Wednesday, September 15, 2010

Putting the Chinese Consumer on the Western Credit Morphine Drip

One has a feeling this is what 'it' was about all along. Cracking the Chinese banking system for a takeover by the West.

"We are concerned that China is breaking its trade commitments to the United States and other WTO partners, both by favoring its one state-owned financial services firm to the exclusion of American credit- and debit-card companies and by manipulating trade remedy investigations to unfairly restrict exports of American steel," U.S. Trade Representative Ron Kirk said in a statement.(1)

Or, as better stated over Jesse's:

...The natural benefit of unrestrained globalization is a canard similar in nature to the fallacy of naturally efficient markets.

It suited some people to ignore it then because the arrangement provided cheap goods to the US while depressing the domestic manufacturing sector and working class incomes, while boosting the financial sector and masking monetary inflation and asset bubbles. It was a means of empowering and enriching Wall Street at the expense of the productive economy.

Now that China's currency manipulation does not suit them, they are willing to discuss it, since China is not 'playing ball' with the financial engineers and encouraging domestic consumption and adopting Western bankers as their masters.(2)

How will China respond ? Centralization is essential to maintaining the cohesiveness of the state in a country so large, and with China's historical geographic weaknesses and propensity to factionalize. The repercussions of opening up their financial system would probably push a Beijing-centered China to the point of collapse.

1'U.S. files WTO cases vs. China on steel, services' - Marketwatch
2'China's Mercantilism: Selling Them the Rope' - Jesse Cafe Americain

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