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CHINA IS TO BE BLAMED FOR THE... GLOBAL CRISIS.
Says Barack Obama and the U.S. financial bodies

CHINA IS TO BE BLAMED FOR THE... GLOBAL CRISIS. Says Barack Obama and the U.S. financial bodies

When all the attempts to overcome crisis fail, the witch hunt starts. The only way to give a satisfactory explanation for the obvious discrepancy of the undertaken actions and actually achieved results is to find an enemy without.

During his last address to the nation Barack Obama admitted that in 2011 American economy rattled once again due to a number of reasons and the situation is, frankly speaking, rather sour. It turns out that anyone but America is to be blamed for the U.S. national debt that went over $14 trillion and other problems. "Our economy is in a desperate need for an urgent electric shock. European mischief may have quite real consequences in our economy, while it’s already feeble. People were more optimistic in the beginning of the year, but afterwards the oil prices went up because of Libyan events, make consumers and businesses nervous and we’ve failed to improve this situation here in Washington, being up to our eyes in the debates over the increase of the national debt plank, debates that no one really needed. If we take a general look upon the situation, there may be little doubts that now our economy is weaker than in the beginning of year" — Obama said at the press-conference, having pointed out the culprits of American troublesome economy. According to him, it is Europe, Libya and the political powers that opposed the further bulking up of the debt pyramid, calling to look for other ways.

Obama mentioned that "Occupy Wall Street" rallies that have been raging in the streets of numerous American cities since the 17th of September, saying that they reflect the discontent of American people with the way state financial system operates. "This movement is a reflection of American fear in front of the financial crisis. Protesters voice the opinions of those Americans, who are disappointed with the financial system" — Obama said. It seemed that American leader was about to exclaim some salvational reforms, allowing people to calm down and the U.S. economy to recover or at least naming some people within the U.S. government to blame for unleashing the current crisis. Yet, nothing like that happened. All the culprits are outside the USA.

Still, the U.S. President actually gave some advice on recovering the economy. According to him, it’s necessary to stimulate the demand and fight unemployment in order to improve the situation. "All these tasks are seen to in the new bill on unemployment" — the U.S. President emphasized. He has once again called for the Congress support and has once again expressed his perplexity with Republican reluctance to support tax benefits for the middle class and small businesses. The topic here is the bill that the White House host passed to Congress on the 8th of September. Plan for fighting unemployment stipulates the increase of social subsidies (apart from tax benefits) and will cost the budget extra $447 billion.

Analysis of these facts finally brings some light to the major domestic problem of the USA, which makes the way out of crisis so thorny and hard. The steps, intended to help the poor, automatically infringe upon the status of large corporations and vice versa. So Obama offers adjusting the taxation policy according to the incomes, while the extra taxes are to stimulate the demand through some extra subsidies. As long as Reps, loyal to the large corporations, are currently in the majority in Congress, it’s clear that they won’t accept the significant encroach upon the affiliated structures of theirs.

The Congress won’t support Obama’s bill. Republican Majority head, Eric Cantor (Rep — VA) has stated that. "President keeps asking: ‘Accept my bill with no exception.’ But I’ve repeatedly said that ‘all-or-none’ approach won’t do here" — Cantor said. He added that Democrats may also vote against this bill: members of Democratic faction (also bound by certain connections and lobby ties) haven’t agreed on whether to support Presidential initiative yet.

Given this background, the U.S. President decided to make a long range shot and try his luck at the outer borders. Obama named the financial system of...China as one of the main reasons of crisis and huge national debt. "China is very aggressive, when it comes to fiddling with the commercial system for their own benefit. I’ve repeatedly mentioned that in public and often addressed my questions to the Chinese authorities" — he said. He named the currency legerdemain as the most vivid example of such "games". "We’ll keep raising this question again and again...The fact that Chinese authorities interfere in the operation of currency markets is beyond any doubts, yuan rate today is much lower than it could have been...The rules have to be the same for everyone and we’ll keep talking about it" — he stressed.

Frankly speaking, complaints regarding the interference in the operation of currency market look quite awkward — U.S. officers have repeatedly "interfered" with and even carried out full-fledged attacks, shattering the rates of national currencies and paralyzing entire bourses. Yet, those rules weren’t seemingly written for the USA.

On the 3rd of October the U.S. Senate started considering the bill, allowing the White House to impose correction fees in regard of the goods, imported from countries, deliberately lowering the national currency rates — in other words, Chinese goods. However, true incentives of Barack Obama for blaming China in American misfortunes are somewhat different from those he had voiced up. Yes, the understated yuan rate benefits China. Yes, equalizing the rate will theoretically give the U.S. industry and trade some advantages. But it’s not about American unemployment rate and industry, but rather geopolitics — defining it broadly, it’s all about the global dominion.

