The international movement to provide the United Nations (UN) with unprecedented power and influence over world affairs has found a seemingly innocuous, but deceptive train to ride. The North American perception of this world body founded in 1945 has become that of a vast, but vapid and corrupt organization. The UN “Climate Change” train will change that impression, but not for the better. With support from the Obama administration, the path ahead will place the UN on a track toward receiving an irreversible influence over our lives. The continuing corruption will render untold dividends for the corrupt and morally repugnant.

There are currently 192 countries making up the United Nations members list. The vast majority of the member nations are dictatorships by any other name. You can dress their leaders in fancy robes and toss an occasional crown on a head, but from Saudi Arabia to Libya and Gambia, their leaders oppress their populations. They loot as much as they can from their economies, while enjoying a comforting credibility rubbing shoulders with other narcissistic misanthropes under the opulent umbrella of the UN General Assembly.

The UN has never been an effective vehicle for achieving real peace and security, although it was intended to achieve exactly that when it replaced the impotent League of Nations. The overwhelming power of the United States has been the major underlying force that has prevented major international wars since WWII. The UN has been an inept bystander to international affairs. America’s power and influence has generated kick-back that has been fomented within the UN where jealousy found broad fertile ground amongst a majority of member nations, including Europeans such as Norway, and Denmark. No need here to extend the list of envious pretenders that easily includes the likes of Russia.

The reaction against the U.S. found new energy when the world found itself in an economic recession, and fingers could be pointed at America for having been too self serving. In slide the opportunists. Beating the newfound drums of climate change fear and catastrophe, they will mutate the upcoming Copenhagen meeting on climate change into a perfect vehicle through which begrudging usurpers will once again attempt elevating the UN to status of world power, “over” the U.S. Read the rest of this entry »

We have suffered a week of apoplexy having endured a bombardment of reasons offered to justify a Nobel Prize awarded for expectations and promises rather than results. Our rationality has been addled as all corners of the MSM meandered through fantastic rationalizations. All appear to have missed the mark. The ideologically motivated radicals dominating the Norwegian Nobel Committee, are not seeking peace in the world, but are making a down payment on fortification for their own agenda. The United States and Canada will pay dearly if this agenda materializes.

Let’s first dispel any doubt that the offered reasons for awarding President Obama the Nobel Peace prize were ungenuine. He hadn’t warmed the king sized bed in the White House when he was nominated, which means that any real evaluation of his authentication as a Nobel awardee, other than the oratory of his campaign, was impossible. In the end, the Nobel Committee stated that it, “… attached special importance to Obama’s vision of and work for a world without nuclear weapons.” Reality and common sense in both Norway and the White House seem to have vacated the premises.

Promises made by politicians are for electioneering, and they rarely see daylight. Remember when Obama made a bold and firm commitment that he would pull out of Iraq if he were made President? That was a defining and differentiating moment in the race to the Oval Office. Did he do what he committed to do? Are some of his phantasmagorical promises also the delusions of the Norwegian Nobel Committee? We will find an answer in the upcoming Copenhagen climate summit to be held in early December.

140 nations will meet in Copenhagen to replace the Kyoto Protocol, which runs out in 2012, with a global deal supposedly intended to limit CO2 emissions, reduce the destruction of rainforests, and help developing countries to become low-carbon economies. On the surface, the publicly claimed intentions of cleaning up our emissions from our air, our garbage from the oceans, and our toxins from the soil are lofty objectives very deserving of acclamation. The reality that will arise from the United Nations Copenhagen Climate Change Conference will prove to be something altogether different. What is to become the “Copenhagen Agreement,” will in fact be the largest international redistribution of wealth ever undertaken. The Earth and our environment will enjoy no benefit. Read the rest of this entry »

You can listen to conflicting opinions of self proclaimed experts on government activity or lack thereof on “stimulating,” the economy, however, the reality is that the economy’s progress remains in your hands. The top of the financial food chain with the government’s help wants to prejudice your perception toward positive spending.

