Can China and Russia Bankrupt the U.S. if Relations Continue to Deteriorate? - Tilted Forum Project Discussion Community

host · 07-05-2005, 10:01 PM

On Monday, July 5, 2005 a Coalition of nations, led by China and Russia, demanded that the U.S. withdraw it's military from central Asia and Afghanistan. U.S. MSM has supplied no background concerning the SCO summit, or the "oberver" status of India and Pakistan. Together, this new alliance has the potential to represent half of the world's population.
This link provides search results about countries with membership or an interest in joining the new strategic alliance:
http://news.google.com/news?hl=en&ne...nG=Search+News

Quote:

http://www.iht.com/articles/2005/07/05/news/stan.php
U.S. is urged to leave Central Asia
By C.J. Chivers The New York Times

WEDNESDAY, JULY 6, 2005
MOSCOW Russia, China and four Central Asian nations issued a declaration Tuesday calling on the United States to set a deadline for withdrawing from its military bases in Kyrgyzstan and Uzbekistan.

The wording in the declaration by the six nations, which are members of a regional alliance known as Shanghai Cooperation Organization, was veiled but clear, and it marked the shifting diplomatic ground in Central Asia since an uprising and antigovernment demonstration in Uzbekistan in mid-May were put down by force.

The nations said that they continued to support international coalition's operations against terrorists in Afghanistan, and had provided access to air space and ground territory to assist in these efforts.

But they added that they had seen signs of stabilization in Afghanistan and now "regard it as essential that the relevant members of the antiterrorist coalition set final deadlines for the temporary use of said infrastructure facilities and for the presence of military contingents of the member countries."

The United States operates two airbases in the region, both of which support continuing military operations and reconstruction efforts in Afghanistan. German troops are also deployed at a river port and rail terminal in Termez, along the Afghan border. France has a military presence at an airfield in Tajikistan.

The declaration on Tuesday, made at a meeting of the regional alliance in Astana, the capital of Kazakhstan, followed weeks of Western criticism of Uzbekistan's handling of the uprising in May, which ended, survivors said, with Uzbek security forces firing into mixed crowds of gunmen and civilians.

Several Western governments and organizations have urged Uzbekistan to allow an independent investigation of the uprising and crackdown, which President Islam Karimov has refused.

As the West has pressed, Uzbekistan has found support from China and Russia, and the nations have increasingly pushed back in public, at times adopting a defiant tone, and scolding the United States for what they portray as meddling in other nations' affairs.

President George W. Bush, whose administration has signaled that it wishes to maintain a military presence in the region, is expected to meet at the G-8 summit gathering in Scotland this week with two of the leaders of nations who backed the declaration, Vladimir Putin of Russia and Hu Jintao of China...

China and Russia both currently enjoy foreign currency reserves of hundreds of billions of U.S. dollars. The U.S. foreign trade debt will near $2 trilllion by the end of 2005. Our unrelenting importation of 13 million barrels of oil per day adds $285 billion to our 2005 projected trade deficit near $700 billion.

We depend on reinvestment by Chinese and other Asian dollar holders to fund our $500 billion annual federal budget deficit by their buying of U.S. treasury bills and by tolerating our growing trade deficit by extending credit to the U.S. Now the Chinese are buying major U.S. domeciled businesse, Maytag, IBM's PC business, and are attempting to buy the third largest US oil company, Unocal, for $18.5 billion.

If the U.S. ignores the demands of these large countries, can Russia demand Euros in payment for their signifigant oil exports, and cause the dollar to drop in value due to lower demand for it as a reserve currency? Can China press U.S> interest rates higher by curtailing treasury bill purchase, while simultaneously divesting it's $300 billion plus dollar portfolio accumulated via it's trade imbalance with the U.S. by purchasing U.S. and Canadian oil and other raw material assets?

The U.S., lacking an energy conservation policy, and any policy to reduce the trade or federal budget deficits, seems to have very little leverage against a coordinated and unified effort to devalue the dollar, or press U.S. interest rates higher, increasing the risk of popping the bubble in the U.S. housing market. Dollar devaluation orchestrated by Asian countries and oil exporters, combined with CHina acting on U.S. pressure to remove the dollar peg on China's currency, could put China in a position to purchase even more U.S. assets with a Chinese Yuan that rises in value vs. the dollar.

