The Russian economy has fallen into dire straits in recent days. While militarily Russia remains the match of the United States, the same cannot be said of its financial strength. Unlike unilaterally-driven development of military might, nurturing a nation’s finances requires close cooperation between winners and losers. Since the dissolution of the Soviet Union, Russia has proactively promoted economic “financialization” under the guidance of Western experts and theory, and foreign capital has flooded every sector of the Russian economy. The United States’ financial advantage is one that Russians themselves have helped Americans build, and one that is now being used in countering Russia’s own weapons. It is based on these meticulous preparations of the past that the financial battles of today are waged.
It is worth noting that as the West continues to spar with Russia, China will not simply sit idly on the sidelines. Relations between the two Asian nations grow closer by the day, and both have been the recipients of increasingly strident U.S. admonitions. While a stubbornly uncompromising Russia is holding the attention of the United States for the time being, a rapidly growing China has become a constant thorn in the side of U.S. hegemony.
The authors of this article have a penchant for watching “Animal Planet,” and have found that as lions grow hungrier, they exhibit less interest in small animals and correspondingly more in zebras, hippos and other large prey. The 2008 U.S. financial crisis did not bring about a so-called “market zeroing” effect, and with elevated risk and other problems building up within the U.S. economy (including the financial apparatus of Wall Street) to increasingly alarming levels, market players made a strategic decision to divert this risk and shift the crisis onto the shoulders of others. With the rapidly changing landscape of Eastern Europe and dissolution of the Soviet Union, the salivating lions of Wall Street ensnared not a hippo, but an elephant, and the golden days of that “new economy” lasted for over a decade. Now, however, those same Wall Street tycoons are standing at the brink of a new crisis, and they sorely need to find a new elephant to fill their empty bellies.
And taking a look around the planet, it would seem that China fits the bill quite nicely. For several years now, sweeping financial liberalization has reinvigorated the growth of the Chinese economy, and the price of Chinese assets has been increasingly determined by foreign capital. This foreign investment has reached every corner of China’s economy, resulting in the virtualization of assets, dramatically increasing their liquidity. As the yuan has become an international currency, the nation’s capital account has come only a step away from being completely open, with financial regulation existing only in name. Financial liberalization and the financialization of the economy has made what in the past would be localized and structural risk into far-reaching and systemic risk today; a single spark can catch on the wind and spread like wildfire.
The biggest problem is that we have yet to consciously sense the impending financial and economic crisis. Instead, we are still patting ourselves on the back for our burgeoning economy that is now “comfortably second, with an eye to take the lead,” as Lu Xun warned us in the past: boasting how fat one is is not a problem for the lion, but the same cannot be said for the pig or the goat. In this time of instability and crisis, with financial battles and color revolutions raging across the world, we are still speaking to ourselves of some fabled strategic opportune moment. By doing so, we will only paralyze ourselves, and will not attract foreign capital investment.
Across the world, Western-launched and led color revolutions (with the United States at their head) are trending toward the extreme, and have now reached a critical flash point. On one side of the world, a color revolution rose on the streets of Hong Kong, while on the other the bigwigs of finance kicked back and reaped the profits through stocks and exchange. This is only a prologue and a rehearsal for the main event, a fact to which many more Chinese should take heed. Little do they realize that the flames of the next financial war are already on the rise, and that China must now be at its most vigilant.
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