Asiatic Adventurism, Part III

Filed in currencies, deflation, euro, Gold, mongolia, obama, US Dollar, Yen, yuan by on October 12, 2010 0 Comments

For a quick overview of issues, consider that China has understood the art of war since Sun Tzu, back when the rest of us didn’t have fireworks or chopsticks. The Chinese do not like losing face. Shooting wars have been known to start over tariffs. China is already using gunboat diplomacy and playing a deep game. They know that a trade war is still a war while Congress was grandstanding to the voters — and Japan cowers. China has many counters to the latest puff ball protectionist gambit, an obvious one being a stiff little note from their Ambassador regretting that due to lost revenue from increased U.S. tariffs his country feels obliged to sell Treasuries according to the enclosed schedule until trading relations are stabilized at the current level…or even one more favorable to China. Start with $100 bn the first month, $200 bn the second month, and schedule $300 bn the next month, anticipating the U.S. would fold after the first sale, if not sooner. Robert Mugabe stymied DeBeers by selling diamonds at a discount, so why not discount T-bills if political and other economic advantages make that course feasible? If I were Chinese Premier Wen Jiabao, I would hold ostentatious talks with the Japanese (who are scared stiff of me) about selling U.S. paper jointly in order to protect my …

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Asiatic Adventurism, Part III

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