An interesting take on the Chinese market issue:

www.financialsense.com/st...lysis.html
Weekly Column - 03.02.2007

CHINA'S ECONOMIC STRATEGY
by J. R. Nyquist

After this week’s stock market decline White House Spokesman Tony Fratto said, “The president’s economic advisors are keeping an eye on the markets. We believe that the economic fundamentals in the U.S. economy are sound.” Yes, Mr. Fratto, the economic fundamentals are sound: like America’s trade deficit with China, the falling dollar and America’s low savings rate. We can count on prosperity forever, with no downturns, no wars and no recessions.

If a “yes man” says yes in the forest, and there’s no mass media to record the sound, is there any noise?

Tuesday’s stock market correction was partly triggered by a correction in China’s “benchmark stock index.” On February 28 The Wall Street Journal alleged that Shanghai’s 8.8 percent tumble “came despite little news suggesting any ill health in the global economy.” The problem here is that Western analysts have yet to understand that China’s economy is one of the sickest in the world. (The very thinking behind China's economy is sick.) The Chinese financial sector is in the grip of the country’s Communist Party, which uses money in a controlled, strategic fashion. The normal investment environment of a free economy does not exist in China. Normal banking and normal trade practices do not exist either. The country is run by Communist Party strategists and economic front men whose logic is not the logic of normal people. They are not capitalists. They are not bourgeois. They place no hope in the normal pattern of economic growth because China is in a hopeless situation, and the Chinese Communist Party is in grave danger. China is severely overpopulated, its water is polluted, its resources limited. The country’s growth cannot be sustained with the advent of peak oil (i.e., the inevitable decline of global oil production). And even more important, the Communists know that a normal path of development will lead to the gradual overthrow of the Chinese Communist Party. Even if things go well for China, the Communist Party itself will be destroyed.

“The Western oppositional forces always change the world according to their own visions,” said former Chinese Defense Minister Chi Haotian in a secret speech, “they want to change China and use peaceful evolution to overturn the leadership of our Communist Party.” Because of this threat the Chinese leaders realize that they will eventually be declared criminals. According Chi, “if we only develop the economy we still face the possibility of losing control.” Therefore, another path must be charted. “We have been thinking about how to prevent … peaceful evolution and how to maintain the Communist Party’s leadership,” Chi explained. “We thought it over but did not come up with any good ideas. If we do not have good ideas China will inevitably change peacefully, and we will all become criminals in history.”

What possible formula could simultaneously solve all of China’s problems and simultaneously save the Chinese Communist Party?

“After some deep pondering,” said Gen. Chi, “we finally came to this conclusion: only by turning our developed national strength into the force of a fist striking outward – only by leading people to go out – can we win forever the Chinese people’s support and love for the Communist Party. Our party will then stand on invincible ground, and the Chinese people will have to depend on the Communist Party.”

The revolt in Tiananmen Square in 1989 forced the Communists to realize that China “must combine economic development with preparation for war.” According to Gen. Chi, “Our economic development is all about preparing for … war. Publicly we still emphasize economic development as our center, but in reality, economic development has war as its center.” Near China’s large and medium-sized cities there are large underground centers. Month after month, year after year, these underground centers are expanded. These form a new “Great Wall” for protecting China from nuclear bombardment. “We are also storing all necessary war materials,” noted Gen. Chi. “Therefore, we will not hesitate to fight a Third World War….”

The speech of former Defense Minister Chi Haotian was allegedly given more than two years ago. The authenticity of the speech cannot be verified because of the regime’s secretive nature. However, in the light of China’s military buildup and the impeccable logic of the speech itself, the position of the Chinese Communist Party could not be more accurately described, and its solution could not be more ably presented. The title of this secret speech was, “The War Is Not Far From Us and Is the Midwife of the Chinese Century.”

When analysts say that China is economically bound to the United States, they are assuming that the Chinese Communist Party is resigned to relinquishing its power. They have yet to explain how the Chinese Communists can use the development of China to their own party’s advantage. The anti-American propaganda that comes out of China, Beijing’s support for North Korea and Iran tell the real story. Actions do not lie. America is China’s main enemy, and according to Gen. Chi’s secret address, China’s key strategic problem is the issue of America. “First,” noted Chi, “if the United States is firm in blocking us, it is hard for us to do anything significant to Taiwan and some other countries.”

The United States cannot allow China to invade its neighbors. And such an invasion would risk a nuclear confrontation for paltry stakes indeed. According to Gen. Chi, “even if we could snatch some land from Taiwan, Vietnam, India or even Japan, how much more living space can we get? Very trivial! Only countries like the United States, Canada and Australia have the vast land to serve our need for mass colonization. Therefore, solving the ‘issue of America’ is the key to solving other issues.”

The strategist sees the big picture. He recognizes the main obstacle. He devises a strategy to remove the obstacle. What do you think that strategy suggests about the U.S.-China trade relationship? What will the Chinese inevitably do with all their dollars? In the last analysis, when a country is at war, money is merely another weapon. China did not acquire U.S. dollars in order to collect interest for the next hundred years. China acquired U.S. dollars in the same way it is building submarines, missiles and nuclear warheads. As Gen. Chi explained to the elite of the Communist Party, “We all know the principle of ‘doing one thing under the cover of another.”

The United States has built its trade policy on a false foundation. America’s foreign policy is hopelessly deluded. The American military is not prepared for World War III. And the recent drop in the U.S. stock market is only a blip compared to what must inevitably unfold.

© 2007 Jeffrey R. Nyquist

Val,

This should be front page news.  It is for real and it is not far down the road.  Time for Americans to start buying guns and building bomb shelters.  They will invade and in general we will not be prepared. 

WHy invade when you can just buy the Panama Canal, and 3/4ths of the country?