The greatest shift of capital in world history, now washing across Asia, poses a dilemma for policymakersNow I’m no economist. I only play one on tv. I sorta kinda suspect that free trade, maximizing production efficiency, and lifting up poorer economies are probably Good Things. (And it’s this kind of incisive economic analysis, btw, that keeps policymakers and really smart people coming back again and again to this blog to find out what’s going on in the world.)
. . . Because of the astonishing profligacy of the western economies, primarily the United States, the region’s 11 biggest economies have amassed the biggest transfer of financial resources in the history of the world. Although most of the focus has been on China, with its US$1.5 trillion in reserves, the region as a whole holds more than double that amount, nearly US$3.9 trillion. And, by one estimate, the figure appears set to soar upward even further, to US$5.1 trillion by the end of 2009.
. . . Ultimately it would probably collapse the global monetary system. . . . Nonetheless, the way the region manages this massive amount of money can be expected to dominate global economics and financial markets for decades to come.
Still, Mr. Berthelsen’s summary of recent reality is unsettling, especially as I’m anything but persuaded that American elites will protect and advance U.S. national interests in any area. For example, is it not strange that the nation’s largest retailer is nothing more than one big box store for Chinese merchandise? And, did we have to favor China as the primary recipient of our financial and technological resources? China, the last large communist power in the world and possible strategic competitor with the U.S. That China? The China that seems to some, me at least, to be so helpful to Bill et uxor at moments of great need for campaign cash? (Or were Johnny Chung, Charlie Trie, and Norman Hsu just concerned citizens adept at raising campaign funds from like-minded Americans?)
Don't expect this be brought up in the current political slugfest.
Something else you will have difficulty hearing about over the roar of Air Force One engines warming up for Mr. Bush’s next trip to visit his Saudi pals -- sovereign wealth funds. Mr. Berthelsen notes their ability to “destabilize financial markets” and fears that their activities may serve political objectives. And this sad fact:
The bulk of sovereign fund assets, however, are held in the petro-oligarchies of the Middle East . . . .He also mentions “the growing desperation of American investment banks.”
Not good.
Basically, just forget any campaign time being devoted to massive outflow of capital, foreigners poised to remake the American financial landscape, loss of technological advantage, or massive inflow of aliens, to name but a few serious issues.
Still, I can’t be too tough on the politicians. After all, there’s the maudlin American electorate who understand nothing of the Constitution of 1789, know no history, do not recognize the malignity of Islam, and mewl about health care.
That electorate may decide the political leadership of the Soleremainingsuperpower this time around but, in the next few decades, business as usual is not what is going to cut it. Actual thinking is going to have to take place. The huge changes in the offing are going to be dismayingly painful to Americans unless they can recover a sense of realism about the value of the European cultural heritage (the value of free speech in particular), about the protection for the peoples' liberties afforded by the original Constitution, about about the difference between diversity of taste (cornflakes/curry) and diversity of identity (Westerner/Muslim), and about piss ant "religions" and countries in the Middle East.
"Asia Ponders Its Astounding Foreign Exchange Reserves." By John Berthelsen, Asia Sentinel, 1/14/08 (emphasis added).
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