US fiscal failure warrants a de-Americanized world
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US fiscal failure warrants a de-Americanized worldXinhua | 2013-10-13 10:01:14As US politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.
Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.
With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.
Meanwhile, the US government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.
Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.
Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.
As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.
Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized.
Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.
To that end, several corner stones should be laid to underpin a de-Americanized world.
For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.
Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against others without a UN mandate.
Apart from that, the world's financial system also has to embrace some substantial reforms.
The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that they could better reflect the transformations of the global economic and political landscape.
What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant US dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.
Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.
And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse. -
Will China ‘de-Americanize’ the world?
October 17, 2013 14:11
The Beltway budget kabuki – aka shutdown – is over. But no ‘terrorist’ or dejected Hollywood screenwriter could have come up with a worse PR move and marketing strategy for brand USA.
Stocks won’t tank, interest rates won’t spike. We will have no rising costs and no weaker US dollar – at least for the next three months. Yes, because these are only stopgap measures.
Not to mention that the US’s biggest creditors – from China and Japan to Brazil – would rather see Washington taking active steps to clean up its horrendous financial act instead of just hiking up the debt ceiling.
But this is not the key story. The key story is how Washington’s paralysis was the straw that broke the dragon’s back; how it led China to abandon its Deng Xiaoping maxim of carrying a low profile, and start saying out loud what it really wants; a radical change of the rules of the game.
The crucial exhibit is the by now famous Xinhua editorial calling for a “de-Americanized” world.
Here, at Asia Times, I had a first shot at examining it.
So what does China really mean by ‘de-Americanizing’? For starters, Beijing called the US credibility bluff as the leader of the international financial system. Beijing was very much aware of how the real ‘international community’interpreted it. On one side the shutdown debacle. On the other side, an economy growing 7.5 percent a year, with consecutive, massive trade surpluses and over $3 trillion in foreign reserves.
Beijing’s offensive had been brewing for a while. It started with Russian President Vladimir Putin (fully supported by China) humbling US President Barack Obama and teaching him a diplomatic lesson in the Syrian chemical weapons dossier.
It continued with Chinese President Xi Jinping’s wildly successful tour of Central Asia, followed by another successful tour of Southeast Asia, which included Xi as the sole superstar at the APEC summit in Bali vis-à-vis no-show Obama.
Incidentally, in 1998, when the Asian financial crisis was still raging, then-President Bill Clinton also skipped a visit to Asia. This is what happened next; Asia turbocharged regional cooperation, and slowly but surely China began to extend its influence and trading power.
The crown in this new success story was Xi actively promoting – from Central Asia to Southeast Asia – a twin, overland and maritime, 21st-century Chinese version of the Silk Road.
Even the Washington Post was forced to wake up to a reality Asia Times had been reporting about for weeks, although, predictably, they totally missed the point, marketing the complex Chinese strategy as a response to former US Secretary of State Hillary Clinton’s ‘vision’. Howls of laughter could be detected in business centers from Shenzhen to Istanbul – as if a New Silk Road could possibly qualify as yet another product of American exceptionalism.
Feel free to bask in our connectivity
For all its immense internal problems and sociopolitical challenges, China also has every reason, long-term, to be on a high. This has everything to do with the productivity of 20 percent of mankind being unleashed wave after wave. The US underestimates Chinese resolve at its own peril. In 2012 China's GDP per capita was around $6,100 (compared with $50,000 for the US). Beijing will go no holds barred to quadruple it by 2020.
Imagine a country that in the foreseeable future remains the key node of the global supply and production chain – the Supreme Trading Power.
Imagine a country that by 2020 will have around 195 million university graduates – which is more than the entire US workforce.
Imagine a country engaged in the most astonishing urbanization process in the history of the world – yielding 221 new cities with over 1 million people each by 2025, most of them, of course, voracious consumers.
Imagine an Iron Silk Road – also known as the Third Eurasian land bridge, a 15,000km high-speed rail network - linking the southeast port of Shenzhen; Kunming, in southern Yunnan; and Xinjiang, in western China, to Myanmar, Bangladesh, India, Pakistan, Iran, Turkey and then all the way to the mega-port of Rotterdam. That translates into China significantly less worried about shipping across the Indian Ocean through the bottleneck of the Strait of Malacca, which could one day be blocked by US warships.
Imagine the Chinese-financed cousin of the Panama Canal; the $40 billion, 286km Nicaragua canal linking the Caribbean to the Pacific.
