Wednesday, March 18, 2009

Who Has the Bear Watch?





Fourteen months ago (before the global financial meltdown) we posed a thought experiment in Rock-Paper-Scissors = U.S. Strategy:








What would the U.S. do if/when China attempts to park an aircraft carrier and/or missile firing submarines in the only deep water port in Baja California, Ensenada?


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Here's the answer we gave:





It is already being done with dollars, EU currency and secret diplomatic arrangements that may not be shared publicly during your lifetime. China is now heavily dependent on the U.S. as a trading partner. Forget the familiar propaganda about China dumping the large share of U.S. debt that it has bought. Dumping means selling, of course. Who are the willing buyers? If the U.S. buys back debt at current rates, the size of the transaction itself would instantly lower dollar value in runaway episodes (too large to be done all at once, evenin 5 years). In effect, China would be agreeing to be paid cents on
the dollar (in addition to invalidating lucrative trade arrangements). China is
enjoying its U.S. trading partnership and has no intention of upsetting its apple cart.



Have we been correct so far on China?


.


Has a Russian Bear bomber overflown Venezuelan woods?

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