“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Friday, January 14, 2011

Chinese Butter for Euro Arms, New Thinking to "design a way forward" to Where?

It gets worse and worse with China. The latest is the suspicion that China will prop up the Euro to cleave a rift between the US and Europe on the transfer of strategic western technology to China. Chinese toxicity spreads.

Vice Premier Li Keqiang, during his recent visit to the UK, called on the EU to relax the restrictions of high-tech exports to China, as well as the lifting of the arms embargo and the recognition of China's full market economy status.

China's leaders know they can depend on the greed, incompetence, and stupidity of Western leaders. China intends to dominate and win. Watch for the next clue to slam our clueless leaders up the side of the head, Chinese naval bases in Africa and the Mediterranean.


Europe fears motives of Chinese super-creditor

The EU authorities fear that China's purpose in buying eurozone debt may be double-edged, intended to push up the euro exchange rate against the yuan and gain advantage for exports.

 8:08PM GMT 13 Jan 2011


Herman Van Rompuy, Europe's president, said during a visit to Downing Street that the Chinese may have "political" thoughts in the back of their minds for coming to Europe's help, and gave a strong hint that they are also engaging in currency manipulation.

"When they buy euros, the euro becomes stronger and their currency a little bit weaker. That is not neutral in regard to their competitive position. But I go no further in this topic. It could be too delicate," he said.

Mr Van Rompuy nevertheless welcomed the latest purchases of bonds from the eurozone periphery as a valuable gesture of support. "They invested even in some weak countries, so they are very confident in the solvency of some countries," he said.
China has emerged as the transforming force in the eurozone debt crisis over recent days, pledging to use part of its €2.87 trillion (£1.82 trillion) reserves to safeguard global stability. The question is whether the Communist regime is hoping to extract strategic concessions in exchange.

The footsteps of a giant creditor were clearly felt in Portugal's bond markets on Wednesday, and again on Thursday in Spain and Italy. Madrid sold €3bn of five-year debt at 4.54pc, a full percentage point jump from November but still below the danger level. Italy also enjoyed a benign auction.

The exact role of China is unclear. Chinese vice-premier Li Keqiang promised to buy Spanish debt during a visit to Madrid last week, reportedly up to €6bn (£5bn).
China was the secret buyer in a private placement of €1.1bn of Portuguese debt last week, according to the Wall Street Journal. Finance minister Fernando Teixeira dos Santos said China "may well have been" a key buyer in this week's debt auction.
China was not the only force at work. Traders say the European Central Bank (ECB) acted aggressively behind the scenes, calling some 20 dealers to buy Portuguese debt in the secondary market.

This created what amounted to a "short-squeeze" in Portuguese bonds just before auction, causing spreads to tighten dramatically and inflicting damage on market makers acting in good faith. City sources say this has caused some bitterness.
Charles Grant, head of the Centre for European Reform and author of a book on EU-China relations, said China's top goal is to secure an end to the EU arms embargo, imposed after the Tiananmen Square massacre in 1989. It rankles as humiliating treatment for a global superpower that has since changed profoundly.

The EU has refused to move on the sanctions until China ratifies the International Covenant of Civil and Political Rights, and China's arrest of Nobel peace dissident Liu Xiaobo has further complicated matters.

Yet Brussels has suddenly begun to shift gear. Baroness Ashton, the EU's foreign policy chief, said the embargo is damaging EU-China ties and called for new thinking to "design a way forward".

Mr Grant said Britain, France and Germany are all wary of giving ground, cleaving closely to US policy. Washington views China's growing military might as a strategic threat to the Pacific region. There have already been hot words over the South China Sea, and the Pentagon claims that China has an "operational" ballistic missile able to sink aircraft carriers at long range.

A WikiLeaks cable from the US embassy in Beijing last January cites the EU's mission chief, Alexander McLachlan, saying Spain had tried to curry favour with Chinese leaders, "seeking advantage at other EU states' expense". He said China was fully aware of Madrid's game but was exploiting intra-EU divisions to gain leverage.
China's second goal is to secure market economy status from the EU. This would make it much harder for the EU to impose anti-dumping measures against Chinese imports. As it happens, the EU has just lifted its punitive tariff on Chinese shoes.

Mr Grant said Beijing will not risk much cash to woo Europe. "They are very hard-nosed. They may splash some money around for goodwill but they are not going to waste the hundreds of billions that may be needed. Nothing short of meaningful action by Europe's leaders can genuinely stabilise the eurozone," he said.
China's sovereign wealth funds, including the central bank's exchange fund SAFE, have been severely criticised at home for losing money on US investment banks during the credit crisis, or on dollar losses from US Treasury debt. They will be careful about fresh risks in Euroland.

"It is debatable whether China would actually be willing to become buyer of last resort of the debt of a country close to default," said Julian Jessop from Capital Economics. "Chinese officials are acutely aware of past losses and will not want to be seen to risk their peoples' capital on a lost cause. Their actions frequently fall short of expectations raised by their words."

