China is Enjoying Increased Prestige in the Financial World

The USA’s standing in the world is diminished.  Though we may hate to admit it, it is true and we’ve earned it.

USA Credibility Destroyed by Bush Administration

It appears we just launched a military attack into Syria this week to take out Al-Qaeda operatives. I believe it, we didn’t go in and launch million dollar missiles just to take out some farmers, at least not intentionally.  We could have received bad intelligence from our torturing of political prisoners.  But when Syria claims that we did attack civilians and that the USA couldn’t be believed.  After all this is the same administration that told us that Saddam Hussein had WMD and was on the verge of obtaining a long range missile to deliver nuclear warheads and it was all a lie!  It wasn’t a mistake, it was a lie!

When Syrian leaders first said that, I tended to believe them, then I rethought it and said wait Rusty, of course they are going to say this.  As bad as Bush is, he’s not Syria.  If it caused me to ponder the idea, what did it do to Muslims.  Muslims that were already on the verge of picking up arms to fight the evil empire.  US!

We are the evil empire to a large part of the world?  How did we get there?  Going to war on false grounds and torturing people to get them to tell us what we wanted to hear.

Lots of Financial Blame to Spread

Now most of the world is blaming the US for the recession.  To some degree that too is valid.  Greenspan, once the darling of the press and the economist and especially of the de-regulators led the US into a huge mess.  Most financial experts knew that housing was over priced.  They call it a bubble and Greenspan insisted on taking no action as he believed that the banks would self regulate in self interest. Problem is, the people running the banks were making huge bonuses because they were doing so well in the short term.

Greenspan is not the only one, Clinton, yes our beloved Clinton knew what was going on and didn’t step in to regulate, perhaps he was unable too.  I tend to believe though, why point out things were going badly when most Americans believed Clinton was the reason for our financial success.  Then again, would you bloody yourself in a loosing battle?  He was limited in what he could do because of the sexual scandals and lack of majority in congress.  Congress could have acted, they could have passed legislation to regulate and bring and gradually slow the growth in the value of housing and derivatives.   Instead we did nothing and instead let it build until the bubble burst.

Could other countries have taken measures to reduce the damage to their own economies.  Yes, by depending less on the USA.  Is that what we really want?  I don’t think I want that.   That is, however, what we can expect from this down turn.  Bush does not get all the blame for this one.  Though he should not have been so surprised by it.  He too does get a piece of this pie.

In an article from the Economist 10/30/08

But while China relishes the attention it commands at such [governmental financial] gatherings, it is resisting the temptation to swagger in its dealings with America. There are concessions China would like. One would be an end to America’s de facto power of veto in the [International Monetary Fund] IMF. Recently it has been showing its pique at this by blocking publication of an IMF report examining whether China has been manipulating its exchange rate for the sake of trade advantage. A Chinese newspaper said America must give up its control over the IMF in return for China’s helping out in the crisis. But the government has not gone that far in public.

As I understand it, China has massive amounts of dollars in its vaults.  This gives China even more powerful.  Suppose we were taking a position that the Chinese frowned on, like attacking Iran.  China could dump the dollars on the market and cause a large devaluation of the dollar.  Or they could threaten to do that in order to get us to behave in the way they would prefer.

I see on CNN International, that the world blames the US for the current financial downturn.  No doubt, politicians from other countries encourage that so they don’t get the blame themselves.

Whether or not the US deserves the blame doesn’t matter if the perception is that we caused it, it will further weaken our standing in the world.  Our weakened state only makes China, Russia and everyone else stronger, even Syria and Iran.

Tagged with: Finance • Financial Crisis 2008 • Politics

Filed under: Politics • US Politics

Like this post? Subscribe to my RSS feed and get loads more!