, writes a regular column analysing key elements that have contributed to the global financial downturn and its impact across the world.
China hasn't allowed its banking sector to become so powerful
The one question that isn't going away this global recession, is whether China can save the world.
But before we go running to Beijing, hat in hand, demanding assistance or else, there are some home truths that need to be considered first.
China is a developing country, with a per capita income of $4,000, which is much closer to those of African economies than to the US per capita income at $39,000, and $33,000 in Europe.
China has 130 million people who still live in absolute poverty, and even electricity hasn't made it every household yet.
So why should China be asked to save anyone but itself right now?
In fact, as Michael Pettis, a professor at Peking University's Guanghua School of Management says, China's consumption was about the equivalent of France's last year, but no one is calling on Paris to save the world.
The crisis, though, has exposed and clearly magnified the fault lines in China's emerging economy of 1.3 billion people.
The Asian giant needs to nurture its own domestic demand, so that when the export market goes sick, like it has in this Great Recession, it doesn't drag China down with it.
But making her people spend more than they save is harder said than done. After all, less than a generation ago the Chinese were so poor that hunger was the accepted norm in their daily lives.
Tiger has risen
Speak to Chinese officials in their late 40s onward and they will tell you that thinking about food was a major preoccupation as they were growing up - it was so scarce and many had to collect food coupons.
Yes, this Asian tiger has risen despite a recent past of malnutrition. So getting the Chinese to move away from the "survivors'" mentality of savers to one of spenders will not be easy.
Economists believe it takes a whole generation before people can change their ways and habits. But such a change can be overwhelmingly helped by the establishment of social welfare and safety nets such as health care provision, and other forms of social security.
This might encourage the Chinese to loosen their purse strings.
So why do we assume China can save the global economy?
Is this not a warped sense of economic prioritising to ask a developing country with pressing economic and social problems of its own to come in and sacrifice herself for the rest of the world?
Lending the US
This could have something to do with China's $2tn in denominated securities, and bonds it has acquired from the US. It is after all the US's biggest lender.
Yet, take that two trillion-dollar sum and divide it by 1.3 billion - the Chinese population - and I assure you not much would be left for your average Chinese citizen.
However, I feel this basic misunderstanding of China and her position in the world, has to do with our negative bias toward that country - we are much tougher and harder when it comes to the way we report our economic stories on China.
We are not telling enough stories of how we can in fact learn from China, particularly in the way its keeps the power of its banks in check.
Something we have been unable to do.
China is the one leading economy where the divide - the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit - doesn't exist.
Both worlds are booming again and this is due to the way the government handled its banks.
China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout.
In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group.
And that is why Chinese banks are lending to the people and their businesses in record numbers. Why don't we hear more about that in the media?
Different planets
In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place.
Wall Street and Main Street might as well be existing on different planets.
And this is in large part because banks are still not lending money to the people.
In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks.
They are using it to shore up, and clean up their balance sheets rather than lend it to the people.
The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen.
I asked Costas Lapavitas from the School of Oriental and African Studies (SOAS) whether governments had put the interests of banks before the interests of their wider populations.
"Yes I think you can say that. I think governments will probably come out and say that we helped rescue the banks, and we prevented generalised collapse. And to a certain extent that is true of course," he said.
"However there were so many ways in which banks could have been rescued and this particular way has been done in such a way that the banks have no incentive to change the ways they operate ... It is as if the banks have written the policies that the state adopted."
Interests of shareholders
The US and British governments have allowed banks to solve their own crises in the interests of their own mangers, and shareholders – they are after all private business.
Governments should have made it conditional for banks to lend to us, before they are given access to so much of our money and the Federal Reserve's cheap credit.
So the Western hemisphere is suffering the consequences of government failure, while the Asian Giant is celebrating government getting it right.
Funny, how our seemingly democratic governments have been taken over by vested interests.
So, lay off China. It is the one country that is putting the interests of its people above that of the banks.
And in these pressing times I say Hallelujah to that.
By Dima Khatib in Caracas
Source
As the rocket carrying the Simon Bolivar Venesat-1 satellite lifted into space from south-western China, Hugo Chavez, the Venezuelan president, could not help but show his excitement.
Watching the launch live from Bolivar State, in south-eastern Venezuela, with Evo Morales, the Bolivian president, Chavez described the October 2008 launch of the country's first satellite "of strategic and historical importance for Venezuela and China".
The satellite is now used by Venezuela to meet some of its telecommunication needs and is one of the main achievements of Caracas' strategic partnership with Beijing.
Venezuela's interest in such a partnership provided China an excellent opportunity as it searched for a reliable partner that could guarantee energy, particularly oil, supplies in the long run.
Their relationship now stretches from the depths of space to Venezuelan soil.
Developing oil fields
In central Venezuela's Faja del Orinoco, believed to be the world's largest oil reserve, China is helping Caracas explore an area that is believed to hold about 40 billion barrels of crude oil, twice the volume of oil reserves in the US.
As Venezuela seeks to diversify and expand the reach of its energy exports in the world instead of largely depending on US markets, it has started exporting oil for the first time in recent years to far-away China.
It currently exports to China almost 400,000 barrels a day and hopes to reach 1mn barrels by 2010. It is also planning to build refineries in China.
In the meantime, China is also helping Venezuela develop its telecommunications and hi-tech infrastructure.
In the Paraguana Peninsula in western Venezuela, China has helped Venezuela manufacture its first mobile phone and computer.