Imagine the port of Lianyungang as the departure node for the Second Eurasian land bridge linking China to Kazakhstan, Russia, Belarus, Poland and then all the way to the juicy markets of the European Union.
This is what the collective leadership in Beijing is imagining; the mega-connected largest economy in the world. And when that happens, new rules must apply.
Don’t take your eyes off the ‘petroyuan’
Make no mistake; the collective leadership in Beijing well knows that a slow US decline has been an ongoing proposition since the 1973 oil shock – in parallel to the US dollar losing its value since the US ended its tie to gold in 1971.
The corporate US response to the rising cost of labor in the West plus automated mass production was to transfer practically the whole American industrial base to China, thus multiplying its profits (and in most cases paying for the delocalization through tax breaks).
In the long run, Asia could not but win. Washington tried all sorts of monetary scams to slow the decline. To no avail; productivity kept falling in the West and rising in Asia.
And then the Federal Reserve kept printing paper like there’s no tomorrow, buying bad debts from ‘too big to fail’ banks and US Treasuries, and thus funding Washington’s ballooning spending.
Beijing still buys US dollars only because - for the moment – this is the global reserve currency. Dollars are needed for the oil trade. Beijing would rather spend its humongous stash on real acquisitions, and not just US Treasury bonds.
Beijing’s game, in a nutshell, is to bypass the US dollar by all means available. That’s the idea behind setting up currency swaps with over 20 of its top trading partners – from BRICS countries to African commodity producers and strategic energy partner Iran. China is slowly but surely driving the progressive global flight from the US dollar.
Washington’s mob tactics forcing the shady, corporate-concocted Trans-Pacific Partnership (TPP) over Asian nations treated more like subjects than partners also helps. As for the much-hyped ‘pivoting’ to Asia, most players – apart from Japan and the Philippines – certainly see which way the geopolitical and geo-economic wind is blowing.
In the Big Picture, there’s still no visible way out from casino capitalism – featuring monopoly money and stock exchanges and commodity prices totally controlled (and rigged) by computers.
Yet even the IMF has called for a new global financial architecture. Beijing bets on an endgame of the US dollar as reserve currency being replaced by a basket of currencies, including the IMF mechanism of Special Drawing Rights (SDR).
At the same time Beijing – as well as Moscow - know that for the system to change, it’s essential for a new reserve currency to be totally backed by gold (or silver). So part of Beijing’s plan is to accumulate gold by all means possible to back up the emerging, convertible yuan. Of course this will take time. But Beijing has been at it for five years now; the yuan may become fully convertible as early as 2017.
The real game changer will happen when the petrodollar, essential for the awesome American military machine to be financed by the rest of the world, meets its match. That would imply the – for the moment unforeseeable – possibility of the House of Saud and other GCC petro-monarchies willing to embrace the petroyuan, as in China not having to use US dollars anymore to satisfy its energy thirst.
Only then we will be living in a ‘de-Americanized’ world. And make no mistake: this is the desired endgame of China’s long game.
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9 Signs That China Is Making A Move Against The U.S. Dollar
by Tyler Durden on 10/18/2013 20:09 -0400
While 20-year highs for the CNY may be enough for many to question the USD's ongoing reserve status, it is clear that there are many other plans afoot that undermine the dominance of the greenback.
Submitted by Michael Snyder of The Economic Collapse blog,
On the global financial stage, China is playing chess while the U.S. is playing checkers, and the Chinese are now accelerating their long-term plan to dethrone the U.S. dollar. You see, the truth is that China does not plan to allow the U.S. financial system to dominate the world indefinitely. Right now, China is the number one exporter on the globe and China will have the largest economy on the planet at some point in the coming years.
The Chinese would like to see global currency usage reflect this shift in global economic power. At the moment, most global trade is conducted in U.S. dollars and more than 60 percent of all global foreign exchange reserves are held in U.S. dollars. This gives the United States an enormous built-in advantage, but thanks to decades of incredibly bad decisions this advantage is starting to erode. And due to the recent political instability in Washington D.C., the Chinese sense vulnerability. China has begun to publicly mock the level of U.S. debt, Chinese officials have publicly threatened to stop buying any more U.S. debt, the Chinese have started to aggressively make currency swap agreements with other major global powers, and China has been accumulating unprecedented amounts of gold. All of these moves are setting up the moment in the future when China will completely pull the rug out from under the U.S. dollar.
