Exposed
Joe Biden arrived in Beijing for a five-day visit last Wednesday, Aug. 17, to try to resolve their [U.S. leaders’] hassles with China. In the first meeting with his counterpart, Xi Ping, he said, “I am absolutely confident that the economic stability of the world rests in no small part on cooperation between the United States and China. ... It is the key, in my view, to global stability.”
During some point in this first conversation, Biden explained to Xi the steps taken by his government to control the federal deficit and assured him that the U.S. is still capable of leading the global economy.
“I too believe that under the new conditions, China and the United States have ever more extensive common interests, and we shoulder ever more important responsibilities,” responded Xi. He will succeed Hu Jintao as president of the Asian nation in March 2013.
Empires have always thought themselves to be eternal. They have expressed it in different ways, of course. The Catholic Church, which still has a fantasy of being the empire of souls for all time, as well as the medieval empires (most noticeably the Roman Empire), expressed it through construction of an architecture meant to last forever. These empires have ended, but their architecture still lasts today, now as spectacular works of art at which tourists marvel in order to become acquainted with their brilliant past history.
Hear this from Biden: “We will continue as leaders of the world economy,”* and Xi: “China and the United States have ever more extensive common interests, and we shoulder ever more important responsibilities.” Ever and ever! It is difficult to understand how men from such extremely powerful states can be so deeply persuaded of such idiocy. History does not transpire in terms of human generations; it eclipses many, and therefore empires can dream of immortality.
Romulus founded Rome in the year 753 B.C.E.; it came to an end in the year 476 C.E. as the Byzantine Empire: 1,229 years, if we count from its birth. We have not again had another empire of this duration, which is just a fragment of the lifespan of Homo sapiens. Although these matters are highly controversial, the period of the Spanish Empire that is most accepted is from 1492 to 1898: 406 years. The English Empire went from 1605, with the colonization of what is today the state of Virginia in the United States, to 1947, the end of World War II: 342 years. The most powerful of all the empires throughout history today is just a doddering elderly man who believes himself immortal.
The United States suffers from the greatest economic problems in the world; it is highly doubtful that it can continue covering its foreign purchases and imminent astronomic increases in interest simply by printing greenbacks indefinitely. The prognosis for its particular problems with China is uncertain.
Since Standard & Poor’s downgraded the debt rating of the United States, Beijing has become nervous and wants Biden to guarantee that its countless investments in the dollar will be safe. China has reserves in foreign currency totaling $3.2 trillion, two thirds of which are in the aforesaid currency; out of that amount, $1.2 trillion are in Treasury bonds. Biden can go down on his knees and swear before Xi, but there is no possibility of guaranteeing anything to Beijing.
The United States would require that China substantially increase revenues from Chinese citizens, seriously revalue the RMB and open its borders to guarantee vertical growth of Chinese internal consumption and thus somewhat revive the global economy. If it did this, China would instantaneously lose its international competitiveness; consequently, it is not going to do it. The United States also needs Europe to resolve its problems, but Europe is in increasing disarray. France has begun to slip toward the same state as Italy; the only one that enjoys complete financial health is Germany (and Austria and the Netherlands, which are tiny economies).
Europe does not have a financial exit. Beginning to resolve its problems would require an economical government, which is to say a unified and centralized fiscal policy that can allocate resources where they are most needed. Who can make the decisions about a centralized fiscal policy? Germany — it’s not that difficult of an answer. But does it want to? It is clear that it does not.
The idea of issuing Eurobonds will not go forward, either. They would have to be guaranteed by Germany, which is to say that Germany would be guaranteeing the stratospheric national debts of the combined E.U. nations. No, Germany’s number one interest is to cover the backs of its banks that are the major creditors of peripheral European countries.
Additionally, the IMF has disclosed that Germany is not the engine of Europe because its current position depends on its high exports; its internal market is depressed, wages are low and they [Germans] do not buy anything outside its borders.
The current relationship of Germany with the rest of Europe is the same as that of China with the U.S.: China and Germany produce, and the U.S. and Europe consume. Thus they are entwined, with defaults around the corner, and world growth forecasts unceasingly being revised downward.
