China Called “The Biggest Risk to the World Economy” But History Shows that War Can Always Straighten This Sort of Situation Out (Update 1X: China Missile = “No-Go Zone” for U.S.?)

~~By InsightAnalytical-GRL

We’ve be writing later about the strength of China, but lately there has been some talk rising about a possible bubble being created in China.  In the Telegraph (U.K.),  Ambrose Evans-Pritchard has written a piece which looks at what’s going on titled China has now become the biggest risk to the world economy.

This article shed a totally different light on the views of Larry Kudlow that I wrote about in my previous post, Larry Kudlow Has a Fit as Obama the “Declinist” Opens His Mouth in Japan; Says Obama is “Not His President”.

Evans-Pritchard argues that China is not going to take over as the growth engine of the world economy.  I’ve heard quite often that China cannot pull the world out of its economic troubles.  The stats that I’ve seen indicate that China, no matter how robust, simply is still too small an economy to accomplish this.

Evans-Pritchard has concluded that China’s policies” continue to play havoc with global trade and risk tipping the world into a second leg of the Great Recession.”

Why?  According to the piece, there’s plenty of overcapacity in China.  I saw a report the other day showing empty structures, built for basically no use.  The article explains:

“The inherent problems of the international economic system have not been fully addressed,” said China’s president Hu Jintao. Indeed not. China is still exporting overcapacity to the rest of us on a grand scale, with deflationary consequences.

While some fret about liquidity-driven inflation, Justin Lin, World Bank chief economist, said the greater danger is that record levels of idle plant almost everywhere will feed a downward spiral of job cuts and corporate busts. “I’m more worried about deflation,” he said.

Paul Krugman is quoted in this piece and he explains that China’s policy to hold the value of the yuan down versus the dollar is basically “stealing American jobs” as it relies on cheap exports to stave off massive unemployment. And other Asian countries must do it, too.

Of course, our capitalists use the cheap labor in China and, as the author says, “then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage.”

But, China doesn’t hold all the cards, although it seems that way.  Evans-Pritchard writes:

Washington can bring China to its knees at any time by shutting markets. There is no symmetry here. Any move by Beijing to liquidate its holdings of US Treasuries could be neutralized – in extremis – by capital controls. Well-armed sovereign states can do whatever they want.

So, what’s the situation in China?  Their much-heralded stimulus has been spent building up more capacity to ship more goods and they’ve been investing in property and stocks. There is a huge credit explosion and production is booming.  BUT, Evans-Pritchard reveals:

Once you know that Hunan authorities have torn down two miles of modern flyway so that they can soak up stimulus by building it again, or that the newly-built city of Ordos is sitting empty in Inner Mongolia, you know what must come next.

A crash, right??

The Chinese consumer is supposed to be the solution to all this overcapacity and oversupply, but it won’t happen overnight.  Meanwhile, China’s central bank is tightening and fewer loans are being issued.

Evans-Pritchard concludes:

The world economy is still skating on thin ice. The West is sated with debt, the East with plant. The crisis has been contained (or masked) by zero rates and a fiscal blast, trashing sovereign balance sheets. But the core problem remains. The Anglo-sphere and Club Med are tightening belts, yet Asia is not adding enough demand to compensate. It is adding supply.

My view is that markets are still in denial about the structural wreckage of the credit bubble. There are two more boils to lance: China’s investment bubble; and Europe’s banking cover-up. I fear that only then can we clear the rubble and, very slowly, start a fresh cycle.

In my earlier post, I included the quote by Obama that Kudlow ridiculed:

While he also talked of multilateral cooperation and human rights, he came to Asia to deliver the message that the rapidly growing export-driven economies can no longer count on the U.S. consumer to keep them afloat.