Are U.S. oil imports, and total consumption, 25 percent of all oil consumed, by just 6 percent of the world's population, sustainable? Germany produces twice the amount of GDP from each barrel of oil consumed than the U.S. does.
Why is this situation not given attention as the real threat to our national security that it actually is. Is there any solution that is practical, or is it too late, given current U.S. policy and leadership?

Quote:

http://www.dailyreckoning.com/Featured/Las.html
..........America grows poorer – both relatively and absolutely. In absolute terms, her expenditures exceed her income by more than 6% per year (based on trade deficit figures). Asian, Eastern European and Russian economies grow – with positive trade balances. Wages, per hour, barely rise in the U.S. In these new competitors, they soar.

The trade gap figures show that much of this increase in wages overseas happens at the expense of U.S. incomes. People in the U.S. spend; people in Asia earn. Incomes rise in Asia; in America, they fall.............

Quote:

http://dailyreckoning.com/Issues/2005/DRUS070405.html
.........n Congress, for example, the peoples' representatives have asserted a right to take a close look at China's bid for Unocal. Free trade is all very well - as long as it comes out in your favor. Even Congress is noticing that it doesn't. The House of Representatives is also threatening to impose a 27% across-the-board tariff on Chinese-made goods, if the Chinese don't revalue their yuan.

The two ideas are at odds with one another. If the yuan is revalued, it gives China even more purchasing power for U.S. assets.

But the whole thing has politicians perplexed. The occasion calls for lies. This is no problem in itself; they've devoted their entire careers to telling lies. The problem is that they don't know which lies to tell. They can tell voters that the United States has the greatest, most dynamic economy in the world. But that exposes them to the obvious question: What do we have to worry about? So what if the Chinese buy U.S. companies, in other words; they buy them because they're the world's greatest, of course. Or, they can tell voters the opposite lie - that we need to protect U.S. resources and American jobs. But that raises its own unpleasant questions: What is going wrong with the U.S. economy that we cannot compete on the world market? And, isn't it Chinese protectionism that we were complaining about in the first place; how can we rail against the Chinese for protecting their own markets while we simultaneously tell the world that ours needs protection, too?

No American politician is going to admit the truth: that Americans work harder than any other group on the planet - but they get less from it.

Both Europe and North America are faced with the same challenge - competition from the East. Low wage countries in Eastern Europe and Asia are dragging down wages in the West. Europe struggles to preserve its standards of living with high rates of capital formation, high wages, high unemployment, expensive social services, and rigid controls. Europe's roads were clogged this past weekend - as were those of America. But in Europe, the roads were clogged with people leaving for weeks, not days. The entire period - from the 1st of July to the 31st of August - is one long vacation season. It is hard to get anything done in Europe - so many people are away on holidays. Families reunite. Resorts fill up. The quality of life remains relatively high, even as many people work short hours.

In America, people work harder and longer to try to meet the Asian challenge. Most of the income gains realized by American households since 1971 have come from more hours of work - not from increases in per hour compensation. But people also came to believe a lie - that the key to prosperity was to spend money, rather than earn it. Consumption rose faster than earnings - made possible mostly by increases in property prices.

The extra consumption - incited, aided, and abetted by the Federal Reserve - gave Asian competitors a big boost; Americans bought more than ever, far more, in fact, than they could afford. It left huge profits in Asia...which are now coming back to the United States in the form of bids for U.S. corporations and resources.

Who wants to tell Americans on Independence Day that it is their own damned fault? Or, that the tide of economic history has turned against them? Or, that their system of imperial finance works against them, not for them? Or, that they might want to learn to speak Chinese?

Many firecrackers will go off today...but not that one.

Seaver · 07-05-2005, 10:35 PM

While I do agree we need to plug the gap of spending, this would be mutually harmful to all three countries if they enacted these things.

Quote:

If the U.S. ignores the demands of these large countries, can Russia demand Euros in payment for their signifigant oil exports, and cause the dollar to drop in value due to lower demand for it as a reserve currency?

Doubtful. With the slap in the face the Europeans gave the EU, and the value of the Euro slipping even faster, it will balance out fairly quickly. The economics of Europe dont support the high value, their trade deficits make ours look profitable. Heck they said it in your clip.

Quote:

Both Europe and North America are faced with the same challenge - competition from the East. Low wage countries in Eastern Europe and Asia are dragging down wages in the West. Europe struggles to preserve its standards of living with high rates of capital formation, high wages, high unemployment, expensive social services, and rigid controls.

