Brad, agree with your "scary" conclusion vis-a-vis SWF activity in the equity markets; but there are differences which may make things just that little more complicated, regulatory declarations (upon hitting certain % of shareholdings) and protectionist sentiments are just some of them ; which makes all those stakes in private equity funds so much more sensible.

bmh: Twofish,how old are you?

Pushing 40. The story of the rise of China is a multi-generational historical saga, and I’m amazed at the roles that my parents, their parents, and their parent’s parent’s had in it. My hope is that in my lifetime, I make the situation better, and at least don’t make the situation worse. There is going to be plenty of stuff left for my kids and their kids to do.

The easiest solution is to let all those stupidly lending to the USA and Europe with their agressive mercantilist policies lose that money.

The best solution in fact would be for europe and USA to start printing lots of money and finance their home deficits.

The best solution is strong regulation on cross border flows of capital starting with a tobin tax and ending with a ban on moves to tax heavens.

Globalisation is ending around these days.

Twofish,how old are you?

BMH

The Pentagon Strangles Our Economy: Why the U.S. Has Gone Broke

by Chalmers Johnson

http://www.globalresearch.ca/index.php?context=va&aid=8813

As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay or repudiate. This fiscal irresponsibility has been disguised through many manipulative financial schemes (causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.

There are three broad aspects to the U.S. debt crisis. First, in the current fiscal year (2008) we are spending insane amounts of money on "defense" projects that bear no relation to the national security of the U.S. We are also keeping the income tax burdens on the richest segment of the population at strikingly low levels.

Second, we continue to believe that we can compensate for the accelerating erosion of our base and our loss of jobs to foreign countries through massive military expenditures — "military Keynesianism" (which I discuss in detail in my book Nemesis: The Last Days of the American Republic). By that, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.

I think thesis/antithesis also has to be borne in mind. One way that elites are made to be more inclusive isn’t by meeting their membership requirements, but by scaring the hell out of them–or by taking advantage of their fear of someone else.

e.g. Japan, S. Korea, Taiwan, and even to some extent China were "free riders" on the armed standoff between the USSR and the West. They obtained favourable membership offers from a Western hegemon looking to make more friends.

If not for the USSR, they might not have had it so good.

Iraqis won’t benefit from these painful years of war, when they’ve confronted the world’s leading power single-handed while everyone else looks on.

But they’ve probably bought some other peoples years of opportunity to pursue their political, economic and cultural destinies with a bit less American interference than may have otherwise been the case.

Hmmm. Well, let’s imagine Uday and Qusay Hussein running Iraq in 2020, with oil at $400 a barrel. They would have plenty of money to build a nuclear weapon and modernize their 1 million man standing army. With Iran and Israel nuclear armed, how could there not be a nuclear exchange on top of the world’s major source of oil? The Iraq occupation is a brilliant long range strategic move to ensure long term stability in the region. You think some ethnic cleansing and roadside bombs represent instability? It doesn’t take much imagination to see the real threats. No need to let loose another propaganda tirade, Chairman Mao. I won’t be back to read your reply.

Human stupidity. People that were dumb enough to actually think that you can impose democracy via barrel of a gun.

DC: Rather than face the tough choices in the US (cutting benefits, investing in science/technolgy, hard work, better products for the world market, etc), the Washington Elites are desperately playing the war card.

Nope. People on Wall Street are self-interested, cynical people whose primary motivation is profit. People in Washington aren’t.

I’ve looked into the eyes of the people in the US government that are out to overthrow the Chinese government, shaken hands with them, eaten at the same table with them. They scare me, because they *aren’t* scheming, self-interested, cynical people. They believe that they are doing good, and they honestly believe that the Communist Party of China is an evil that must be destroyed, and they really believe their own propaganda about spreading democracy and freedom in the world.

They scare me because, frankly speaking, they are idiots, and well meaning idiots can do a lot more damage than cynical schemers.

DC: So, consider the consequences for the Soviet Union…

One of the reason that the Soviet Union fell is that it had an economic system that required that the people at the center make good decisions. If you have a system of central planning, and the central planners can’t plan, the system crumbles.

The thing about markets and constitutional systems is that they are more idiot-proof. You can have Washington DC run by complete morons, but the system is strong enough to survive and fight back. If you put a moron in charge of the Communist Party, then China is finished. You put a moron in charge of the US government, things get a little worse, but the nation survives. It’s important to rely on systems rather than people, because sooner or later, an idiot will manage to come to power, and you want to limit the damage that they can do. People make the mistake of pointing to the dozens of things that the US is doing wrong and assuming that the US is finished. They forget that the US cna do dozens of things wrong and still survive.

The good thing about China is that it didn’t make the same mistake that Japan did which is to assume that the US is much more fragile and weak than it really is. China will have a difficult enough time making the deals that will keep the US from interfering in it’s vital domestic affairs. Challenging the US for global supremacy or coming with an alternative economic system is totally out of the question in my lifetime.

Which gets to the question that if the US is clever at arranging the world economic system to live far beyond its means and to control the vital centers of finance, and if it has both the means and the ability to destroy nations that dare oppose it, then isn’t it total madness to challenge it?

Why is the US in Iraq other than the Oil. I am reminded of a historian who answered the question, ‘Why did the Soviets go into Afghanistan?’. He said that it was a desperate gamble by a crumbling empire. Rather than face the tough choices in the US (cutting benefits, investing in science/technolgy, hard work, better products for the world market, etc), the Washington Elites are desperately playing the war card.

So, consider the consequences for the Soviet Union…maybe it’s better to get it over with, so we can have some real change in this country.

I really don’t think that this has a good chance of happening. In most developed countries, governments and business have a relationship that is more symbotic than adversarial. Booming businesses create tax revenue that keeps the government afloat. Governments have systems of law and regulation that allow businesses to exist.

DC: Chinese policymakers. As a consequence of the Asian crisis in 1997, many officials remain deeply suspicious of advice from western countries

Not really. The thing about Western economists is that they strongly disagree with each other about what to do. After all Joseph Stiglitz is a "Western economist" as much as Jeremy Sachs. Economists sometimes give advice that is politically unrealistic, but this isn’t a Western/Chinese dichotomy.

The thing that makes China different from Zambia is that that China has enough of an indigenous knowledge base to pick and choose ideas.

DC: It is time that the non-western world starts establishing their own global currency system, an interest free system, that promotes the "real economy" exchange of goods rather than "finance capitalism of money manipulation".

"Money manipulators" have been the target of scorn and suspicion for thousands of years. The curious thing is that when people get rid of all of the finance people and deal-makers, that tends to destroy an economy. The current global economic system has on the whole worked quite well for China, and I don’t see any large desire to radically overturn it.

DC: Under the existing Neo-liberal economic regime, the US Federal Reserve remains a puppet of 5 private banks, which ultimately owes their allegiance to narrow Wall Street special interests.

Let me tell you my special interest…..

people get rich -> rich people need something to do with money -> Wall Street helps rich people do something with money -> I help Wall Street help rich people do something with money -> I get nice fat bonus check…..

The thing about liberal democracy and capitalism that makes it work better than other forms of government is that it assumes that people will act in their self-interest, and rather than fighting it, it uses it.

This is what I don’t understand about conspiracy theorists. Let’s say there is this small cabal of people who actually run the world. Why fight them if you can join them? Go up to the cabal that runs the world and just find out what they want from you in order to join the great conspiracy. If it is acceptable, shake hands and do the deal.

That’s basically what China did, and it’s worked out pretty well….