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"Victory will never be found by taking the line of least resistance." Winston Churchill

If people no longer expect objectivity from their political and legal systems, then all justice will be reduced to a power struggle between conflicting and irreconcilable perspectives, a struggle in which the most dominant and pervasive bias will replace fair and impartial process as the character of justice. But if objectivity in law and politics is everywhere supplanted by conflict between subjective interests, then the side of economic privilege and established authority will always retain dominance. A society in which people no longer expect representatives of its major institutions even to attempt to render objectivity in their professional demeanours is a society whose major institutions are in a crisis of ethical legitimacy. In such a society, there is wide spread cynicism regarding the possibility of fair political process because it seems impossible that impartial, unbiased dispositions could exist to enact such processes.

Robert Nicholls

Language and Logic

Saturday, December 19, 2009

chinese Currency Manipulation

Published recently in Harvard Business School Faculty Research this article discusses in detail chinese currency manipulation:

The End of Chimerica

Link to PDF of paper

My thoughts:

If it was in china’s leaderships perceived interest to correct the value of its currency it would have done it by now.

For the most part a good article, however I disagree with Mr. Ferguson’s statement that it is in both America and china’s interest that proper revaluation take place. From a western perspective it is in everyone’s interest the trade imbalance be corrected, but from an eastern perspective this government policy of imbalance is in line with eastern interests, that being the collapse of the modern international financial architecture and by extension western dominance. Why else would the chinese maintain such a policy for so many years when it is obvious what the results would be. Mr. Ferguson lists china’s suggestion that the international reserve currency be changed from the dollar to IMF Special Drawing Rights as evidence that china is concerned about American fiscal policy, he fails to recognise the realist mercantilist worldview the boys in beijing subscribe to. To the chinese a devaluation of the value of their foreign exchange reserves and temporary increase in unemployment is a price they are willing to pay to severely damage the American economy and turn Pax Americana on its head. The chinese policy of unsustainable sustained global imbalances is intentional and the cheapest way to wage war in the twenty first century. For decades in chinese policy papers an emphasis has been made on asymmetric warfare, a strategy first outlined in the centuries old text the art of war. These people wrote the book on war and for thousands of years have been perfecting the methods of imperial conquest. In the past 60 years a small hand full of evil geniuses, the latest communist dynasty, has mastered how to control over a billion people with the realisation of the ultimate modern police state. Their ambitions are not restricted within their borders, but rather global. If it was in china’s leaderships perceived interest to correct the value of its currency it would have done it by now. They know exactly what they are doing, they have been doing it for years. You cannot compare their model of export driven growth with Germany or Japan because both those nations are American allies and are under the American security umbrella. They had incentive to correct imbalances to maintain stability of the international system. china has no interest in a permanent Pax Americana as America is their chief rival. The Chimerica marriage is an exploitation of western liberal naiveté. Instead of becoming a responsible stakeholder in the international political economy beijing has fattened itself at the expense of said institution in preparation for a great leap outward. The west over the years is one by one giving away the keys to the store. How long will our policy makers wait until taking decisive action to correct this global imbalance? Until the keys to the commanding heights are under new management? Let us hope Uncle Sam has one last ace up his sleeve. If not, our window of opportunity to turn things around is closing as history passes us by. We must cause an implosion of the communist state. Rising propaganda induced chinese nationalism and the all powerful modern police state apparatus make grass roots political revolution unlikely. Political instability in china must be brought about by external economic coercion. We must throw a wrench in the chinese economic machine.