h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

How do we feel about the recent Chinese suggestion that they might unload their U.S. dollar reserve? Do we imagine that it might cause the collapse of the Bush administration? Of the U.S. as a world power? Does it matter to us in our own countries? Will we dread a world without the U.S. in control? Will we be willing to accept personal financial hardship in exchange for the satisfaction of seeing the Fall of the American Empire?

How did the U.S. get into this state? I confess, I'm not surprised: I've been watching the foresightless decisions for years now with a combination of dread and fascination. I've also been arguing quite openly for some time that U.S. troops will be in the streets of the cities of my country (Canada) within my lifetime. Being as I live in a city which is both a Canadian Forces centre and the heart of petroleum refining in my country, I find the prospect of Mr. Bush being put over a financial hurdle by the Chinese quite discomfiting. If Mr. Bush digs in his heels, my dark vision I fear will come quite soon and bee quite a bit darker than I used to expect. If he capitulates and submits the American Empire to the financial control of China, I suspect it will be only a matter of time before the U.S. president, whoever it might be at that moment, will move to create a Fortress North America, no matter what the citizens of North America might actually desire.

Here's a fun discussion of the issue: http://www.counterpunch.org/roberts08082007.html

The financial mal-prudence displayed by the Bush administration would terrify any sane person.

I think China would look for a trigger before taking action like this, for they would immediately lose their biggest market.

The potential trigger seems to be the pressure the U.S. Congress is about to try to put on the Yuan. Or where you thinking of something more military or territorial (support for Taiwan, for example)?

I suspect it would be a perceived insult that would start issues. There seems to be quite a bit brewing up about the Olympics next year, and the success or failure of that could have repercussions.

I'm just not looking forward to having a grumpy neighbor with no money, the largest military in the world, and an o'erweening feeling of superiority and entitlement.

My god anhaga, you've truly gone beyond the pale this time. US troops occupying Canada? You and zoomer need to huddle up there in North, fearing the dread "United States of America", and yet I'd lay odds there's a 90% probability that both of you live within 50 miles of the US - Canada border.

For someone who claims to have such a long view of history, and can criticize the lack of foresight of US monetary policy, you might want to study up on the dollar devaulation that occurred in the 80s, and how that caused the collapse of the Reagan administration, and US troops to invade Canada.

'I'd lay odds there's a 90% probability that both of you live within 50 miles of the US - Canada border.'

I wish I were into betting, because I'd win that one.



(It's a popular misconception that the majority of the Canadian population lives where it does in order to be close to the U.S. border. In fact, we live where we do in order to be near to historic transportation routes [the St. Lawrence River, the Canadian National and Canadian Pacific Railway, the North and South Saskatchewan rivers, the Carleton Trail, all of which run primarily east-west rather than north-south. The coincidental fact that we primarily live fairly close to the border [which is sparsely populated on most of the U.S. side, BTW, and so is offers little economic attraction] is, of course, cause for a certain degree of nervousness at times)

Relax, Arnie: There seems to be a good deal of concern about the U.S. debt held by China amongst even non-Canadians. And, if you read parts of the text of the Canada-U.S. Free Trade Agreement and NAFTA from the Canadian point of view, you have to spend a moment wondering what some U.S. eyes will see when they look north, especially considering the sensibilities of our current Prime Minister.

Beyond the pale? Well, yes. But most of the world living outside that particular fence.


So, to the question: Are you suggesting that the Chinese-held debt and the Chinese threat is inconsequential? And, for fun, are you suggesting that the U.S. would never invade one of its allies, particularly one with rather consequential fossil fuel reserves?

Oh. And thanks for letting us know that there's nothing to worry about.

Interesting article. I think it's starting to dawn on people that the US is not the hyper-power the Neocons seem to think. This is just sabre-rattling by the Chinese in response to American pressure on them to revalue their own currency, so I don't think they'll actually sell them at the moment, or in the near future.

Economically, selling their dollars would hurt the Chinese as much as the Americans. If the dollars devalues, then the Yuan appreciates relative to it, and that won't help China at all. Also, if China does decide to sell its $700 bn worth of US bonds, who's going to buy them? If it announces a decision to sell them, the price will fall before the end of the televised announcement, and that will lose China tens of billions of dollars immediately, and curtail their economic growth in the medium term.

What it is is a reminder to the US of global realpolitik. Why the hell should China do anything with their currency that doesn't benefit China anyway? The globalisation of financial markets, combined with the US deficit means that other countries now have significant leverage over the US. Now they're letting them know about it.


How did it happen? Gradually

Interesting to see if the yuan becomes the reserve currency of choice. My money () would be on global finance switching to the preferred currency of cheese-eating surrender monkeys... damage to the dollar can only help the euro... or is that desperately simplistic?

Interesting to note that one of the last thing Saddam Hussein did before the invasion of Iraq was threaten to start selling Iraqi oil in euros instead of dollars. He'd done a lot to provoke, but some would say that was the final straw...

anhaga, you're worried about being invaded by the US, and you're telling me to relax?

I don't know why the majority of Canadians live close to the border - I just know they do.

Why do I have 2 choices, those being that 1) either the Chinese held debt will cause such cataclysmic consequences that the US will invade Canada, or 2) its inconsequential

?

