The danger of our time
Wednesday, February 11, 2009 at 1:24AM ARTICLE: The Great Crash of China, by Brian Klein, Far Eastern Economic Review, October 1, 2008
Good piece worth reading.
It corresponds to my sense that the financial crisis arrived about 5 years too soon. By that I mean China isn't ready for the structural economic adjustments in its exports-v--domestic consumption required by the looming end of what economists call the informal "Bretton Woods II" agreement by which America kept its dollar strong and rising Asia kept their currencies implicitly pegged and the unstated deal was: Asia buys our debt and outsources security and America buys their exports and turns a blind eye to trade imbalances. To me, this I a de facto rerun of what we did for "recovering West Europe" after WWII through the end of BW1 (marked by Nixon's decision to pull us off the gold standard).
This BW2 mode performed the same "miracle" in Asia that it previously achieved in Westen Europe, but that grand strategy is now tapped (we cannot borrow much more and our forces are stretched thin), so a realigment of our grand strategy is necessary--Great Powers in a nutshell.
Problem is: China and the CCP aren't ready for what the shift entails from China. We need China to stand up big-time, stimulate like crazy, and suffer more risk exposure (monetary).
But China isn't really ready for any of these things, thus the sense of danger.
(Thanks: Terry Collier)
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