French Finance Minister Francois Baroin: “The reality is that China is the third largest shareholder in the International Monetary Fund, and if China via the IMF wants to participate – not by saving Greece or the euro – but by participating in investment, that is a gesture of confidence”.
Gorilla translates: “Who knew the ECB would be relocating from Frankfurt to Beijing?”
China: a “modern military” by 2020, sayeth the Pentagon!!!
And of course, they’re spending roughly 10% of what we waste on defense to achieve this modernity, so we must spend even more!!!
It’s utter nonsense of the first order. We could reduce the Defense Department’s budget by 50% and still be spending far more than anyone else in the world.
Gorilla says: “Being a threat apparently is always cheaper than pretending to be threatened!!!”
Now running at 6.5%, despite various interest rate and reserve requirement increases.
And the Chinese, like everyone else, are behaving stupidly.
What’s needed is a substantial rise in the value of the yuan, on the order of 25%.
This would spread the impact of inflation within China by making imports more expensive.
This would also redress the serious global trade imbalances, caused in part by China’s pursuing a mercantilist trade policy.
And this would make the slumping US and Euroland economies more productive.
But the Chinese fear their own people, so the muddle through approach continues, to the detriment of all.
Gorilla says: “Communists, capitalists, we’re all idiots at the moment!”
The Chinese now say they’ll probably miss their 4% inflation target, despite many rises in interest rates and reserve requirements…
The problem, as ever, is the currency.
What’s needed is an appreciation on the order of 25-30%, which would allow the country to more evenly distribute and control inflation throughout the economy.
Instead, the Chinese continue to favor exporters in what is an unsustainable policy of currency manipulation.
The fear is social upheaval, threatening the authorities, when in fact social upheaval is inevitable under the current approach.
Gorilla says: “If only we could convince our own central banks to inflate like the Chinese!!!”
The yen’s been rising, who knows why (is everyone shorting?)…
So the G7 does its bit for depreciation!
Gorilla says: “And the yuan is just a yawn?”
The Chinese government wants:
1) Political reform, so long as it doesn’t have any negative impact on the current system and those who run it.
2) More compensation for the parents of Chinese students killed in the New Zealand earthquake.
Gorilla does the translation: “Paying off the parents, now that the students are no longer a political threat!”
China remains a medieval dictatorship, no different than Saudi Arabia, or Iran, or Russia, or North Korea.
Gorilla says: “And reporting the truth about China will continue, whether they like it or not!”
The Chinese annual defense budget, that is, in comparison to the Pentagon’s annual budget!
Should we be worried about this? No, not at all!!!
If the Chinese want to piss away lots of money on national security, that’s their business. It’s one of the few things we Americans know how to do!
But undoubtedly voices will be raised in DC, Tokyo, Seoul and Moscow, all clamoring for yet more firepower against “this regional threat”.
Gorilla says: “For what the Chinese spend, we could give every unemployed American a check for $3,640, and still lose two pointless wars!!!”
Yes, it’s the Chinese again, changing their statistical basis of inflation to de-emphasize the rising cost of food.
And it’s this sort of manipulation that makes it impossible to gather, let alone analyze, reliable statistics from the Chinese authorities.
There’s no doubt that inflation is rising rapidly in China, just as there’s no doubt that the obvious solution, letting the currency appreciate by at least 20%, is politically untenable, even for a dictatorship.
Gorilla says: “All this fiddling does not make for a happy symphony!”
Time for China to whip inflation now, says its Premier!!!
And of course the easiest way to do this in the Year Of The Rabbit would be to let the currency appreciate by 20-30%.
Alas, beggar thy neighbor and support thy exporter are the only slogans that count in Beijing.
Gorilla says: “Hippity, hoppity, chaos on its way!”
