Are the chinese going to economically influence the election in 2008?

[blazespinnaker]

The chinese have immense influence and power over the american consumer.

By floating the yuan hard coming into the election in 2008, they could cause a lot of significant pain and displeasure with the republican party.

Are they sending out signals right now to bush and the republican establishment that he better pony up and do as they say or they're going to turn off the taps and stop underwriting the american consumer?

If so, how can we watch republican - chinese relations to determine that the GOP is acting like good little boys and serving their chinese masters well?

At what point does the chinese have to start causing pain in order to cause significant economic damage that republican polling numbers drop enough to guarantee a democratic president?

How will bernanke deal with this threat? How could the republicans (other than doing the bidding of the chinese communist party) deflect this?

Love to hear your thoughts.

Cheers,

Blaze.

[jk]

Re: Are the chinese going to economically influence the election in 2008?

i think it would be useful for you to present your evidence that they are "sending out signals."

[blazespinnaker]

Re: Are the chinese going to economically influence the election in 2008?

Why do you think I have evidence?

[jk]

Re: Are the chinese going to economically influence the election in 2008?

Why do you think I have evidence?

"Are they sending out signals right now to bush and the republican establishment that he better pony up and do as they say or they're going to turn off the taps and stop underwriting the american consumer?"

i assumed you wouldn't have asked that question unless you suspected it might be true, and i assumed you wouldn't suspect it unless you had seen at least a shred of reality that supported the notion.

i did not consider the possibility that it was pure fantasy. sorry.

[blazespinnaker]

Re: Are the chinese going to economically influence the election in 2008?

i assumed you wouldn't have asked that question unless you suspected it might be true, and i assumed you wouldn't suspect it unless you had seen at least a shred of reality that supported the notion.

i did not consider the possibility that it was pure fantasy. sorry.

Now that's a tad harsh

I certainly don't have any evidence, just that I have a hard time seeing China not using its economic power and influence.

If you were China with fascist control over your economy, wouldn't you be positioning yourselves for concessions from the US GOP right about now?

The US exerts its influence via its military might. Why can't China leverage all those 100s of millions of chinese working in those factories?

[jk]

Re: Are the chinese going to economically influence the election in 2008?

Now that's a tad harsh

I certainly don't have any evidence, just that I have a hard time seeing China not using its economic power and influence.

If you were China with fascist control over your economy, wouldn't you be positioning yourselves for concessions from the US GOP right about now?

The US exerts its influence via its military might. Why can't China leverage all those 100s of millions of chinese working in those factories?

i don't think the chinese have to DO anything. their mere presence on the globe and their economic situation speaks louder than words. while schumer et al posture with their fake tariff threats, everyone knows that the chinese are our bankers. and the chinese play a loooong game. i would imagine the chinese are more concerned with internals, how to develop the interior and the western regions, how to transition those millions of workers in uneconomic state operated enterprises. and buying natural resources all around the globe. they are no doubt grateful that the u.s. is far along in the process of destroying its own global influence. these processes will be more than adequate to achieve their aims, i think.

if they wanted to influence the coming elections, all they need do is game the price of oil. slow down purchases to lower the price and the g.o.p. benefits. accelerate purchases and the dems numbers will rise along with the price of gas. [have you ever seen that chart from http://pollkatz.homestead.com ?]



speaking of manipulation, don't you wonder if bush's friends, the saudi's, have anything in particular to do with the recent drop in oil? we'll never know.

[blazespinnaker]

Re: Are the chinese going to economically influence the election in 2008?

speaking of manipulation, don't you wonder if bush's friends, the saudi's, have anything in particular to do with the recent drop in oil? we'll never know.

I think the recent drop in the price of oil is obvious manipulation (at least to me).

The fact that the chinese aren't putting pressure on the price of oil right now is a very interesting point.

Though, unless they're just going to dump it into the ocean for all that oil that they'd have to purchase to put pressure on the price, I'm not entirely sure where they would put it.

[blazespinnaker]

Re: Are the chinese going to economically influence the election in 2008?

and the chinese play a loooong game.

I have heard this before, but really, I see only headlong, cliff jumping economic upheavel in China right now. There is nothing long game about it.

[jk]

Re: Are the chinese going to economically influence the election in 2008?

