« The Booboisie | Main | Progress »

臥 虎 藏 龍

By Owen Paine on Friday March 27, 2009 06:37 AM

Behold the canny devils -- first they question the soundness of the imperial dollar, and now they want an actual collegially-determined global reserve currency -- de jure not kath' hegemontos -- the impudent little red knaves! I believe our last emperor, the Crawford Caligula, called these crafty Han our "strategic competitors" -- and with good reason.

A call for the institution of a higher earthly authority than the biggest bully nation-state -- and with actual money-making powers! Why, that is, in the last analysis, a call for a one-world economy, with all the dismal horrors that might entail -- like, well, a broader measure of earthly prosperity, greater inter-regional harmony, even faster material progress -- The mind gags!

Must be pure phoney-baloney Pollyanna mischief-making, right? -- Yup, it is. In fact, it's just the latest shot across the collective bows of the Yankee Diddle armada.

Only sapsucker friends of the wretched, like nobel idiot savant Joe Stiglizinski, could push such an enlightenment-era chimaera on an ignorant and gullible cosmopolitan public.

Nope -- 'tain't a thousand humanisms blooming. The Chinese people's politburo has its sights on one thing and one thing only -- keeping its forex fiddle flying high wide and handsome.

But to look magnificent while being petty, the PRC is positioning itself to play head tribune of the planet's south pole, just as Uncle Sam plays world emperor from his perch at the north pole.

Plenty of room for playin' and foolin' here, on both sides; yet despite the snarls and teeth-bared grins, both of 'em will continue to discover ways to make this strategic rivalry safe, profitable, and comparatively bloodless. It's a waste of time trying to figure how long this gig can last -- how long before China finds herself suddenly willing to butt heads for real with our dear Tio Rico. As they say, 'that, comrades, is over the event horizon.' The US vs. PRC ain't even close to that yet -- despite the arms lobby inspired chatter.

But then again Clio can really hoof it when she has a mind to, morphing ploughshares into strategic air fleets in a flash. So who knows, some reading this may live to see that doleful hour.

Comments (17)


OP! Gotta parse the prose, as usual, but I'm game after a few Korean lagers... and the task is made easier by my underlying trust that you are on message! More or less.

I think we agree that the special drawing rights/currency reserve instrument proposal mooted by Zhou Xiaochuan is just a trial balloon floated by the PRC party-state apparatus in the run-up to the G20 confab... to give China some wiggle room on a platter-full of negotiable matters, including an "assurance" (FWIW) that the PRC's two trillion dollar holdings won't be wasted away by Geithner II/Obama stimulus excess. If only China's sovereign wealth fund could get a piece of the Geithner II action, grabbing toxic trash for mini-RMB on the dollar, used to leverage Afro-Asian raw material asset acquistions in their moment of deflationary grief! No go on that score, of course...

If and when China get its own internal demand-led accumulation scheme house in order, the SDR threat will morph from the prospective to the actual though, eh? The Kontradiktion the CCP has to deal with of course is that boosting domestic proletarian welfare also boosts the material autonomy of said proletatiat. And therein lies the rub -- will this buttress CCP legitimacy, or lay the groundwork of its undermining? It's all chaotically indeterminate, although my instincts and scholarship tend (and it's all tendential) to incline me to the former conclusion, since cross-class Chinese nationalism/great power chauvinism is still robust, in the face of real and imagined Nippo-American provocations.

The most humorous and lovely aspect of this whole drama is the extent to which US paleocon nutbags (some of them grotesque media pantomimes and nothing more, to be sure) received Mr. Zhou's message LITERALLY... and immediately demanded a Bernanke-Geithner-Obama loyalty test, that they were not conscious or unwitting collaborators in a China-Russia-NWO-global communist conspiracy. Ah, the paleocon wildcard factor!


Glue and OP: you both dance around the issue, concede and deny the significance of the Zhou announcement. Sure, we're not going to have war between the two overpopulated empires, but there will be many interesting diplomatic spats, some involving threat of force -- say, over Taiwan or N. Korea. Or even Tibet, for godsakes, since it has so many do-gooder liberals over here who want to liberate it.

But on the strictly economic level, if we don't ever get to Special Drawing Rights, surely the dollar is going to lose its reserve currency stature. Now, here, I'm a bit over my head, since I dont really know what stature is, in the case of currency, but the question is, when the dollar loses half its value, does it thereby become smaller, and does it lose some of its appeal as "reserve" currency? Can there be a Reserve Currency system with more than one currency?


Senecal, maybe you misread my smudgy finger paintings, maybe not, but I don't deny that dollar dominance is on its way out. But I think that it is still unclear if now is the "tipping point" (VERY sorry for the cliche) and if pressed, I'm wont to say that now is not. There are a host of reasons for this and to put it very simply, China is not ready to assume the burden at the moment. It must retool its development model, and God Forbid it is light years away from serious monetary-financial cooperation with Japan, these occasional and nugatory Chiang Mai currency swaps notwithstanding. Any assessment of the matter that focuses exclusively on summit politics and ignores mass politics does so at its peril, by the way. Greenback dominance is indeed going down in the medium run, but I'd advise you to bone up on chaos theory and non-linear outcomes... one man's opinion of course.


PS Yes, idiot paleocons and noxious Shangri-las, all lodged in Congress of course, will make barking noises about Taiwan and Tibet, agreed. But these are not imminent threats that will compel China to dump its treasury notes. Rather, these are chits in the game that shape the pacing and the extent of China moving toward a post-fiat dollar system, IN CONSULTATION (in part) with the US, of course.
Did Wall Street become the center of global finance overnight? No, it happened 20 years after the British Empire had decisively lost its mojo to the trans-continental and tentatively trans-Pacific US. In fact, the CCP wishes that the Christopher Coxes and Nancy Pelosis would cool their shit mainly because it rouses the nationalistic ire of both the lumpen and nouveau riche Chinese masses, and puts pressure on the CCP to be more confrontational than it would otherwise be predisposed to be.


I think that this is the main problem (why they are being so tricky):

China would buy bonds issued by IMF

They're just trying to shift their peg to being vis-a-vis the world, instead of just the US. They're not offering to stop pegging. I'd probably support a global currency if there were some of Keynes' safeguards in place that had penalties to discourage persistent trade imbalances and mercantilism.

China is just trying to do a dirty one on the whole world now, after sucking the life out of the US.


"safeguards in place that had penalties to discourage persistent trade imbalances and mercantilism"

'glory days' as the boss howls


precisely not going to happen
as u know bob

"concede and deny the significance of the Zhou announcement"
i for one 'concede 'nothing
but i 'deny 'the 'significance ' of the proposal
is in any way literal or straight forward

"I don't deny that dollar dominance is on its way out"

i will also deny that too

the imperial dollar rules baby

I'll gladly post up
a bit of fluff
on the world historical signifigance
Of an unattainible official world reserve Currency and how it ... Would ...
Make The planet spin faster toward nuovo eden

As to why the chicoms are
certainly just digging an elbow into
the U.S.S. Laputa's ribs......

Suffice it to say
Under any global Reserve system
-- worthy of the name--
forex fiddles ala bei jing
Would evaporate as quickly
as any former hegemonic state's
Arbitrary Seigniorage privileges


Glue: you seem to be better informed about the mysteries of international currency than I am, and I like your viewpoint that big changes don't happen overnight. There's a lot of moaning or gloating over the end of the American empire these days, and somehow I don't see that happening either. Not in one presidential term, at least.

Gabriel Kolko offered a good perspective on this four years ago, before the last Bush election. He saw a future of regional alliances, in which for example, Europe moved away from the US toward Russia. There is an underlying, vegetable kind of logic to this view, like the way a tree grows, even though temporary obstacles, like US hysteria over some "crappy little country" force the main forward movement into an S turn.



".. an "assurance" (FWIW) that the PRC's two trillion dollar holdings won't be wasted away by Geithner II/Obama stimulus excess"

not a serious issue

the the last 8 years of
the trans pacific profit slurry
prolly were " worth it" to the PRC
even if the us bonds etc
lose all their value... eventually
given the fiddle fuck
the real gig
was the export subsidy
import tariff
implicit in serious undervaluation
even if they were forced to burn
90 of their dollar surplus
i suspect they'd have acted
pretty much as they have

are we at a node here ...perhaps

but the road ahead will be a
slow and deliberate one
and with the sole objective
" keep the norte americano markets open "


"cross-class Chinese nationalism/great power chauvinism is still robust"

i agree on the whole
but precluding big struggles
the life expectancy
of the present one party state
effortlessly escapes my intuitions
i'll leave the timing of that final act
to Clio's
kitchen cabinet


"Europe moved away from the US toward Russia"
not so long as perfidious albion can weigh in on the yankee doodle side

uncle has many stooges
none rank with the UK
save japan

apropos an earlier post comment
any thing by paul craig
--or is it craig paul??-- roberts
is the bunk sen
i know i never tire of this remark
but alex c doesn't know
a pink witchdoctor
from a mocking bird
and his anti uncle hegemonic
editorial alliance
with the libertarian right
is silly
he needs to make space
at his site
for polemics
precisely aimed at coon heads like roberts

an scarifying blitz against
the glibertarian right
with its puerile moronic wet dreams
of full throttle
free exchange etc etc ...

fuck the "white magic" market cult

anti roberts type stuff
oughta fly in formation
over counterpunch air space

flung by the pens
of the anti capitalist
libertarian left

such marginals' unite
opportunism isn't crafty
mr C
its crapulent


I think you're right, OP, or you're putting up very intelligent sounding smoke. Your observation that China would have done what it did for the last ten years anyway, even if it knew the Treasuries it was purchasing would later melt away, is very shrewd. You must hang out in some very cool coffee shops, like right next to Columbia, or MIT, to get this kind of stuff.