It seemed a bit arrogant, particularly because Obama hasn’t really been pushing China much:

As for Obama, during the presidential campaign Obama promised to “crack down on China” but during the primaries there was chatter: “But his commitment to that point of view was thrown into doubt during the primaries when a Canadian official said an Obama adviser had privately characterized his tough stance on the North American Free Trade Agreement as political posturing.” (As an example, see: U.S. to Impose Tariff on Tires From China, Wall Street Journal, September 12, 2009.  Detractors figure that “the tariff won’t result in more jobs. Tires will simply come in from other low-cost countries, they say, and U.S. manufacturers, keep making their cheaper tires in China.”) Of course, this is classic Obama…all that “get-tough” talk and “insisting” while we have to go “hat in hand” to China…more blowing smoke.

But Evans-Pritchard comments (above) about Washington’s ability to really shove are food for thought. To repeat, “Well-armed sovereign states can do whatever they want.”

Now, I’m not suggesting Barack Obama is going to start a “real” war with China.  I don’t even think a sane Repbulican would.  (Then again, the Chosen One may just be arrogant enough????)

But, what about an INSANE Republican or Democrat, for that matter, since the elite in Washington are all about the same?  George W. Bush and his oil buddies decided to mess around in Iraq and look what we’re stuck with.  (George and his father were too busy with their long-time ties to China, so Iraq filled the bill for George II.) Barack Obama is worrying about that pipeline in Afghanistan that’s attacked so often by the Taliban that it hasn’t even been able deliver any oil yet.

But, there are lots of INSANE Republicans and Democrats around and who can trust ANY of them?

And, there’s history which shows a link between trade and wars.

Over at the RGE Monitor, Kevin O’Rourke wrote in a 2008 piece  titled “Lessons of 1000 Years of Trade History“: (my bolding)

Even more fundamentally, the continuation of a broadly liberal international trading environment will require that the geopolitical system adapt to the rise of China, India and other ‘Third World’ giants.  In a historical context, this represents of course the restoration of the status quo ante, the end of a “Great Asymmetry” in international economic and political affairs caused by the Industrial Revolution, which was itself in large part a product of the interactions between early modern Europe and the rest of the world.  But that is not to say that such an adjustment will be easy.  The international system has historically done a pretty poor job of accommodating newcomers to the Great Power club. German unification and industrialisation during the late 19^th century led to tensions with Britain and France over colonial and armament policy, while Japan’s rise to regional prominence during the interwar period, and its search for secure sources of raw materials, ended in war against United States and its allies.  Both precedents are worrying, in that similar questions are posed today, both in terms of the rights of emerging nations to rival the established powers’ military capabilities (notably with regard to nuclear weapons), and in terms of the strategic importance to countries like China of ready access to oil supplies and other natural resources.

The last point should cause us to reflect that, Cobden and Montesquieu notwithstanding, interdependence and trade do not necessarily guarantee peace.  The world economy of the late 19^th century was extremely interdependent, to the point where Norman Angell famously felt able to pronounce, on the eve of World War I, that major conflict was now unthinkable.  Interdependence implies vulnerability, and vulnerability can lead to fear, with unpredictable consequences, as Anglo-German rivalry in the run-up to the Great War, and Japanese reactions to the Great Depression and Smoot-Hawley, both indicate.

Impermanence appears to be the most enduring feature of the human condition, and if there is one lesson which we can safely learn from history, it is that history has not ended.  Hopefully it will not repeat itself.

We know that Barack Obama knows nothing about history (in fact, dismissing the entire Viet Nam experience), and I’d bet that none of our future leaders will know it either. And, even if they DO, I doubt they’d actually pay any attention to any lessons to be learned.

***

UPDATE 1

Looks like China isn’t missing this military angle:

Related Story from Bloomberg News, November 17, 2009 (excerpt):

China’s New Missile May Create a ‘No-Go Zone’ for U.S. Fleet

China’s military is close to fielding the world’s first anti-ship ballistic missile, according to U.S. Navy intelligence.The missile, with a range of almost 900 miles (1,500 kilometers), would be fired from mobile, land-based launchers and is “specifically designed to defeat U.S. carrier strike groups,” the Office of Naval Intelligence reported.

Five of the U.S. Navy’s 11 carriers are based in the Pacific and operate freely in international waters near China. Their mission includes defending Taiwan should China seek to exercise by force its claim to the island democracy, which it considers a breakaway province.

