Interesting, the Japan analogy.
Of course, the Japanese peril of the 80s took care of itself. Mainly because of Japan following the global free-market rules of currency valuation (the Yen became a monster, increasing the costs of Japanese exports and also forcing production to move overseas) and also with a little help from Soros and friends (the rampant currency speculation of the early '90s that precipitated the East Asian crash of '97.) Japan never quite recovered from that. In the mid '90s the internet revolution brought the center of gravity of innovation squarely back to the United States, followed by a gigantic boom in the US economy. Everything had been set right once again, from Washington's point of view.
This is unlikely to happen with China. As of this year they pretend to let the Yuan float, but they've learned the Japanese lesson well, and the Yuan is but a Shikhandi insulating the grossly-undervalued RMB. They are also unlikely to face a situation where the domestic economy slumps into the doldrums as dramatically as Japan's did, since they have a vast consumer market of their own. Their industrial base is stronger, and manufacturing labour is far more abundant and inexpensive than it was in late 1980s Japan.
The big difference today, of course, is that the dollar itself stands on unprecedentedly shaky ground. The solitary indestructible pillar of the post-Bretton-Woods financial world is vulnerable as never before. The Chinese can tell the US Fed to go f*ck themselves with far more confidence than the Japanese could ever muster at the height of their economic power.
Interesting in this light is an article Ramana posted on another thread:
http://www.globalresearch.ca/index.php? ... &aid=21716
This outflow from the dollar is not the kind of capital that takes the form of tangible investment in plant and equipment, buildings, research and development. It is not a creation of assets as much as the creation of debt, and its multiplication by mirroring, credit insurance, default swaps and an array of computerized forward trades. The global financial system has decoupled from trade and investment, taking on a life of its own.
In fact, financial conquest is seeking today what military conquest did in times past: control of land and basic infrastructure, industry and mining, banking systems and even government finances to extract the economic surplus as interest and tollbooth-type economic rent charges. U.S. officials euphemize this policy as “quantitative easing.” The Federal Reserve is flooding the banking system with so much liquidity that Treasury bills now yield less than 1%, and banks can draw freely on Fed credit. Japanese banks have seen yen borrowing rates fall to 0.25%.
Some points to ponder.
1) In the post-Bretton-Woods world (1946-2008), "free trade" was sold to the rest of the world by the Americans, particularly the Hamiltonians, as the human race's best available guarantee against war, chaos and instability. When nations were doing business with each other, it was theorized, they would be far too invested in each others' stability to challenge each other militarily.
2) The above sales pitch was predicated on one thing only... the world's absolute faith in the global dominance of the US dollar, established first during the Roosevelt-Ibn Saud talks of the 1930s as the primary currency for oil valuation, and then consolidated at Bretton Woods with the creation of the World Bank, the IMF and the dollar standard.
3) Hamiltonians since that time, have gone to any extent to assure the pre-eminence of the US dollar. Much of the United States' West Asia policy from the 1970s onwards, all the way up to the invasion of Iraq can be seen in this light. So can their policies towards the other nations of the Americas, if one pays attention.
4) The recent economic crisis in the United States threatens to completely turn the system on its head, because the world is losing faith in the US dollar. The primary cause of this, as the author describes, is that post-Reaganomics America led to the global financial system (with its helmsmen at Wall Street) taking on a "life of its own." The slump in US productivity following the Clinton presidency was not reflected by the sort of classic economic consequences one might have seen two or three decades earlier; rather, the financial Frankenstein continued to feed itself through the creation of debt (and its hot-air derivatives). When the crash hit home with the Lehman Bros collapse many years later, it was all the more damaging for having been delayed. The damage was worst of all to the credibility of the United States Dollar itself.
5) The results of this have been well articulated in the article.
Once upon a time, we were told that "free trade is the best guarantor of stability and peace."
Then all of a sudden it became clear how vacuous the myth of the almighty dollar actually was.
Now the entire story has changed. The edifice of assumptions on which the old story was based, is smashed. There is no longer absolute faith in the dollar or the global financial system it nurtured and supported. It is a time of uncertainty, and in times of uncertainty, nations grab what they can. Fearing instability, they hasten the arrival of greater instability.
Now...
In fact, financial conquest is seeking today what military conquest did in times past.
We might, indeed, paraphrase Clausewitz's old dictum to say:
"Trade has become the Continuation of War by Other Means."
6) Since the middle of the last decade, the Chinese have either seen this coming, or they have been behaving as if they saw it coming albeit for some other reason. Their thrusts into Africa, Latin America, and Asia have all had the spirit of "military conquest by financial means" about them... whether it's copper mines in Afghanistan or gas fields in Burma. They are not investing in developed economies, institutionally, in the way the Americans once invested in their own economy. They are grabbing what they once would have taken with PLA troops, now with the vast reserves of cash they have appreciated.
Ever since the dollar took a WWF-class bodyslam in 1998... the Chinese have intensified their practices with the ferocity of a shark tasting blood in the water.
7) According to the article above... the US, for totally different reasons (its own economy collapsing, the demise of the Bretton-Woods-era financial system, the loss of confidence of its own investors in the dollar and all the practices and assumptions that went along with that)... is in some ways,
beginning to do the same thing as the Chinese have for the last decade. Military conquest by financial means.
It is like Spain and Portugal after the treaty of Zargasso, out to subject the whole world to colonization with their unparalleled military might. Except right now, it's financial might that is being used.
8 ) Where will this end up? I don't know. What does it mean for India? It means that we will have to gird our economy as we gird our physical borders. Man the battlements and dig in for a fight. Shoot down overflying predatory investors on sight. Maintain free-fire zones to resist any attempt by the US or China to overrun certain key sectors of the Indian economy... strategic energy generation for one, defense for another, banking for a third, mass media for a fourth.
And demand of our Indian financial players the same absolute dedication to duty, the same total prioritization of national interest that we do of the Jawans and Officers guarding our land. And hang the Harshad Mehtas and Ramalinga Rajus as we would deserters from our regiments... utterly without clemency, for their treasonous dereliction of duty.
touche
