The idea that any country can do international business in a vacuum is not a workable thesis. At some point in time all things come to equilibrium. It's OK if you piss in the pool in your own back yard, but if you piss in the public pool eventually everybody will be swimming in it. People don't like that and it is a good way to have your membership revoked.
Entering Iraq wasn't like taking a leak in the pool, it was a "Caddyshack" sized dookie that left people climbing the ladders for escape. Pictures from Abu Grhaib were just the type of imagery the world needed to justify finding somebody new to play with. This is not surprising as an increasingly oil addicted world learns the perks of distancing itself from an increasingly demonized Bush.
But addictions are a funny thing. More often than not the dependence is more of a psychological need than an actual physical need. Perhaps not with the life blood of oil, but when it comes to the markets and market psychology this is a dangerous realization.
It appears that the psychological hold that the US has had has begun to wane as more and more countries reevaluate their financial ties and dependence on the ebbs and flows of the US market.
Take the IMF position on the sinking dollar and the crushing sub prime lending collapse. In a recent thestar.com article about the link between the US and Canadian markets, the paper writes:
"(T)he U.S. slowdown has had little discernible effect on growth in most other countries," the International Monetary Fund wrote in its world economic outlook in April.
Under the heading Decoupling the Train? the IMF parsed the main points at hand: the slowdown in the U.S. was sectorally isolated to housing; trade linkages with the U.S. had become less important for "many" other countries; and domestic demand in both emerging and advanced economies could be more resilient than in prior U.S. downturns.
The decoupling thesis caught like brush fire, with a key accelerant being the Chinese economy. With China contributing more than 30 per cent to global GDP growth, who needs the U.S.?
"The consensus was, `That's okay. It will only affect the U.S. It won't affect anybody else," says Stephen Poloz, senior vice-president and chief economist at Export Development Canada. "The reasoning was that China was growing fast enough and India was growing fast enough to keep the world growing. The U.S. was just not as important any more."
The point seems relatively clear. Bush Administration foreign policy has been a global failure. The timing could not have been worse. Not only did it squander international sympathy on the wake on the attacks, it came when the world had economic alternatives and incentives to want to distance themselves from the US. Favorable treatment from oil rich countries sensitive to Middle East policy and an artificially undervalued Yuan have made it a good time to seek better friends. Once they found new friends they found they didn't need the US as much as they thought they did.
Yes, the US sneezed and the dollar fell below the Canadian dollar. The falling dollar and sub prime fallout, however, did not ripple as far as might have been expected (except for those in the Japanese market deep into the sub prime lending). It has become increasing evident that the world market doesn't need the American fix as bad as it thought it did. Besides, the US is an expensive habit. The world needs a cheaper addiction and China has mass produced exactly what they need. Sure, it may be cut with a little lead paint and anti-freeze, but it feels good. But, do we really want to let our children play with this thing?
The questions is whether the market is cured of an addiction or simply finding a newer and cheaper one. Another question is whether this new bed fellow may have darker and deeper problems, such as bed wetting. China has certainly been pissing in its own pool for quite some time. China's blocking of Wikipedia will not erase what happened in the Square. The stranglehold on the media cannot last forever. Current policy is simply a filthy diaper that is getting fuller and stinkier. At some point it is going to have to be changed or it will blow, and when it does the terds will fly. And when a diaper full of 60+ years of shit blows, it is more than piss in the pool. 1.3 billion people have been crapping in that thing for over half a century and it is going to stink to high heaven.
Where will the world run to then? India? I'm not joking, the largest democracy in the world isn't looking too bad at the point. One thing is for sure, the Bush Administration is a catastrophe. The president has become a propped up mockery of staged leadership and photo ops. It is virtually devoid of direct contact with inquisitive media and accountability is non-existent. He is running the place like it was China. But as bad as Bush has made it, he is on the way out. Though I have no dreams that the new administration will bring a brand a new day in America, the process gives me the illusion of hope. The process gives me the comfort that bitching won't land me in a forced labor camp.
So ya, the US pissed in the pool when it let Bush run the show. Countries rightfully took a step back and in so doing discovered they didn't need the US as bad as they thought they did. But thinking that you can improve your situation by simply getting in bed with China is bad policy. If you learn anything from the US debacle you must see that you cannot depend on what happens economically with little or no attention to related policies.
The truth is that China has been pissing in its own bed since the drunken step-father (the CPC) moved in decades ago. This will come out. The cameras are really really cheap here and eventually someone is going to make it out of the country. If you think Iraq was a disgrace you are right. If you think that China offers you a long-term relationship without these sorts of images you are insane. Eventually the pictures from the work camps and prisons will come out. Abu Grhaib was a prison in a system. China is an Abu Grhaib system in the prisons. At some point policy issues must precede investments. Perhaps then we won't find ourselves running the global economy like frightened hypocrits.
No comments:
Post a Comment