The missile could turn this region into a “no-go zone” for U.S. carriers, said Andrew Krepinevich, president of the Center for Strategic and Budget Assessments in Washington. (MORE)

SHILLING and CHURNING–the State of the Media and the “Mass Production of Ignorance” (A Double Post by kenosha Marge and InsightAnalytical-GRL)

The two pieces in this post are intertwined. First, there is “American Media Shills for Obama” by kenosha Marge.  Then, check out “Flat Earth News–The State of ‘Churnalism'” by InsightAnalytical-GRL, an introduction to the acclaimed journalist Nick Davies and his courageous expose’ about the “news” business.

American Media Shills for Obama

~~By kenosha Marge

Has the time finally come when ordinary citizens stop listening to the drivel coming from the mouths of multi-millionaire pundits? Have we really gotten mad as hell and aren’t going to take it any more?

Going back as far as William Randolph Hearst it is easy to see that media moguls were always about money and power, not journalism. It was in fact Hurst’s engaging in a bitter circulation war with Joseph Pulitzer‘s New York World which led to the creation of “yellow journalism“–sensationalized stories of dubious veracity.

There was a time between Hearst and the Current Millionaire Media Morons that infest our newspapers and airwaves today when some actual journalism occurred.

Having been raised with the Huntley-Brinkley Report and Walter Cronkite what passes for journalism these days is wretched. Certainly Edward R. Murrow, must be spinning in his grave knowing that a hack like Keith Olbermann, is using his signature line, “Good Night and Good Luck”.

It is interesting that Murrow gave a speech before the Radio and Television News Directors Association in Chicago in which he blasted TV’s emphasis on entertainment and commercialism at the expense of public service. That was on October 15, 1958. I suspect he would be appalled to see how far down that road the media has traveled.

Today’s media gives us such stalwarts as Charlie Gibson of ABC who sneered his way through an interrogation disguised as an interview. Gibson tried to embarrass and demean Governor Sarah Palin. Instead he embarrassed himself and the occupation he represents so poorly. We really aren’t interested in whether you like Governor Palin or not Charlie, we just expect you, as a professional to conduct an interview that allows us to make our own decisions based on what WE perceive to be the truth. Your opinion Charlie is irrelevant.

This election cycle, like many before has shown us a media increasingly less interested in reporting the news than in making it. We expected that the Clinton-hating media would attack her relentlessly without regard for truth, fairness or integrity. We didn’t expect their blatant misogyny and their slobbering preference for Obama. There wasn’t even a pretense of fair coverage.

Now John McCain is being treated in the same way. Must be a surprise for him since he is used to being the media darling. He is learning that media, like jackdaws, are attracted to the newest shiniest object to enter their sphere.

Oprah Winfrey had the honesty to admit being an Obama acolyte. She is just a talk show hostess so her opinion is just that, her opinion. She might better occupy her time recommending Diets or Authors but then she’s missed a few times on those issues too.

Chris Matthews is a silly, sexist, twit. Had Matthews forthrightly admitted to being in the tank for Obama you might at least have respected his honesty. His pretense of being neutral was absurd. The tingle up his leg is probably a sign of poor circulation and not enough blood getting to his brain.

The list of Obama fans in the press is nearly endless. Eugene Robinson, E.J. Dionne, and Chris Cillizza are press agents for the Washington Post. Like many papers its circulation is dropping and will likely continue to drop as readers find themselves faced with fewer journalists and a proliferation of cheerleaders.  Were it not for Dana Priest and Thomas E. Ricks the Post wouldn’t be worth reading.

Frank Rich, and Bob Herbert love them some Obama for the New York Times. The Times should no longer be allowed to proclaim itself a newspaper of record. Professional and unbiased? Were it not for Paul Krugman the current Times would only be useful for the bottom of my parrot cage.

Only on the right is Obama not fawned over like the second coming. Even there he isn’t pummeled with the fervor to which a democrat is typically subjected. If Corporate Left and Corporate Right likes someone, that someone might not be the best choice for all us little peons out here that don’t have media contracts worth millions.

