Monday, January 13, 2014

The True Picture by Erick San Juan

The True Picture by Erick San Juan

'Loose lips sink ships' is an American English idiom meaning "beware of unguarded talk". The phrase originated on propaganda posters during World War II. The phrase was created by the War Advertising Council and used on posters by the United States Office of War Information.

The gist of this particular slogan was that one should avoid speaking of ship movements, as this talk (if directed at or overheard by covert enemy agents) might allow the enemy to intercept and destroy the ships.

There were many similar slogans, but "Loose lips sink ships" remained in the American idiom for the remainder of the century and into the next, usually as an admonition to avoid careless talk in general. (

But in this age of high-tech information gathering and sharing especially through the internet and the widely use of several social networking sites, keeping mum on certain information that pertains to a country’s national security is no longer applicable, and some are using this avenue to mind conditioning or as deliberate leak of information.

Take for example, the endless word wars via rhetoric and double talk of countries especially claimants in the disputed area in the South China Sea (SCS) plus the saber rattling between the United States versus China. Such exchanges of provocative words are the reactions to certain actions taken usually by both China and US that involve contested areas in the region.

Such actions usually pertain to the military buildup of both Beijing and Washington that were conveniently posted on the internet through online newspapers and definitely in their government-controlled media. The mere fact that these are deliberate leaks, there are still a lot that these two giants are not telling the media because it might just ‘sink ships’ in the process.

One such ‘secret’ is about the true picture of their economies, both countries are trying to hide the sad realities of the situation that their economies are in the brink of collapse or shall I say in the process of collapsing and such situation might lead to internal conflict among their citizenry.

Let us heed the words of U.S. President Abraham Lincoln in his letter to Col. William F. Elkins dated November 21, 1864 -  “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”  (thanks to my friend and loyal listener, Rels Octaviano for this quote)

May it be the global elites or the local elites, through corporations, these elites are enriching themselves unabated. Sounds familiar? Our country is actually not spared from this phenomenon.

Like I used to say, the G2 (China and US) needed war to avoid an internal confrontation (translation-civil war). But recently it was China that has been creating situation that spells provocation. Scenarios that have made its neighboring countries nervous from ADIZ to the much recent one - the new Chinese fishing restrictions in disputed waters in the South China Sea.

The legislature of China's Hainan province approved rules in November 2013 that took effect on January 1,2014 requiring foreign fishing vessels to obtain approval to enter waters under its jurisdiction.

Such a move, if broadly enforced, could worsen tensions in the region. Beijing claims almost the entire oil- and gas-rich South China Sea, rejecting rival claims to parts of it from the Philippines, Taiwan, Malaysia, Brunei and Vietnam. (Reuters)

My observation was seconded by this article "Did Soros Just Predict a China Crash?" by William Pesek that in a Jan. 2 op-ed for Project Syndicate, George Soros didn't say whether he's hitting China. But he did connect the dots in a way that can't make President Xi Jinping happy. To Soros, the main risk facing the world isn't the euro, the U.S. Congress or a Japanese asset bubble, but a Chinese debt disaster that's unfolding in plain sight.

“There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years," Soros wrote.

Xi would be negligent to ignore Soros's warnings. He's hardly alone: Peking University professor Michael Pettis and Jim Chanos of Kynikos Associates have been beating this drum for years. Silvercrest Asset Management's Patrick Chovanec worries about a “shadow” Chinese balance sheet that would be keeping policy makers awake around the globe, if Beijing's obsessive opacity weren't concealing the problem. (You can read his latest concerns in this Jan. 3, 2014 Bloomberg View op-ed.)

We remember George Soros, the billionaire who first shook a major government in September 1992, when he led an attack on the British pound. For his role in humiliating London and forcing former Prime Minister John Major's government to exit the European exchange-rate mechanism -- essentially the euro -- Soros reportedly netted $2 billion. Soros made a bundle off America's sub-prime debt crisis as well. Here in Asia, his legend has loomed large since 1997, when then-Malaysian Prime Minister Mahathir Mohamad accused him, bizarrely, of heading a Jewish conspiracy to spark an Asian crisis.

People haven't made lots of money betting against China. But Soros is absolutely right that there's a worrisome disconnect between China's pledges to move away from excessive investment and overborrowing and toward a services-based economy without sacrificing rapid growth. If Xi doesn't act now, Soros could possibly make more than $2 billion when things go awry and savage the global economy. Add a zero. (Ibid)

Like any country’s economy, if it is built in bubbles, the day will come that it will just burst and people will ask what hit them because they never heed the echoes of the past and so they will always repeat history. And the sad part is, history might not be kind to them in the end.

No comments: