A small news story – the House has voted to authorize trade sanctions against China for failing to allow its currency to float, creating a subsidy for Chinese goods.
If you follow John Batchelor, he’s been warning of Chinese aggression towards Japan, Korea and other South China Sea neighbors. Asia is getting very fragile.
Following the market crash in 1929, Republicans came up with the way to bring stability to the economy – they created the Smoot Hawley Tarrif to “protect American jobs”. The only effect was to turn friends into enemies, and lay the foundation for the Great Depression and ultimately the Second World War.
The House vote passed with bipartisan support. The Senate would have to pass it and President Obama sign it before it becomes law. There is very little time left before Congress adjourns, and they haven’t even started on the bills to fund the government after October 1st.
So you’re suggesting communist China is our friend and the application of trade sanctions might change that? It seems from the news that China is making plenty of enemies on their own without help from the U.S. Congress.
The “collapse of Asia” would be very good in the long run for the U.S. if we could just avoid getting involved militarily. Let China, Russia, North Korea, Pakistan, and India fight it out amongst themselves. But I doubt the Pentagon (prodded by our defense contractors) could long withstand the temptation not to come leaping out of the spectator seats to tackle someone as they ran by…
I suppose the Federal Reserve can just buy back all of the U.S. Treasuries when they flood the secondary market and the Chinese stop buying. And we are pretty far downwind from any radioactive fallout, so maybe there is nothing to worry about.
As John Batchelor is fond of pointing out every time he talks about this, the U.S. has a mutual defense pact with Japan – it’s part of why Japan agreed to not rebuild an offensive military force after World War Two. If China seizes islands claimed by Japan, we have two main choices – military confrontation directly with China, or ignoring the mutual defense obligation. If we do the latter, Japan then has two choices – ignore the China invasion or fight China without U.S. help. (“Friends” could have meant other countries beside China)
As John also slyly mumbles under his breath, Japan is the third largest nuclear power producer in the world and as a result has a large stockpile of plutonium – and nuclear scientists – and an active missile launch program for civilian use. Japan is no Iran or North Korea. Japan could join the ballistic nuclear weapons club in a day.
If you watch the financial markets, the Japan Yen recently hit a 15 year high vs the U.S. Dollar which only stopped when the Bank of Japan stepped in. We’re living in dangerous times, and provoking China for domestic political reasons (knowing that the Senate will not pass the measure) is playing high risk poker.
Another thing John Batchelor has been pointing out is that China is now blocking exports of “Rare Earth” minerals, necessary for a wide range of industrial products. China has put most other mines out of business, and is close to the sole supplier of those materials. They aren’t holding only the Dollar and Technology cards.
Japan and Rare Earth Metals