America Frozen Out of World Trade

 

Yet another trade agreement excludes the U.S.

A new trade agreement that covers more than 13 percent of the world economy, accounting for 15 percent of global trade, was ratified by its first six countries on December 30. The Progressive Agreement for Trans-Pacific Partnership (cptpp) will cover 500 million people.

Australia, Canada, Japan, Mexico, New Zealand and Singapore will be joined by another four countries that have already signed but not yet ratified the agreement. Vietnam joins on January 14, while Brunei, Chile, Malaysia and Peru will join the deal 60 days after completing the ratification process.

Officials say Chinese spies have targeted every sector of the U.S. economy

The Chinese are playing dirty in the international spy game, according to current and former intelligence officials at the highest levels of government.

“This is stealing American wealth.  It’s stealing American jobs.  It’s stealing American competitive advantage,” General Michael Hayden, former head of the Central Intelligence Agency and the National Security Agency, said in an interview with NBC News.

Collapsing Europe is in crisis and the U.S. bailout option, for once, is not available

Despite the fact that Europe is in the Northern Hemisphere, the downward swirl of the euro this month took a reverse direction and started going left — counterclockwise. Maybe it is the first part of the Mayan prediction that gravity will fail later this year and we will all go flying off into space. But certainly it indicates that the euro crisis is still very much with us — and deepening. Political developments further diminish chances for a settlement — if attainable at all — without a breakup, perhaps of the European Union itself and not just the countries using the euro.

The erosion of the Schengen Agreement, which permitted free movement within the EU, is an important indicator of how far the political situation has deteriorated. Opposition to free movement as a fundamental principle of European integration is fueled by rising unemployment, growing xenophobia, as well as legitimate concern that Western Europe will continue to be flooded with illegal immigrants from North Africa, sub-Saharan Africa and South Asia.

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With a quarter of Spain’s workforce unemployed — approaching 50 percent among younger workers — providing a tough test for the conservative government’s belt-tightening, the rating agencies now call Madrid an increasingly bad risk, raising the cost of refinancing debt. (Much of that debt was created by regional governments to which the former ruling Socialists gave free rein.) With Spain representing almost 5 percent of the EU’s gross domestic product, a bailout is beyond the present capacity of the European Central Bank to finance.

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Socialist presidential candidate Francois Hollande — if he wins the French runoff election — poses yet another threat, unless he could forget his campaign promises to blow his nation’s budget with new entitlements. A France headed back into higher subsidies, more protectionism and more voter-purchasing welfare would be a crushing blow for the European unification that Paris had done so much to sponsor since World War II.

The U.S., always the essential midwife to postwar European reconstruction, stability and prosperity, is turning inward in one of its most bitterly fought presidential contests in generations. Spain’s role as the second-largest foreign investor in Latin America after the U.S. has implications for American exports — just one small example of the bad news for the American economy as Europe’s troubles deepen.

The Obama administration’s strategy of “leading from behind” is less than adequate to help the EU, the world’s largest economy, in its hour of crisis. But facing its own domestic economic problems in an acute stage, even a Romney administration would, at least early on, have to give European issues lower priority — no matter how much they would impinge on the U.S. economy and American security.

 

Full article: Collapsing Europe is in crisis and the U.S. bailout option, for once, is not available (World Tribune)

But Aren’t We Joined at the Hip with China?

Another very common objection raised to the Economic Warfare reality is based on the misperception that China is so connected to our economy that “they” would never harm us. [Of course, these are the same people who said that America would never lose our Triple-A Credit Rating.] The idea that “the Chinese” would never harm us is ridiculous on its face, given the proven reality that there are Chinese who continually hack our systems, manipulate and undermine our markets. There is ample evidence of that. The whole concept is rather naive, assuming that all Chinese are the same. Certainly the average businessperson in China might not want harm to our economy. But, how about the PLA (People’s Liberation Army)? We addressed this in our posts titled “Which Chinese?” and “Which Chinese Part 2.”

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“Here in the U.S. you may hear many people worry that the Chinese government might stop buying American T-Bills. I think those fears are vastly overblown. The economic situation between China and the U.S. is the financial version of mutually assured destruction…”

Basically, this theory is based on the idea that the Chinese hold so much in dollar debt that they couldn’t afford to see the dollar go down. Here’s the problem. The military doesn’t care. They have a much longer view of things than the next quarter’s export sales. The smug response of those who believe China needs us so much that they must always stay friends is just another example of American arrogance. Now, there is further evidence of what we have been saying all along. We have no idea about what China really holds in dollar debt. They have so many ways to obscure their holdings that we can’t ever be certain. This from the March 2, 2012 Wall Street Journal cover story (Beijing Diversifies Away From U.S. Dollar):

Full article: But Aren’t We Joined at the Hip with China? (Kevin Freeman / Global Economic Warfare)

Understanding the Big Picture

Those who deny the reality of financial terrorism tend to use the same basic arguments. One of those is built on the idea that everyone is motivated by money and so no one would intentionally harm America’s economy. There are many flaws in this reasoning and we will likely catalog them in a future post. Another set of arguments is built on the idea that we brought on the decline all by ourselves through terrible monetary and fiscal policy. There is truth in this line of reasoning but it is not the whole truth.

Few people recall that a little over a decade ago our government was running a budget surplus. In fact in December 2000, the Office of Management and Budget projected that the entire Federal debt would be paid off by 2010. Imagine that. It was less than a dozen years ago but it seems like more than a lifetime. Now, we are almost $16 trillion in debt with $1 trillion deficits projected for years to come.

It was in this context that al Qaeda attacked the World Trade Center with the intention of harming the American economy. Bin Laden even stated as much in his December 2001 speech taking credit for 9/11. This was noted in a September 11, 2007 US News article that actually made the case that bin Laden had failed in his economic attack.  Ironically this article was written right as the stock market was peaking just before the horrible 2008-09 collapse still haunting us today.

Full article: Understanding the Big Picture (Kevin Freeman/Global Economic Warfare)

Which Chinese? (Part 2)

When considering the possibility of economic warfare, the most frequently asked question is:

“Why would the Chinese hurt our economy when they are so dependent upon it and have trillions of dollars in U.S. debt?”

Our standard answer is a return question: “Which Chinese?”

It is clearly naive to believe that China is monolithic. Certainly the business community and many in the government would not want anything to hurt the American economy if it in turn hurt China. Having said that, however, there are no doubt members of the People’s Liberation Army (PLA) who have every intention of harming America. We proved this point once before in our post “Which Chinese?” In that post, we documented how the PLA leadership had gone around the civilian leadership, making a dramatic and aggressive statement. Now, it has happened again. Rumors have begun to surface that some military officers may have attempted a coup. Why? Because they believe that the civilian leadership has not been aggressive enough. Should anyone doubt that given the opportunity, some PLA elements would strike hard against us? The collateral damage to Chinese business would not be their primary concern.

Continue reading article: Which Chinese? (Part 2) (Global Economic Warfare)

Additional article: Which Chinese? (Part 1) (Global Economic Warfare)