China Banks to Raise Capital

Lending out money to projects that do not generate revenue means you will go broke...how close is China to being broke ? As impossible as that seems.

CNN: "China's banks are preparing to raise tens of billions of dollars in additional capital to meet regulatory requirements following an unprecedented expansion of new loans this year, according to people familiar with the matter."

1"Capital crunch for Chinese banks" - CNN; Anderlini
2"China Banks Said to Submit Capital Raising Plans" - Bloomberg

Protests on California Campuses

Will increased tuition really make the UC system 'less diverse' and is it really an attack on 'immigrants', as claimed in the attached article ? Well, not exactly. The UC system is substantially funded by overseas East Asians who pay full fees. They aren't going anywhere.

It's really an attack on poor people or working class people, but class warfare is not in the vocabulary of most young people now, even those who are politicized. Until it gets to be, there can only be minimal improvements made in the system. It's quite easy to divide and rule using identity politics.

1 UCLA Students 'Riot' Over Tuition Hikes - You Tube
2"Rage at UC fee hike in L.A., Berkeley protests" - SF Gate; Tucker, Asimov

U.S. Banks Will Use Unlimited Fed Liquidity to "Buy the World" ?

Get ready for a lot more of this: "Blue-blooded City broker Cazenove bought by US bank in £1bn deal"

U.S. banks are sitting on trillions of dollars and are poised to buy distressed financial firms, particularly in Europe, that were not given access to unlimited liquidity. Whether they meet strong resistance or not, only time will tell.

Toyota Going the Way of GM ?

Well, at any rate, they have already given up the world #1 ranking to Volkswagon, after the latter's acquisition of Porsche and big gains in the China market.

And there have been insinuations that the root of Toyota's Sudden-Acceleration-Syndrome has nothing to do with seat mats, but with dud electronics. Modern cars accelerate through the medium of a computer. Whether true or not, I can't say, but this rumor is definitely something I've heard from so-called Joe and Josephine 6P.

1"Report: Volkswagen passes Toyota as world’s largest manufacturer"- Car Tech
2"Toyota Gets Stuck in a Pair of Ruts" - Business Week; Welch and Rowley

"Europe is Bigger than the U.S."...

"it's richer than the United States, it gives more to the developing world than the United States by far." (1)

But Europe doesn't have a military, which means much of its international power comes on the coattails of Washington. Oh, the power struggles within the international ruling class.

1"Leaders meet to elect EU president" - Al Jazeera

Confrontation With China Is Likely

Martin Wolf, a high-level spokesman for Western finance capital, tosses a few logs on the fire:

"We have spent long enough discussing China’s exchange rate policies. It is time for action."

Krugman joins in:

"The problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways."(2)

IMF Managing Director Dominique Strauss-Kahn, as well:

"We do believe firmly in the IMF that the renminbi is undervalued, and that it is not only in the interests of the global economy but also in the interests of China to have revaluation of the currency."

It's doubtful this will come to a happy ending for all sides. Overcapacity in capitalism is resolved through the liquidation of competitors (war or mass bankruptcy) or expansion of markets (the end of communism, for one). There is a problem with overcapacity - a very typical Marxian crisis of overproduction - that has been fermenting for decades. As Justin Lin of the World Bank said in July: "Significant excess capacity has been built up and unless this issue is addressed, we will face a deflationary spiral and the crisis will become protracted".

China needs a trade surplus to recycle money back into its banking system, which has quite a lot of bad loans, and many more coming. You can't built unoccupied cities without having vast amounts of non-performing loans. And, as is often mentioned, export-industry employment is maintained through a devalued currency. This is why Beijing will do what it wants with the yuan. The Western financial elite considered the destruction of its working class a loss-leader to open up China and crack its banking system. This has not happened, and the dream is gone now that the West is riddled with its own banking crisis.

Meanwhile, China has used the crisis to bolster its dominance in world markets, and this is not going to go unchallenged. It could lead to military confrontation.

For all the talk of democracy and rights, the Western ruling class is not far removed from World War, slavery, imperialism and nuclear attacks. China's government was rather naive to buy billions in worthless paper from the US government, and they should not be so naive to forgot history.

1"Grim truths Obama should have told Hu" - Financial Times; Wolf
2"World Out of Balance" - NYT; Krugman
3"IMF chief urges China to let yuan rise" - AP
4"World Bank warns of deflation spiral" - UK Telegraph; Ambrose-Pritchard
5"Cracking China's Banking System" - previous post

Where to Get Jobs ?

There seems to be a growing clamor for a jobs program. For large swaths of the American population, steady employment is dream of yesteryear. Wages are 'too high' here, and interestingly, the class struggle has played out to the point where long-term private sector growth can only come through technology driven productivity gains.

Labor in 'Asia' is cheap and plentiful. So while the West still has the capital, there is little reason to invest it here when profit rates are much greater elsewhere.

Capitalism can be defined as a system in which private capital controls the chief modes of production in society. Small-letter capitalism has existed for much longer than Capitalism. One can see a scenario in which the private sector is unable to fulfill a dominant production role in OCED countries, and where government takes over entire developed industries that have reached a stage of zero profitability. In this scenario, Capitalism might fade once again into capitalism. But this is just a scenario.

Silence on China

It's interesting how little the Left talks about China. Are 'they' the merciless bosses of the New World order ? Stalinists ? Socialists ? etc.