"Best" mobile phone
Chavez wants to use Venezuela's oil to break what he believes is US hegemony [EPA]
Baptised the Vergatario, or in colloquial Spanish "the very best", the new mobile phone is assembled in a joint Chinese and Venezuelan company called VTELCA.
Chinese engineers have contributed the technology and parts while Venezuela provides the manual labour, infrastructure and financing.
The Vergatario costs a mere $14, the cheapest by far in the market, and is intended to cater to low-income Venezuelans.
The phone was released for the first time on Mother's Day in May earlier this year. Within hours all units were sold out and many Venezuelans are waiting for the next batch to come out.
Technological sovereignty
VTELCA is one of 209 new socialist companies that have been established to help Venezuela reach what Chavez has termed 'national technological sovereignty'.
Most of its 170 workers were hired through local "communal councils" in the area's towns and villages. Comprised of housewives and labourers, the workforce was trained by the Chinese who now only supervise the work in the factory.
In one such factory, which began operating in December 2006, Chinese engineers are helping Venezuelans develop the first homemade computer.
Venezuelans hope Chinese technology and know-how will be transferred to them in the future so they can design their own computers and locally manufacture the parts in future socialist companies.
Joint investments
In 2007, China and Venezuela established a joint investment fund in which China initially pledged to inject $4bn over a period of three years. Venezuela provided $2bn into the fund.
The idea behind the fund is that the Chinese contribution would be a down payment for future oil supplies, while Venezuela would use the money in development projects.
The two would agree on a fixed oil price in a way that protects both from constant fluctuations in the energy market.
Less than two years later, China had already provided its share. In early 2009, at the height of the current global financial crisis, Chavez managed to convince Beijing to add an extra $4bn to the fund; Caracas also injected a further $2bn raising the total value to $12bn.
This is one of the Chavez government's many alternatives to conventional financing by the IMF and World Bank. These funds are designed to finance development projects without the burden of high interest rates and without dictating economic policies by the lender.
It is also a mechanism to break the circle of speculation in the energy market which Chavez believes is based on "capitalist principles" and he calls as "unfair and greedy".
The fund has been used to finance many projects in Venezuela so far. In one project in the state of Monagas in eastern Venezuela, the fund is financing a pilot project to increase chicken production in the country using Argentinian know-how.
It has also been used to finance a nationwide railway network that is being built in a partnership with other countries.
Ideology and strategy
When Chavez came to power 10 years ago, trade with China had peaked under $200mn but since then it has jumped to nearly $10bn.
It is no surprise then that Chinese officials say that Venezuela has now become the biggest recipient of its investments in Latin America.
While the Chinese community has existed here for decades, the presence of Chinese companies is increasing and being felt in several sectors of the economy: housing, agriculture, industry. The relationship serves China's commercial interests.
But for Venezuela, it serves ideological and strategic purposes.
Since becoming president, Chavez has travelled to China six times, making him its most frequent visitor among Latin American leaders.
He says the growing ties with Beijing are part of his stated aim to build a new multi-polar model of international relations "to break" US hegemony.
He has also embarked on a programme of cultural and scientific exchange with China.
By having Venezuelans study and benefit from Chinese technological expertise, Chavez is hoping to create a strategic partnership which merges China's socio-economic experiment with Latin American socialism.
China seeks to add to its development and power through a win-win strategy; it identifies the advantages of those countries it does business with, makes promises it keeps and strives for a harmonious relationship. Compare this to the US and Great Britain's strategy of bombs, bullets, invasion, proxy wars and lies to maintain their hegemonic goals alienating the entire world.
Another reason why China will rule the world is its policy of keeping multinational corporations on a short lease with the government maintaining 51% of any corporation operating in China. This short circuits the type of fascist corporate strategy that turns governments into big business puppets, as in the US and UK.
More reasons why China will emerge as top dog in world development:
1) It has the economic resources to provide loans to developing countries without the strangulation of regulations the World Bank and IMF imposes on its clients.
2) It strives for a multipolar world governance to the benefit of all countries and,
3) It has within its power to change the reserve currency, along with its allies in BRIC and SCO, from the dollar to a more acceptable unit for all nations.
Those who delude themselves that those dirty Chinese are the bad guys probably need to pull their heads out of the propaganda sandbox, and at the very least, look in a mirror.
China puts people before banks
China is one economy where there is no disconnect between the financial and normal world [GETTY]
Source
Samah El-Shahat, Al Jazeera's resident economist, writes a regular column analysing key elements that have contributed to the global financial downturn and its impact across the world.
China hasn't allowed its banking sector to become so powerful
The one question that isn't going away this global recession, is whether China can save the world.
But before we go running to Beijing, hat in hand, demanding assistance or else, there are some home truths that need to be considered first.
China is a developing country, with a per capita income of $4,000, which is much closer to those of African economies than to the US per capita income at $39,000, and $33,000 in Europe.
China has 130 million people who still live in absolute poverty, and even electricity hasn't made it every household yet.
So why should China be asked to save anyone but itself right now?
In fact, as Michael Pettis, a professor at Peking University's Guanghua School of Management says, China's consumption was about the equivalent of France's last year, but no one is calling on Paris to save the world.
The crisis, though, has exposed and clearly magnified the fault lines in China's emerging economy of 1.3 billion people.
The Asian giant needs to nurture its own domestic demand, so that when the export market goes sick, like it has in this Great Recession, it doesn't drag China down with it.
But making her people spend more than they save is harder said than done. After all, less than a generation ago the Chinese were so poor that hunger was the accepted norm in their daily lives.
Tiger has risen
Speak to Chinese officials in their late 40s onward and they will tell you that thinking about food was a major preoccupation as they were growing up - it was so scarce and many had to collect food coupons.
