In the past 24 hours, we’ve posted two very hard-hitting articles from China’s state-run Global Times that bear attention.
The first article, an editorial headlined American Arrogance Will End Dollar’s Dominance, is Beijing’s reaction to the FED’s “QEII” – the second round of U.S. quantitative easing now underway that involves the FED buying $600 billion on U.S. Treasury Bonds at $75 billion increments for the next year – in effect printing – and devaluing – the U.S. dollar. The editorial is also China’s latest rallying cry for a new reserve currency to replace the dollar.
The second article, an analysis of the U.S. midterm elections headlined American Politicians to Stick with China-Bashing Hypocrisy, makes it clear that despite all the anti-China rhetoric uttered during the campaign, Beijing has every expectation that the new U.S. Congress will prove just as needy of China’s fiscal mercy as the Congress it replaced.
The editorial headlined American Arrogance Will End Dollar’s Dominance says in part:
What the U.S. Federal Reserve seeks to do is print $600 billion and pump it into the economy – and the Americans clearly understand the impact of FED’s move on other countries. The U.S. appears determined to equate economic globalization to the globalization of American interests. Barack Obama said in a letter written before the G20 Summit that “strong growth and job creation” would be the “most important U.S. contribution to the global recovery.” We sincerely hope he will not repeat such meaningless words in Seoul today.
As manager of the world’s premier currency and by therefore dominating the global financial system, the United States enjoys colossal benefits. Beyond being a common form of currency, the dollar serves to provide blood transfusions to America’s national economy. No matter how tepid the U.S. economy may be, it can turn on the printing presses and instantly bring growth back on track.
Brazenly, America claims that strong U.S. growth is good for the entire world, while ignoring the fact that its very vitality depends on voluntary international fiscal blood donations. The fundamental reason for U.S. recklessness is the lack of a global mechanism to restrict it.
The world must develop tools powerful enough to bridle the U.S. dollar and the people that manage it. That is why so many countries and organizations are considering a sovereign reserve currency to replace the U.S. dollar.
In the second article headlined American Politicians to Stick with China-Bashing Hypocrisy by columnist Liu Ge, it’s clear that the prevailing wisdom in Beijing is that the anti-China vitriol spouted during the midterms, as they say in Texas, was ‘all talk and no cattle’:
Forgetfulness and impatience are distinctive features of modern man. Obama cannot meet the demands of Americans to change the status quo quickly enough. So out of a kind of amnesia, they have written him off and forgotten all of his efforts to save the U.S. economy.
Less than two years is a bit short, but in fact, Obama’s answers to his midterm exam could have been better. For Obama, the health care reform bill can be regarded as his first major achievement as president. From Kennedy to Clinton, Obama made possible what many Democratic presidents wanted do but always found impossible. But although it was achieved, the timing wasn’t right. To push through such a challenging reform while the economy is in the trough is like having a tooth extracted while having a cold: it tends to make a person extremely uncomfortable.
Interestingly, China became a common prop for Democratic and Republican candidates in these midterms. Democrats tended to criticize Republicans on trade and employment issues. One Democratic candidate from Ohio produced such an ad: in the TV spot, his Republican rival claims to be a supporter of free trade. The following shot is of a busy port and crowded China street, which is immediately contrasted with run-down factories in Ohio where even the windows are shattered and American workers look on with helpless looks on their faces. Then the narrator says, “we’ve lost 91,000 jobs to China through unfair trade deals.”
The ads convey two messages: First, all the two American parties can do is point out what the other party shouldn’t do, not what they should. Second, policies to stimulate the economy alone cannot create employment.
That is why, although this debate – and the game – will now move to Capitol Hill and the White House, U.S. economic policy won’t significantly change because neither party can find a better solution. Therefore, the law of “battling it out with China before being elected, then seeking China’s help after taking office” remains in effect.
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