China

The USA/China Relationship: Obama’s Conflict of Interest

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For years we’ve been selling China a lot of our bonds. We need the money and they want a safe place to put their money. Some people said that we were at their mercy, but really we had them by the balls. A big borrower always has leverage against his main creditor, because creditors want their money back and are reluctant to do anything that might interfere with the big borrower’s earning ability.

Since our government is increasing its spending substantially, and borrowing to cover much of the new spending, we need China more than we used to. If we can’t sell more bonds we will have to print even more money or raise tax rates even higher than is already planned. Either course of action would eventually be politically costly, perhaps ruinous, for the Obama adminstration. So Treasury Secretary Geithner has been spending a lot of time trying to persuade the Chinese to buy more US bonds.

I think it’s reasonable to ask what price our country will pay in exchange for Chinese financial cooperation (we are asking them to take more risk, after all), and whether the Obama administration has a conflict of interest. Obama can do things to benefit the Chinese government — such as by muting actions that we might otherwise take in response to China’s military expansion or its hostile behavior toward our ally Taiwan or its human-rights abuses or its lack of cooperation on North Korea — that will be costly for us but whose costs will not be obvious for years. Obama has a strong political incentive to get his expensive programs passed. Could his personal political interest be allowed to trump the national interest? It might if the rest of us don’t pay attention.

(BTW, we’ve also been selling a lot of our bonds to Gulf oil states. Might there be some worrisome quid pro quos there as well?)

An Island People in a Sea of Humanity

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This Forbes article talks about China being an empire, i.e., a polity composed of many different ethnic groups but trying to behave as a nation, i.e., a polity based around a single ethnic group. [h/t Instapundit] This reminded me of a mock map at the very interesting blog Strange Maps.

The map below combines the distribution of China’s ethnic Han population (the people we think of as Chinese) with China’s geographic isolation to produce an image of the Han inhabiting an island surrounded by a sea of non-Han peoples.

china-island-400_2

This post accompanying the map makes several very good points:

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Have a Nice Day

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The underlying fundamentals are toxic: US gross debt as a percentage of GDP (currently at 375%) is still climbing, housing prices are still falling (wealth destruction as far as the eye can see), un/underemployment is still rising (an inability to service debt), the financial industry is back to its old tricks (bonuses are shooting through the roof again, etc.), China is still manipulating its currency (dashing prospects of future jobs), commodities (higher costs for daily life) are shooting up again, etc. Worse, what action has been taken is largely short term masking of symptoms and not a cure. Our government “brain-trust” is using all of its financial powder on deprecated 20th Century economic measures to prop up the industries that got us into this crisis: like the greasing of palms in the bloated construction industry (what relation that industry has to our future prosperity is a big mystery) and the flooding of a failing oligopoly (the financial industry) with free money.

So where is it heading?

“… a post-Westphalian century replete with neo-feudalism and global guerrillas is on an inexorable march.”

John Robb.

Farming And Africa

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MEDIA HEAD FAKE

Recently there have been a flurry of articles about farming and “returning to the land” in various Western magazines and newspapers. This headline in the most recent Monocle is typical of the trend – a few city-dwelling Japanese are considering a return to farming given recent economic events and also the fact that farming seems more eco-friendly and popular nowadays.

While returning to organic farming in the West on a modest scale or hobby farm is more of a “personal growth” type activity, the farms in the West are of course extremely productive, using intensive agriculture, fertilizer and optimized seeds, as well as mechanization. The small organic farmer movement is more for media show than a viable long term strategy for feeding Earth’s billions, although certainly it has its place as long as people want to pay the requisite higher prices it entails.

AGRICULTURE & INDUSTRY IN AFRICA

In Africa, the population is exploding – from what I have been able to gather it is north of 880 million and probably closing in on a billion soon – and most of Africa is importing critical foodstuffs. African “governments”, which are mostly a collection of individuals who achieve power and utilize it to enrich themselves and their cronies, do not focus on agricultural needs since most of the population has migrated to vast cities and shanty-towns and their power base moved with them (they DO focus on mineral rights and oil, of course).

This article from the Economist called “Outsourcing’s Third Wave” is eye-opening – it describes how foreign governments are negotiating with African leaders to buy / rent / run large tracts of land for the purpose of growing food in Africa for importation back to THEIR home countries. From the article:

The Saudi programme is an example of a powerful but contentious trend sweeping the poor world: countries that export capital but import food are outsourcing farm production to countries that need capital but have land to spare. Instead of buying food on world markets, governments and politically influential companies buy or lease farmland abroad, grow the crops there and ship them back.

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