A US Austerity Program is On the Way
The recent military aggressions by China, along with yesterday's comments by Chinese Priemer Wen, should put recent financial events and the international banking/credit meltdown into a crystal clear context. We, the United States, have been floating a massive trade deficit and treasury debt with China that has provided significant profits for our Corporate Class while evicerating our actual economy.
As our corporations reaped historic profits, and pushed their global empire full-speed ahead, China took their share of the loot , stregthened their police state, and built an industrial/military complex capable of expanding its military reach across the globe. Right now they are using the stolen wealth of our middle-class to build fleets and armies. The end result of this betrayal sits before our eyes: our economy has been gutted, our middle-class robbed blind, our social institutions have been looted, and our working folk have been pushed face-first into 3rd World poverty. But don't just blame China, they had inside help.
The draining of our manufacturing economy and the downward pressure China's trade and illegal Mexicans have put on domestic wages have been the tools our corporations and their Corporate Politicians used to drain the American Middle-Class of their earning and political power.
The massive expansion in population, consumption, and profits we experienced during the last 15 years (35 years. really) was built on a house of credit cards, and is now falling into a pit of debt of almost unimaginable porportions. This scam has made our country completely incapable of generating the purchasing power to support the basic level of consumpton and employment required to feed, clothe, medicate, or educate the massive population our corporate government stuffed into our country without massive infusions of outside credit. Unless our middle-class can go into endless debt on decreasing wages to support the endless growth of corporate profits, we're screwed. Well, now we've seen the end of this scam. And China is going to screw us.
We are at the point that we do not need Chinese Credit to continue this scam, we need China to loan us our money back so we can just survive. If you have been watching China, you have a pretty good idea of how they are going to handle this amazing advantage that our traitor politicians, of BOTH corporate parties granted them.
First, China is going to spend whatever sum is required to avoid internal meltdown, and rebellion, if that is possible. Domestic stability is their #1 priority. This may be a real challenge. The massive downturn has shuttered the industrial Southwest in China, and millions of unemployed are loitering about, and they are not very impressed with their government's political or economic policies. This is indicative of China's interrelated domestic corruption and credibility problems. The corruption in China is justifiably legendary, and I dare anyone to match any capitalist or commie theory with the Chinese "commie" total police state. The Chinese govenment is as much of an insult to their Constitution as our government is to ours. China is going to experience significant economic and domestic instability in their immediate future.
Second, China is going to trade US debt purchases for solid international diplomatic, military, and economic concessions from the US. Billery licking their Police State Balls on her recent trip to China effectively removed human rights as an issue between China and the US. As their major allies are Burma and N. Korea, that should surprize no one. This is appropriate, as we are running so many dictatorships, international war crimes and crimes against humanity that they are too numerous to list here. China is simply a Totalatarian Police State, with all the abuses that entails. Neither China nor the US have a leg to hop on, when it comes to protecting human rights. We can expect any debt purchases to reinforce China's regional and global influence, and remove American obstacles to their economic and military expansion.
Third, China is going to make the US suffer, and enjoy it. I expect China to invest just enough in our debt to attempt to keep US Treasuries from imploding, to protect their already massive holdings, but not enough to keep interest rates low and the dollar strong. Make no mistake about it, China will not invest a large enough sum to prevent bond prices from dropping, and their interest rates from rising significantly.
But when the international debt market looks likely to implode, China will step in with purchases to protect the value of their existing US holdings. Their investment goal will be to end US dominance of international finance and trade. That should not be hard to do, as indicated by the massive amount of bad debt that we sold into the world banking system, and the constantly expanding massive US debt requried to feed our consumption of the world's trade resources. The system is massively imbalanced, and China is going to try to use our debt problem to improve their global financial and trade influence.
This means a lot more than just the inflation I predicted for June '09. What this means is that China is going to play a game of "Chicken" with the global debt markets. China will attempt to damage our credit and currency supremecy without destroying the international credit system and completely tanking the value of their US holdings. In either outcome, our debt will not be fully funded without significant price drops in the cost of purchasing US debt, and a significant increase in the interest the US will be required to pay US creditors.
It may be that China will be in position to lead a movement to impose an austerity program on the US that will force us to pay back more than we borrow, i.e. actually pay down our massive debts. This means extreme increases in taxes. food, and energy prices in the US as the dropping productivity of the US is finally factored into global valuations. This means a long period of high inflation, high energy and food prices, high taxes along with low economic activity, low consumption, and significantly reduced spending on education, medicine, and infrastructure.
The bottom line is that our bribed politicians betrayed our country when they allowed our Corporations, with China's willing help, to loot our country's economy. This is a direct consequence of allowing our Corporations to purchase our politicians. We let our democratic restraints on wealth and power slip away, and now we've got hell to pay.
Note
I am an idiot, and have not figured out how to hyperlink this article. There is a fully hyperlinked ver of this essay @
http://nextrevolution.org/node/65
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