The American taxpayer is provided an abundance of opinions and fantasies surrounding economic progress packaged as truths, facts or principles. The certitude applied to the delivery of this inspiring radiation has maximum impact on the behavior of the audience.

The vast central swath through the middle of the American political spectrum representing a majority, seeks reasonableness from government. The majority expects its business to be conducted with some integrity, without the encumbrance of concrete boots of left or right extremism demanded by party affiliation. This expectation of common sense, and forthrightness has not been honestly accommodated by politicians. The cost of reaching elected office has so escalated that special interests have become the overwhelming force behind all thrones influencing legislative agendas. As a result, every utterance emanating from a political pulpit has become suspicious.

When Paulson and Geithner browbeat their economically illiterate, and incurious bosses, into bailing too big to fail financial firms, and to launch profligate spending programs, the taxpayers had no input, nor were they provided enough truthful information to know right from wrong. Furthering confusion came in the form of suddenly popular Keynesian economists affirming government stimulus spending. Their continual proclamation of mission accomplished, and the recession is over, has become a tired refrain. Read the rest of this entry »

We cannot listen to Iran’s Ahmadinejad posturing on the expansion of the Iranian atomic energy program, without recalling Obama’s dramatic reversal on the U.S. land based missile defense system in Europe only days ago. The blunder was not in the reversal, but in its timing and its process.

The degree to which Iran has advanced its uranium enrichment capabilities will remain an unknown factor, and the international community reaction will continue to be perplexed, and marooned in paralysis of fear. Iran will not let anyone into whatever enrichment facility exists. No one will see what the ayatollahs do not wish to make public, sending us into recollections of the disastrous outcome following a long hide-and-seek dance with Saddam Hussein seven years ago. This leaves the world, Israel and the U.S. in particular, with a conundrum of literally seismic proportions. Iran’s nuclear progress is not new, nor is it news. What is new is the loss of one very powerful strategic negotiating tool that could have been useful in addressing Iran’s dangerous belligerence – the land-based European missile defense system.

When Obama backed off the deployment of a missile defense system in Europe, he did so without gaining a single concession from Putin and Russia. Russia had long blustered and railed against the U.S. missile deployment plan. Putin claimed the missiles were intended to threaten Russian sovereignty in the region, and that they were not meant to defend against Iran. The hovering menace from the U.S. was a significant affront to Putin’s self-image. Obama’s abrogation of such significant “stance” on behalf of the United States suggests that this Administration learned nothing from the Ronald Reagan approach to international negotiations. Reagan changed the world when he boasted of his Strategic Defense Initiative satellite based defense system. The long list of concessions extracted from Gorbachev by Reagan, as well as his brilliance throughout the process of negotiations, should be compulsory reading for any student of Presidential impact on history.

Disclosure that Obama has known about Iran’s second uranium-enrichment facility all along, and that he has supposedly sprung an international trap for Iran, as some media such as the Washington Post are now suggesting, is peculiar analysis, as well as it is pandering in the extreme. Obama gave up a major negotiating card that could have been used to push Russia toward joining the strengthening of sanctions against Iran. China cannot be counted on to assist any future confrontation with Iran, having taken itself out of the equation with investments in Iran to feed its own requirements for energy and natural resources. The only other power, whose advocacy is truly needed in the region for serious containment of the ayatollahs in Tehran, is Russia. China and Russia provide Iran with enough trade to successfully finance the Ayatollahs through many more elections no matter what sanctions Obama might think of adding to the existing limitations. Iran’s path to becoming a nuclear power appears unobstructed. Read the rest of this entry »

The lawyers and legal minds holding the joystick of politics in America’s White House and Congress, are afraid to make a move. The administration and legislature are staying away from confronting their friends, and former classmates, in the legal profession.

