http://elainemeinelsupkis.typepad.com/money_matters/2008/05/china-japan-and.html
http://elainemeinelsupkis.typepad.com/ezmoneymatters/2008/05/china-japan-and.html
May 4, 2008
Elaine Meinel Supkis
Big news, so we won't see it in the US: China,
Japan and South Korea have finalized the second stage of their
currency unification project! The euro has blazed this path
quite clearly. The IMF and the US hates this development and tried
mightily to stop it. But we have no 'leverage' anymore. This union is
the joining up of the world's biggest FOREX reserves and will be used
to build a huge financial fortress to protect
Asia if the US decides to cheat them by either devaluing the dollar
against their currencies or going bankrupt! Japan was tempted
for a year to side with the US and Europe against China's currency
but last summer showed how the
Chinese soundly defeated the Japanese in this matter. Japan
surrendered last September and now is joining China against the other
G7 partners. And I predicted this! HA.
Statistical
Releases and Publications Scheduled for the Next Six Months from
April to September 2008
The release of "Foreign Exchange Rates (Monthly)" will be stopped as of April 2008. (March 31, 2008)
First off, a Russian reader alerted me to this
notice at the Bank of Japan's official web page. I read their press
releases a lot but fell behind this week due to all the breaking
stories. Well! Just like the Bank of England unilaterally deciding to
keep the information about banks seeking help because they are
insolvent or the private bankers of the Federal Reserve last year
unilaterally deciding to hide the M3 statistics from us even as they
still collate these numbers, so it is with the Bank of Japan! In this
case, unlike England trying to prevent bank runs by withholding vital
information or the US hiding inflation by hiding vital information,
Japan is hiding CURRENCY information vis a vis the dollar, I might
add. So this news alerted me the other day that something big was
about to happen in the currency news markets. And it happened
yesterday.
East
Asian finance chiefs move closer to regional foreign exchange reserve
swap
Finance ministers of China, Japan and South Korea took one step further on Sunday towards a regional foreign exchange reserve swap arrangement.
"We reached an agreement on several key elements of the CMI Multilateralization," finance chiefs of the three East Asian countries said in a joint statement after they met on the sidelines of an annual meeting of the Asian Development Bank (ADB).
The CMI, or the Chiang Mai Initiative, is a regional financing arrangement agreed by finance ministers of ASEAN (Association of Southeast Asian Nations), China, Japan and South Korea in 2000 to prevent a recurrence of the 1997-1998 Asian financial crisis.
Under the scheme, the central banks of participating countries can swap foreign exchange reserves to counter speculative moves on their currencies.
CMI Multilateralization is the next step, as has been agreed at the last finance ministers' meeting of ASEAN and three East Asian countries in Japan's Kyoto last year, which would be moving from the bilateral system to a multilateral one.
The proposal holds that by setting up a common pooling reserve, in which each country would input an amount of foreign reserve under a single agreement, any country in the framework could draw from the fund to cope with short-term liquidity difficulties.
I have been rather deeply involved in Asian
politics for most of my life. My father, since WWII. It is very
interesting, watching the people of Asia rebuild and reformulate
themselves. The madness of the Japanese empire has been replaced with
a sense of sly rebuilding of a Greater Asian Co-Prosperity Sphere.
Previously, the Japanese were extremely arrogant and brutal and tried
to build this via military conquests. Now, they have wised up and are
using diplomacy. Over the last several years, I have praised Hu, the
leader of China, for his many successful diplomatic initiatives.
The recent dust up over Tibet was a big test. The
Chinese leadership first retreated into snarling and snapping at the
Tibetans. But now, they are organizing meetings with the Dalai Lama
and so he has won something out of this. But the Chinese won, too.
They let it be known, they will not let their nation be ripped to
shreds by the West. This was a test of strength Indonesia, China,
Pakistan, Iran and many other nations being ripped apart understand
very well. So overall, I would say that China is now ahead of that
game, not behind.