Simon Derrick, from the Bank of New York Mellon, said that China must find somewhere to recycle its fresh reserves or lose control of its own currency. It is already sated with US assets. Holdings are 65pc in dollars, 26pc in euros, 5pc in sterling and 3pc in the yen.

"They may start buying some emerging market bonds but basically the only place they can go is into euros, and buying €6bn of Spanish debt is a good investment if it helps protect their other euro assets," he said.

Mr Derrick said Beijing appears to take the view that the ECB's monetary policy is fundamentally more rigorous than the money-printing ventures of the US Federal Reserve. "The Chinese have made it clear that they don't see any meaningful shift in US policy."

In the global beauty contest, Europe's debt still looks less ugly than the main alternative.


  1. Keep allowing US sovereign debt to be bought by the Chicoms. What could possibly go wrong?

  2. It is the Europeons that have lost GDP market share to the Chi-coms, not the US.
    It is the Europeons that are in an immediate state of financial crisis, not the US.

    Recall, as well, that it was Charlie that organized the ethnic Turks, under Mongol influence, that marched to Poland. Leaving on their own volition, not because they were ever defeated upon the battlefield. Unlike the Islamic hordes that came later.

    The current Stockman piece illustrates that the US is on the brink of disaster, but has not fallen off the cliff, yet.

    There is still an opportunity for US to change focus, to move to a policy of prioritizing the American Hemisphere, first.

    But, as Stockman says:

    "This is a profound disappointment that there's not even a debate -- a serious debate about dramatic change in our imperialist foreign policy and war-making establishment in this administration -- allegedly the most left-wing administration that we've had in modern time."

    The entire piece is interesting, from the fellow that engineered Ronald Reagan's Keynesian illusion. The first step to where we are today, as it relates to the debt overhang that we labor under, as a nation.

    the addicts in Washington are now unfortunately terrified to stop all this borrowing whether it's for guns or butter for fear of the economy will collapse.... That's why we're just at the beginning of solving this massive financial collapse we had in 2008 and not in the process of healthy recovery as some of the pals in the White House or on Capitol Hill or on Wall Street would have you believe."

    America's "massive debt-created, artificial prosperity" is unprecedented in history, he continued. The dependence on consumption supported by public and private borrowing, not income, is a new stage for Western Europe as well.

    We do not have to look to Islam to see the threat to our freedoms, we merely have to look in a mirror.

    We have met the enemy, he is us

  3. "massive debt-created, artificial prosperity"

    Stockman knows of what he speaks, he set the debt deal in motion.

    It is time to chart a new direction, not to "Stay the Course".

    This has been evident to the observant, for quite a while now.

  4. ... the addicts in Washington are now unfortunately terrified to stop all this borrowing whether it's for guns or butter for fear of the economy will collapse ...


  5. "Resolve then, that on this very ground, with small flags waving and tinny blast on tiny trumpets, we shall meet the enemy, and not only may he be ours, he may be us.


    —Walt Kelly, June 1953

  6. This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

    In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

    We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
    As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.
    Down the long lane of the history yet to be written America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be instead, a proud confederation of mutual trust and respect.

    Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield.

    Ike, who everyone liked.

  7. There is no longer a global military threat, to the US.

    We won.

    It is well past the time we should realize that reality.

    It is time to reset our priorities.
    While there is still time to do so.

  8. One witness allegedly saw the incident and said "it looked like they were committing suicide."

    The reported incidents of mass animal deaths come on the heels of similar incidents cited around the world, which first gained widespread media attention when thousands of black birds fell dead from the sky in Arkansas on New Year's Eve, following a nearby mass fish kill in the week prior. A few days after that, hundreds of similar birds were reported dead 300 miles away in Louisiana. Mysterious bird deaths were also reported in nearby Kentucky.

    The incidents aren't isolated to the United States, as hundreds of birds were reported dead in Italy, and dozens of dead jackdaws were also found littering a town in Sweden. Massive fish kills were also recently reported in Maryland, Brazil and New Zealand, and 40,000 dead crabs were reported to wash ashore on England's beaches.

    Various reasons have been given by officials for the numerous incidents, which they say are unrelated.

  9. There never should have been the free trade, which was never free, with China. Free trade should be fair trade. It should not be conducted with the monstrosity of selling sovereign debt to foreign powers.

    The US borrowing from China gave China the option of not purchasing US goods. It simply accrued US, interest paying, US government backed and guaranteed securities which the Chinese put on the balance sheets of their bank and government and military owned enterprises.

    By artificially maintaing the exchange rates, Chinese surpluses exploded and they collapsed American manufacturing. Wall Street made a fortune and fat assed non thinking Americans never stopped either party from stopping their spending party on Chinese manufactured goods.

    China flooded US universities with brilliant students, many graduating and taking key jobs in US technology driven companies for the purpose of forming a fifth column of technology pirates. All of this done under the guidance and approval of the multi-cultural crowd.