The massive Chinese economic boom is funded by American investments. It would be ubsurd for them to bankrupt their primary investor. The Japanese would shrivel at the thought of investing in them, Europe is too involved with internal politics, and the Arabs are uninterested in foreign investment (outside of our country it seems).

Now this isnt saying that together they could not cause a severe depression, but it would be multiplied in their own countries in return.

Mephisto2 · 07-05-2005, 10:46 PM

I don't think they would deliberately bankrupt the US, but unless America does some significant rethinking of its economic policies, you will soon find yourselves no longer the world's most important economy. Indeed, no matter what you do, I think this is almost inevitable.

Why is this to be feared? Well, traditionally countries try to protect their own economic interests. Certainly America does that today, but globalization, the IMF and WTO are two sided swords. What appears to be good for America's blue-collar, lower class today is even more so for tomorrow's hungry, ambitious Chinese prole; indeed, more so.

Terrorism, in the scheme of things, is a minor anonyance. It is the "yellow dollar" and Asian world dominance in economic terms, that will eventually bring about the end of America's current hegemony.

Mr Mephisto

host · 07-06-2005, 01:55 AM

Quote:

Originally Posted by Seaver

While I do agree we need to plug the gap of spending, this would be mutually harmful to all three countries if they enacted these things.

Doubtful. With the slap in the face the Europeans gave the EU, and the value of the Euro slipping even faster, it will balance out fairly quickly. The economics of Europe dont support the high value, their trade deficits make ours look profitable. Heck they said it in your clip......

My money is on the euro...

Quote:

http://www.cia.gov/cia/publications/...k/geos/ee.html
http://www.cia.gov/cia/publications/...k/geos/us.html
................USA................Spain.......Italy....France...Germany.....Euro Union
2004 GDP:........$11175 Bln...$937...$1609....$1737....$2362.........$11650

2004 Invstmt:% of GDP...15.7... 25.4...19.3...19.2......17.6..........19.5

Public debt:% of GDP.....65...53.2.....105.6.....67.7......65.8.........N/A

Current accnt bal:$-646.5 bln...-30.9...-21.1...-.3......73.6..........N/A

Exports:Bln f.o.b.....$795 bln......172.5...336.4...419....893.3.......1109 (2003)

Imports:Bln f.o.b. ..$1476 bln......222.....329.3...419.7..716.7......1123 (2003)

Resrv forgn exchg & gold:..$85.94 Bln.. 19.7... 61.5..70.7.....96.8......N/A

Debt - external: $1400 Bln-(2001) 771-(2004) 914-(2004)..N/A....N/A...N/A

If you use the figures above to attempt to evaluate what countries, by the measures that I selected, are "going concerns", the U.S. seems to have the poorest fundamentals. Trade deficits and percentage of GDP reinvested, indicate that the U.S. is in a trade crisis and is not investing it's way out.
1.)On the right, the "Euro Union" consists of 25 nations, only 12 are approved to use the Euro as their currency. The UK, Denmark and Sweden elected not to use the Euro, and 10 other countries must meet economic goals, first.

2.)The Import/Export figures $1109 bln and $1123 bln for the "Euro Union" represent net trade outside of the 25 countries in the union. (All figures provided are in bln - billions of U.S. dollars, except where a % is on the left of the row.

3.)External debt, in and of itself is a difficult figure to measure the near term impact of. (The UK has external debt of $4710 bln (2003 est.) and does not use the Euro as it's currency. The UK has a trade imbalance of $-33.4 bln, or
5 percent of that of the U.S. The UK GDP $1782 bln, is 16 percent of US GDP.

4.) I included only the 4 Euro Union nations which are approved to use the Euro as their domestic currency, and have annual GDP of near $1000 bln or more. 8 other Euro Union Countries,approved to use the Euro....including Ireland, Belgium, Austria, Portugal, Netherlands, have annual GDP each of less than $500 bln.