The American public is holding fast on its resistance to health care reform. The double talk and confusion from Washington is abundant, however the leadership is unwilling to implement changes that could dramatically reduce health care costs such as those that could easily be acted on pertaining to tort reform. We are provided claims such as those from the “nonpartisan” Congressional Budget Office report that malpractice litigation represents only 2% of health-care costs. This one is very “misleading,” since lawyers have always made up the majority of representatives sitting in Congress. It also purposely ignores the real costs burdened onto physicians, and the costly “actions” they take to protect themselves from being financially wiped out. Insurance premiums are just the beginning of the overhead. Defensive medicine has nothing to do with health care, but with doctors protecting themselves, and there is almost no viable measurement on the hundreds of millions that this truly mounts to.

You could extrapolate some numbers such as the 83% of doctors in Massachusetts who order tests they know are unnecessary in order to minimize their potential liabilities. When doctors already pay up to $250,000 per year in malpractice insurance, it is understandable that protecting themselves as much as they can, comes naturally. This is defensive medicine, … not the good kind, but the expensive kind. These tests are not preventive care defending patients against future illness. These defensive actions come from doctors protecting themselves against lawyers of the ambulance chasing kind. While some doctors can be accused of offensive medicine by ordering extra, not wholly necessary tests, don’t believe for a moment that there can be no agreement on what constitutes defensive medicine. You might also ask yourself on average, and in their general population, would you trust more of the doctor, or would you trust more of the lawyers? Read the rest of this entry »

Today, the Supreme Court will hear arguments on the constitutionality of the restrictions that have been placed on corporate money in politics. The ruling may be one of the Court’s most critical decisions in an age which has seen one Presidential campaign accumulate almost a billion dollars in contributions. When the constitutionality of any far reaching federal law is opposed, it is a matter of national relevance, however, when a law affecting the foundation of the Democracy is challenged, such event should be arousing everyone’s notice and should be at the forefront of all news media outlets.

The case in front of the Supreme Court, Citizens v. Federal Election Commission, revolves around a documentary called “Hillary: The Movie,” produced by Citizens United. Based on Hillary Clinton, the film was banned for violating the McCain-Feingold bill which requires disclosure on funding sources, and stipulates that neither corporate or union treasuries can finance any “ad” pro or con just before a primary.

The 2002 Bipartisan Campaign Reform Act (BCRA), also known as the McCain-Feingold bill, was the last major piece of legislation passed to control the source of financing for Federal political campaigns. The bill eliminated soft money donations to the national party committees, and restricted the funding of political pronouncements, ads, etc., by corporations, or organizations such as unions and non-profit organizations.

The arguments and presentations beginning today in front of the Supreme Court, will address a question all voters should take a stand on. Are your rights to free speech the same as the rights of corporations or organizations? Corporations and organizations are not individuals, they do not have the inherent rights of the people, nor do they have the same privileges. They are vehicles created and used by society for diverse purposes. Voters should seek to minimize their further influence on the political process and on the political landscape.

You will hear and read arguments whining that the government is treating organizations big and small, unfairly by prohibiting election advocacy, and is in effect imposing censorship. Some suggest that such treatment of organizations provides them less protection in the eyes of the law than is provided to individuals. The suggestion that organizations should be equal to individuals under the law twists the interpretation of the Constitution beyond common sense, and ignores the fact that current laws provide organizations with rights and privileges not available to individuals. Let’s not let anyone convince us that organizations are “persons.” Read the rest of this entry »

Few Americans have the time to educate themselves on the operations of those who control the most critical elements at the heart of the Nation’s well being. The Kings of Wall Street have long coveted the absolute supremacy they now enjoy over the largest economy in the world. Their road to ascendancy has been long and methodical, but with the collapse of the mortgage and equity bubbles, the past year’s actions by those pillars of persuasive absolutism on Wall Street confirm that their dominance is unprecedented in American history.