Low yuan rate means low cost of exported Chinese goods — the production in China itself is paid with yuan, while the goods are sold for dollars abroad. It goes without saying that this benefits China, this "world factory", aplenty. Chinese government stimulates the real sector of economy, diligent Chinese conquer all the more outlets, allowing to pump the production volumes up all the more and create more jobs. Simultaneously with that, low yuan cost is a natural "barrier" on the way of foreign goods, coming to China. Foreign commodities cost too much and destined to wretch without a mass demand.

Besides, salary of Chinese laborers is also paid in yuan, making a miserable thing in a dollar equivalent. This circumstance keeps the productions costs low and foreign companies willingly transfer their manufactures to Chinese territory. That’s why the benefit from low yuan rate is huge complicated — China will hardly saw the branch that its progress sits upon, without a profound reason.

At that, present advantages naturally become the nearest future benefits. Experts have been saying that Chinese economy will outstrip the U.S. one for quite a time. Their forecasts vary — will it happen in 2020 or in 2050. After that China will be free do what Obama demands now — set the real yuan rate, which will automatically turn into the global currency, putting the Dollar Age to an end.

There’s nothing surprising in the fact that the U.S. leadership keeps attempting to slow down the Chinese growth. Fighting the Celestial Empire is pretty dangerous, which is why the pressure is exerted through the economic policy. First blows against China have already been delivered. On the 29th of September quotations of the Chinese hi-tech companies "collapsed". Just like in the Europe-Gazprom case, U.S. officials warned about the possible investigations in regard of a number of Chinese companies, whose shares are traded at the American exchanges, causing panic and mass sale of those. Shares of the Youku the largest Chinese video hosting service have fallen the most — 18%. David Cohen, U.S. Secretary of Treasury Deputy claimed that the USA would impose sanctions against four largest commercial banks of China — Bank of China, Chinese Construction Bank, Industrial-Commercial Bank of China and the Agricultural Bank in case if the latter ones keep cooperating with Iranian insurance companies.

Reps and Dems, utterly unable to reach common grounds in the matter of social subsidies for their own people, demonstrate complete unanimity, when it comes to opposing China. Mike Rogers, Chair of the Congress Intelligence Committee (Rep. — MA) said: "Scale of Chinese economic espionage becomes really threatening and I believe that the USA and its allies in Europe and Asia have to address Beijing without beating about the bush and demand it to stop that piracy; we have to come together and press the (Chinese) because combined diplomatic and economic leverage of America and its European and Asian allies is quite substantial. We have to use them in order to get this activity stopped." Charles "Dutch" Ruppersberger, major Democrat (MD) in the Committee in his turn expressed an opinion that aggressive cyber-attacks against the USA take place. He predictably accused China — not failing to mention Russia and Iran, of course — of such anti-American raids.

Chinese authorities are surely aware of the true reason for American discontent. They announced that they "flatly object" the bill considered in the U.S. Senate. Central Bank of the PRC, Ministry of Foreign Affairs and Commerce have stood up against it, accusing the USA of "politicizing the global currency market".

Spokesman of the Chinese Ministry of Foreign Affairs Ma Zhaoxu stated that the bill contradicts the WTO regulations, will have a negative impact on Sino-American trade relations and complicate the situation at the global currency market. Chinese Central Bank representatives said that it won’t solve American social problems like trade deficit and high unemployment rate, albeit it can trigger the trade war "that nobody craves for". We can’t rule out the possibility that Chinese government is mistaken, though, and that certain circles in the USA desperately need that "war".

Responding to Chinese accusations, Ben Bernanke, FRS Director, claimed that it was Chinese own economy that does no less than "blocks" the recovery of the global economy at the currency market. According to Bernanke, understated yuan prevents the global demand from recovering and the global economy — from stabilization.

Thus, if we put our trust in Bernanke, it is not the USA to blame for the current pandemonium, but Libya, Europe and — most of all — China. The USA once again tries to lay the blame at somebody else’s door.

By Alexander Vishnevsky

 

 

 

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  • At first I’d like to point out the main thesis of the material: China has long ago become the first economic of the planet. While reports on the U.S. monetary policy contain the new data on its financial troubles all the more often, the PRC macro-statistic data indicates a fantastic increment of steel, cast iron and cement production.

  • Most likely the situation will develop in the following way: outstanding democrat Barack Obama will express his support of the participants albeit the police and the FBI will be slowly arresting the "revolt" leaders. Demanding total freedom and inviolability for the rebellious ringleaders abroad (especially in the countries stuck in geopolitical or economic discrepancies with the USA), America isn’t going to stick to the same rule inside the country.

