dear family and friends

just found this and if anyone has any illusions about what it is we are facing, this should dispel those illusions. "ah yu rike 1 frum caumm a and 2 frum caumm b.
you rike msg or no msg. never you no mine you take we give you"

it is good to remember that this is the way the inscrutable chinese communicate the internal dialog that goes on inside the power structure. it is never spoken directly.
it is always transmitted through third parties in articles in the official newspaper.

the direct communication which you will never hear but will feel the effects of go directly to the white house. any one know a good mandarin language course?

Before Saving the US
November 11,2008





by Xiang Songzuo


The nature of the current global financial crisis is the biggest debt
crisis in America's history. The issuer of the world's reserve
currency, the US has been borrowing for quite a long time without any
limit. America's trade, international payment and fiscal deficits have
existed for over 40 years (a fiscal dividend once occurred during
Clinton's administration but deficit soon returned). Statistics show
that America's internal and external debt exceeds $60 trillion, over
400% of the country's annual GDP of a bit over $14 trillion. Of that
total, family debt (including mortgages), financial and non-financial
firms' debt, and municipal and national debt come to about $15
trillion, $17 trillion, $22 trillion, $3.5 trillion, and $11 trillion,
respectively, though it is hard to tell how these debts have been
split up among foreign governments, financial firms, companies, and
individuals.

To relieve the crisis, the US must repay its debts, and to do that it
needs to live a more frugal life instead of asking others to continue
lending it the money to maintain its over-consumption.

The first thing the government needs to do is reduce spending and the
deficit. Correspondingly, the US needs to cut military disbursement,
stop its global expansion and the robbing of oil resources from other
countries. Companies should also become thrifty and avoid highly
leveraged operation. Families and individuals should stop anticipating
their income to buy houses and travel globally. Instead, they should
warmly welcome foreigners to travel to and spend money in the US.

China Should Raise Conditions

But if the US must ask China to buy some portion of its national debt,
what kind of conditions and principles should China we raise?

The principle should be the same as the basic principle upheld by the
US and IMF when "saving" other countries in crisis: cut fiscal
disbursement and both the government and the people should save money.
Besides that, there are six points: first, the US should cancel the
limits on high-tech exports to China, and allow China to acquire
advanced technology and high-tech companies from the US; secondly, the
US needs to open its financial system to Chinese financial
institutions, allowing all Chinese financial firms to open branches
and develop business in the US; third, the US should not prevent
Europe from canceling the ban against selling weapons to China;
fourth, the US should stop selling military weapons to Taiwan; fifth,
the US should loosen its limits on numbers of Chinese tourists and
allow them to travel freely to the US; and sixth, the US should never
restrain China's exports to the US and force RMB appreciation in the
name of domestic protectionism and employment pressure.

If the US should refuse to agree to the six principals, that only
means it doesn't really need China to save its market and buy its
national debt. Then China's choice is quite simple: rationally adjust
the structure of its foreign exchange reserve assets and avoid the
risk of the US national debt according to market rules.

What is worth special attention is that the prerequisite for China's
purchase of US national debt is that China has enough foreign currency
to meet the exchange demand when hot money is flowing out in large
scale. Otherwise China will have to sell US debt to relieve its lack
of foreign exchange currency, which will lead to sharp depreciation of
China's dollar assets. What is even worse, China may immediately
suffer a financial crisis led by the lack of foreign currency.

So if the US wants China to help save its market, the US government
and the IMF must admit China's right to manage its foreign exchange
independently. Once large scale hot money outflows occurs, China has
the right to take effective measures to restrain the speed and amount
of hot money outflow, and the US and IMF can't blame China for it.
This is the most important prerequisite, even more important than the
six principles mentioned above. If the US can't agree to it, China may
trap itself when saving the US. When exchange crisis happens in China,
who can promise the US and the IMF won't hit China when it's down?

(The author is a professor at Central China University of Science and
Technology. The piece is translated from his article on China Business
News)


so good night america you have had a very busy 219 years. you desreve a rest
now someone else can run things.

your loyal info serf

om shanti
joe