One paragraph was a bit over my head though, if you'd care to rephrase it:

"Under any global Reserve system
-- worthy of the name--
forex fiddles ala bei jing
Would evaporate as quickly
as any former hegemonic state's
Arbitrary Seigniorage privileges"


OP: was that a refutation of PCR's argument (re the question I asked at the end of Every Man His Own Investor), or just a slur of his person?

Since I've already defended Tom Hayden, above, I might as well say I've enjoyed people like PCR, and AC, even Pat Buchanan, for their steady attack on administration policies. I dont care if they occasionally flout a crank idea -- I do it all the time.

Al Schumann:

I'll take a stab at explicating. A reserve currency, ideally, should be resistant to arbitrages, even the reciprocally "beneficial" extractive kind. It should be a stable medium of exchange, with a small implicit tax accruing to the benefit of the issuer(s) as compensation for keeping it reliable. Uncle Freeloader tries to use it extractively, coming and going, as a means of transnat engorgement and as a means of keeping other countries comparatively weak. Full blown kleptocrats are happy to play along. Their power depends on maintaining their countries' vulnerability. They have no vision beyond personal aggrandizement.

The PRC played it as a subsidy for massive, rapid Embourgeoisement. They wanted to build a modern industrial state, quickly, and they wanted to do so without accepting the hammerlock of debt. They weren't set on acquiring paper wealth. Hence their willingness to let Uncle Freeloader burn it up.


Al, that was good! And a nice trick of the Chinese. Instead of borrowing money for development, they made things out of thin air, sold them to us and then gave us back the money to finance our purchases. Why didn't we think of that?

Seriously, if the Federal Reserve were truly a state-owned bank instead of a private one, we could lend money to ourselves, at nominal interest, to finance our own development, from which each individual would repay the principal at death (or not, in the case of non-productive humanist wastrels like me.)

Al Schumann:

Running off on a digression, I think the PRC made a terrible mistake. It looks to me like they thought creating a petit bourgeois managerial class was essential to industrialization. The disgruntled petit bourgeois are worse than crazed ideologues, when their dreams don't work out. They're not just genocidal in pursuit of the means to keep dreams inflated into something that looks like real security. They're planet-wrecking serial killers.

Maybe I'm borrowing trouble with that digression. But I can't see how the PRC leadership is going to reconcile defensive industrialization, based on thousands of years of national security concerns, with circumscribed hegemony. They've set the country on an expand and consume or perish cycle. In a pinch, the leadership is going to have a nasty choice: internal strife or expansionist war. Maybe they'll finesse it, who knows. Not me, for certain.


The sins of humanist wastrels are few and vastly entertaining. What's the point of production beyond subsistence, if not vastly entertaining sin?


Al: why is a managerial petit bourgoisie more likely to ause internal dissension than a displaced peasantry? Are you saying that by creating any class above the peasantry they are inviting revolution against party rule? Isn't that what the neo-dems have been saying all along?

Al Schumann:

They're not more likely to cause dissension, for all they may agitate for some kinds of privileged protections from the state apparatus. They're more likely to react to hard times with wholesale, well-organized, persistent, narrow-minded viciousness, just like our neoliberals and neoconservatives. Some will prefer humanitarian ethnic cleansing to swaggering bully ethnic cleansing.

The way industrialization has been carried out there gives me a sour outlook. Mass relocations and expropriations, with little in the way of government cushioning and plenty of trickle down graft that stops at the middle manager level. It looks like Carnegie Collectivism.

As I said, though, my Cassandra act should be taken with many grains of salt. I'm running my mouth amongst friends and consequently feel free to let my mouth run away with me.

I understood the neo-dems were predicting a managerial class that would demand something like our bill of rights and an Anglo-American concept of corporate rule of law. I doubt that's in the cards for the PRC. Dirigisme, on the community and corporate level, runs too strongly.

Post a comment

Note also that comments with three or more links may be held for "moderation" -- a strange term to apply to the ghost in this blog's machine. Seems to be a hard-coded limitation of the blog software, unfortunately.


This page contains a single entry from the blog posted on Friday March 27, 2009 06:37 AM.

The previous post in this blog was The Booboisie.

The next post in this blog is Progress.

Many more can be found on the main index page or by looking through the archives.

Creative Commons License

This weblog is licensed under a Creative Commons License.
Powered by
Movable Type 3.31