One could probably find twice the articles on Venezuela, as compared with China, in any leading Leftist organ. Despite the fact that China will soon be the second largest economy in the world.

It seems that few people know what to make of the country's rapid economic growth. But as the U.S. and China head for geo-political collision, it seems important to develop a more sophisticated understanding of this large, factionalized, and class-riven country. Rather than just talking about 'The Chinese'.

The Thailand - Cambodia Dispute

This is fairly significant, because it is happening at a time when Asia is trying to integrate politically, and 'go EU'. Little progress will occur if two ASEAN-bloc countries are not talking with each other.

Thaksin is the former prime minister of Thailand, who was booted out by the mostly middle-class opposition parties. His support is in rural areas, and additionally he is regarded as a cats-paw of China. This is a key element of missing undertext - to what degree is China pushing things ?

1"Thaksin extradition demand denied " - BBC News

China to Ruthlessly Exploit Africa

What Africa really needs is more help from Europe, the U.S. and Bill Gates - people who have their best interests at heart.

Oh, and I forgot Bono.

1"China pledges $10 billion in low-cost loans to Africa" - Wa Post; Jopson, Anderlini

We Are Probably Past Peak Oil

The Guardian reports that the IEA has been lying about their numbers. And windmills are not going to replace oil, nor is solar power in its current or projected form into the near future. But space based solar power is one of a number of long-term solutions. In the meantime, resource tensions and shocks to the world economy based on the end of cheap energy, will continue to surface and slowly intensify.

1"Key oil figures were distorted by US pressure, says whistleblower" - UK Guardian; Macalister

Obama and Netanyahu Meet Privately

Apparently , this was a one-to-one conversation mostly without advisers present. I suppose this was one of those candid talks that leaders engage in as they wrestle with the full implications of war - in this case, against Iran.

I don't usually link to Debka, but this report seems mostly straightforward.

1"Obama asks Netanyahu for more time for dialogue with Iran" - Debka

The EU Pushes Forward

The European elite knows it has integrate or be left in the dust of world geo-politics. Traveling through Europe however, there is not much enthusiasm for this project of a banker's democracy amongst the general population.

1"Leaders build Franco-German ties" - BBC; Kirby

Murdoch Takes on Google

The evil 'genius' of the right, Murdoch was one of the first to recognize the destructiveness of the internet when it comes to profit. Many more jobs will be destroyed by the internet than created, which will inevitably put pressure on profit rates unless productivity increases are distributed to 'the masses'. Which they haven't been.

1"Murdoch could block Google searches entirely" - UK Guardian; Johnson

Will Football Go the Way of Boxing ?

Who wants to watch a sport that renders its participants vegetables ? Ali is a walking testament to the destructiveness of boxing. No such icon exists yet in football. But what parents are going to sanction brain damage for their kids when sports like soccer, baseball, and basketball exist ? This issue is quickly hitting critical mass.

1"Is It Time to Retire the Football Helmet?" - WSJ; Wang and Albergotti

California Bonds Downgraded

More cuts in social spending coming...the Golden State is toast for the next decade, apart from a few wealthy enclaves. And given the coming expansion of the Panama canal, the import-export aspect of the economy may never fully recover.

1"Moody's becomes latest to downgrade California bonds"
2"California forced to pay 4% yield in bond sale" - LA Times; Petruno

Izzat Ibrahim Al-Douri

What ever happened to this guy ? The King of Clubs, and only surviving member of the 1968 coup that brought the Baathist party to power.

1 Bio

About Those Green Jobs

Yes, those high paying , high tech, green jobs can be done in other lands for a much cheaper price. There are plenty of smart people in the world, and quite a number of them are rather poor and willing to work for less.

H1N1 Goes Postal in the Ukraine ?

Eighty-six people have died in Ukraine from flu and respiratory infections, the health ministry said Wednesday, in an epidemic the World Health Organisation said could be largely due to the A(H1N1) virus.

The ministry said that almost half a million cases of flu and acute respiratory infections had been recorded since mid-October in the country of 46 million, while 24,000 people have been hospitalised.1

The WHO is on the look out for mutations that could make the virus more deadly. And the Ukraine is a country in deep economic crisis, with a strained health care and social system to begin with. As an example:

"Mr Spijkers describes the situation in the children’s hospitals his foundation supports as appalling. There is a lack of basic medical supplies. There are barely any Flu tests, vaccines or anti-viral drugs such as Tamiflu. The children’s hospital in Lviv, 130 kilometres from the Polish border, has 100 Tamiflu tablets for 160 patients. “If children get ill, we can’t even establish whether they have the A(H1N1) virus. We just have to go by the symptoms,”2

Likewise, the H1N1 vaccine shortages in the U.S. are inexcusable. I know a medical care professional, in daily contact with H1N1 patients, who has not had access to the vaccine.

The End of the Population Boom - Japan

Japan may well become an incubator for what a world of declining population levels will look like. It's doubtful capitalism is sustainable in such a world. Absolute declines in surplus labor means profit must almost entirely come from technological innovation and the resulting productivity gains. This is a very stiff task.

"The savings rate has crashed from 15pc in 1990 to near 2pc today, half America's rate. Japan's $1.5 trillion state pension fund (the world's biggest) has become a net seller of government bonds this year, as it must to meet pay-out obligations. The demographic crunch has hit. The workforce been contracting since 2005."(1)

1"It is Japan we should be worrying about, not America" UK Telegraph; Evans-Pritchard