A vast majority of Americans must have been astounded by Bernanke’s recent response to Congress’s request that the Government Accountability Office (GAO) audit the Federal Reserve’s financial transactions and assets. The following was the heart of Bernanke’s response, “… auditing … would be highly destructive to the stability of the financial system, the dollar and our national economic situation.” The GAO is a legislative branch agency organized under the U.S. Congress. How is it possible that Bernanke would have had the guts to tell Congress to go fly a kite? This is the same Federal Reserve whose power Obama wants to expand? Does he really have a good grasp of the true nature of Wall Street and the functions of its insiders? Perhaps the $14 million he received from Wall Street bankers, investment firms and securities brokers during the election campaign are clouding his perception.

Bernanke not only screamed an emphatic, “no,” but he had the gall to threaten Congress and the American people with economic destruction. How is such arrogance and power remotely possible? While it might be tolerated if coming from the oval office, it should not be tolerated from a banker. It is also, for anyone who is watching, an obnoxious affront to the Constitution as articulated in Article I, Section 8, “The Congress shall have power to … coin money, regulate the value thereof, and of foreign coin, and … to borrow money on the credit of the United States.” Does this resemble anything we have witnessed during the past year? Not remotely.

Through a century of market ups and downs, interest rate fluctuations, mergers, acquisitions, political influence, lobbying and positioning insiders to the most powerful government and government related institutions, the Kings of Wall Street have nurtured and advanced their isolated power to a point where they are responsible to no one. After the Fed created hundreds of billions in bailout dollars to purchase unaudited toxic waste from its “friends,” these same friends paid themselves billions of dollars in bonuses. These were billions more than the amounts they distributed to their own shareholders, and the rationalizations were as asinine as the bonuses. Obama’s wishful thinking and promises of “oversight and transparency,” over trillions of Fed dispensations, have long been attenuated by the dissonance of fear. Stating that the Fed and Wall Street’s autonomy is complete, would be a gross understatement. Read the rest of this entry »

The recession is dealing a hard blow to government revenues with tax receipts expected to drop 18 percent this year. The big question being lathered across the Nation, but not being answered honorably by the Administration, revolves around tax increases. The double-speak and denials are only adding annoyance to the feelings surging around the stress already felt by the taxpayers. Not only will the “middle class” be saddled with fresh tax increases, but so will you and your neighbor if you live in America.

The strategy of repeatedly pretending that only the wealthy are going to pay for the massive spending increases is quickly getting old and not believable. From the mansions in Beverly Hills to the park benches of Central Park, all residents will be sending more dollars to the government in one way or another. This is not about new tobacco or alcohol consumptions taxes, or even about the massive tax-grab that will come from Cap And Trade, this is about new tax measures, and new taxes on everything that can be squeezed for cash starting with your income. Forget the campaign promises you almost believed about middle-class tax cuts, and forget Sunday meet-the-press equivocations by well-trained emissaries like Geithner and Summers. Your taxes are about to increase dramatically.

The Administration is very demonstrably building a larger government than national revenues can support. With the Nation stuck in a long-term economic quagmire hurting all taxpayers who are already feeling the weight of chronic tax-creeping, the imposition of obvious and visible new income taxes is politically dangerous. The sophistication of the speciousness will find new levels of creativity during the coming weeks. Read the rest of this entry »

As you shelter yourself in a cool closet from the hailstorm of healthcare promotion, Congress and the President are sliding into home plate with compensation controls in the senior offices of financial firms, … for starters. The new Corporate and Financial Institution Compensation Fairness Act will provide no other than the SEC with the ability to establish the rules on how executives are paid, and will enable government agencies to effectively control the “inappropriate risks,” practices of financial companies. Institutions with less than $1 billion in assets will be exempt. This further intrusion into the fiber of corporate America by those who have completely failed in carrying out their responsibilities to the electorate is another misguided kneejerk reaction.

This bill will empower government bureaucrats to control compensation plans that will threaten the safety of financial institutions, or adversely impact economic conditions or financial stability. Have no fear, the newly hired experts will figure this part out, what it means and how to implement it, and they will diligently look after your interests.