The research that I've seen does not convince me that the Euro is a weaker currency, fundamentally than the dollar. For another currency to compete with the dollar as a world reserve currency, it must be widely held and readily available in great sums. The Euro is the dollar's only competition now, but could be overtaken in the future by a fundamentally sounder and more popular....to sheer numbers of people than the dollar or the Euro. The negative fundamentals for the dollar are trending in a direction, aggravated by a growing U.S. trade imbalance, deteriorating relations with many other nations, and an unknowable cost of near future military and domestic security spending, and a huge appetite for spending on foreign oil...that further reduces the amount of oil that a dollar will buy...that makes the U.S. vunerable to an attack on our currency by oil exporters or a boycott on the purchase of U.S. treasury bills.

Our government practices bluster, arrogance, and threats of pre-emptive war while it acts as if our oil dependence and eroding dollar fundamentals are not possibly our greatest national security threat. Our leaders are squandering our leverage. China and Russia are already in a position to force us, to do their bidding, unless we decide to risk a currency crisis that could cause a desperate, reckless decision to resort to war as a remedy by a U.S. leadership in denial. IMO, reasonable options to maintain something resembling our current, national lifestyle, may have already slipped beyond our grasp, even with a sudden change of heart and energy, foreign, and tax policy.

pan6467 · 07-06-2005, 05:35 AM

If China and the USSR were to start demanding payment it would destroy us. Mephisto said it best, we are a declining nation. We have no manufacturing, we rely far too much on imports and we have a vast population that believes this to be ok. Most of them don't care as long as prices are cheap or truly just don't care and think the debt and all the implications will go away because, "noone would ever want to bankrupt us, it would hurt their economies more."

I don't see it hurting their economies. China for instance has its own market now, the Pacific Rim and Australia along with the Middle East no longer need our money. Except for nukes we are becoming a third world nation fast. Education is free falling, infrastructure is being largely ignored, we keep increasing trade and domestic deficits and believe nothing will happen, we are trying to reneg on Social Security, we tell companies it is ok to raid their pensions and fuck those who need the money, we are bankrupting ourselves with exponentially price increases in medical care, and we are spending billions upon billions on a war with no ending.

Countries don't have to take over our government, all they have to do is keep buying our businesses up and they will control us.

There's the cry that if people start losing their jobs and making less that companies will decrease their prices. True, companies will make things cheaper but eventually what the past and present show is that they will cut jobs, ship manufacturing overseas and eventually just sell to a foreign company or just merge in a leveraged buyout and really cut domestic jobs and move overseas.

The greed of the executives is destroying us.

Use the BoA/MBNA buyout as an example. $35 BILLION and the first thing they are going to do is cut AT LEAST 6,000 jobs probably more. Now, don't you think they could buy the company for $34 billion and with that extra billion develop jobs for those they are firing? Ah, but why should we subsidize others to find jobs????? Fuck them, doesn't affect us. Freeloaders, why should a company be made to make sure those they fire find jobs of equal quality and pay?

Fuck the tax bases of these companies that leave and the employees that lose their jobs. As long as Bush and the GOP keep cutting those taxes, even if we can't afford it and deficit spend trickle down economics will do just that...... take the lake of money and trickle it down in drips.

SO let's keep buying our imports and selling our companies and shipping jobs overseas and fucking the tax bases and blaming people that try to bring some sanity and want to protect our economy.

Let's laugh at the deficit and never expect any country to come in and try to dictate to our heavily indebted nation what we should do.

Let's keep believing as we watch our soldiers underequipped and expected to buy their own gear fight in a neverending war, as our friends China, Saudi, Japan, Russia, start figuring out how to divide the pie.

Let's watch as our tax base becomes depleted and we have talking heads of 1 party laugh telling everyone that it's ok. That having the Chinese, Germans, Japanese, Russians, British, Saudis and so on buy up our companies is good for our economy.... that they would never interfere with our government.....

Let's watch as we become a colony for all the countries we had huge trade deficits with and laughed at thinking the debt would never be collected...... as we become colonies and our dollar is useless.

pan6467 · 07-06-2005, 05:41 AM

By the way, if Russia doesn't want it in Euros they can always ask for it in Chinese yuan, or roubles and increase their own money's value as ours is decimated.

It's like if I go do work for someone and they keep up a debt. So I use their debt to buy things, but I make sure my debt is never more than what I am owed. Then a time comes when I get tired of the debt and demand payment because I have to pay off my debts and I just want the money.

But they can't pay me, at first my money suffers. So I just start taking control of what they own to pay my debts, my money increases in value again but unfortunately the guy who owed me loses everything.

Same concept on nations currencies.