Yes, this Asian tiger has risen despite a recent past of malnutrition. So getting the Chinese to move away from the "survivors'" mentality of savers to one of spenders will not be easy.
Economists believe it takes a whole generation before people can change their ways and habits. But such a change can be overwhelmingly helped by the establishment of social welfare and safety nets such as health care provision, and other forms of social security.
This might encourage the Chinese to loosen their purse strings.
So why do we assume China can save the global economy?
Is this not a warped sense of economic prioritising to ask a developing country with pressing economic and social problems of its own to come in and sacrifice herself for the rest of the world?
Lending the US
This could have something to do with China's $2tn in denominated securities, and bonds it has acquired from the US. It is after all the US's biggest lender.
Yet, take that two trillion-dollar sum and divide it by 1.3 billion - the Chinese population - and I assure you not much would be left for your average Chinese citizen.
However, I feel this basic misunderstanding of China and her position in the world, has to do with our negative bias toward that country - we are much tougher and harder when it comes to the way we report our economic stories on China.
We are not telling enough stories of how we can in fact learn from China, particularly in the way its keeps the power of its banks in check.
Something we have been unable to do.
China is the one leading economy where the divide - the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit - doesn't exist.
Both worlds are booming again and this is due to the way the government handled its banks.
China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout.
In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group.
And that is why Chinese banks are lending to the people and their businesses in record numbers. Why don't we hear more about that in the media?
Different planets
In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place.
Wall Street and Main Street might as well be existing on different planets.
And this is in large part because banks are still not lending money to the people.
In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks.
They are using it to shore up, and clean up their balance sheets rather than lend it to the people.
The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen.
I asked Costas Lapavitas from the School of Oriental and African Studies (SOAS) whether governments had put the interests of banks before the interests of their wider populations.
"Yes I think you can say that. I think governments will probably come out and say that we helped rescue the banks, and we prevented generalised collapse. And to a certain extent that is true of course," he said.
"However there were so many ways in which banks could have been rescued and this particular way has been done in such a way that the banks have no incentive to change the ways they operate ... It is as if the banks have written the policies that the state adopted."
Interests of shareholders
The US and British governments have allowed banks to solve their own crises in the interests of their own mangers, and shareholders – they are after all private business.
Governments should have made it conditional for banks to lend to us, before they are given access to so much of our money and the Federal Reserve's cheap credit.
So the Western hemisphere is suffering the consequences of government failure, while the Asian Giant is celebrating government getting it right.
Funny, how our seemingly democratic governments have been taken over by vested interests.
So, lay off China. It is the one country that is putting the interests of its people above that of the banks.
And in these pressing times I say Hallelujah to that.
Chavez's 'historic' China strategy
At a land base in Venezuela, Chavez and Morales
cheer the satellite's successful launch [EPA]
cheer the satellite's successful launch [EPA]
By Dima Khatib in Caracas
Source
As the rocket carrying the Simon Bolivar Venesat-1 satellite lifted into space from south-western China, Hugo Chavez, the Venezuelan president, could not help but show his excitement.
Watching the launch live from Bolivar State, in south-eastern Venezuela, with Evo Morales, the Bolivian president, Chavez described the October 2008 launch of the country's first satellite "of strategic and historical importance for Venezuela and China".
The satellite is now used by Venezuela to meet some of its telecommunication needs and is one of the main achievements of Caracas' strategic partnership with Beijing.
Venezuela's interest in such a partnership provided China an excellent opportunity as it searched for a reliable partner that could guarantee energy, particularly oil, supplies in the long run.
Their relationship now stretches from the depths of space to Venezuelan soil.
Developing oil fields
In central Venezuela's Faja del Orinoco, believed to be the world's largest oil reserve, China is helping Caracas explore an area that is believed to hold about 40 billion barrels of crude oil, twice the volume of oil reserves in the US.
As Venezuela seeks to diversify and expand the reach of its energy exports in the world instead of largely depending on US markets, it has started exporting oil for the first time in recent years to far-away China.
It currently exports to China almost 400,000 barrels a day and hopes to reach 1mn barrels by 2010. It is also planning to build refineries in China.
In the meantime, China is also helping Venezuela develop its telecommunications and hi-tech infrastructure.
In the Paraguana Peninsula in western Venezuela, China has helped Venezuela manufacture its first mobile phone and computer.
"Best" mobile phone
Chavez wants to use Venezuela's oil to break what he believes is US hegemony [EPA]
Baptised the Vergatario, or in colloquial Spanish "the very best", the new mobile phone is assembled in a joint Chinese and Venezuelan company called VTELCA.
Chinese engineers have contributed the technology and parts while Venezuela provides the manual labour, infrastructure and financing.
The Vergatario costs a mere $14, the cheapest by far in the market, and is intended to cater to low-income Venezuelans.
The phone was released for the first time on Mother's Day in May earlier this year. Within hours all units were sold out and many Venezuelans are waiting for the next batch to come out.
Technological sovereignty
VTELCA is one of 209 new socialist companies that have been established to help Venezuela reach what Chavez has termed 'national technological sovereignty'.
Most of its 170 workers were hired through local "communal councils" in the area's towns and villages. Comprised of housewives and labourers, the workforce was trained by the Chinese who now only supervise the work in the factory.
In one such factory, which began operating in December 2006, Chinese engineers are helping Venezuelans develop the first homemade computer.
Venezuelans hope Chinese technology and know-how will be transferred to them in the future so they can design their own computers and locally manufacture the parts in future socialist companies.