The fact that the chinese aren't putting pressure on the price of oil right now is a very interesting point.

Though, unless they're just going to dump it into the ocean for all that oil that they'd have to purchase to put pressure on the price, I'm not entirely sure where they would put it.

at worst you can just keep it in tankers. plus i believe that the chinese have established a strategic petroleum reserve similar to the one in the u.s. -- put it there.

[metalman]

Re: Are the chinese going to economically influence the election in 2008?

at worst you can just keep it in tankers. plus i believe that the chinese have established a strategic petroleum reserve similar to the one in the u.s. -- put it there.

the chinese are building a strategic petroleum reserve. they are going to use their dollar hoard to buy it.

http://www.msnbc.msn.com/id/14535192/site/newsweek

[jk]

Re: Are the chinese going to economically influence the election in 2008?

the chinese are building a strategic petroleum reserve. they are going to use their dollar hoard to buy it.

http://www.msnbc.msn.com/id/14535192/site/newsweek

the newsweek article is interesting- mainstream media beginning to pick up on the economic forces we take for granted around here. how can the chinese spend their dollars without driving the dollar down? i don't think they can pull that off unless they buy assets in the u.s. of a. but of course we won't let them buy oil companies. maybe they could buy gm and ford - they have lots of experience with uneconomic enterprises, and they won't get much complaint from the politicians who see the us auto producers going down. ford and gm would cost at least a few months of current account surplus at $17billion/month. saying that brings the size of this issue into focus.

[EJ]

Re: Are the chinese going to economically influence the election in 2008?

the newsweek article is interesting- mainstream media beginning to pick up on the economic forces we take for granted around here. how can the chinese spend their dollars without driving the dollar down? i don't think they can pull that off unless they buy assets in the u.s. of a. but of course we won't let them buy oil companies. maybe they could buy gm and ford - they have lots of experience with uneconomic enterprises, and they won't get much complaint from the politicians who see the us auto producers going down. ford and gm would cost at least a few months of current account surplus at $17billion/month. saying that brings the size of this issue into focus.

Goldbugs are fond of saying that gold is the only "real" money but the fact is oil is the only "real" money, while gold acts as a proxy for oil.

Here's a scenario for you. Keep in mind that the "OPEC" oil crisis had little to do with a cut in oil supply and everything to do with OPEC countries forcing the US buy oil from 3rd parties–OPEC allies–at much higher prices. Also, note that totalitarian China has its strongest military and oil trade partnerships with dictatorships–Iran, Venezuela, and Russia (at least on its way to becoming Putin's state).

As the Chinese buy oil for their oil reserves with their accumulated dollar reserves, the remaining dollars in reserve will depreciate but the purchasing power of their oil reserves will appreciate at more or less the same rate, offsetting the loss; they can always re-sell the oil to Japan and other Asia countries, such as Japan, to recoup the loss. Spending the dollars on oil is a win-win for the Chinese; it weakens the US–their rival for super-power status–and strengthens China's key oil-for-goods trading partners Iran, Russia and Venezuela, and with them these countries' respective influence over the Middle East, Eastern Europe, and Latin America.

As they exchange dollar reserves for oil reserves, they will not only have the oil reserve they need to ride out any threats they may get from the US along the way, but they will help make their military/oil partner Iran become the dominant power in the Middle East. With nuclear Russia standing beside them, also supplying oil, China can gain special access to future oil flows out of Saudi Arabia, with the House of Saud is then backed by Russian and Chinese military might versus US. With the dollar and the US thus politically and economically weakened, and with the advantage of special access to Middle East oil that the US has had since the 1920s, China is then in a position to wield truly heavy influence over the rest of Asia, and the world.

Checkmate.

Not a very pretty scenario, and perhaps unikely, but the Chinese are chess players so it's worthwhile trying to create a scenario that puts their moves into context. (I often get the distinct impression that US leadership is playing jacks.)

p.s. You may wonder what Iran and Russia will want with the depreciating dollars they get from China as China purchases their oil with dollars. My guess is that they'd sell them for euros, yen, and gold.

[jk]

Re: Are the chinese going to economically influence the election in 2008?

