Saturday :: Jun 3, 2006

Not Following The Leader

by pessimist

Remember all the way back to the year 2000 when the US was held in high regard by (the majority of) the world's nations? Now, with the possible exception of Killer Attack Lap Poodle Tony Blair's UK, are there any nations which still respect the American government [June 2005]?

[T]he United States remains broadly disliked in most countries surveyed, and the opinion of the American people is not as positive as it once was. The magnitude of America's image problem is such that even popular U.S. policies have done little to repair it.

I'm sure that the world would love for America to again be the nation it was up until December of 2000. I'm sure also that the decline in respect of the American people by the nations of the world is due to the fact that we continue to allow - if not actively support - the continuance of that cabal which has brought about this decline in respect. I guess oderint dum metuant didn't work too well!

To paraphrase Malthus, there is only so much patience to go around, and it appears that we are reaching that asymptote:

US ports deal: A bitter aftertaste
By Emilie Rutledge
19 April 2006

Sultan Bin Nasser al-Suwaidi, the UAE’s central bank governor, said that “trade and investment relations with the United States must now be viewed from a new perspective”. Many analysts, including some from the US, have said that the DP World affair may set a damaging precedent and deter investors, particularly from the Middle East, from investing in the US.
The US economy would inevitably suffer if petrodollars did not filter back into its economy and were instead converted into euros or yen. Asian exporting economies and Opec states seem less willing simply to hold their US dollar assets in treasury bonds and are looking for better returns by buying fixed assets such as companies and property.

That was back in April. See what comes of this over the fold. Just keep the words "China" and "payback" in the back of your mind as you go there.

Dubai just spat in Uncle Sam's eye:

UAE won't pay "political price" for US trade deal
Jun 3, 2006

The United Arab Emirates is not willing to make any political concessions to secure a free trade agreement with the United States, the country's prime minister told Asharq al-Awsat newspaper on Saturday.

They just won't play the American Way! Neither will Hugo:

Venezuela supports proposal to sell oil in euros
Source: Xinhua

Venezuela has backed a proposal to sell oil in euros instead of U.S. dollars, Energy and Mines Minister Rafael Ramirez said on Thursday.

In an interview with state television, Ramirez said "Iran has an initiative that we support. They are going to start to do oil transactions in euros."

Ramirez, who is also the president of the state oil company PDVSA, said "If a market in euros is created, with the euro as a reference, we could send our supplies so they are sold under this (currency)."

The remarks came ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) in Venezuela's capital on the same day.

I'm going to translate my next comment into Texan so that Texas Wannabe W won't misunderestimate the gravity of the situation:

"They's drawed a line an' dares ya ta cross!"

Back to American English.

I don't expect OPEC to formally propose euro pricing today, but the idea of a parallel euro pricing scheme that Chavez' oil minister presents certainly opens the door to that eventuality.

Why do I say eventuality, you ask?

Both of these nations - UAE and Venezuela - have suffered what they consider grievous insults at the hands of Bu$hCo America, and they aren't alone. Remember Dumbya's recent insulting of Chinese President Hu? Recall how Australian Prime Minister John Howard got the Stste Dinner denied Hu? What about Taiwan's president being denied US landing rights? And just what would prompt former Russian Premier Gorbachev to use the word 'durak' to describe Dick Cheney? Would it be over inflammatory rhetoric which might be starting a new Cold War?

It's becoming clear to me that the world is beginning to get a little tired of the power-drunken cowboy act based in Washington these days, and they are striking back in the only way they can without resorting to open military warfare. This is clear in the number of new economic and trade agreements made with China.

Just this week alone, China is concluding deals with Australia involving general trade, an energy drilling deal with North Korea, investment in Ecuador, building a cement plant in Yemen, a banking agreement with Deutsche Boerse AG of Germany, and - most importantly for all you SUV owners - energy development agreements with 22 Gulf States

All Bu$hCo can offer to match that is a small trade deal with Vietnam - the sum total of their work for the month of May.

Bu$hCo is its own worst enemy when it comes to international relations. South Korea needs to rebuild trust with the U.S., and up in Canada, they are saying "Thanks! It was fun while it lasted!"

Bu$hCo needs to be very careful about how they treat the other nations of the world. The Chinese are telling everyone how to deal with the American 'spoiled child':

[T]he US dollar simply continues acting like a "spoiled child" within the international financial system, selfish and self-indulgent, not willing to be responsible for its dominant reserve status in the international financial system, for the excessive issuance of the currency, and for its low saving rates. Excessive issuance of US dollars has led to an excess liquidity of the global economy and served as a macro background of the appreciation of RMB.
All it expects is to let developing countries like China assume the consequences of the economic imbalances, just like what it did in dealing with the currency relations with the Japanese Yen in the last century.
From the view of global pattern with the massive issuance of US dollars, some Asian countries, taking China as a typical head, accumulate this kind of "junk currency" (whose purchasing power is continuously declining) through large scale of export.
This is a very unfair pattern for these Asian countries.
The huge amount of US current account deficits and the rapid growth of debt have gradually damaged the confidence of foreign investors.
International investors believe that a long-term depreciation of the US dollars is inevitable which will unceasingly increase the exchange rate risks of the dollar assets. Under such circumstances, the investment attractiveness of the US dollar relative to other countries and regions assets is evidently weakening, which has led to a gradual shift of the global capital from focusing on the dollar assets to the assets with higher rate of return and smaller exchange rate risks in Japan, Asia and other emerging areas.

Those of you who still have thinking brains, warm them up and stand by for action. All of you Red Staters who don't are excused.

[Theme from Jeopardy plays in the background...]

OK, we can begin.

Among many other observers who have far more creedence than I, I have been saying for a while now that at some point, China would pull the plug on the US economy. What you have just read above is the framework for how that will happen. It is underway.

As FarmWeek notes: We're buying our imports with our own assets. This is what you would find if you looked:

[Larry DeBoer is an agricultural economics professor at Purdue University, West Lafayette, Ind. His e-mail address is]

People in China, Dubai, Australia, and Spain seem to have a lot of dollars to spend on American assets. Where are they getting all that money? From us.

The world owns a lot of dollars. We’ve seen three big controversies over foreign purchases of U.S. assets in the last year. We will see more. If we block these deals, world investors might decide to unload their dollars on currency markets. The value of the dollar would fall. And, if the world decides to take its wealth elsewhere instead of lending it to us, our interest rates would rise. No more housing boom.

For the most part, the world has been content to lend those dollars back to Americans. But eventually they may not be satisfied with the money they earn from mortgage loans and Treasury bonds. These interest rates have been pretty low for years, after all.

Some day they’ll want the higher returns that they can get from other American assets, such as oil companies and highways. Maybe that day has arrived. We’re starting to pay for our imports by selling off our assets.

If it all happened too fast, things could get ugly.

Just like Dorian Grey, we're about to get a real close look at that portrait we've kept hidden away in our attic for all these years.

Who would have guessed that Communist Chinese would prove to be better capitalists than the capitalists themselves?

Hu would have guessed - indeed!

I hope all of those Red State neo-confidence men who thought all of those insults aimed at President Hu were real funny.

It may be the last laugh they have before Hu starts laughing himself - at us, the stupid capitalists.

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pessimist :: 7:38 AM :: Comments (7) :: TrackBack (0) :: Digg It!