Joint investments
In 2007, China and Venezuela established a joint investment fund in which China initially pledged to inject $4bn over a period of three years. Venezuela provided $2bn into the fund.
The idea behind the fund is that the Chinese contribution would be a down payment for future oil supplies, while Venezuela would use the money in development projects.
The two would agree on a fixed oil price in a way that protects both from constant fluctuations in the energy market.
Less than two years later, China had already provided its share. In early 2009, at the height of the current global financial crisis, Chavez managed to convince Beijing to add an extra $4bn to the fund; Caracas also injected a further $2bn raising the total value to $12bn.
This is one of the Chavez government's many alternatives to conventional financing by the IMF and World Bank. These funds are designed to finance development projects without the burden of high interest rates and without dictating economic policies by the lender.
It is also a mechanism to break the circle of speculation in the energy market which Chavez believes is based on "capitalist principles" and he calls as "unfair and greedy".
The fund has been used to finance many projects in Venezuela so far. In one project in the state of Monagas in eastern Venezuela, the fund is financing a pilot project to increase chicken production in the country using Argentinian know-how.
It has also been used to finance a nationwide railway network that is being built in a partnership with other countries.
Ideology and strategy
When Chavez came to power 10 years ago, trade with China had peaked under $200mn but since then it has jumped to nearly $10bn.
It is no surprise then that Chinese officials say that Venezuela has now become the biggest recipient of its investments in Latin America.
While the Chinese community has existed here for decades, the presence of Chinese companies is increasing and being felt in several sectors of the economy: housing, agriculture, industry. The relationship serves China's commercial interests.
But for Venezuela, it serves ideological and strategic purposes.
Since becoming president, Chavez has travelled to China six times, making him its most frequent visitor among Latin American leaders.
He says the growing ties with Beijing are part of his stated aim to build a new multi-polar model of international relations "to break" US hegemony.
He has also embarked on a programme of cultural and scientific exchange with China.
By having Venezuelans study and benefit from Chinese technological expertise, Chavez is hoping to create a strategic partnership which merges China's socio-economic experiment with Latin American socialism.
Saturday, June 27, 2009
End of the Dollar
Will the 'Dollar Wars' Kill
What's Left of the American Dream?
What's Left of the American Dream?
Countries yoked to America's currency, and therefore its cratering empire, want to kick the dollar to the curb. And that's bad news for the U.S.
Here's a terrible joke: An elderly man walks into a bar and says, "I got good news and I got bad news."
"What's the good news?" the bartender asks.
"I stayed out of the stock market, so my retirement dollars are safe."
"What's the bad news?"
"They're dollars."
OK, I said it was a terrible joke. But that may be what the dollar is becoming, now that the critical mass of wartime spending, rampant consumption, hyper-real finance and environmental collapse has hit the fan.
The hangover from the last three presidential terms, but especially the last two, has taken the American economy down the rabbit hole, with the international monetary system begging for mercy while hitched to its off-the-ralls crazy train. But the ride has stopped, and some countries yoked to America's currency, and therefore its cratering empire, don't want to get back on.
Namely, Brazil, Russia, India and China, loosely termed BRIC by Goldman Sachs economist Jim O'Neill, who is not alone in predicting the four countries' ascendant power, as the United States and the Eurozone fade into the 20th century.
With Brazil and Russia lording over a large share of what's left of the planet's natural gas and oil, and China and India providing a titanic labor force that rivals the intelligence, productivity and regimentation of workers anywhere outside their borders, BRIC is in the house, big time. And it wants a say in what's going on, as Marvin Gaye sang.
What's going on is that the dollar, to which the majority of the planet's economies and currencies are now reliant, has us all by the proverbial balls, and BRIC is screaming about it in the press. Something has to give, it's saying, and that thing is the dollar.
"There is a lot of political and economic posturing involved," Rachel Zimeba, lead analyst at economist Nouriel Roubini's RGE Monitor, explained to AlterNet. "But I think there is substance to it. China has been trying, relatively unsuccessfully, to diversify for a couple of years, which has conflicted with its desire to have undervalued exports. Same thing has happened to countries in the Middle East, which are pegged to the dollar. And we're going to see even more pressure to diversify from these countries to reduce the share of their [dollar] assets.
"They see that the U.S. has a rising debt burden and record financing needs. Over time, they are worried that inflation and a weaker dollar will reduce the value of those assets."
They should be worried. Since the Bush administration took office, the dollar has lost 33 percent of its value. And since the Bushies left office, the dollar has been on autopilot, hovering beneath the pound and euro and jockeying for position with the Canadian dollar for the bronze medal in underperforming currencies, losing or gaining altitude every time a politician from Russia or China slams or praises it in the press. Like the American economy itself, the Humpty Dumpty dollar is wobbling on the fence, hoping reality doesn't hop along and give it a shove.
The good news? It could land softly.
"This is not an overnight thing," Ziemba added. "Same thing goes for these countries' attempts to turn their own currencies into transactional and reserve currencies."
That's reassuring, especially to what's left of those who still have a lot of dollars, as the American unemployment rate rises to levels nearly unseen since World War II. But once you wormhole a bit further into the future, the dollar's fate is much more murky.
"The debate between the inflationists and deflationists is red-hot these days, as the U.S. financial system continues to wobble and the 'real' economy of goods and services staggers," explained Jim Kunstler, author of The Long Emergency, World Made By Hand and the riotously acerbic column "Clusterfuck Nation." "The fate of the dollar in the short-term depends on which way this really goes. But in the long term, both sides say the dollar is toast."