There’s hope, however, with some minor good news in this bill that resides in its provision for procedures for shareholder approval of golden parachutes. What this portion of the bill looks like in final form will dictate whether or not it makes any sense, but in the meantime, three cheers for the crumbs thrown at demands for common sense. We shall not hold our collective breath. Another clause that might have provided teeth in a corporate structure fix was the providing of a voice to shareholders on executive pay. It failed miserably in its final form, since the shareholder vote on executive pay will be non-binding, therefore will leave shareholders where they were before, … “we’ll tease you with a little influence on the company you own, but, … naah, just kidding, get lost and go back to your trading screens.” Shareholders, large and small, should have greater influence on the proceedings of the public companies they own, and such influence should be addressed at the Board of Directors level. The government is not improving the lot of shareholders, but is escalating its own intrusion into the boardrooms of America.

We should remember that this is the same Administration and Congress that couldn’t even track the bailout money, or put strings on the money to restrict it from getting dished out in the form of bonuses. This is also the government that threw those billions at financial institutions on the pretext that they had to be bailed, to avert a depression, yet no one in government could tell you where that money actually went. So how was it, exactly, that those bailout billions were allocated? The toxic assets could not be defined or audited, which means that the fear mongering and threats were outright lies. Wall Street skunked this Administration, as well as the last one, and as a result a colossal extortion of the taxpayer was allowed. Did anyone making these horrendous decisions ask the hundreds of thousands of businesses from coast to coast what their banking preferences might be? … Would you rather deal with a gigantic-too-big-to-fail-market-dominant bank headquartered in New York, or a medium or smaller sized regional bank? When did “failure” get expunged from the dictionary of American Capitalism? Read the rest of this entry »

For a generation, now, we have been accommodated with a front row seat to a rigorous and seemingly intractable advance of government into the whole of America’s social fabric, and into the institutions of its capitalist system. Today we are confronted with a wave of negative wind pushing against the capitalism that has brought America its unprecedented success, as it absorbs the blame for the economic meltdown.

I am not equating capitalism with free markets here as is too often done, because that would imply an inclusion of international communities into a common basket, and there has to be balance and common sense in the application of “free trade,” between participants as we have discussed in previous articles.

Recessions inevitably deliver capitalism a bad rap. Making matters worse, there are usually groups or individuals who have taken advantage of power and influence, or who hustle the provenance of panicked confusion into magnified opportunities for fortune creation. All the while, wide swaths of society are struggling to meet basic needs. Visible abuse of the system that leads to wealth concentration provides thresholds over which those so inclined will leap to promote expansion of government and its insinuation into the corporate fiber of the Nation. Such intrusions usually come from those with little grasp of the elements at the heart of economic growth, human nature, creativity and the human spirit. On the other hand, extravagant, unrestrained, and unconscious excess fosters jealousy, and reaction. It can also propel overreaction, which in turn empowers those in government who seek increases in government intervention at all levels of commerce.

Such exercises in reactive belligerence pretending concern for the public “good,” are actually acts of self-interest intoxicated by ideology, or worse, driven by overwhelming ego. The reactive process ignores long term consequences of hysterically applied policies, and absolutely cannot effectively evaluate the secondary or tertiary repercussions. Read the rest of this entry »

The loud, national sigh we heard this week was America gratefully, but suspiciously, acknowledging Ben Bernanke’s claims that, well, it’s over. The Fed Chair is satisfied that the recession is in a turn around mode, or at least stabilizing. Covering his backdoor, he added that America can look forward to a sluggish recovery. Just in case anyone missed it, he added, with all the vigor and compassion of a snail, “Unemployment will stay high for some time. It’s not going to feel like a very strong economy.”

You cannot get more confident than that, can you? With that level of insight you can now go out and make major decisions for your own future, such as, whether or not to buy a house, upgrade your car, perhaps even fly to Europe on the wings of hope. No? This is the kind of foggy thinking and direction we have come to expect from the independent organization that controls America’s most important economic element – America’s money. Did he define an exit strategy for the money being fed into the system? Did he even describe where, or how, that money is doing anyone any good? Not so much.