Our media has decided that they want Obama to be president. In pursuit of their wish that such a thing come to pass they are willing to slime anyone, tell any lie, spin a few words into something unrecognizable as from the truth and show us their true, corporate colors. There may be a few, a very few, honest, decent, hardworking journalists around. But real Journalists don’t work on cable “news” programs and they seldom show up on the pages of the top newspapers in the country. Like common sense, integrity and honesty are becoming less common all the time.

MSNBC has become the Obama network. I believe the “M” stands for misogynistic. CNN has become the loving Obama all the time network. CNN was once a respected news channel. Now there is more blather than news and more opinion than fact. Jumped the shark a while back. FOX, to everyone’s surprise has been the most unbiased of the 3 cable “news” network. Whoever would have believed that would come to pass?

Few people respect or believe media. Seven out of 10 voters (69%) are convinced that reporters try to help the candidate they want to win, and this year by a nearly five-to-one margin voters believe they are trying to help Obama. What does that say about how voters view the integrity of the media?

As if the misbehavior of the media were not enough they sneer down their exfoliated noses at the rabble for being “low information” voters. They do not do their job to inform us, then insult and demean us for NOT being informed.

Who, what, when, why and where as journalistic ideology? Gone with the snows of yesteryear…

*****************************

“Flat Earth News” — The State of ‘Churnalism'”

~~by InsightAnalytical-GRL

While listening to the BBC World Service months ago, I heard an interview with author Nick Davies, an acclaimed investigative reporter from Britain (see bio below). Davies, who had written a book entitled “Flat Earth News” (published in February 2008) lambasted the present state of journalism. In the book, Davies “exposes falsehood, distortion and propaganda in the global media.” Check out his website of the same name.

The part of the interview that has stayed with me these many months was his discussion of what Davies calls “churnalism.” If you scan the reaction by the journalists who have commented on the book, you’ll see the frustration of many of them who have experienced the process of taking press releases that have been rehashed and passed off as real news gathering and those who have been forced to rely on “automated news-sifting services” because they are no longer given the time to investigate stories or check their facts. In other words, as one comments, most news “isn’t original anymore.”

A video of a more recent interview with Davies on “churnalism” is available here at the BBC site and is well-worth watching!

Here’s a synopsis of the book from Davies’ site:

“Finally I was forced to admit that I work in a corrupted profession.” When award-winning journalist Nick Davies decided to break Fleet Street’s unwritten rule by investigating his own colleagues, he found that the business of truth had been slowly subverted by the mass production of ignorance.

Working with a network of off-the-record sources, Davies uncovered the story of the prestigious Sunday newspaper which allowed the CIA and MI6 to plant fiction in its columns; the daily newsroom where senior reporters casually refer to ‘nig nogs’ and where executives routinely reject stories about black people; the respected quality paper which was so desperate for scoops that it hired a conman to set up a front company to entrap senior political figures. He found papers supporting law and order while paying cash bribes to bent detectives and hiring private investigators to steal information.

Davies names names and exposes the national news stories which turn out to be pseudo events manufactured by the PR industry and the global news stories which prove to be fiction generated by a new machinery of international propaganda.

He shows the impact of this on a world where media consumers believe a mass of stories which, in truth, are as false as the idea that the Earth is flat – from the millennium bug to the weapons of mass destruction in Iraq, tainting government policy, perverting popular belief.

He presents a new model for understanding news. With the help of researchers from Cardiff University, who ran a ground-breaking analysis of the contents and sources for our daily news, Davies found most reporters most of the time are not allowed to dig up stories or check their facts – a profession corrupted at the core.

Read All About It. The news will never look the same again.

An extract from the book is here.

Needless to say, this book has raised the hackles of many in the established media.  A paperback edition will be published in early 2009.

