#1 could be keeping an eye on how close the Taliban get to Pakistan's arsenal.

#2 best comment

I would suggest to you and your readers that China’s foreign exchange rate policy over the last 20 years has not been the major contributor to Europe and the USA’s economic decline (of course the Yuan should float) but rather it has been the voting in of increasingly high tax, anti-market governments that have shut down the engines of innovation, enterprise and wealth creation in the domestic economies of Europe and the USA.

To blame China for the West’s unemployment and economic decline on a simple single metric such as the external value of the Yuan, is a very dangerous game, that hides unpleasant domestic truths.

We in the West need to ask the question – “To what extent have we manufactured our own economic downfall?”

China represents one of the world’s core civilizations just as the USA represents one of the world’s core civilizations. Calamity awaits everyone when core civilizations collide.

ambrose

I just happen to be in Beijing as I read your comment today from the comfort of my room in a luxury hotel.

What you have written makes me consider the economic changes that have taken place in China over the last 20 years that I have been privileged to come here. We need to look at China with the perspective of time.

What can I say that is positive in China based on a simple visual comparison of a typical downtown Beijing street 20 years ago and today?

The change, in summary, is breathtaking.

Today you see vast numbers of mainly new cars (Mercedes Benz sold 65,000 and BMW 80,000 vehicles here last year), state of the art shops and offices, luxury (in contrast) apartments, superb restaurants, clean, safe streets (the air quality needs attention) and an increasingly well educated young population seeking to advance themselves (Compare: 80% of MBA graduates in France seek government employment, virtually no MBA graduates in China seek government employment – they overwhelmingly want to start their own businesses).

These changes are not just limited to Beijing but to the many other cities across China.

Unless one is driven by untrammeled envy, one must say that on balance the Chinese government has introduced wealth creating policies that have done extraordinarily well for a broad base of its population over the last 20 years. This is a country which is in a virtuous cycle of economically upgrading itself.

Can the same be said for Europe?

Are there social injustices here in China– yes, many, such as the iniquitous one child per family policy. But is the world a better place with an economically prosperous China or with an economically backward China? The evidence speaks for itself.

And so back to the question of the external value of the Yuan. I have written in your column before that it is in China’s own interests to let the Yuan float freely based on calculations of relative labour productivity, and needed growth in broad domestic consumption. The floating of the Yuan should take place without any prior notice.

But let’s first get the perspective right on whether China’s policy of a managed exchange rate is the major contributor to Europe’s economic decline, which is your proposition in today’s comment. Is the major contributor to Europe’s economic decline not the result of home grown European policies which destroy rather than create wealth?

Consider European growth in coercive state spending through transfers of wealth from wealth creators. Consider the disincentives to starting a business in Europe through its employment laws, payroll taxes, corporate taxes, local taxes, personal taxes, dividend taxes, union power, and a plethora of incentive draining quangos.

Indeed consider Mr. Brown’s economic track record of borrow, borrow and borrow again when the wealth destroying coercive state sector cannot squeeze any more funds from today’s exhausted wealth creators.

Do the Chinese have any responsibility for these insane economic policies? Is the external value of the Yuan the major contributor to the economic decline of Europe as you imply or is it the wasteful big Governments across Europe with their cradle to grave bribery?

Full text

I would suggest to you and your readers that China’s foreign exchange rate policy over the last 20 years has not been the major contributor to Europe and the USA’s economic decline (of course the Yuan should float) but rather it has been the voting in of increasingly high tax, anti-market governments that have shut down the engines of innovation, enterprise and wealth creation in the domestic economies of Europe and the USA.

To blame China for the West’s unemployment and economic decline on a simple single metric such as the external value of the Yuan, is a very dangerous game, that hides unpleasant domestic truths.

We in the West need to ask the question – “To what extent have we manufactured our own economic downfall?”

China represents one of the world’s core civilizations just as the USA represents one of the world’s core civilizations. Calamity awaits everyone when core civilizations collide.

Therefore let us avoid such a calamity by being forthright in our understanding of the root causes of the decline in European and American economies. Not to do so could lead to a tragedy of global proportions.

Rather let the relationship between the West and China be one of “iron sharpening iron”.

Dr Jonathan Wilson

Maybe we should look to Cuba for our solutions? HT Matt via email
This piece was written by a professor at the LSE. Hard to believe but it was.
Not sure we should buy it but worth a look.

"The Cuban Revolution is a living example, with increasing relevance, showing it is possible to live with dignity and sustainably outside of the capitalist profit motive, with human welfare and the environment at the centre of development. "

http://www.greenleft.org.au/2010/830/42684

In that article are listed some of the core problems with severe worlwide implication. We are facing major changes in the near future.

Walter

As Bernhard mentioned earlier sometimes from countries which struggled most for years, the best solutions are created:

http://www.youtube.com/watch?v=J03j9Zo5oDk

Walter

It was good reading, AndrewJ, until it got a bit crossed up!

#1

Regardless of the rights and wrongs of bombing Iran one of the ironies of electing a "progressive" African-American democrat president is that in some ways it probably makes the bombing of Iran easier from a political perspective (hence more likely). I think Obama probably gets one-free war. The progressive and liberal opinion in Europe and the US won't be united in opposition as many (but not all) will give Obama the benefit of the doubt in a way that they wouldn't for a republican president.

c'mon Wally, Walter, Rog, Olly even... step 234, step 234. That's it Bernard....careful with Emma's toes step 234, step 234. Backbeat Iain..... Excellent Nicholas - but then you always had it....Solo by Mark Hubbard.... andrewJ congas.... and on we go..

