Chris Cook gives his view of state of geo-politics and geo-strategy in the global economy and global finance.
Read it at Asia Times Online
Iran talks have right mix for history
By Chris Cook | former director of the International Petroleum Exchange
(h/t Kevin Fathi via email)
6 comments:
Cook seems to believe or believes that U.S. officials believe that China can "pull the plug" on the U.S. economy any time it wants. If they do believe this then it may be true that China has veto power over war options in Iran. One could draw the conclusion from Cook's article that Iran is more about China than it is about nuclear arms or Israel. One would think that our "leaders" would know that the real threat from China is the competition for access to scarce resources not that they might suddenly sell all their dollar denominated financial holdings in a fire sale. Given the policies they have pursued and the consequences, perhaps unintended, of those policies, it is by no means certain that U.S. officials understand China's game.
We have a populist government. War, Oil and the Chinese are unpopular. Sadly the policy and strategy from the Administration really is that simple.
Pay attention to North Korea, Iran and the other places because the Admin really doesn't want you to look at what they are doing elsewhere.
Media and tech are popular among the Obama base so the Admin is busy subverting democracy in dangerous places like New Zealand right now to promote Apple, Intel, NBC, Disney and Fox and other multinational demands for more stringent patents and copyright controls.
"Cook seems to believe or believes that U.S. officials believe that China can "pull the plug" on the U.S. economy any time it wants."
Yes, Cook is wrong about this, it seems, although he does say that abruptly altering the Chimerica relationship is mutually assured destruction, and I think he has a point there. China has become export dependent and the US import dependent. That can and will correct gradually, but a sudden shift would be difficult for both sides to absorb easily without wrenching adjustment.
"China has become export dependent and the US import dependent"
Or taxes and govt spending aren't balanced in in the US and China to maximize real output and employment in both countries.
Right, according to MMT, if the government offset non-govt saving desire, which includes the capital surplus that corresponds to a CAD, then it could enjoy both FE and the benefits of real terms of trade.
China as a developing country doesn't have as much leeway as the US, however. A country doesn't build a vibrant consumer economy overnight.
So an abrupt change in Chimerica potentially could hurt China pretty badly.
Re: By 2007, the sheer scale of US dollar liabilities to China led to the opening of a new front.
Hmmm, and I thought Cook understood MMT. Does he imagine that "the scale of liabilities" makes it harder to press the computer keys that adjust the debit and credit columns in the ledger spreadsheet?
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