Bernanke is the same expert who only last year told Congress wonderful fairytales about housing, the markets, and the economy just as the bubble was beginning its implosion. This is the also the Bernanke who, along with Geithner, in a desperate moment of panic made a deal with J.P. Morgan, taking on $30 billion of toxic derivatives from Bear Stearns. Even former Fed Chairman Paul Volcker thought the deal impelled the Fed to, “extend to the very edge of its lawful and implied powers.” What an incredible understatement. The agreement viewable here, was not a loan as claimed, but an outright purchase of an ephemeral mountain of garbage. It was in effect a gift. Did anyone in Congress jump on this breach of law? Of course not. No one would dare question The Fed. Did anyone explain why Lehman was sent over into the abyss, but not Bear? Don’t ask. You don’t want to know. You also won’t be told how it was possible that giant firms including A.I.G., were allowed to gamble with complex derivatives that their own executives didn’t understand. The crumbs leave a trail from Wall Street, all the way to Congress.

You will note that the first signature on the hastily created agreement (linked above) is Tim Geithner’s. You can judge for yourself with a little analysis of Tim’s “signature,” what help such a massive ego (IMHO), will bring to your neighborhood. While you’re at it, also check out Morgan CEO James Dimon’s scribble on the signature line. Let me know what you think he’s all about. Looking at that signature, I doubt anyone really knows, but in the meantime, understand that he has more influence on your life than most of your friends do. These are some of the egos that were so overwhelmed with arrogance, and so confident in self intelligence, that there was nothing that the economic super-bubble would throw at them which couldn’t be handled. As the world economy melted about their ankles, all they could do was panic, and in turn panic everyone around them. Read the rest of this entry »

Dear Mr. President,

This should prove a challenging week on the PR front for us at Goldman Sachs. There are a few situations surfacing for which appropriate clarification will provide you sufficient context in the event that the inevitable questions arise. We also have a couple of suggestions.

Regarding this nastiness of the past week, please do not be too concerned about all this talk surrounding our super high-speed fully automated transaction processors. Also please understand that they are our future. Admittedly, we are enamored with the technological prowess we have acquired. Don’t believe those jealous rumors coming from begrudging low-level corners of the financial community, whining about our “edge.” We run a clean and very efficient business that can withstand any scrutiny. Our company represents about one quarter of all program trading on the NYSE. We realize you are not familiar with our business or what we do, but just know that the billions in valuations that represent our daily trades require extremely fast, exceptionally complex algorithms running on the largest, and fastest processors money can buy, with as close proximity to the NYSE as is physically possible. This is part of our multifaceted long-term strategic plan.

This business is not for the feint of heart. We take risks, but attempt to minimize our exposure. That’s all. Don’t listen to noises suggesting that we make money on trades even when we buy and sell at the same price levels to ourselves. Everyone in the business is familiar with our fee structures. What’s a half penny a trade anyway? Nothing. There is no magic. As for front running orders with our faster than light system on stocks or options, well, that is just not the way we work, and it’s not even legal, is it? We’ll get back to you on that. In these difficult times people can become very excited, and reactive to unwarranted rumors. Pay no attention to hearsay coming from bottom feeders. … Front running indeed.

Thank the guys at Justice and the FBI for being so quick to respond, and picking up that frustrated dancer, Sergey Aleynikov. Stealing secret algorithms should be punishable by incarceration for life. Oh, could you check into what’s wrong with that judge who let him out on bail? Bail should be revoked. This is a matter of grave concern, and is of National import. As we said, someone could get a hold of this program and use it to manipulate the markets. OK, not “manipulate,” so much as harm the markets. We would never manipulate of course, but someone else certainly could. This is no superficial matter. This breach and the whole episode must be snuffed out before it develops any legs. This is no time to demonstrate any sign of weakness or lethargy in addressing such a heinous affront to the intellectual property at the deepest core of our business, and in some ways, the characterization of its essence. Read the rest of this entry »

The recent representation of America at the Moscow summit delivered a mutually agreed-to target for the removal of some nuclear warheads and launchers. Almost. The relationship was neither improved nor set back, and America achieved little beyond being dealt a little embarrassment at the hands of Putin. The mainstream media (MSM) is applauding the event as a job well done. What meeting could it possibly be writing about with such approval and commendation?

