Monday, June 8, 2015

The Economics of War

The Economics of War
By Erick San Juan


Politics begin and end in economics. Everybody thought all the while that economic data being leaked to the press by big powers are all real. But reality check will confirm that their economies are overheating. Especially China, where information is very limited due to their adherence to secrecy and strict control of media. The worst, they are creating a MAD – Mutually Assured Destruction by making new economic and political alliances like BRICS, creating banks like AIIB and NDB to counter WB, IMF, etc.

While the west invented the BLICS(Belgium, Luxemburg, Ireland, Cayman and Swiss) to reportedly purchase huge tracts of US Treasury bonds, using dollar swap funds on behalf of the US Federal Reserve to counter the BRICS economic cooperation.(www.gold-eagle.com)
 The pattern of history is in place. Prepare for the worst when these superpowers are already overheating in producing military hardware in the global arena, what is it like in their own backyard?

The rising tensions in the disputed areas in the South China Sea has created the arms race where claimants blindly follow the trend of accumulating more arms even if it is disadvantageous on the part of their citizenry.

Based on the article by Thomas J. Christensen posted at Bloomberg.net – “These disputes are fuelled by historical victimhood narratives and postcolonial nationalism. For the countries involved, defending sovereignty claims and recovering allegedly stolen territories are core missions. China is no exception.

Since the 2008 financial crisis, China has been more confident abroad and more afraid at home. The country's elite and its citizens feel that its power position on the international stage has improved drastically. But the foundations of its export-led and investment-fuelled growth model were shaken at the same time. Top leaders worry about rising social discontent. It isn't a good time for Chinese leaders to look weak on defense.”
This is what I have been writing all along that an outside enemy is needed or a war is necessary in order to unite their people away from the rising discontent in the domestic front due to economic factors overshadowed by too much defense spending. Plus the stone throwing between several factions of the chinese Politburo on the issue of graft and corruption. Reason why China's President Xi Jinping was forced to jail even some of his trusted lieutenants. Translation, it all boils down to economics no matter how they cook their books, truth will come out and thanks to the internet.

Another view by Zhang Jun in his article - China’s pursuit of a new world economic order, he writes : Economists are increasingly divided over China’s economic future. Optimists emphasize its capacity for learning and rapid accumulation of human capital. Pessimists focus on the rapid decline of its demographic dividend, its high debt-to-GDP ratio, the contraction of its export markets and its industrial overcapacity. But both groups neglect a more fundamental determinant of China’s economic prospects: the world order.
The question is simple: Can China sustain rapid GDP growth within the confines of the current global order, including its trade rules, or must the current U.S.-dominated order change drastically to accommodate China’s continued economic rise? The answer, however, remains unclear.

One way that China is attempting to find out is by pushing to have the renminbi added to the basket of currencies that determine the value of the International Monetary Fund’s reserve asset, the Special Drawing Right (SDR). As it stands, that basket comprises the euro, the yen, the pound and the dollar.

The SDR issue was the audience’s main concern when IMF Managing Director Christine Lagarde spoke in Shanghai in April. Her stance — that it is just a matter of time before the renminbi is added to the basket — garnered considerable media attention. (Regrettably, however, the media read too much into her statement.)
From China’s perspective, sustained domestic economic growth seems unlikely within the existing global system — a challenge that Japan and the other East Asian economies did not encounter during their economic rise. Indeed, the only country that has encountered it is the U.S., when it replaced the United Kingdom as the world’s dominant economic and financial power before World War II; fortunately, that precedent is one of accommodation and a peaceful transition.

To be sure, China still needs to undertake important domestic reforms, especially in the financial sector, in order to eliminate distortions in resource allocation and stem the economy’s slowdown. But the refusal by China’s leaders to pursue export-boosting currency depreciation, even in the face of decelerating growth, suggests that they are willing to make the needed sacrifices to secure the renminbi’s international role and, with it, long-term economic growth and prosperity.”

Overheated economies of leading countries will in turn affect the world economy whether we like it or not. And in turn, in order to save their economies, it will be the smaller countries like ours will save them by staging a war and will use us as one of their cannon fodders.

What will be the pretext this time? Be ever vigilant!

1 comment:

Anonymous said...

well said.......