European Chamber of Commerce Warns on China Protectionsim

"Foreigners don't have the money anymore," said the European Chamber. "They just have the know-how. And there is a feeling that China can develop the know-how on its own. What we are seeing is almost an isolationist stance."

Meanwhile, a manager at a retail company put it more bluntly: "The idea that China was one day going to be a lucrative market for foreign companies was just an illusion." 1

China was never going to fully open their economy to the West, particularly their financial sector. And domestic companies will always be favored, and potential profits for foreign run companies shaky. China can't open up too much because of the geographic scale and size of the country. Their leaders aren't idiots and they know fragmentation has historically doomed Chinese empires. Therefore, a powerful central government is of the utmost importance.

Ultimately, an authoritarian government can not integrate into the leadership of global capitalism. Capitalism requires a particular brand of bourgeoisie democracy to be successful - on its own terms - over the long run. This is not to applaud the West for its form of government, which of course is quite imperialistic in its foreign affairs. But China is ultimately a single party system that is going to restrict the 'rights' of private capital and the growth of an independent business class. No matter how much the City of London or Wall Street have stomped their feet, China has maintained control of its banking sector.

Meanwhile, Andy Xie has a presented rather detailed set of ways that trade war could be avoided, few of which look likely to be implemented. The various elites of the world seem to be preparing for war, and ready to drag the rest of humanity along with them.

1'UK businesses threaten to pull out of China over protectionism' - UK Telegraph; Moore, Foster
2'Steering Out of a Smash-Up No One Wants'- Caixin; Xie

A Riff on Playing Music for a Living

Here in the U.S., one has to wonder about the future of music schools and conservatories with tuition rates of $20,000 a year, when available jobs are dwindling. Many orchestras are in severe crisis now, with large deficits and no apparent way to make them up. And orchestras are traditionally the largest source of employment in the private sector for classical musicians. The decline of the orchestra in the U.S. has to eventually impact opportunities for musicians in the education system. Yet, people in positions of authority seem pretty much oblivious.

This is not just restricted to classical music. One could throw in jazz, as well, where opportunities are even more scarce. It's sad to see people who regularly played with Coltrane and Miles Davis living in rent-by-the month hotels as they struggle with the difficulties of age. Yet I know such people, who made much more thirty years ago than now. We are throwing away our history and cultural legacy.

Music schools have the standard jazz studies department, but who goes into fields such as these, when the opportunities to make money are limited and dwindling ? More and more it's exclusively children of the rich, who know they will be taken care of if things don't work out. But you're not going to get much vitality in an art that way.

Musicians don't go into the field to get rich, but one has to survive. The field is demanding, and requires one's full attention to improve and succeed. You simply can not be a top flight musician and have a 'day job'. This can apply to any segment of music, not just the above mentioned categories of classical and jazz. As economies decline, so to do the arts. People feel the pinch and have to survive, even if it means limiting their artistic pursuits. The Renaissance was an economic as well as an artistic flowering. They go hand in hand.

Those who celebrate their ability to get free music are pretty much celebrating the destruction of another economic base, though of course no one is 'pure' in this regard. As with any situation, there are success stories, but the general drift in the music field over the last decades has been towards less : less live music opportunities and less money through recordings (with or without evil record companies). Comparing our world of copyrights with Mozart's world is ridiculous. There were no recordings in Mozart's time, so live music was needed. Restaurants couldn't re-run a CD all day as they can now.

Everything cannot be about promotion - giving something away for free for a future reward. There eventually has to be a pay off. Bills have to be paid, teeth have to be fixed, shelter provided for. If musicians can not get their basic needs met by playing music, many will move to other fields, and a whole lot of interesting ideas will never be heard.

Yes There is a Ruling Class, No You're Not Invited

It's hard to find articles about this meeting organized by the Bank of International Settlements.

The world's top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets.

Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow (2/7) at a secret location, the Herald Sun reports.

1'Secret summit of top bankers'- news.com.au

Palin is Still Around

Despite being the standard joke at liberal dinner parties, Sarah Palin's poll numbers are not too bad. Her most recent Gallup poll, in December, had her at 44-47 , or a -3 % in favorability. In contrast, Obama's current Gallup 'Job Approval' is 49-44, or +5. Slightly different types of polls, but it is interesting how small the gap is. Incumbents usually need to crack 50% job approval to be favored in a re-election.

The election of an incipient fascist like Palin is some ways off - it would require continued deterioration in the economy and political establishment - but she is not going to just fade away. In the meantime she can build her base through shock troop movements such as the Tea Party. And stay in the media advocating another 'American revolution' (from the right), and war with Iran:

Say he decided to declare war on Iran, or decided to really come out and do whatever he could to support Israel, which I would like him to do.1

It will be interesting to see if she continues developing ties to the 'intellectual' far-right of U.S. politics, such as hardliner John Bolton.

1'Palin: Barack Obama needs to ‘toughen up’ if he wants to be re-elected' - Orlando Sentinel
2'Palin says US 'ready for another revolution'' - Financial Times; Luce

Federal Tax Receipts and GDP

One wonders if we are seeing the growth of a grey market in U.S. economic activity, given the drop off in federal tax receipts in proportion to GDP. This could also be a measure of the weakness in personal earned incomes, which make up most of U.S. tax receipts. And, throw in the Bush tax cuts for good measure.

NPL's Soar in China

Non-performing loans in China have risen into the “trillions of renminbi” because of poor lending practices, an insolvency lawyer said.

“We work really closely with SASAC, the state-owned enterprise regulator in China, and there are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China that no one is doing anything about,” Neil McDonald, a Hong Kong-based business restructuring and insolvency partner with Lovells LLP, said at an Asia-Pacific Loan Market Association conference yesterday. “At some point there’s going to be a reckoning for that.1

When this last happened, the government was able to bail out the state-managed banking system. But that was during a time of rising trade and trade surpluses. On the other hand, experts have been waiting for China's inefficient banking system to collapse for years, and it was the freewheeling West that went down first. In the meantime, living standards have risen for a good portion of China's population.

---
1'China Defaulting Loans Soar, Insolvency Lawyer Says' - Bloomberg; Smith
2'Wen Says Chinese Concerned About Graft, Income Gaps, Housing' - Bloomberg

Capitalism Is About Making Money

Why are people surprised when capital seeks to do just that ?