Helping push America off the debt-soaked cliff it built for itself by hitching its future to hyper-real derivatives and unsustainable deregulation and development is beginning to look less like sacrilege and more like prudent international monetary policy. Whereas in the past, China and Russia's public protestations about the hegemonic corruption of the American empire would have been shooed away like jealous flies, now more countries are joining in the anti-American chorus, even as they shake President Barack Obama's hand and hope openly for a kindler, gentler global village.
What's going on behind the scenes is anybody's guess. But it's probably a good guess that more than a few long knives have been unsheathed.
"Geopolitically, I suspect there is whispered consensus between our various partners and rivals that the American situation is pretty hopeless," Kunstler cracked, "and that they would now all more or less benefit from the diminishment of U.S. power across the board. The Chinese, for instance, must know that we will never again ramp up the orgy of credit spending. Why keep throwing away their wealth to keep us consuming?"
It's a good question. One of the BRIC members' solutions to the conundrum is to spend more time on their own currencies, as well as those of the beleaguered International Monetary Fund, which has its own currency, called special drawing rights. The SDRs are pegged to a currency basket, containing the U.S dollar, the euro, the yen and the U.K. pound sterling. In other words, the currencies of the 20th century's superpowers.
BRIC, the purported superpowers of the 21st century, have been buying SDRs like mad lately. When BRIC met in mid-June in the Siberian city of Yekaterinberg, it committed to giving $80 billion to the IMF, with China carrying the lion's share at $50 billion. Add that to the $250 billion that the G20 coughed up in April, and the IMF is quickly becoming the planet's reserve bank of choice.
“There is a need to make the IMF a true representative of the world’s leading economies," Russian Finance Minister Alexei Kudrin asserted in June. "It’s not there right now,” he said, adding that it would be a decade before what People’s Bank of China Governor Zhou Xiaochuan recently called a super-sovereign reserve currency mounted enough of a challenge to displace the dollar.
In the meantime, Russia, China and the other BRIC members are putting their money where they want their mouths to be, which is in the International Monetary Fund's ear. But whether that super-sovereign reserve currency is the SDR is too soon to say.
"The SDR can't handle the load in its current form," Zimeba argued. "You'd need a payment system that accepted the SDR, for one. But where it can grow is in reserve assets, and this upcoming issuance of IMF bonds denominated in SDR will be a significant increase. But SDRs will only be open to governments, not the secondary market where they can be traded, which fails the requirements of convertibility and liquidity.
"Right now, the SDR doesn't have that mechanism. But that can change over time. In the near term, this is a way towards diversification, because the dollar doesn't have a majority share in the SDR."
Kunstler adds: "They're obviously hedging their bets as much as possible. Put yourself in their shoes. They see the U.S. financial system's stupendous swindles, and they know the score. So their interests are strictly tactical and strategic in the interests of their survival. They also surely want to try to insure the continuation of world trade, with or without the U.S. consumer."
Which is why BRIC, and by extension the countries beneath its heel or shaking its hand, are diversifying their dollars and dumping cash into the IMF, where they can attempt to influence the international monetary system in their favor. The United States has so far committed $108 billion, including $5 billion siphoned from the controversial war-funding bill that passed in mid-June.
In addition, it has arranged for the IMF to receive over $500 billion altogether, mostly to prop up zombie European banks that drank too much of the derivatives Kool-Aid. So BRIC has an uphill battle ahead of it. But it's gaining strength, and wants to convert that to IMF say-so.
"They want more significant voting rights in the IMF," Ziemba said. "The money is in exchange for leverage. China has talked in detail about how the over-reliance on the dollar was adding to global instability, creating a situation where the optimal monetary policy for the U.S. is not optimal for countries tacked to the dollar. But it's fairly obvious that, in five to 10 years, the role of these countries in the global economy will only increase. But they also have to figure out how much responsibility they want to take on."
Or can take on. BRIC is ascendant for sure, but it's about to inherit a global economy and environment that is nothing like the respectively stable climates American and European empires have enjoyed over the last few hundred years. From the econopocalypse to climate crisis and beyond, BRIC is quickly going to find its hands full of problems that will doubtlessly dampen its upward surge. Sure, the dollar is toast, but so is Earth's biodiversity and store of natural resources. It's hard to build a superpower on that heap.
"I think all nations are losing the ability to control events at the global level," Kunstler concluded. "It's a symptom of the crack-up of globalization, per se: A set of transient economic relations that only existed because of special conditions, namely, the final blowout of the cheap energy era. With that over, it's now a mad scramble for each player to survive.
"Observers seem to think that China will become the new global hegemon, but I doubt it. They have problems with water, food, overpopulation and environmental degradation that are much worse than ours. The world is comprehensively headed for a reduced standard of living."
Scott Thill runs the online mag Morphizm. His writing has appeared on Salon, XLR8R, All Music Guide, Wired and others.
Wednesday, June 17, 2009
Why the dollar is dying
Update: June 24, 2009
A new world is being born, one without the US dollar greasing the wheels of commerce
BRIC & SCO summits: Reinventing the wheel
Updates: June 18, 2009
Fed Buying Treasuries; China Selling Treasuries
Russia, China to Promote Ruble, Yuan Use in Trade
Probably the most important meeting in the world is going on right now in Russia: but, only a few people will notice the article below. Yet, it details the most critical change occurring currently creating a new world order and eradicating the United States financial and military hegemonic plans. And the change will be soooo quiet. Not really quiet; it's just that people's attentions are being focussed elsewhere. The information is here for all who are interested in it.
