Monday, October 21, 2013


Gets many things right in this article.  Like this observation:

China’s seemingly open-ended purchases of US government debt are at the heart of a web of codependency that binds the two economies. China does not buy Treasuries out of benevolence, or because it looks to America as a shining example of wealth and prosperity. It certainly is not attracted by the return and seemingly riskless security of US government paper – both of which are much in play in an era of zero interest rates and mounting concerns about default. Nor is sympathy at work; China does not buy Treasuries because it wants to temper the pain of America’s fiscal brinkmanship.
China buys Treasuries because they suit its currency policy and the export-led growth that it has relied on over the past 33 years. As a surplus saver, China has run large current-account surpluses since 1994, accumulating a massive portfolio of foreign-exchange reserves that now stands at almost $3.7 trillion.

But then borks up the conclusion:

With rebalancing will come a decline in China’s surplus saving, much slower accumulation of foreign-exchange reserves, and a concomitant reduction in its seemingly voracious demand for dollar-denominated assets. Curtailing purchases of US Treasuries is a perfectly logical outgrowth of this process. Long dependent on China to finesse its fiscal problems, America may now have to pay a much steeper price to secure external capital.

The U.S. does not need to "secure external capital" from anyone, and it certainly does not need China to "finesse" its fiscal problems.  Its all about the pricing, gentlemen, and given the U.S.'s strategy of market control via military dominance (like being the prime mover in Africa,  etc.), the U.S. has the initiative once again.

Creating Order...

One of the themes of this blog has been the inevitability of strong U.S. presence in Africa.  Since I have been writing about this subject, Arfricom, military bases, and vastly increased attention to the continent have followed.  While most of this has been accomplished in a clandestine fashion, it appears that the Pentagon nees a new budget for this project and is now letting all of us know its intent.

This is wonderful for Africa, and terrible for the U.S. in the long run.

Full article here.

FORT RILEY, Kan. — Here on the Kansas plains, thousands of soldiers once bound for Iraq or Afghanistan are now gearing up for missions in Africa as part of a new Pentagon strategy to train and advise indigenous forces to tackle emerging terrorist threats and other security risks so that American forces do not have to.
The first-of-its-kind program is drawing on troops from a 3,500-member brigade in the Army’s storied First Infantry Division, known as the Big Red One, to conduct more than 100 missions in Africa over the next year. The missions range from a two-man sniper team in Burundi to 350 soldiers conducting airborne and humanitarian exercises in South Africa.
The brigade has also sent a 150-member rapid-response force to Djibouti in the Horn of Africa to protect embassies in emergencies, a direct reply to the attack on the United States Mission in Benghazi, Libya, last year, which killed four Americans.
“Our goal is to help Africans solve African problems, without having a big American presence,” said Lt. Col. Robert E. Lee Magee, a West Point graduate and third-generation Army officer whose battalion has sent troops to Burundi, Niger and South Africa in the past several months, and whose unit will deploy to Djibouti in December.

Monday, October 14, 2013

Optical backstops...

...making the rounds across the world...the EU edition below.  I am sure this will take care of all of the structural problems in the EU...

"The effectiveness of this exercise will depend on the availability of
necessary arrangements for recapitalizing banks ... including through
the provision of a public backstop," Mario Draghi said on Friday.
"These arrangements must be in place before we conclude our
assessment," he said.

But the ministers' talks face an additional hindrance because
Germany's finance minister, Wolfgang Schaeuble, is not expected to
attend the two-day Luxembourg meeting. Germany, Europe's biggest
economy, in talks to form a new government.

Starting to unravel...

Of course they are angry about the current Congressional imbroglio.  Its a partial turning off of the only spigot that is holding the Peoples Republic of China together.

The keys to the Middle Kingdom are held in Washington D.C.

BEIJING—China's exports unexpectedly shrank in September, in a sign of
weakening global demand for its products and a potential headwind for
the world's No. 2 economy.

Exports fell 0.3% in September compared with the year-ago period, data
from the General Administration of Customs showed o  This
was sharply down from August's 7.2% growth and far below economists'
median forecast of a 5.5% expansion.

Imports rose 7.4% on year, slightly up from the 7% rise in August and
beating economists' median forecast of a 6.75% increase. China's trade
surplus narrowed in September to $15.2 billion from $28.52 billion in