"How the Noughties Were a Hinge of History"

Martin Wolf seems to think so. But it's rather doubtful in my opinion. Humans have a tendency to overestimate the importance of the moment. And every moment is a hinge in one way or another. I grew up hearing about Japanese supremacy and now it's common knowledge their economy is decline. Then there was the fall of the USSR and the 'end of history'. Now high school students hear about the inevitable dominance of China. Though China is a country whose growth has been driven by cheap surplus labor, and those days are either at an end now, or will be in the near future. Remember this was never the case for the United States , in fact the wages of free labor in the United States were always higher than Europe due to scarcity. So we will see how the China story plays out.

Wolf frets about the decline of relative Western economic power. But really, this would be a good thing for the vast majority of the world. Just maybe not for the Bilderberg folks and their like. Most of the world lives in Asia and most people there are very very poor. They need more economic 'power'.

Wolf quotes Benjamin Franklin : “We must all hang together or assuredly we shall hang separately.” Is Wolf addressing the world's elites when he says 'we', much as Franklin was addressing the nascent American ruling class ? Then what about the rest of us ?

1"How the noughties were a hinge of history"- Financial Times; Wolf

Where to Invest Surplus ?

David Harvey asks:

If we are to get back to three percent growth, then this means finding new and profitable global investment opportunities for $1.6 trillion in 2010 rising to closer to $3 trillion by 2030. This contrasts with the $0.15 trillion new investment needed in 1950 and the $0.42 trillion needed in 1973 (the dollar figures are inflation adjusted).

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What spaces are left in the global economy for new spatial fixes for capital surplus absorption? China and the ex-Soviet bloc have already been integrated. South and SouthEast Asia is filling up fast. Africa is not yet fully integrated but there is nowhere else with the capacity to absorb all this surplus capital. What new lines of production can be opened up to absorb growth?

I think there is more potential for growth than Harvey envisions. The massive rural populations of China, India and Indonesia have not been integrated into the consumer or credit markets. Of these countries, only China's rural population has been mostly integrated into production. There is still a long way to go. However, they are some fairly stiff infrastructure and cultural barriers to further extending capitalism, especially on the consumer demand side of things. If one had to guess though, capital will find a crack and open it up, much like water. This does not mean the process will be pleasant, efficient, peaceful or desirable. But capitalism has a long way to go unless it faces significant organized opposition.

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Having lived in the Philippines, this lack of integration in the rural areas is very evident. There are still a lot of people 'living off the land' in a pre-capitalist mode of production, and even the few who work in factories are mostly producing, not consuming. And no one has access to credit in the way a Westerner does.

1"Organizing for the Anti-Capitalist Transition" - David Harvey

China To Go Into Trade Deficit in 2010 ?

The E.U. is carrying a trade surplus, and the U.S. trade gap is dwindling. In both cases this is primarily a result of weakness in domestic demand. Likewise, China's trade surplus noticeably decreased last month.

Given their capacity issues, a trade deficit might force China to devalue their currency, even against the debased dollar. This could act as a trigger for the kind of dollar-carry reversal that many people only expect when the Fed raises interests rates in 201(?).

1"Europe's Trade Surplus Spikes" - The Business Insider
2"U.S. Trade deficit shrinks by 7.6%" - San Diego Union Tribune; Calbreath
3"China to stay a plodding "ox" in year of the tiger" - Reuters
4"In Asia, 2010 Likely to Be as Bad as 1998" - Seeking Alpha; Cooper
5"MOFCOM: China's trade surplus may further narrow next year" -People's Daily Online

"Arbeit Macht Frei" Recovered

From the BBC:

"The "Arbeit macht frei" sign stolen from Auschwitz in southern Poland has been found in the north and five men have been arrested, police say."

This is good news. However, the original sign should never have been left up. It's too important and too easy to steal on location. It should have been removed and put on public display in a safe area, under 24 hour security. A replica should be put in its stead. This type of replica replacement is not unusual.

1"Police in Poland find sign stolen from Auschwitz gate" - BBC

Copenhagen Marks the End of the Post World War 2 Order

A better world is possible, as is increased chaos, war and factionalization on a global scale.