    During the entire last two decades we ignored rational trade with our natural partners in America from The Aleutians to Tierra del Fuego.

    It is late, damn late but not too late to turn it.

  10. There is the national tragedy, not the media created one of a mad man killing six and wounding nine.

  11. Hope you all have a wonderful day.

    As for me, it is time to enjoy the subsidized bounty of the Tonto national Forest.

    Yes, it's time to ride!

  12. I am convinced the only thing that will work is an immediate straight across the board budget cut at federal and state levels and the winding down of agencies that are job killers.

  13. US consumers represent 70% of US consumption and economic activity. That needs to be reduced to 60%. At the same time, unemployment clearly near 12-13% has to be halved.

    The net result of that would increase savings over the present 5%. That could be done by increased spending on domestic capital investment in combination with exports. We have no guarantee that we can do that with exports but can certainly do it with direct investment in manufacturing and infrastructure.

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  16. Great post, Deuce. And, great comments from the Rat.

    All I can add right now is, "Cui Bono?"

    And, it ain't me, and thee, bro's.

  17. All we're doing is destroying the aspiring middle class in the U.S. to create "slaves" in China.

    Great for GE, Citibank, and the political class, catastrophic for American Citizens.

  18. As I have stated many times, live in the Heartland (stay out of the break off areas), stay out of debt, stay employed (unless you are wealthy), and get off the grid as soon as possible.

    You don't have to hoard guns and ammo, but it doesnt hurt to have a few weapons around (just in case).

  19. Thanks for opening this back up, guys.

    I agree with LT or Q?

    Ignore the bad posters and they will go away.

  20. Nah, Gag, Bob won't go away. He'll just stay around a stink up the joint. The only answer is to keep "deleting."

  21. 83. Gaffe Price:
    @#32 Teresita, perhaps you’d be interested in what’s behind door number two, the 13 billion price tag that goes to Egypt every year?

    I have Egypt at $1.558 million dollars.

    Afghanistan gets almost $4 billion dollars, I suppose irrigation and fertilizer for all those warlord's poppy fields.

    We’re supposed to borrow money from China, give it to Israel, and this becomes accounts payable for our children and their children. But if anyone objects to this, they are called “Anti-Semitic”.

  22. Selah, that would be $1.558 Billion for Egypt.

  23. Million, billion, pretty soon you're talking real money.

    Commas and periods don't mean the same in the US and Europe (yeah, that's the ticket!)

    Anyway, thanks Rufus.

  24. That $2.9 Trillion is money that should have gone to the Chinese workers. This, along with, "free" trade would have allowed those workers to buy products made in the United States.

    But, no, the money is "loaned" to the U.S. Government, so it can waste it on God knows what all (foreign adventures, and propping up the oil companies oome to mind.)

    A tariff on all Chinese goods equal to the difference between our average wage for workers in that particular industry, and the wages of the Chinese workers producing the imported product.

    As it is we're just supplying the rope with which the Thuggocracy in China intends to hang us.

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  26. So how's my super-dooper, can't miss "sell Brent/buy WTI" arbitrage doing?

    It's losing money.

    The markets can stay irrational a lot longer than You can stay solvent. :)

  27. West Texas Intermediate (WTI) normally sells at about a $1.50 Premium to Brent Crude.

    Today, Brent is up to $98.50, and WTI is selling for $90.50.

    It only costs about $1.50 to ship a barrel of oil from NY to Rotterdam.

    By the way, yesterday Tapis Crude (Singapore) was selling for $104.00/bbl.

    The Elephants are "dancing a jig," and all "mice" need to get the hell out of town.

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  29. Oil Prices around the World

    Notice that Brent "Spot" ($100.40) is above the Front Month "Futures" contract.

    Strange times.

  30. Somebody take that crazy fool down before he gets started.

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  32. At least you're a nice fellow.

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  35. .

    Strange times.

    But the government indicates there is no inflation, Ruf.

    Saw an article the other day listing dozens of products that have been downsized over the past couple of years with no reduction in price.

    That is products such as Ivory liquid soap have reduced the amount of product (sometimes by 20%) but left the packaging the same. They also did not lower their prices accordingly.

    Sounds like inflation to me. One wonders if the government figures pick up all of these changes.


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  44. WiO: You have created the critical mass from hundreds of your posts to give anyone who reads this blogs threads the proof you are an antisemite

    Israel's founding was made possible by the forcible expulsion of the indigenous Palestinian people.

    Israel fought unprovoked wars of aggression against Egypt in 1956 and Lebanon in 1978 and 1982.

    That's Israel's business, of course. Who am I to judge? But I sure as shit don't relish having the state extort money from me and transfer it to Isreael to keep the show going over there.

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  59. Melody

    I have answered your comment over at my place.

  60. Senor, I have answered at my place. Bob stay away please.

  61. Deuce, please get some bright eyes.

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