Goldbugs are fond of saying that gold is the only "real" money but the fact is oil is the only "real" money, while gold acts as a proxy for oil.

gold was wealth long before anybody found oil. i shake my head over why people value the shiny stuff, but given humanity's atavistic nature, it's likely people will still want gold after the oil's run out. this is not to imply i disagree with your overall thinking here.

Here's a scenario for you. Keep in mind that the "OPEC" oil crisis had little to do with a cut in oil supply and everything to do with OPEC countries forcing the US buy oil from 3rd parties–OPEC allies–at much higher prices.

i thought it was mostly driven by the fear of scarcity, leading to motorists wanting to keep their gas tanks relatively full and thus transferring reserves from storage tanks to automobile's tanks. there was never a shortage, just a redistribution.

Also, note that totalitarian China has its strongest military and oil trade partnerships with dictatorships–Iran, Venezuela, and Russia (at least on its way to becoming Putin's state).

i think the chinese don't actually get much from russia. there's always talk of a pipeline from russian oil fields to china, but neither country wants to pay for it. thus, eastern russian oil is more likely to go by pipeline to tankers to japan. of course, there is nothing more frangible than oil.

As the Chinese buy oil for their oil reserves with their accumulated dollar reserves, the remaining dollars in reserve will depreciate but the purchasing power of their oil reserves will appreciate at more or less the same rate, offsetting the loss; they can always re-sell the oil to Japan and other Asia countries, such as Japan, to recoup the loss.

oil will certainly appreciate in terms of u.s. dollars, but it's less clear to me how it might move v other currencies or commodities. on the other hand, a trillion dollars is a lot of dollars. the faster they spend it the faster their remaining dollars will depreciate, and simultaneously they will be increasing demand for oil in a supply constrained world, pushing up oil prices in all currencies. it reminds me of thermodynamic experiments, in which everything has to happen very slowly and reversibly in order to maximize output.

Spending the dollars on oil is a win-win for the Chinese; it weakens the US–their rival for super-power status–and strengthens China's key oil-for-goods trading partners Iran, Russia and Venezuela, and with them these countries' respective influence over the Middle East, Eastern Europe, and Latin America.

As they exchange dollar reserves for oil reserves, they will not only have the oil reserve they need to ride out any threats they may get from the US along the way, but they will help make their military/oil partner Iran become the dominant power in the Middle East. With nuclear Russia standing beside them, also supplying oil....

the russians and chinese have some similar interests at the moment, especially an interest in weakening the u.s. and creating a more multipolar world [as a first goal]. but it's hard to see them as long term intrinsic allies. they are already competing for influence in central asia [kyrgestan, uzbekistan, khazakstan] and the russians have got to worry about the ethnic chinese in their far eastern regions, regions to which the chinese feel they have some historical claim.

...but they will help make their military/oil partner Iran become the dominant power in the Middle East... China can gain special access to future oil flows out of Saudi Arabia, with the House of Saud is then backed by Russian and Chinese military might versus US.

my understanding is the house of saud is scared stiff of the iranians. in particular they worry about the loyalty of their substantial shia minority. i think a revolution in saudi arabia is more likely than the house of saud shacking up with iranians. perhaps most likely is just intimidation - with the iranians as regional hegemon with chinese and russian weapons, a retreat by the u.s. would leave the saudis as likely victims of a mugging.

With the dollar and the US thus politically and economically weakened, and with the advantage of special access to Middle East oil that the US has had since the 1920s, China is then in a position to wield truly heavy influence over the rest of Asia, and the world.

Checkmate.

Not a very pretty scenario, and perhaps unikely, but the Chinese are chess players so it's worthwhile trying to create a scenario that puts their moves into context. (I often get the distinct impression that US leadership is playing jacks.)

you forgot to mention a convertible yuan as a new reserve currency, perhaps even a gold backed convertible yuan. and of course there will be the oil backed convertible ruble.

p.s. You may wonder what Iran and Russia will want with the depreciating dollars they get from China as China purchases their oil with dollars. My guess is that they'd sell them for euros, yen, and gold.

i'm not sure they'll be so interested in euros and yen, when their own currencies will be stronger. i think they'll want to buy ASSETS, not other countries' paper.

[china might also want various oil bearing seabed regions in dispute with vietnam and japan, not to mention taiwan. russia might also want the caucasus and the baltics. we'll still have park place and boardwalk.]