As the dollar enters its death cycle, Americans are focussed on GM and Sarah Palin's new
blooper. The fall of the dollar will be a big surprise for many....but don't worry, it will happen gradually (for the near future).
I highly recommend this long but lucid article on why the US Empire is being superceded by the power of Shanghai Cooperation Organisation SCO; and BRIC (Brazil, Russia, Inda and China). See When China awakes, it will shake the world. - Napoleon Bonaparte
If switching to another reserve currency or basket of currencies disables the American military stranglehold on earth, I say, Bring it on!
For those of you who prefer the Americanised version of news with its 'happy ending' see Dollar poses dilemma for Bric countries , the BBC version of the SCO summit.
by Michael Hudson
Global Research, June 13, 2009
Source
The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.
Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai
Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).
The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.
Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.
What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.
Members of Shanghai Cooperation Organisation
"The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.”2 At the root of the global financial crisis, he concluded, is that the United States makes too little and spends too much. Especially upsetting is its military spending, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.
The sticking point with all these countries is the US ability to print unlimited amounts of dollars. Overspending by US consumers on imports in excess of exports, US buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These agencies then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.
When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives. “Free markets” US-style hook countries into a system that forces them to accept dollars without limit. Now they want out.
This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” Mr. Medvedev ended his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”
When foreign military spending forced the US balance of payments into deficit and drove the United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative by default was to invest their subsequent payments inflows in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves – and these loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagon, along with US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.
The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further US deficit spending – including military spending on their borders?
For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros,3 and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi.[4] Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People's Bank of China wrote an official statement on its website that the goal is now to create a reserve currency “that is disconnected from individual nations.”5 This is the aim of the discussions in Yekaterinburg.
In addition to avoiding financing the US buyout of their own industry and the US military encirclement of the globe, China, Russia and other countries no doubt would like to get the same kind of free ride that America has been getting. As matters stand, they see the United States as a lawless nation, financially as well as militarily. How else to characterize a nation that holds out a set of laws for others – on war, debt repayment and treatment of prisoners – but ignores them itself? The United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. US interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other Washington vehicles.
The United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked China’s CNOOK from buying Unocal on grounds of national security, much as it blocked Dubai from buying US ports and other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away.
In this respect the US has not really given China and other payments-surplus nations much alternative but to find a way to avoid further dollar buildups. To date, China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the US Government took these two mortgage-lending agencies over, formally adding their $5.2 trillion in obligations onto the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring US balance-of-payments deficits.
Seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down China’s sovereign wealth funds sought to diversify in late 2007. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.
Foreigners see the IMF, World Bank and World Trade Organization as Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.
Click to enlarge image
On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut. America has become a deadbeat – and indeed, a militarily aggressive one as it seeks to hold onto the unique power it once earned by economic means. The problem is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s Academy of Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the United States should “save” first and foremost by cutting back its military budget. “U.S. tax revenue is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’”6
At present it is foreign savings, not those of Americans that are financing the US budget deficit by buying most Treasury bonds. The effect is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for America’s balance-of-payments deficit. Since the 13th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.
Foreign nations see themselves stuck with unpayable IOUs – under conditions where, if they move to stop the US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If China’s currency rises by 10% against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When Mr. Geithner put on his serious face and told an audience at Peking University in early June that he believed in a “strong dollar” and China’s US investments therefore were safe and sound, he was greeted with derisive laughter.7
Anticipation of a rise in China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?
To avoid this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, “Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.8
An era therefore is coming to an end. In the face of continued US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.
Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that US global hegemony cannot continue without spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the US financial-military world order. If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others (in the form of its own recycled dollars) nor have the money for unlimited military expenditures and adventures.
US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.
Notes
1 Andrew Scheineson, “The Shanghai Cooperation Organization,” Council on Foreign Relations,
Updated: March 24, 2009: “While some experts say the organization has emerged as a powerful anti-U.S. bulwark in Central Asia, others believe frictions between its two largest members, Russia and China, effectively preclude a strong, unified SCO.”
2 Kremlin.ru, June 5, 2009, in Johnson’s Russia List, June 8, 2009, #8.
3 Jamil Anderlini and Javier Blas, “China reveals big rise in gold reserves,” Financial Times, April 24, 2009. See also “Chinese political advisors propose making yuan an int’l currency.” Beijing, March 7, 2009 (Xinhua). “The key to financial reform is to make the yuan an international currency, said [Peter Kwong Ching] Woo [chairman of the Hong Kong-based Wharf (Holdings) Limited] in a speech to the Second Session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body. That means using the Chinese currency to settle international trade payments …”
4 Shai Oster, “Malaysia, China Consider Ending Trade in Dollars,” Wall Street Journal, June 4, 2009.
5 Jonathan Wheatley, “Brazil and China in plan to axe dollar,” Financial Times, May 19, 2009.
6 “Another Dollar Crisis inevitable unless U.S. starts Saving - China central bank adviser. Global Crisis ‘Inevitable’ Unless U.S. Starts Saving, Yu Says,” Bloomberg News, June 1, 2009. http://www.bloomberg.com/apps/news?pid=20601080&sid=aCV0pFcAFyZw&refer=asia
7 Kathrin Hille, “Lesson in friendship draws blushes,” Financial Times, June 2, 2009.
8 Steven R. Weisman, “U.S. Tells China Subprime Woes Are No Reason to Keep Markets Closed,” The New York Times, June 18, 2008.
Related:
BRICs May Buy Each Other’s Bonds in Shift From Dollar
Is the First World Being Turned into the Third World?
