Thursday, 14 October 2010

Do you know Liu Xiaobo?

Last Friday, October 8th 2010 the democratic activist Liu Xiaobo received this year's Peace Nobel Price. This is where he lives, a prison in Jinzhou, North-East China:

British media as most international does not cover much about the country he lives in and really not much about him - all in comparison to the country's size, its influence, its role, its power; the usual headlines are related to the suppression of journalism, shut down blogs and a bit more about the US trying to convince China to appreciate its currency, the Renminbi, better known as Yuan. Here is the reason why:

Unbelievable $1,600,000,000,000 (some sources even say 2,5 trillion) and no debts, no interest on debts, no sovereign bond crunch but pure investment potential, isn't it? The difference makes it twice as much!

China is pouring another $7bn (£4.4bn) into Brazil's oil industry, reigniting fears of a global "land grab" of natural resources. (The Independent)

And the UK is trying to cut some £5bn and close down a number of quangos just because sovereign debts, bad banks and interest payments are killing us; they question our creditworthiness while at the same time our industrial base is shrinking following the US model of neo-liberalism for the last 40 years. Yet, China is back on track:

This is all we (can?) do:

Question: Do you miss Mrs Merkel?

Answer: Germany does not really want to applause its hardest competitor China while it is copying same in taking advantage of an artificially depressed currency (€) allowing it to boost Exports and create another economic miracle; however, this time this miracle is neither sustainable nor will it last very long.

The trend is back to normal, a downward spiral for the US and the rest of the world while China invests in anything possible - including land which you hear and read not much about. China's severe protectionism not only covers for example its currency but also its land which is state owned, so one might be able to lease it, but an individual will never own it. So even China itself goes shopping for land and more elsewhere:
While much of the developed world is baulking at its debts in the aftermath of the financial crisis, China has continued a global spending spree of unprecedented proportions, snapping up everything from oil and gas reserves to mining concessions to agricultural land, with vast reserves of US dollars. (The Independent)

What will be the impact on the Pound once the wars on labour, resources and markets are united in what will be one global trade war sparing no currency and no asset? We might well see a soaring Pound, that's not optimism and won't last that long either, but one or two or three currencies out there will be loosing the war for the weakest one and will (have to) play the counterparts of what will be a crushed $, € and/or ¥. So we better prepare ourselves for rough times to come pretty soon where imports will include a big portion of inflation and challenge our industrial base; rather, what's left of it.

By the way, this is Liu Xiaobo! Why "by the way"? Just because I think that Liu will share the same experience as the Dalai Lama did when he was rewarded the Nobel Peace Price in 1989: nothing changed and China moved forward.

Carpe diem!


Post a Comment