I think there might be some possibilities between those to extremes.

>I think it's starting to dawn on people that the US is not the hyper-power the Neocons seem to think

I've been arguing this for a while (ironically, it's more the anti-Americans than the "neocons" who are responsible for talking-up the USA as a world-bestriding collossus - see Chomsky et al for details). America is hugely rich and powerful but it's not an "empire" - its power relies on making deals, securing alliances and working towards "mutual benefits" (sometimes for whole countries, sometimes for their dictatorial leadership). It's power acquired more through businessmen's "networking" than military prowess. The great weakness of the neoconservatives is that they didn't understand this and believed all the hype.

American power will inevitably wane as globalisation means capital is something that states and individuals have less control over and it sloshes around between the economic powerhouses of the world - North America, Europe, China and the Pacific Rim.

"Interesting to note that one of the last thing Saddam Hussein did before the invasion of Iraq was threaten to start selling Iraqi oil in euros instead of dollars. He'd done a lot to provoke, but some would say that was the final straw..."

He probably was going to do that. So are most of OPEC and there's nothing the Americans can do about it because it's simple economic sense. The idea that they invaded Iraq to stop one country doing something they're all going to do eventually anyway is ludicrious.

Oh, and all this "the US might invade Canada stuff" is pure evil-empire fantasy. No US President who sent troops against Canada would last a second longer in the White House, it would infuriate many Americans (those with friends in Canada, those with business interests in Canada, Anglospherists who would be appalled an attack on another "Anglo-Saxon" nation (incidentally, Anglospherists are well-represented on the US right who I assume it's being prophesised would drive such an invasion) and it would completely destroy the NATO alliance and, with it, much essential US interest and power.

But, yeah, they might do it because they're a mad neocon empire.

"So, to the question: Are you suggesting that the Chinese-held debt and the Chinese threat is inconsequential? And, for fun, are you suggesting that the U.S. would never invade one of its allies, particularly one with rather consequential fossil fuel reserves?"

The Chinese "threat" is merely a theoretical one. It is not in China's interests to economically damage the US because it would end up damaging their own economy. What their power over the US *does* do is provide them with a bargaining chip which means they have leverage in Washington.

And, no, the US would not invade Canada for its fossil fuel reserves. The considerable negative consequences such an action would entail massively outweigh the positive (which themselves would probably be temporary).

<> (Zagreb)

Nor for timber or water resources? All of which I thought the US was getting at cut-rate prices already (anhaga will be able to tell me if I'm wrong about this, as I haven't lived in Canada for 15 years).

I was under the impression that most of Quebec's natural resources were already pretty much 'owned' by the US. Again, I await further information about this from people who live in Canada now and know more than I do about the present state of things.

az

<> (Arnie)

Why does it matter how far a Canadian lives from the Canadian/US border?

What point are you trying to make? Exactly?

az

I would also like to know what AA's point is.

As to huddling in fear, a healthy respect for an agressive neighbour is just good sense. Any physical invasion would cause me to head to the mountains with a long gun and scope. I know I wouldn't be alone on both sides of the border.

I tend to believe that economic *invasion* would be more likely, so the ham fisted handling of the US economy and monetary policy of late is more of a relief, actually. It shows that such a move would undoubtedly be fumbled.

The Canadian economy is doing quite well, thank you very much- getting more independent with the passing years. The US may not suffer from foreign control in the future but it may have to mind it's Ps and Qs.

I think we are past the stage where empires require garisons and fuedal systems to support them. There is a US empire it doesnt look like the Roman empire for the same reason that cars dont look like chariots.

It is begining to, if not crumble, then certainly show stress lines.

Growth and even stability for any empire come at a cost. They require a sacrifice from citizens to keep them going and after awhile the citizens want to enjoy the luxuries of emoire and would rather dodge the costs. The stages of growth and stability have passed for the US empire. The US empire is a dangerous beast in its death throws, it is enraged by attacks on it, still strong enough to strike out but its ability to take control of its destiny is waning.

Should we be worried. No. bad things will happen whether you worry about them or not. The geo-political future has no pre-destined shape. What we can say with some certainty is this. Devaluing currencies can have some effect but money is just a measure of your ability to acess resources, the more you have the greater your access.
People in small and large groups have always got into fights over scarce resources. If you are living on or near fertile land with water running through it you better get ready

"Why does it matter how far a Canadian lives from the Canadian/US border?

What point are you trying to make? Exactly?"

I find it "exactly" ironic that people who greatly fear the US live so close to it. Why not move to any of the 6 other wonderful continents?

The other point is that more generally, this is obvious hyperbole/scaremongering. I'm confused as to why me pointing that out receives such a negative response. Zoomer has a long history of this...

I have great respect for Canada, and would actually prefer to invest there (e.g. put my money where my mouth is) if it were *more* independent from the US.


It's also interesting to note that the tactic of oversimplification (either the "Chinese threat" will cause complete havoc or it is inconsequential" is the same tactic employed by Repulicans and right-wingers in the US. By removing complexity, they are able to steer (and some here would say use propaganda) to get what they want. Why is this tactic reviled when used by the right, but perfectly acceptable when used by the left?