A new world is being born, one without the US dollar greasing the wheels of commerce
BRIC & SCO summits: Reinventing the wheel
Updates: June 18, 2009
Fed Buying Treasuries; China Selling Treasuries
Russia, China to Promote Ruble, Yuan Use in Trade
Probably the most important meeting in the world is going on right now in Russia: but, only a few people will notice the article below. Yet, it details the most critical change occurring currently creating a new world order and eradicating the United States financial and military hegemonic plans. And the change will be soooo quiet. Not really quiet; it's just that people's attentions are being focussed elsewhere. The information is here for all who are interested in it.
As the dollar enters its death cycle, Americans are focussed on GM and Sarah Palin's new
blooper. The fall of the dollar will be a big surprise for many....but don't worry, it will happen gradually (for the near future).I highly recommend this long but lucid article on why the US Empire is being superceded by the power of Shanghai Cooperation Organisation SCO; and BRIC (Brazil, Russia, Inda and China). See When China awakes, it will shake the world. - Napoleon Bonaparte
If switching to another reserve currency or basket of currencies disables the American military stranglehold on earth, I say, Bring it on!
For those of you who prefer the Americanised version of news with its 'happy ending' see Dollar poses dilemma for Bric countries , the BBC version of the SCO summit.
De-Dollarization: Dismantling America’s
Financial-Military Empire
The Yekaterinburg Turning Point
Financial-Military Empire
The Yekaterinburg Turning Point
by Michael Hudson
Global Research, June 13, 2009
Source
The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.
Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai
Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.
Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.
What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.
Members of Shanghai Cooperation Organisation "The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.”2 At the root of the global financial crisis, he concluded, is that the United States makes too little and spends too much. Especially upsetting is its military spending, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.
The sticking point with all these countries is the US ability to print unlimited amounts of dollars. Overspending by US consumers on imports in excess of exports, US buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These agencies then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.
When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives. “Free markets” US-style hook countries into a system that forces them to accept dollars without limit. Now they want out.
This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” Mr. Medvedev ended his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”
When foreign military spending forced the US balance of payments into deficit and drove the United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative by default was to invest their subsequent payments inflows in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves – and these loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagon, along with US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.
The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further US deficit spending – including military spending on their borders?
For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros,3 and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi.[4] Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People's Bank of China wrote an official statement on its website that the goal is now to create a reserve currency “that is disconnected from individual nations.”5 This is the aim of the discussions in Yekaterinburg.
In addition to avoiding financing the US buyout of their own industry and the US military encirclement of the globe, China, Russia and other countries no doubt would like to get the same kind of free ride that America has been getting. As matters stand, they see the United States as a lawless nation, financially as well as militarily. How else to characterize a nation that holds out a set of laws for others – on war, debt repayment and treatment of prisoners – but ignores them itself? The United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. US interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other Washington vehicles.
The United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked China’s CNOOK from buying Unocal on grounds of national security, much as it blocked Dubai from buying US ports and other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away.
In this respect the US has not really given China and other payments-surplus nations much alternative but to find a way to avoid further dollar buildups. To date, China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the US Government took these two mortgage-lending agencies over, formally adding their $5.2 trillion in obligations onto the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring US balance-of-payments deficits.
Seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down China’s sovereign wealth funds sought to diversify in late 2007. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.
Foreigners see the IMF, World Bank and World Trade Organization as Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.
Click to enlarge imageAt present it is foreign savings, not those of Americans that are financing the US budget deficit by buying most Treasury bonds. The effect is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for America’s balance-of-payments deficit. Since the 13th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.
Foreign nations see themselves stuck with unpayable IOUs – under conditions where, if they move to stop the US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If China’s currency rises by 10% against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When Mr. Geithner put on his serious face and told an audience at Peking University in early June that he believed in a “strong dollar” and China’s US investments therefore were safe and sound, he was greeted with derisive laughter.7
Anticipation of a rise in China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?
To avoid this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, “Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.8
An era therefore is coming to an end. In the face of continued US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.
Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that US global hegemony cannot continue without spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the US financial-military world order. If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others (in the form of its own recycled dollars) nor have the money for unlimited military expenditures and adventures.
US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.
Notes
1 Andrew Scheineson, “The Shanghai Cooperation Organization,” Council on Foreign Relations,
Updated: March 24, 2009: “While some experts say the organization has emerged as a powerful anti-U.S. bulwark in Central Asia, others believe frictions between its two largest members, Russia and China, effectively preclude a strong, unified SCO.”
2 Kremlin.ru, June 5, 2009, in Johnson’s Russia List, June 8, 2009, #8.
3 Jamil Anderlini and Javier Blas, “China reveals big rise in gold reserves,” Financial Times, April 24, 2009. See also “Chinese political advisors propose making yuan an int’l currency.” Beijing, March 7, 2009 (Xinhua). “The key to financial reform is to make the yuan an international currency, said [Peter Kwong Ching] Woo [chairman of the Hong Kong-based Wharf (Holdings) Limited] in a speech to the Second Session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body. That means using the Chinese currency to settle international trade payments …”
4 Shai Oster, “Malaysia, China Consider Ending Trade in Dollars,” Wall Street Journal, June 4, 2009.
5 Jonathan Wheatley, “Brazil and China in plan to axe dollar,” Financial Times, May 19, 2009.
6 “Another Dollar Crisis inevitable unless U.S. starts Saving - China central bank adviser. Global Crisis ‘Inevitable’ Unless U.S. Starts Saving, Yu Says,” Bloomberg News, June 1, 2009. http://www.bloomberg.com/apps/news?pid=20601080&sid=aCV0pFcAFyZw&refer=asia
7 Kathrin Hille, “Lesson in friendship draws blushes,” Financial Times, June 2, 2009.
8 Steven R. Weisman, “U.S. Tells China Subprime Woes Are No Reason to Keep Markets Closed,” The New York Times, June 18, 2008.