07-06-2005, 05:35 AM	#5 (permalink)
pan6467 Lennonite Priest Location: Mansfield, Ohio USA	If China and the USSR were to start demanding payment it would destroy us. Mephisto said it best, we are a declining nation. We have no manufacturing, we rely far too much on imports and we have a vast population that believes this to be ok. Most of them don't care as long as prices are cheap or truly just don't care and think the debt and all the implications will go away because, "noone would ever want to bankrupt us, it would hurt their economies more." I don't see it hurting their economies. China for instance has its own market now, the Pacific Rim and Australia along with the Middle East no longer need our money. Except for nukes we are becoming a third world nation fast. Education is free falling, infrastructure is being largely ignored, we keep increasing trade and domestic deficits and believe nothing will happen, we are trying to reneg on Social Security, we tell companies it is ok to raid their pensions and fuck those who need the money, we are bankrupting ourselves with exponentially price increases in medical care, and we are spending billions upon billions on a war with no ending. Countries don't have to take over our government, all they have to do is keep buying our businesses up and they will control us. There's the cry that if people start losing their jobs and making less that companies will decrease their prices. True, companies will make things cheaper but eventually what the past and present show is that they will cut jobs, ship manufacturing overseas and eventually just sell to a foreign company or just merge in a leveraged buyout and really cut domestic jobs and move overseas. The greed of the executives is destroying us. Use the BoA/MBNA buyout as an example. $35 BILLION and the first thing they are going to do is cut AT LEAST 6,000 jobs probably more. Now, don't you think they could buy the company for $34 billion and with that extra billion develop jobs for those they are firing? Ah, but why should we subsidize others to find jobs????? Fuck them, doesn't affect us. Freeloaders, why should a company be made to make sure those they fire find jobs of equal quality and pay? Fuck the tax bases of these companies that leave and the employees that lose their jobs. As long as Bush and the GOP keep cutting those taxes, even if we can't afford it and deficit spend trickle down economics will do just that...... take the lake of money and trickle it down in drips. SO let's keep buying our imports and selling our companies and shipping jobs overseas and fucking the tax bases and blaming people that try to bring some sanity and want to protect our economy. Let's laugh at the deficit and never expect any country to come in and try to dictate to our heavily indebted nation what we should do. Let's keep believing as we watch our soldiers underequipped and expected to buy their own gear fight in a neverending war, as our friends China, Saudi, Japan, Russia, start figuring out how to divide the pie. Let's watch as our tax base becomes depleted and we have talking heads of 1 party laugh telling everyone that it's ok. That having the Chinese, Germans, Japanese, Russians, British, Saudis and so on buy up our companies is good for our economy.... that they would never interfere with our government..... Let's watch as we become a colony for all the countries we had huge trade deficits with and laughed at thinking the debt would never be collected...... as we become colonies and our dollar is useless. __________________ I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

07-06-2005, 05:41 AM	#6 (permalink)
pan6467 Lennonite Priest Location: Mansfield, Ohio USA	By the way, if Russia doesn't want it in Euros they can always ask for it in Chinese yuan, or roubles and increase their own money's value as ours is decimated. It's like if I go do work for someone and they keep up a debt. So I use their debt to buy things, but I make sure my debt is never more than what I am owed. Then a time comes when I get tired of the debt and demand payment because I have to pay off my debts and I just want the money. But they can't pay me, at first my money suffers. So I just start taking control of what they own to pay my debts, my money increases in value again but unfortunately the guy who owed me loses everything. Same concept on nations currencies. __________________ I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?" Last edited by pan6467; 07-06-2005 at 05:51 AM..

07-05-2005, 10:46 PM	#3 (permalink)
Mephisto2 Junkie	I don't think they would deliberately bankrupt the US, but unless America does some significant rethinking of its economic policies, you will soon find yourselves no longer the world's most important economy. Indeed, no matter what you do, I think this is almost inevitable. Why is this to be feared? Well, traditionally countries try to protect their own economic interests. Certainly America does that today, but globalization, the IMF and WTO are two sided swords. What appears to be good for America's blue-collar, lower class today is even more so for tomorrow's hungry, ambitious Chinese prole; indeed, more so. Terrorism, in the scheme of things, is a minor anonyance. It is the "yellow dollar" and Asian world dominance in economic terms, that will eventually bring about the end of America's current hegemony. Mr Mephisto