From the UK Independent, and a 'source at the heart of the negotiations':

"this was the first sign that China is emerging as a superpower, which is not interested in global government, is not interested in multilateral governance that affects its own sovereignty or growth."

China is unlikely be a superpower in the sense most people think; it has too much extreme poverty and will continue to have for decades. It also has no Navy to speak of. Its resistance at Copenhagen was more a sign of weakness, not strength. They don't want to nuke their economy, which has coal as 70 % of its energy source. However, China combined with other so-called emerging capitalist economies now have the weight to at least push back against 'the West'. Is there room at the top for many more people, within a world economic system which has been dependent on cheap labor and energy for its development ? I'm guessing not.

1"China stands accused of wrecking global deal" - The UK Independent

They Hate Us For Our Freedom

We Will All Be Speaking Norwegian

Or the UK will, at least. Hide your daughters proud Englishmen, Fish and Chips will become Lutefisk and Chips:

Norway's Sovereign Wealth Fund "has become so large that it now owns more than 1% of the world's shares, is Europe's biggest equity investor and speaks for 1.7% of all listed European companies" says the UK Guardian.

More forbidding is this: "The fund's exposure to the UK will soon increase further, as (CEO)Yngve Slyngstad is planning to invest into the UK property market in the coming months."The UK is the first property market we will go into," he says."

After all, "At £259bn, they (the fund) have never been higher and could easily cover the UK's £175bn budget deficit."

(substitute China for Norway ; would the Guardian be so sanguine ?)

1"Norway's sovereign wealth fund: £259bn and growing" - UK Guardian; Fouche

Green Tariffs !

China is driving the rest of the world's exporters into the ground. So it's natural that some type of resistance is going to concocted. After many generations of lecturing about Smoot-Hawley, it looks like 'green tariffs' is what Washington is coming up with to put a friendly face on a trade war.

...the Chinese refusal to accept verification measures could also lead to calls for punitive tariffs on Chinese goods coming into the United States. The House bill allows for the imposition of tariffs on goods from countries that do not constrain their carbon output. A group of 10 Democratic senators wrote to Mr. Obama two weeks ago warning that the Senate would not ratify any treaty that did not protect American industry from foreign competitors who do not have to meet global warming emissions limits.(1)

1"China and U.S. Hit Strident Impasse at Climate Talks" - NYT
2"Obama hard-pressed before Copenhagen meeting " - Xinhua

60 Votes in the Senate ?

I don't recall Bush II needing 60 votes to pass any of his favorite bills.

Democratic politicians are often as weak and craven as their conservative adversaries portray. But it's inherent in the politics, defending a system of private profit and property while grandstanding against its 'excesses'.

A World of Nation States

Marxian contradictions are more than apparent at Copenhagen:

From the Guardian :

"But tonight it appeared that many did not want to risk being pressured into signing an agreement they believe would be against their national interests."
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"One key point of contention is the US and EU insistence that emerging economies such as India, China and Brazil agree to peak their emissions by 2020. Developing countries argue that this would lock them into poverty."

1"Poor nations threaten climate deal showdown at Copenhagen summit" - UK Guardian

"India Deluged with Demands for New States"

The British used these factional divides in India to take control of the country. No one did Divide and Rule like the British.

Some anonymous Chinese bloggers have also mentioned it recently, as well.

It's worth mentioning that India's per capita income is lower than any country within the South American continent. And the U.S. brain-drains India of many of its professionals.

1"India deluged with demands for new states" - LA Times, Magnier
2"Does Beijing really want to “break up” India?" - The Hindu; Krishnan

"National Interest Trumps Everything Else"

As Indian Environmental Prime Minister Jairam Ramesh says.

It's a world of nation states. And failure at Copenhagen seems poised to be the historical marker for the end of the post-World War 2 order, as enforced by the United States. Capitalism without a systemic regulator means a collapse into spheres of influence; trade, proxy and shooting wars. We seem to be at the beginning of a major breakup and it is impossible to know what emerges at the end.