Monday, June 01, 2009

How Others See the Dollar and Debt, or why China is Worried

Financial assets are merely claims on future earnings, paid for using regular payments (debt) or uncertain but variable payments (stocks). If the total income of any economy is itself dependent on the generation of debt and its refinancing, then any solution will have to focus on the reorientation of that economy towards income generation. This is still missing in the US, not to mention Europe where all focus remains on how much further exports will fall...Meanwhile, developing countries like China and Brazil are wasting precious resources supporting what cannot be ultimately sustained; namely the continued holdings of US Treasuries and European government bonds. Reducing their holdings of these assets in favor of physical commodities or capital means of production is what they need to do; in turn sparking domestic consumption...Taking a gradualist approach to a crisis that deserves greater immediate attention simply leaves the balance of negotiating power with the deadbeats in Washington and Paris rather than the savers in Beijing...Till Debt Do Us Part, Chan Akya, Asia Times, 6/1/2009

It's a pleasure to read a writer like Chan Akya, who refuses to mince words, who doesn't gasp about hope and change except insofar that he hopes Europeans and Americans will wake up and start earning their way, and paying back their debt.

Those used to be considered hard, unshakable values in Germany, France, England, and America. This might be why when beggars banquets are held, the host is Chinese and the waiter is the current occupant of the White House.


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