Today, the U.S. financial system is the core of the global financial system. Because nearly everybody uses the U.S. dollar to buy oil and to trade with one another, this creates a tremendous demand for U.S. dollars around the planet. So other nations are generally very happy to take our dollars in exchange for oil, cheap plastic gadgets and other things that U.S. consumers "need".
Major exporting nations accumulate huge piles of our dollars, but instead of just letting all of that money sit there, they often invest large portions of their currency reserves into U.S. Treasury bonds which can easily be liquidated if needed.
So if the U.S. financial system is the core of the global financial system, then U.S. debt is "the core of the core" as some people put it. U.S. Treasury bonds fuel the print, borrow, spend cycle that the global economy depends upon.
That is why a U.S. debt default would be such a big deal. A default would cause interest rates to skyrocket and the entire global economic system to go haywire.
Unfortunately for us, the U.S. debt spiral cannot go on indefinitely. Our debt is growing far, far more rapidly than our GDP is, and therefore our debt is completely and totally unsustainable.
The Chinese understand what is going on, and when the dust settles they plan to be the last ones standing. In the aftermath of a U.S. collapse, China anticipates having the largest economy on the planet, more gold than anyone else, and a respected international currency that the rest of the globe will be able to use to conduct international trade.
And China is not just going to sit back and wait for all of this to happen. In fact, they are already doing lots of things to get the ball moving. The following are 9 signs that China is making a move against the U.S. dollar...
#1 Chinese credit rating agency Dagong has downgraded U.S. debt from A to A- and has indicated that further downgrades are possible.
#2 China has just entered into a very large currency swap agreement with the eurozone that is considered a huge step toward establishing the yuan as a major world currency. This agreement will result in a lot less U.S. dollars being used in trade between China and Europe...
The swap deal will allow more trade and investment between the regions to be conducted in euros and yuan, without having to convert into another currency such as the U.S. dollar first, said Kathleen Brooks, a research director at FOREX.com.
"It's a way of promoting European and Chinese trade, but not doing it with the U.S. dollar," said Brooks. "It's a bit like cutting out the middleman, all of a sudden there's potentially no U.S. dollar risk."
#3 Back in June, China signed a major currency swap agreementwith the United Kingdom. This was another very important step toward internationalizing the yuan.
#4 China currently owns about 1.3 trillion dollars of U.S. debt, and this enormous exposure to U.S. debt is starting to become a major political issue within China.
#5 Mei Xinyu, Commerce Minister adviser to the Chinese government, warned this week that if the U.S. government ever does default that China may decide to completely stop buying U.S. Treasury bonds.
#6 According to Yahoo News, China has already been looking for ways to diversify away from the U.S. dollar...
There have been media reports this week that China's State Administration of Foreign Exchange, the body that handles the country's $3.66 trillion of foreign exchange reserve, is looking to diversify into real estate investments in Europe.
#7 Xinhua, the official news agency of China, called for a "de-Americanized world" this week, and also made the following statement about the political turmoil in Washington: "The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonized."
#8 Xinhua also said the following about the U.S. debt deal on Thursday: "[P]oliticians in Washington have done nothing substantial but postponing once again the final bankruptcy of global confidence in the U.S. financial system". The commentary in the government-run publication also declared that the debt deal "was no more than prolonging the fuse of the U.S. debt bomb one inch longer."
#9 China is the largest producer of gold in the world, and it has also been importing an absolutely massive amount of gold from other nations. But instead of slowing down, the Chinese appear to be accelerating their gold buying. In fact, money manager Stephen Leeb says that his sources are telling him that China plans to buy another 5,000 tons of gold. There are many that are convinced that China eventually plans to back the yuan with gold and try to make it the number one alternative to the U.S. dollar.
So exactly what would happen if the Chinese announced someday that they were going to back their currency with gold and would no longer be using the U.S. dollar in international trade?
It would change the face of the global economy almost overnight. In a previous article, I described some of the things that we could expect to see happen...
If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar. At that point you could forget about cheap gasoline or cheap Chinese imports. Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively. If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living. Today, most U.S. currency is actually used outside of the United States. If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.
The fact that we get to print up giant mountains of money and virtually everyone around the world uses it has been a huge boon for the U.S. economy.
When that changes, the word "catastrophic" is not going to be nearly strong enough to describe what is going to happen.