Check out Nick Davies’ site for updated posts on recent media distortions and for many links about the book and reactions to it, as well as media-monitoring sites, including:

http://www.flatearthnews.net/links

http://blogs.pressgazette.co.uk/wire/2040

****

Nick Davies’ Resume

“Nick Davies has been named Journalist of the Year, Reporter of the Year and Feature Writer of the Year for his investigations into crime, drugs, poverty and other social issues. Hundreds of journalists have attended his masterclass on the techniques of investigative reporting. He has been a journalist since 1976 and is currently a freelance, working regularly as special correspondent for The Guardian. He also makes TV documentaries; he was formerly an on-screen reporter for World In Action. His four books include White Lies (about a racist miscarriage of justice in Texas) and Dark Heart (about poverty in Britain). He was the first winner of the Martha Gellhorn award for investigative reporting for his work on failing schools and recently won the award for European Journalism for his work on drugs policy.”

Part I: Nunn-Boren “Unity” Rears its Ugly Head on Behalf of Obama: With an Introduction to David L. Boren

UPDATE: Parts II and III to follow…

So, former Senators Sam Nunn and David Boren endorsed Obama today. It seemed like a convenient thing to do in light of Obama’s recent juvenile activities involving fingers. Both will now advise on national security. Nunn heads the Nuclear Threat Initiative, a charitable organization, as Co-Chair and CEO. Boren served as chairman of the Senate Select Committee on Intelligence. More on the very scary background of Boren later.

Of course, Nunn and Boren are the the epitome of what Obamaphiles looking for “change” are thirsting for!

Let’s see, Nunn’s record in the Senate includes: being a member of the Democratic Leadership Council (DLC); voting NO on deducting Social Security payments from income taxes; voting YES on prohibiting same-sex marriage; voting Yes on limiting death penalty appeals; voting YES on limiting product liability punitive damage awards; voting YES on abstinence education funding; and an unknown stance on abortion rights.

Boren’s record is even more conservative. And scary, especially with regard to foreign policy. Sourcewatch, A Project of the Center for Media and Democacy, quotes from a 2001 article entitled “CIA Support for Bin Laden: Who’s Responsible?”:

“The current crisis calls for Americans to investigate the records of all Congress members who approved of any legislation enabling U.S. support for the Afghan rebels during the 1980s. Those who supported this hideous adventure deserve severe judgment.

“As an Oklahoman, I am particularly interested in the record of former Senator David Boren, whose close tie to the CIA is well known. He was appointed to the Intelligence Committee in 1985, and later became its Chairman.

“Boren also has close ties to the extreme right. Political Research Associates, a group whose purpose is to expose the threat to democracy presented by right-wing groups, includes Boren as a member of one of the organizations which they have targeted for concern.

“Boren was co-chairman of the Congressional divison of the National Coalition for Peace through Strength (CPTS), a creature of the American Security Council (ASC). The CPTS believed that the USSR and communism were the greatest evils in the world. Other CPTS members included Ronald Reagan, Phyllis Schlafley, and Jesse Helms. Organizational members have included the American Conservative Union, the American Legion, Citizens for Reagan, Young Americans for Freedom, and Young Republicans. PRA also says that emigre groups with a history of association with Nazis were included in the CPTS membership.

“One of the more prominent ASC members was Major General Milnor Roberts, chairman of the Committee for a Free Afghanistan (CFA). During the 1980s proxy war the CFA promoted U.S. support for the Islamic militants whose successors are now being accused of the September 11 attack.

“Boren has also been a close political ally and Congressional puppet for Eddie Gaylord, the reactionary publisher of The Daily Oklahoman, described as ‘the worst daily newspaper in America’ by a January 1999 article in the Columbia Journalism Review. In the same article, the Review reported that Boren as a Senator had sponsored ‘a one-of-a-kind, multimillion-dollar’ tax break that would benefit only eight wealthy investors — one of whom was Gaylord.

“Additionally, Boren’s relationship with former CIA director Robert Gates deserves critical scrutiny. Robert Gates was essentially a liar used by Reagan to corrupt the CIA away from its mission of providing the government with accurate assessments of Soviet strength. Under Gates, the CIA’s mission came to be the exaggeration of Soviet strength and expansionist tendencies while sabotaging the goal of detente. David Boren was an enthusiastic supporter of Gates and helped push through his nomination as CIA director.

