US China Japan Quandary

As I write this, President Obama has ended his Asian tour (sounds rockstaresque). Although he was met by major protest nearly everywhere he went, from the Philippines where protestors were sprayed with water hoses to Malaysia, his main worry continues to be how to deal with Japan, an ally but at the same time not offend one of America’s largest holder of U.S. debt – China.

In word, President Obama stated that the US Japan alliance was "stronger than ever" adding in so many words that America opposes any efforts (by China) to undermine Japan’s administration of the disputed and uninhabited Diaoyu Islands in the East China Sea (note East China not East Japan).  By taking this position, The President basically questioned China's sovereignty and “legitimate interest," to use the words of foreign ministry spokesman Qin Gang, in the Diaoyu Islands, which they feel have nothing to do the Japan-US security treaty. Also, there remains the effort of the U.S. to implement Obamas GATT and NAFTA, the 12-nation Trans-Pacific Partnership (TPP), which excludes China.

Some may argue otherwise, but it should be remembered that since the fall of japan after WW 2, it was clear that a primary objective of the occupation of Japan would be U.S. military control in the region for decades to come albeit not originally outlined in the Potsdam Declaration as such. This was achieved when General Douglas MacArthur, along with a few staff WROTE the entire new constitution of Japan that has lasted ever since. Specifically via But the most unique and one of the most important provisions came in Article 9, which outlawed the creation of armed forces and the right to make war.

This is a difficult prospectus for the U.S. while mainstream media incessantly pounds that China is faltering economically, the question is compared to whom?  Not the U.S. for certain.   First, U.S. bureaucrats insist that the Chinese economy is in deep trouble, although the Chinese economy grewat 7.4% year-on-year for the first quarter of 2014. In particular when compared with the miniscule expanded 0.10 percent growth in the U.S. Gross DomesticProduct (GDP) observed in the first quarter of 2014 over the previous quarter.  And loot will continue to flow in to China given the global demand for copper, soybeans and multiple investments and trade arrangements between China and South America. China has a large hand and equal investment in Copper in both Chile and Peru and Iron in Brazil as well as sustainable energy development in Venezuela. Plus one must recognize the long standing relationship China and Trinidad have in the Caribbean. The reality is that South America now imports more from China than it does from the European Union, according to the U.N. economic agency for the region.

Then there is the issue with China and Russia , which appear to be making moves toward quitting using (diversifying) the US dollar or at least significantly cutting the dollar share in their forex reserves (a move that will most likely broaden the Yuan’s daily trading range). Add to this that from of January 2013 to the end of July, the Bank of Russia reduced its stockpile of US Treasury securities from USD 164.4 billion to USD 131.6 billion (a reduction of US Treasury obligations by USD 32.8 billion, or by 20 percent), there are some serious issues on the table for the administration to address and not just give window dressing.

Even more important is that the military containment of China for the U.S. is the main reason this administration has proffered unequivocal support for Japan, although they are well aware that such may have a dire impact and strain on the U.S. economy.  Specifically, speaking, if China desires to retaliate, in concert with Russia and other BRIC nations, the result could led to starting the demise of the dollar – meaning the American way of living will be severely impacted as a consequence with growing levels of inflation in the form of increases in the cost of food, clothing and gasoline and utilities.

It should be reminded, give the manner in which the U.S. has targeted Russia for what has occurred in the Ukraine, and leaving China out of the TPP talks, what we observe as closer interaction between Beijing and Moscow are really about protecting their domestic economies. But it is not farfetched to see that is they continue this close corporate, an outcome of bad and poorly thought-out U.S. foreign policy could be a direct challenge and attack on the dollar.

The U.S. concerns in China will prove to be challenging for the present administration. For one they are all over the place in policy and tend to reflect a moderately satirical ineptness to the goals and aims of their foreign policy efforts.  On the other, I am still waiting (as I suspect others) for  Mr. Obama to define what he means by “rebalancing” U.S. policy towards Asia, when his actions show opposite and even worse, the same old U.S. approach. By this I mean the neocolonial zeal reflected in President Obama’s desire to re-occupy the Philippines consequently continuing the United States historical imperialist agenda in Asia.

China has the second largest economy in the world and recently it has been project to pass the U.S, before the next year, with some economist suggesting that the size of the Chinese economy will become three times larger than the U.S. economy by the year 2040. The concern is that much of the U.S. dollar’s valuation stems from its lock on the oil industry and if China and Russia and the BRIC nations can accomplish this, next thing is the dollar is gone and  gold will rise. As I write and you read, Iran is already in the field trying out a non-dollar based international trade system.

