The American artist Andy Warhol seemed to understand that
China's revolution comes with many faces. One of the faces is a brand of global capitalism.
Mao Zedong may have seen China's adoption of non-democratic capitalism as the ultimate revolutionary act.
More band aid solutions to European debt crisis. It is wise to still be prepared for an economic meltdown and will China help?
by Tom Thorne
I was amused this morning by the front page of the Globe and Mail, Canada's newspaper of record. They published a sketched diagram obtained from the meeting of economic ministers in Brussels. It reminded me of my own napkin notes satires still to be found on this blog.
A reporter found this revealing document on the floor of the meeting room. It showed how the debt crisis, especially in Greece, would be solved. What was particularly interesting was the numbers of question marks on this diagram and so solutions may be fleeting notions of fiction.
The question marks remain no matter what spin the Europeans put on their economic meetings. The bail out money has to be created, or more accurately printed and distributed, while the Greek people still take rounds of cutbacks and austerity. That of course will lower the value of the Euro and subsequently raise interest rates on the debt because it will take more money to retire the debts. Simple Economics 101 stuff really.
These meetings are so much theatre for the world stock markets which have skittishly lost ground to hedge for another meltdown like we got in 2008. The Europeans are now asking their banks to write down or reduce debt owed by debtor governments.
So the balance sheets of the banking establishment will take a hit and the economy of excess will continue now slowed by chastened bankers who will be reluctant to loan anyone money to cover the losses they experienced at the hands of the politicians and bureaucrats. A vicious circle.
Stock markets rebound...up and down there is always profit taking for someone.
Financial markets like trained seals rebounded yesterday because investors want to believe that the Europeans have finally got financial religion and had a encounter with what is right and true on some mystical Fiscal Road to Damascus.
This is really hopeful status quo thinking. What is needed is for governments in Europe to live within their means and in the case of Greece, Spain and Portugal to collect income taxes from their populations who routinely hide money in black cash economies of some scope.
In addition, throughout all of Europe it is essential that these cash black economies be curbed. They may be in some cases up to 30 percent of GNP. However this is also a double edged sword because in many cases the underground black economies are essential to keep things rolling on each day.
Harden up too much up on black money and the economy slows down. There is the official economy and then there is the unofficial economy that people create to avoid high European union taxation rates. However, Europeans also expect quality social programs and services. They can't have it both ways.
So these meetings in Brussels are really so much smoke and mirrors. They are long on rhetoric and short on real plans for the European union's future to control spending and generate the right fiscal balance for the Euro and its political union and its considerable economic activity.
China invited to help solve European debt crisis. A cat among the pigeons situation.
Another startling piece of news that emerged yesterday concerned China and Europe. China is being invited to invest in Europe big time, ostensibly to stave off financial disaster but also to prop up the ECU one of China's biggest customers so they don't lose business. China will take this opportunity to invest and ultimately influence what happens in Europe down the road.
China's influence is growing in what the USA will and can do financially and now they are being invited to protect their markets in Europe by helping solve the debt crisis.
The Chinese leadership will see this as an opportunity to expand political and financial influence into the west. To help now will have a real politic payback in the future. Fighting debt with more debt seems to this observer to be a recipe for a future problem when the debt is called. That problem will be China and their attitude to calling debt could be more like a mafia loan shark's approach to debtors.
Imagine the stupidity of this move in the not so distant future. In effect European leaders are prepared to mortgage their economies and the economic output of their future populations to China in the name of globalism and the notion that economies are so interlinked that transactions and investment sourcing are one great world wide economic pot.
Unfortunately Chinese investment or purchase of European government bonds means a win-win for China. No western country is snapping up Chinese bonds. In addition, China is seeking resources world wide to fuel its industry and so their economic pressures on national sovereignty of many countries including Canada goes on unabated.
The nature of this deal will be one-way and will serve to expand Chinese power not only in Europe and North America but throughout the Third World where they will access resources they need to develop their economic revolution. Capitalism does not need democracy to flourish as we see each day in our dealings with China.
The Chinese don't want an economic disaster or an uncontrolled spin into a recession. That would create havoc inside China as we saw for a while during the 2008-10 period when their normal nine percent growth rate was reduced appreciably by lower demand from the west and subsequently created unemployment and downturns and even social dislocation within their Economic Zones. That's not how the Chinese economic revolution is expanded.
And so the smoke an mirrors of western government debt and living beyond their means continues in Europe and the USA providing China with routes into the fabric of the world economy that are unprecedented. Truly Mao Zedung, The Great Helmsman himself, has realized a global revolution using the tools to capitalism to do it.
© Copyright 2011, Tom Thorne, All Rights Reserved.