Biden and Sarkozy have yet to tell us what they plan to do about it.
*Editor’s Note: This quotation, accurately translated, could not be verified.
During some point in this first conversation, Biden explained to Xi the steps taken by his government to control the federal deficit and assured him that the U.S. is still capable of leading the global economy.
“I too believe that under the new conditions, China and the United States have ever more extensive common interests, and we shoulder ever more important responsibilities,” responded Xi. He will succeed Hu Jintao as president of the Asian nation in March 2013.
Empires have always thought themselves to be eternal. They have expressed it in different ways, of course. The Catholic Church, which still has a fantasy of being the empire of souls for all time, as well as the medieval empires (most noticeably the Roman Empire), expressed it through construction of an architecture meant to last forever. These empires have ended, but their architecture still lasts today, now as spectacular works of art at which tourists marvel in order to become acquainted with their brilliant past history.
Hear this from Biden: “We will continue as leaders of the world economy,”* and Xi: “China and the United States have ever more extensive common interests, and we shoulder ever more important responsibilities.” Ever and ever! It is difficult to understand how men from such extremely powerful states can be so deeply persuaded of such idiocy. History does not transpire in terms of human generations; it eclipses many, and therefore empires can dream of immortality.
Romulus founded Rome in the year 753 B.C.E.; it came to an end in the year 476 C.E. as the Byzantine Empire: 1,229 years, if we count from its birth. We have not again had another empire of this duration, which is just a fragment of the lifespan of Homo sapiens. Although these matters are highly controversial, the period of the Spanish Empire that is most accepted is from 1492 to 1898: 406 years. The English Empire went from 1605, with the colonization of what is today the state of Virginia in the United States, to 1947, the end of World War II: 342 years. The most powerful of all the empires throughout history today is just a doddering elderly man who believes himself immortal.
The United States suffers from the greatest economic problems in the world; it is highly doubtful that it can continue covering its foreign purchases and imminent astronomic increases in interest simply by printing greenbacks indefinitely. The prognosis for its particular problems with China is uncertain.
Since Standard & Poor’s downgraded the debt rating of the United States, Beijing has become nervous and wants Biden to guarantee that its countless investments in the dollar will be safe. China has reserves in foreign currency totaling $3.2 trillion, two thirds of which are in the aforesaid currency; out of that amount, $1.2 trillion are in Treasury bonds. Biden can go down on his knees and swear before Xi, but there is no possibility of guaranteeing anything to Beijing.
The United States would require that China substantially increase revenues from Chinese citizens, seriously revalue the RMB and open its borders to guarantee vertical growth of Chinese internal consumption and thus somewhat revive the global economy. If it did this, China would instantaneously lose its international competitiveness; consequently, it is not going to do it. The United States also needs Europe to resolve its problems, but Europe is in increasing disarray. France has begun to slip toward the same state as Italy; the only one that enjoys complete financial health is Germany (and Austria and the Netherlands, which are tiny economies).
Europe does not have a financial exit. Beginning to resolve its problems would require an economical government, which is to say a unified and centralized fiscal policy that can allocate resources where they are most needed. Who can make the decisions about a centralized fiscal policy? Germany — it’s not that difficult of an answer. But does it want to? It is clear that it does not.
The idea of issuing Eurobonds will not go forward, either. They would have to be guaranteed by Germany, which is to say that Germany would be guaranteeing the stratospheric national debts of the combined E.U. nations. No, Germany’s number one interest is to cover the backs of its banks that are the major creditors of peripheral European countries.
Additionally, the IMF has disclosed that Germany is not the engine of Europe because its current position depends on its high exports; its internal market is depressed, wages are low and they [Germans] do not buy anything outside its borders.
The current relationship of Germany with the rest of Europe is the same as that of China with the U.S.: China and Germany produce, and the U.S. and Europe consume. Thus they are entwined, with defaults around the corner, and world growth forecasts unceasingly being revised downward.
Biden and Sarkozy have yet to tell us what they plan to do about it.
*Editor’s Note: This quotation, accurately translated, could not be verified.