  • It will be rather difficult to forge a solid economic blockade of Iran. The geopolitical opponents of the US and Israel see little point in helping them pursue their own interest, while many American allies are scared of sanctions even more than Tehran itself.

  • The fourth BRICS summit getting together Brazil, Russia, India, China and South Africa was held on March 28-29 in New Delhi. No matter it didn’t last long one can say with confidence it has resulted in substantial achievements. In any case it’s obvious the leaders of the member countries had no intention to confine themselves to purely symbolic resolutions, so the outcome of event looks quite telling.

In this section

THE BRICS NATIONS CHALLENGE THE WEST?
The fourth BRICS summit getting together Brazil, Russia, India, China and South Africa was held on March 28-29 in New Delhi. No matter it didn’t last long one can say with confidence it has resulted in substantial achievements. In any case it’s obvious the leaders of the member countries had no intention to confine themselves to purely symbolic resolutions, so the outcome of event looks quite telling.

 

AGGRAVATION GAME: WHY US WINS IN CASE IRAN BLOCKADES HORMUZ STRAIT?
The Hormuz Strait closure by Iran will mainly benefit US oil companies and defense industry. The action will spark a crisis that would make easier to find a solution to the US economic woes and even create an opportunity to curtail its huge external debt.

 

US WILL PUNISH ITS NATO ALLIES, NOT IRAN. Will the economies of Greece and Italy finally collapse without Iranian oil?
It will be rather difficult to forge a solid economic blockade of Iran. The geopolitical opponents of the US and Israel see little point in helping them pursue their own interest, while many American allies are scared of sanctions even more than Tehran itself.

 

LIKELY SCENARIO: Greek crisis — euro crisis — German political crisis — collapse of the EU
Today few people doubt that the Greek crisis will turn into the euro crisis. The wish to write off Greek debts in order to avoid the future increase of debts and depreciation of loans seems to gain popularity in business and political circles. Yet the resistance of German voters, discontent with the realization of host plans will keep building up with each passing day, which means the only thing — crisis of euro may easily transform into a pan-European political crisis, which will question the very existence of the EU.

 

YUAN TROUBLES AND THE CHINESE GLOBAL ECONOMIC LEADERSHIP
At first I’d like to point out the main thesis of the material: China has long ago become the first economic of the planet. While reports on the U.S. monetary policy contain the new data on its financial troubles all the more often, the PRC macro-statistic data indicates a fantastic increment of steel, cast iron and cement production.

 

THE EUROPEAN CRISIS AND THE SALVATION OF EURO. Will the USA profiteer on the financial collapse of the EU?
According to Soros, Germany is to save Greece on the account of its own economy and the wealth of its citizens, which is fraught with tremendous political and economic risks for Germany. That’s an equivocal situation indeed that makes us thinking that European crisis benefits the USA. Mind that if the ratings of European banks are collapsed and the major European states are bled by the donor transfusion of their money in favor of weaker countries, then the investors’ preferences (along with their money) will flow to better place, i. e. the USA.

 

CHINA IS TO BE BLAMED FOR THE... GLOBAL CRISIS. Says Barack Obama and the U.S. financial bodies
When all the attempts to overcome crisis fail, the witch hunt starts. The only way to give a satisfactory explanation for the obvious discrepancy of the undertaken actions and actually achieved results is to find an enemy without.

 

"OCCUPY WALL STREET" MOVEMENT: American media looks right through it
Both American government and the state financial system made plenty of common Americans suffer. Still, hotbeds of protest and mass rallies take place just like 40 years ago. They haven’t become particularly crowded as of yet and American media prefer ignoring their very existence. Meet the laws of post-modern information age: several thousand Middle-Eastern protesters make up a heroic national uprising against the tyranny, while the same sort of rally in the USA is merely a bunch of lunatics, threatening public order and national security.

 

REVENGES OF THE EUROPEAN COMMISSION. Searches at Gazprom offices is the European reaction to South Stream and poor prospects of Nabucco
The searches at German and Czech Gazprom subsidiaries that took place in the end of September are seemingly the revenge of the European Commission for South Stream and poor prospects of Nabucco. In reality the EU should have better consolidated partnership with Russia as long as our country has the largest gas deposits in the world — the cleanest kind of fuel.

 

IS EURO BECOMING "CONTAGEOUS"? Possible scenarios for the euro-crisis
Globalization’s playing an evil joke on the global economics. Troublesome region can hardly be "contained" and put into a financial "quarantine", isolating it from the more or less healthy EU body until the recovery. Such medical analogies are rather popular these days — the former chief economist of the IMF Kenneth Rogoff has recently stated that "euro carry crisis from one country to another like an infection". Besides there already are several patients in Europe and the doctor is in the same ward with them.

 

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