Getting rid of antiquated and cumbersome warheads, 2,200 down to 1,500 or so, and trimming delivery rockets from 1,600 to around 1,000, is a good thing, if it ever happens, but such reduction would have absolutely no impact on either nation’s present realities. Elimination of a few war heads, or WVMDs, (weapons of very massive destruction), leaves entrenched and siloed enough destructive power to annihilate everything living on the face of the Earth a few times over. We shall hear over the coming months whether the Administration’s claims of these reductions ever actually come to pass. The odds are not terribly favorable to the President’s claims. Any part-time student of international affairs knows that Putin will not allow any such compliance under his watch, if the U.S. proceeds with its defense shield deployment in Poland and Czech.

Did America advance ground on obtaining any cooperation whatsoever on its objective of reigning-in Iran? Not a nod. Putin is very comfortable with selling Iran anything nuclear that it wishes to put its hands on. He has to sell Iranians something, anything, since they won’t buy his cars. Iran strategically presents the most critical foreign relations pillar to potential peace in the Middle East, and for now it remains an ace in Putin’s hand.

Countries expected by Putin of remaining within the “Russian sphere of influence,” such as Ukraine and Georgia, are making efforts to slip away from the bear’s grasp through entry into NATO. While the U.S. supports their inclusion, this stance is considered a direct threat to Russian hegemony in the region, further aggravated by the U.S. ballistic missile defense system intentions. Putin is not buying the sales pitch that this deployment is intended as a deterrent against Iran, no matter how the U.S. presents it. Putin just can’t take a joke. Of course it’s intended to protect against Russian aggression, however, in reality, well, it would augment the threat looming over Moscow, … just in case. Read the rest of this entry »

While countries struggle, muddling their way through stimulus packages and bailouts, China is being touted as everything from, “the best current place to invest,” to being, “the engine that will pull the globe out of its recession.” These entreaties and prognostications are sprinkled with reminders of the power it wields over America, given the huge dollar reserves that it holds. If I may quote Tony Soprano, “forget about it.”

China has asked rather politely, that the U.S. maintain its creditworthiness. No kidding? That plea was less a wish that the U.S. not skip town on its debt (devalue the dollar dramatically), than it was a declaration of a deep desire for a return to excessive U.S. borrowing. When the U.S. borrowed, it bought. When it bought, China prospered. This is rather basic, however, what is not so evident, or obvious to many pundits and experts, it seems, is the fact that China became inebriated through the glory days of consumerism. China now suffers the consequences of its acquiescence to a surety that the intoxicating euphoria enjoyed around the globe for a generation, would never end.

China understood that to become America’s principal provider of goods, it had to manufacture less expensively than anyone else. China excelled at squeezing productivity out of its labor force. It rapidly implemented a sweeping expansion of the necessary infrastructure to manufacture products faster, better (sometimes), and cheaper (always). New plants sprouted at an unprecedented rate. China’s expansion of its machine was based on an enormous assumption – the rate of growth it was enjoying through exports would continue unabated. It is now shutting down plants faster than it opened them. The capacity that was preparing for demand twenty years out, is now shutting down, and the Chinese are not about to ramp up their own consumption to energize reopening of the plants. While China has become a major manufacturer, the majority of its manufacturing is for, and on behalf of foreigners, selling established brands. China’s authoritarian “system” has made the creation and recognition of its own brands, all but impossible. Read the rest of this entry »