Monday, March 15, 2010

The Gathering Storm

You may recall my recent prediction that, sooner or later, China and Israel are going to have to go to war, either directly or by proxy. The prize? The dwindling, but still formidable, resources of the United States. The irony? If the war is by proxy, we will be Israel's proxy; in other words, we will be fighting to insure their right not only to exist but to continue to drain us dry -- politically, diplomatically, economically, and militarily. As I commented before, there may have been another episode in recorded history as absurd as this, but if there was I have yet to hear of it.

One small sign that the timetable for all of this continues to advance is the “lecture” Chinese Premier Wen Jiabao gave the U.S., just yesterday, on the subjects of currency and foreign policy. Wen, according to the article, was “directing (the U.S.) to change its foreign policy to improve relations with China.” In other words, do as we say and shut up – a line remarkably similar to the one we've been hearing from Israel all these years. So China "directs", but Israel is "she who must be obeyed", to quote a line from a prominent conservative columnist. And unless their priorities are identical -- ha ha -- we're in a heap of trouble.

So China is going to “generally pursue a relatively tough line in its relations with the United States this year.” Is that anything like the “tough line” we seem to be moving toward with Israel, in the wake of their humiliation of Joe Biden? No, because in China's case it's for real.

And this currency issue is interesting as well. We seem to be afraid that China is “keeping the value of the yuan artificially low”. But their currency has no real backing (e.g. in gold), just like ours, right? So who is to say? Without a solid, objective backing, no currency has any value other than that assigned by the people who print it – or the currency traders who trade it. It's entirely artificial, in other words. So our house of cards called “the dollar” is only worth what other countries are willing to, in effect, pay for it, which means that if they aren't willing to pay, it could collapse in a heap. But if its any consolation, China is in the same boat – so what we have is a kind of Mexican standoff, currency-wise. When we politely ask China to raise the value of its currency, what we're really asking them to do is lower the value of ours. But as a debtor nation, this would be to our advantage; everybody wants to borrow high and pay back low. We might wind up like debtors in Germany in 1923 who chased their creditors through the streets with wheelbarrows full of money, demanding to be allowed to pay off now-worthless loans.

As to how things came to this sorry pass, at least part of the credit goes to the fact that, doggone it, Americans are just too big-hearted and generous for their own good. For decades now, every time anyone has asked us for money for any reason, we've given it to them. So we've been like a drunken millionaire staggering through the Bowery, like in an old Chaplin comedy. But we've never neglected “domestic needs” either, and our system of welfare and entitlements is the envy of... well, nobody any longer, since they can all see where it led. And then we're constantly having to destroy the economy in order to save it -- through things like earmarks, subsidies, bailouts, and economic stimulus plans -- all of which lead to more, and even more intractable, debt. Plus, you know, we're a “peace-loving nation”, and the only reason we spend more on our military than all other nations combined is that, doggone it, they just can't leave each other alone. And they can't leave us alone. And we can't just sit there and “take it”, like a bunch of girly men – so we have to go out and, basically, set up military occupations in nearly the entire world, 'cause it's the only way to keep the peace.

Now, notice – when it comes to China, our biggest rival at this point, they have somehow avoided all of those perfectly understandable – honorable, even! -- mistakes. On the domestic side, they expect their citizenry to live, with rare exceptions, in a state of austerity that would send American welfare recipients into the streets. And on the foreign side, they only help other countries when they can see a clear return on investment. And on the military side, why should they be the ones to police the world when we're already doing it (and failing)? There are far more efficient ways to exert power and expand an empire – ones that actually work, even. They have learned from our follies – but we have yet to learn from their successes. And we cling to the notion that China's achievements aren't “real” because they are still, at least in theory, communist – or at least socialist, or collectivist, or totalitarian, or something. But none of this seems to matter; for some reason – possibly anchored in the Chinese national character – capitalist-type success and collectivist-type government and economics can coexist quite nicely. (And as usual, we grossly underestimate national character as a factor in history, assuming that there is only one national character, and that's the American one... and that everyone in the world would act, and think, like Americans if only they were given the chance.)

So this paper tiger called China – relatively new on the world economic scene – is beating us black and blue. Not only that, but it's buying up all of our debt, which is a euphemism for “taking over our economy”. And these folks are patient, have no doubt. They lived through the worst predations of Maoism and the Cultural Revolution, and have come out stronger, and more realistic and level-headed than we are (or have ever been). They are, truly, more dangerous now than they ever were when Mao was testing nukes out in Lop Nur. But are they a threat to “the American way of life”? I say no, because the American way of life is already a thing of the irretrievable past. They are, however, a threat to the American way of self-delusion, which is all that is keeping us going at this point. And frankly, I would be willing to trade that in for a cold dose of reality – because after that, there might actually be some hope of recovering our own national character.

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