Related:
BRICs May Buy Each Other’s Bonds in Shift From Dollar
Is the First World Being Turned into the Third World?
Friday, June 5, 2009
This is why GM went bust
Update June 14, 2009
Have You Driven a Han Lately?
Here is a re-post of a March blog: the cars available in Europe this summer. GM should have been making these cars since the 1980's instead of gas guzzling, status appealling SUVs. GM deserved to go bankrupt and the US has truly lost its edge in manufacturing autos now.
Innovative cars - from Germany and India
US carmakers deserve to fold having lost the plot decades ago. The Big 3, Chrysler, GM and Ford could have produced these cars and be on top - if they didn't have their collective heads up their corporate arses. And they have the cheek to ask for bailout money. Guess it's another case of American know-how - yep - know-how to bankrupt the US economy. Good work lads.
Source
This is not a toy, not a concept car. It is a newly developed 2-seater car in highly aerodynamic tear-shape road-proven real car. It is ready to be launched as a single-seater for sale in Shanghai in 2010 for a mere RMB 4,000 = US $600 .00 ! Interested? Wait till you learn that it will cruise at 100-120 Km/Hr with an unbelievable 0.99litre/100Km =(258 miles/gallon) !! Impressed? Totally, after you have read all the details below about the hi-tech and space-age material input into this care !!! Truly the most Economic Car in the world . Must see and read to the end and please comment !!!! The Most Economic Car in the World will be on sale next year....
Source
The Tata Nano is a rear-engined, four-passenger city car built by Tata Motors, aimed primarily at the Indian market. It was first presented at the 9th annual Auto Expo on 10 January 2008, at Pragati Maidan in New Delhi, India.
Tata Motors commercially launched Nano on March 23, 2009, with bookings from April 9 to April 25.The sales of the car will begin in July 2009, with a starting price of Rs 1,15,000 Rupees, cheaper than the Maruti 800, its main competitor and next cheapest Indian car priced at 1,84,641 Rupees. It also has an 8 percent smaller exterior size and a 23 percent larger interior space compared to Maruti 800. Tata had sought to produce the least expensive production car in the world — aiming for a starting price of Rs.1,00,000 (approximately US$2,000 in March 2009).
In early 2008 the news magazine Newsweek identified the Nano as a part of a "new breed of 21st-century cars" that embody "a contrarian philosophy of smaller, lighter, cheaper" and portend a new era in inexpensive personal transportation — and potentially, "global gridlock" The Wall Street Journal confirmed a global trend toward small cars, which includes the Nano.
"Nano" means "small" in Gujarati, the language of the founders of the Tata Group. In English, the prefix "nano-" is often used to mean small. This derives from the Greek root 'nanos', meaning dwarf.
Have You Driven a Han Lately?
Here is a re-post of a March blog: the cars available in Europe this summer. GM should have been making these cars since the 1980's instead of gas guzzling, status appealling SUVs. GM deserved to go bankrupt and the US has truly lost its edge in manufacturing autos now.
Innovative cars - from Germany and India
US carmakers deserve to fold having lost the plot decades ago. The Big 3, Chrysler, GM and Ford could have produced these cars and be on top - if they didn't have their collective heads up their corporate arses. And they have the cheek to ask for bailout money. Guess it's another case of American know-how - yep - know-how to bankrupt the US economy. Good work lads.
VW - 2 passenger car - 258 mpg
SourceThis is not a toy, not a concept car. It is a newly developed 2-seater car in highly aerodynamic tear-shape road-proven real car. It is ready to be launched as a single-seater for sale in Shanghai in 2010 for a mere RMB 4,000 = US $600 .00 ! Interested? Wait till you learn that it will cruise at 100-120 Km/Hr with an unbelievable 0.99litre/100Km =(258 miles/gallon) !! Impressed? Totally, after you have read all the details below about the hi-tech and space-age material input into this care !!! Truly the most Economic Car in the world . Must see and read to the end and please comment !!!! The Most Economic Car in the World will be on sale next year....
Tata Nano from India
Source
The Tata Nano is a rear-engined, four-passenger city car built by Tata Motors, aimed primarily at the Indian market. It was first presented at the 9th annual Auto Expo on 10 January 2008, at Pragati Maidan in New Delhi, India.
Tata Motors commercially launched Nano on March 23, 2009, with bookings from April 9 to April 25.The sales of the car will begin in July 2009, with a starting price of Rs 1,15,000 Rupees, cheaper than the Maruti 800, its main competitor and next cheapest Indian car priced at 1,84,641 Rupees. It also has an 8 percent smaller exterior size and a 23 percent larger interior space compared to Maruti 800. Tata had sought to produce the least expensive production car in the world — aiming for a starting price of Rs.1,00,000 (approximately US$2,000 in March 2009).
In early 2008 the news magazine Newsweek identified the Nano as a part of a "new breed of 21st-century cars" that embody "a contrarian philosophy of smaller, lighter, cheaper" and portend a new era in inexpensive personal transportation — and potentially, "global gridlock" The Wall Street Journal confirmed a global trend toward small cars, which includes the Nano.
"Nano" means "small" in Gujarati, the language of the founders of the Tata Group. In English, the prefix "nano-" is often used to mean small. This derives from the Greek root 'nanos', meaning dwarf.
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