According to a Rasmussen Reports survey that was released this week, only 13 percent of all Americans believe that the country is on the right track. But the truth is that these are the good times. The American people haven't seen anything yet.
Someday people will look back and desperately wish that they could go back to the "good old days" of 2012 and 2013. This is about as good as things are going to get, and it is only downhill from here.
http://www.zerohedge.com/news/2013-10-18/9-signs-china-making-move-against-us-dollar
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PLEASE STFU AND GTFO
I just take a look and can recognise it as propaganda.
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no meaning�
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Its all a Rothschild conspiray. :P
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China seeks world role for renminbi
06 Nov 2013 17:13
With deals from London to Singapore, China is seeking a greater role for its yuan currency in global markets to challenge the hegemony of the almighty dollar.
BEIJING: With deals from London to Singapore, China is seeking a greater role for its yuan currency in global markets to challenge the hegemony of the almighty dollar.
The most attention-grabbing reform planned for Shanghai's new free trade zone is free convertibility of the yuan -- also known as the renminbi, or "people's money" -- an unprecedented change which would allow greater use of the currency.
But no timetable has been specified, and a true contest between Mao Zedong, Communist China's founding father whose face is emblazoned on most yuan notes, and Benjamin Franklin on the $100 bill will be years in the making.
For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback's role as the default global reserve unit.
But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China's official Xinhua news agency called for a "de-Americanised" world.
It also urged the creation of a "new international reserve currency... to replace the dominant US dollar".
For China -- which has the world's biggest foreign exchange reserves -- the immediate appeal of a greater role for the yuan is lubricating trade flows and drawing foreign investment.
"Policymakers have made new efforts to increase the attraction of the renminbi in global markets," said Capital Economics analyst Wang Qinwei.
He pointed to a deal with Britain in October allowing London-based institutions to invest directly in China -- avoiding an expensive detour via Hong Kong -- with an initial quota of 80 billion yuan ($12.9 billion).
A week later Beijing signed a similar 50-billion-yuan agreement with Singapore.
China's central bank, the People's Bank of China, also signed a currency swap deal with the European Central Bank last month for 45 billion euros ($61 billion), giving eurozone banks greater access to the yuan.
In the run-up to an important plenum of the ruling Communist Party, Zhao Longkai of the Guanghua School of Management at Peking University, said the measures were "important steps" but added that progress was likely to be slow.
"We take gradual steps, so that's what China will do," he told AFP. "It's China, it's hard to talk about any dramatic changes."
"China has to be very careful about this because... we want to maintain the value of the currency," he added.
The yuan-dollar exchange rate is effectively controlled by Chinese authorities, and the relaxation of strict capital controls could see funds flow out of China.
Since January, the yuan has strengthened by more than two per cent, setting a series of record highs and creeping towards the symbolically significant 6.0 yuan to the greenback mark.
The Chinese central bank has been "purchasing foreign exchange at a frantic rate in recent weeks... underlining again how reluctant policymakers are to leave the renminbi in the hands of market forces," said Wang of Capital Economics.
"Among many other implications, this suggests that capital account liberalisation is a long way off."
But investors' lust for yuan shows no sign of weakening. It became the world's eighth most-traded currency this year, overtaking the Russian ruble and South Korean won, according to the interbank network Swift.
Yuan currency trading volumes more than doubled between January 2012 and August this year, when it held a 1.49 per cent global market share, it added.
Outside China and Hong Kong, London saw 62 per cent of the transactions by value, followed by New York and Paris.
The market for "dim sum" bonds, denominated in yuan and issued in Hong Kong, is small but growing rapidly: the total issued in the first nine months of this year was 65 per cent higher than that for all of 2012, according to ratings agency Fitch.
The yuan will become the world's fourth most commonly used currency in international trade by 2020, with $3 trillion-worth of business denominated in yuan, estimates Standard Chartered economist Stephen Green.
But Jens Nordvig, global head of foreign exchange strategy for investment bank Nomura, warned that internationalisation of the unit could only occur "over a multi-year horizon".
China needs free convertibility on the capital account and developed capital markets, he said. At present the yuan is only convertible on the current account, consisting mainly of trade flows.
"First, it needs to be super liquid and second it needs to be available for global investors," he said, "neither of which is fully developed in China".
- AFP/jl
http://www.channelnewsasia.com/news/business/china-seeks-world-role/876328.html
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wot.
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i dun think this will happen we want a nation that loves to borrow money from the world
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