“In a speech available online at the CIA website, Gates boasted about CIA success in Afghanistan, where it supported the anti-Soviet Mujahhadin. He admits that the CIA funneled billions of dollars in supplies and weapons to the Mujahhadin. Oddly enough, he forgot to mention that Bin Laden was one of the beneficiaries.”

Sure does inspire confidence, doesn’t it? He’s going to advise Obama, the great agent of CHANGE?? The one who was a GENIUS in saying he was against the Iraq War but didn’t have to vote on the resolution (but MAY have if he had been in the Senate)? And the one who has continued to vote to fund this unholy mess? And the one who agrees with Condi Rice on the “unpredictability” of planes ramming into tall buildings? The one who knows squat about foreign policy?

Nunn and Boren, if you recall, headed the Oklahoma “unity” conference in January of this year. As reported by Katrina Vanden Heuvel at the time,

“a dozen leading Democrats and Republicans, including former Senators San Nunn, David Boren, Gary Hart. Senator Chuck Hagel, former New Jersey Governor Christie Todd Whitman, Clinton Defense Secretary William Cohen and former GOP congressman Jim Leach also say they’ll attend. Boren, who’s hosting the meeting at the University of Oklahoma, says that if “we don’t see a refocusing of the campaign on a bipartisan approach, I would feel I would want to encourage an independent candidacy.”

Of course, Unity ’08 “scaled back” their operations and in their parting message opined:

Barack Obama, for example, has made the theme of unity and the necessity of bridging the partisan divide an absolutely central theme of his campaign. And just last week, a group of former and present national office holders – independents, Republicans and Democrats – met in Oklahoma for the sole purpose of stating their belief that at the present perilous moment, a unity government is the only hope of solving the nation’s mounting problems. When you have agreement among the likes of former RNC chairman Bill Brock and Gary Hart, you’re onto something.

So, it’s no surprise that Nunn and Boren have come out at this moment to deflect attention from Obama’s juvenile behavior and poor debate performance in Pennsylvania. As for being “onto something,” I would argue that this unity crew, including Obama, is onto NOTHING good.

Vanden Heuvel continued her comments by quoting Paul Krugman:

As NYT columnist Paul Krugman has argued effectively, “the real source of today’s partisanship is a Republican move to the right on economic issues.” Today’s GOP has overseen the shredding of our already frayed social contract, and currently obsesses about giving the super-rich more tax breaks. There may be some smart people gathering next week in Oklahoma. But they don’t get it if they think you can have national unity with one party waging class war politics.

But I have to say that I think the comment on the World Socialist Web Site really nails it.

The “unity” demanded by Messrs. Boren, Hagel & Co. is essentially unity of the corporate elite against the working class. The billionaire Bloomberg is, therefore, an entirely logical rallying point. Possessed of the wealth required to launch a 50-state independent campaign, at a cost estimated at $500 million to $1 billion, Bloomberg’s message to both parties is: Don’t stray too far from the consensus positions of the financial oligarchy, or I can single-handedly upset all your electoral calculations.

The rhetoric of bipartisanship has also played a major role in the corporate media’s embrace of Barack Obama. There has been a frenzied media campaign over the past two weeks to transform Obama into an unstoppable frontrunner, an effort that was at least temporarily stalled Tuesday by Hillary Clinton’s narrow victory in New Hampshire.

Obama is a conventional bourgeois politician, dependent, like his rivals, on lavish financial support from corporate interests and the wealthy. He is not the product of any sort of genuine movement from below in American society, but rather the latest in a long line of demagogues employed to foster illusions that the big business-controlled political system can serve the interests of ordinary people. …

The campaign for bipartisanship thus has a distinctly antidemocratic and sinister aspect. It is an effort to discipline the political squabbling within the US ruling elite in order to face a far greater danger: an eruption of social conflict produced by the increasingly desperate conditions facing the vast majority of the American people.

Of course, the WSWS doesn’t approve of Clinton, either. But at least she talks like Democrat and hasn’t morphed into the Obama “Unity” campaign.

The Nunn-Boren endorsement is another signal to run from Obama. Because it’s getting harder and harder to place ANY trust in him at all, because, obviously, the bipartisan pooh-bahs DO.

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