It will be hard for Obama to both keep from upsetting China and at the same time appease Japan, as current news reports in the region have noted.  It is the administration desire to maintain U.S. military hegemony in both Malaysiaand Philippines, by making sure neither nation ever reach the strength militarily equal to Vietnam, as well as do all possible to prevent China from reaching parity with the U.S as a naval power that could eventually challenge American in the Indian Ocean and the Western Pacific. The obstacle is, has the Obama administration really thought about what their actions may result in, or are they just making it up as they go like they were in a game of pick-up and run?

Detroit Is the Future

One thing for certain, is that in politics, ethics and morality is a sign of cowardice.  They are the dead weights of any autocratic disposition when it comes to profits and financial gain, in particular when buttressed on the backs and hard work of those whom anyone seeking and securing the highest office in these United States of America – the presidency, need to obtain power.

Thus it should come as no surprise, as was the case with presidents before him, that Barack Obama has learned this lesson well.  Since he has taken office, while implementing the same policies of Bush and Clinton before him, U.S. businesses have never had it so good. As we speak, the masses are working harder than ever before, that is if they have a job or if under employed.  The global banking houses and large multi-national corporations have more loot than they can ever use and continue to add more and more each day, whether we are speaking in terms of cash on balance sheets or in terms of their proportion of ownership of the U.S. economy.

I start with Clinton because it was in the 1990s when our service industry began to bloom and our manufacturing base declined, and it may have had its signature moment when he signed into law, with Republican approval, the Personal Responsibility and Work Opportunity Act (welfare reform) in 1996. Yes, this was the start of the rapid growth of the so-called 1 percent, which Obama has increased more dramatically in economic prosperity in five years than the sixteen combined years of both Bush and Clinton.  It continued when Clinton ended Glass-Stegall, Signed GATT and NAFTA into law and implemented the Commodities Futures Modernization act which not only gave way to new fancy smancy accounting methods but also the mass proliferation of various complex papers based on selling debt.  And with a debt based economy come the obvious, less jobs, less employment, less value in the dollar, a decline in available jobs and an increase in overall poverty.

You see, it isn’t particle physics, but rather the natural result of Keynesian political/economic philosophy that results in what we see in places like Detroit. In simple terms, from this perspective, growth in corporate profits is directly correlated to people being paid less and less. This means that if profits continue to grow for the few, wages will continue to decline for the majority. And as wages continue to decline the US labor market will never ever be able to reach full employment – ever. Namely because companies make their profits by employing as few workers as possible and by transporting what jobs are available abroad to places like India and China.

This is not by accident. As I pen this, we are in a time in which working-age people now make up the majority in U.S. households that rely on food stamps. It used to be the elderly and children. All because government polices produced within the beltway are nothing more that state supported economic theft and terrorism. Policies that over leverage economic gain singularly toward the direction of corrupt plutocrats in the form of capital misallocation courtesy of the Federal Reserve Bank in the form this time of what is called Quantative Easing. In 2012 alone, more than 200 people became billionaires which when added to the more than 1400 billionaires in the US, gives them an estimated $5.4 trillion in combined net worth.

President Obama’s focus on deficit spending doesn’t and will never help the folk who may or may not have voted for him but it does help those whom he appoints to political positions and his other large campaign contributors. The people on Wall Street have access to funding, at a cheap price too given the Federal Reserve Bank’s penchant for hold down interest rates near zero while people who are the heart of America see their rent and food and gas cost steadily rise.  Many call this outcome “internal devaluation,” and is what we have seen abroad in Europe especially in nations like Italy, Greece, Spain  and more recently the Ukraine.

Now if you watch TV or even listened to the President’s State of The Union Address, you probably think it is all good, but that is only because of “newspeak” and selectively telling you what they want you to know.  For example, the only reason they can report that American competitiveness increased by over 10%, is because folks are getting paid less and due to all the benefits and wealth that is counted is what is on the books of big corporations.  They will tell you that  in December that that employment grew by 74,000 jobs and that as a consequence, the unemployment rate went from 7.0% to 6.7%.  But what they won’t say is that to keep up with the new folk entering the work force (which are not counted as unemployed) the nation needs 250,000 jobs just to maintain pace for this group of available workers alone. Or that the same month, the net number of folk with jobs (full-time and part-time) fell by 400,000 to a 35 year low. Then to add insult to injury, they will say that American economic productivity has grown in the area of about 7 percent since 2007, as if that is a good thing, but won’t say that during the same period in China it grew 90 percent.

 These are dire times in America and unfortunately, President Obama and his economic team are not making things any better for the majority of US citizens. What they are doing is developing the middle class in China at the expense of the middle class here for all the jobs that were once middle class (like in Detroit) are now in China. And this is their game, to artificially promote fake progress, while lowering the wages of Americans and growing unemployment, while the rich get richer, because they want a global market place with a global labor pool that they can pick and choose who to pay what.  By doing this, American job seekers will by default have to take lower wages, meaning the middle class is gone and that Detroit, is the future of America.