@Bernard Hickey

The Cuban experiment is nothing more then the Amish approach but instead of picking 1856 to live in they chose 1952. It works on any scale as long as someone much more wise then all of us decides what year innovation ends.

Cuba? ha ha, pull the other one.

Foreign armies ??? - just wait for the natural "Weather-bombs" - enough headaches/ costs.

The innovation in Cuba is second to none. I saw a documentary on Harley Davidson clubs around the world. The people there, due to trade embargoes, have literally no access to parts from outside the country. One guy had just part of a Harley, but he built the remaining top of the engine (pistons etc) probably in a shed, based on some hand drawn diagrams brought into the country. Wow.

Echoing Steve Keen:

"The Great Australian Property Swindle"

http://www.dailyreckoning.com.au/reports/property-swindle.pdf

I think some of you lot have been on the bottle most of the day. By the way...when English shoves up the tax on spirits and all other life giving drinks..just switch to pure apple juice or a mix if you like cocktails...open and drop in your yeast of choice..put the cap back tightly and leave in a warm place...blow your brains out.

PhilBest - try reading with comprehension, as my Standard 4 teacher used to say.

I wrote:

'Which is a different thing entirely from extolling it as the most desirable scenario on your wish-list'.

that is not 'would will it upon us'.

And read that Martenson / Bartlett piece, huh? Nothing like being informed, and never too late to learn.

The 'free market' died nearly two years ago, needed bailed out once, and is now on life-support permanently. At some stage, we'll do the decent thing, and pull the plug. Nobody can afford the last bailout, and nobody will have the brazen effrontery to propose/initiate another.

@William
Don't worry, America only attacks countries that are crippled by economic sanctions and China won't allow any serious economic sanctions on Iran.

It's all a scrap over oil. Owning or denying it to others. This is a big-boys scrap and losing is not an option. Despite economists thinking of oil as 2% (or whatever) of transactions, it's like blood - you die without it. Iran only wants weapons because she's seen what happened next door (12 million bpd in contracts was the prize, not WMD) and is understandably a little worried.

We just get the propaganda/spin - those dratted turban-wearing scimitar-wielding ........s are getting nuclear weapons.....

Afghanistan is part of the jigsaw, not as a resource but strategically. Wherther the EROEI of the effort is worth it to the USA, is an interesting Q.

I refer to 1)
http://www.youtube.com/watch?v=mf2UUmqW6LU&feature=channel

listen 3:33min !

Ludwig - true, very true. I just shake my head at those who cling to the so-easy-to-say free market. It ends with all the dosh in one winner's hands, mathematically. What do you do then? New game?

But it obviously ends earlier, where growth need meets supply constraint. The underwriting in the bailout - and printing money at near zero is surely eventually a public bailout, even if the Fed is not quite Govt - cannot be honoured. Goes for all sovereign underwriting at this stage, far as I see it.

It's an easy mantra to parrot, though, doesn't require much thought. The cynical would suggest that a certain circle push it, rather like those Rothschilds in Wally's piece a couple of days back.

Have a good day - I don't think they've worked out how to tax sun, rain or time yet - enjoy! :)

@BH: "The Cuban Revolution" There is another more relevant video on how cuba survived the collapse of the soviet union and no hence oil....its economy collapsed almost overnight, and Cuba almost starved, but ppl lost fat, and grow a lot of their own organic food (no fertilizer)...I dont see we need Cuba's command economy however NZ's scale and the lack of oil in the future will force us this way.....

@Philbest, Cuba has gone "backwards" because of the embargo of the USA stopping virtually all oil and other materials and not necessarily because its "Communist". The last laugh would be if Cuba developed the oil reserves apparently off its coast it may actually become quite self-sufficient and well to do...

regards

Powerdownkiwi,

I did not misunderstand you, I thought I was agreeing with what you said. Cuba is an example of a post-oil world, not that that is a desirable scenario. That is precisely why I included that part of what you said, in my quote.

It is now you who is misunderstanding me. What I mean, is that a post-oil world once the free market and technology have done their thing, will not be a great leap backwards like Cuba; it will be another leap forwards.

I don't know what you mean by a Bartlett-Martenson piece. I am talking about George Reisman, and that is who I linked to. I have yet to see any proper argument against Reisman's thesis, all I have seen is name-calling and other childish non-engagement.

I am in the same camp as Ludwig. The free market didn't fail, when you didn't have the free market to start with.

Let me summarise Reisman's argument for you:

We have actually barely begun to prospect the entire surface of the earth, and under the sea bed, for all known resources.
As mankind becomes more technically advanced, he discovers uses for more and more resources. Many of the resources we use most today, we did not use at all until we discovered how to use them.
There is no reason to believe that we have come to an end of that process. That is, we will yet discover resources that give us even more power over our well-being than the resources we currently make use of.
The more capital accumulated by mankind, the more access we get to resources. We can drill deeper, extract elements more efficiently, access the resources under the sea bed, and so on.
Furthermore, that accumulation of capital underpins the research and technological progress that bring ever more resources within our purvey, and anything that restricts or harms that process of accumulation of capital, will have an effect of “self fulfilling prophesy” regarding resources.
Apart from what has been blasted into space, every molecule in every substance “used” by man, is still here and will be able to be re-cycled one day; a lot of it has merely been re-ordered to man’s advantage meanwhile. Even every carbon molecule that has been burnt to extract energy, returns to the biosystem after a short time in the atmosphere, and will be able to be accessed again for the purpose of energy, by our descendants at some time in the future.
Although Reisman does not say so, it is such a beautiful system, I think some very intelligent designer must have had a hand in it!