Back to the rising Asian currency Zollverein
['Toll Association' - think NAFTA] that
is slowly being built: this process began in earnest after the Great
Asian Currency Crisis. When Japan folded itself into a real
depression in the 1990s due to the US recession of 1990 caused the
Japanese Bubbles to pop, the flow of money and trade in Asia was hit
very hard. Monetary speculators had to drop the strong yen and seek
their fortunes elsewhere as the Bank of Japan dropped interest rates
rapidly to zero. This was before the notorious 'Japanese carry
trade.' Japan began to build one of the biggest FOREX reserves in the
world during this time. Their notion to park many US dollars in their
FOREX accounts was a novel innovation. Even they couldn't see how
this would create the 'Japanese Carry Trade.' All
they knew was, it made the yen weaker and weaker.
All the other trade partners with the US, having
huge surpluses, didn't accumulate dollars in FOREX reserves like
Japan. They celebrated roaring stock and property markets with glee.
Then the global traders began to sell, not buy, these Asian
currencies. Simultaneously. This was because the Federal Reserve
dropped interest rates just like Japan and the US stock market took
off like a rocket...AND the Nikkei FELL. So Japanese investors, cut
off from decent interest rates at home, first parked their loot from
their trade surplus with the US in other Asian countries or in the US
stock markets. We had a huge bubble form here, when it popped, it
never quite returned. At the height of the last bubble, if you key in
inflation figures, was significantly lower than the Dot Com bubble.
My cartoon from July, 2007, concerning Japanese trade
with China.
The flood of foreign investment in Asia collapsed rapidly and the US stock market ballooned just as rapidly. So we had a vast crisis in Asia while the US went hog-wild. There was really no need for a Japanese Carry Trade in 1998. But the fix for the Asian Currency Crisis created the Japanese Carry Trade. Which took off AFTER the US stock market bubble burst! From 1998, with the IMF saving Asian economies in their usual brutal fashion, to today, world markets have been utterly transformed. Back in 1998, China was still a struggling second tier economy. Japan was floundering in a depression. The US budget deficit vanished in a puff of smoke and this particular flood of red ink ceased. All systems seemed to be evolving rapidly with the US in full control of Asia's economic fate. Then the Dot Com Bubble broke. Greenspan panicked and dropped interest rates rapidly starting in 2000 and the selection of Bush as our dictator. The fatal US economic bubbles that mirrored the 1990 Japanese bubbles, began. Both the US and Japan had super-low interest rates. But Japan had a gigantic FOREX reserve which doubled in size every 2 years! So they were hoarding dollars. They used the Bank of Japan to issue credits [NOT SAVINGS] to buy US dollars and hold them so the yen would be weak! Investors and speculators were then welcomed to come to this new banking entity and borrow money at super low rates! So Japan flooded the world with new loans while hoarding dollars which they bought...with loans they issued themselves!
To do this, BOTH the government of Japan and the
government of the USA had to overspend their budgets. This produced
an epic amount of Japanese government bonds and US Treasuries. Which
Japan bought! Both the US bonds AND their own. This way, they further
weakened the yen. China began to imitate all this starting in 2000.
They built up their FOREX reserves, they bought US government bonds
and debts and they stored all this in a warehouse bank and weakened
the yuan! This began a political process of non-stop howling and
raging in the US and Europe. Which Japan gleefully joined.
For Japan is part of the Inner Sanctum, the
Banking Security Council of the planet Earth: the G7. This group
worked under the wing of the US victors in WWII. The US, to fight the
Russian and Chinese empires, decided in 1948 to
rebuild all the empires we were battling for 150 years and thus,
create a hyper-empire. This is the present system. The other
empires were all defeated or bankrupted by 150 years of endless
global wars. The US was flush. So we decided to
pay for 90% of all the costs of the military power of the G7 nations and we also decided to
let them flood us with imports so their economies would grow.
This way, they would be our buddies and would be strong against communism.
This scheme worked perfectly until the high costs
of running a global empire protecting our G7 buddies began to
bankrupt us. Since they paid less than 10% of the costs and were
finally over 60% of global economic power, the US began to flounder
and sink under the weight of all this. The G7 allies continued to
pour their exports into the US markets and the US tried various
tricks to fix this like dropping the gold standard, debasing the
currency and devaluing the dollar like crazy. Inflation took off in
the US. The end is obvious: we will go
bankrupt. But the one thing that can save us, dropping
the idiotic idea we can patrol the planet at our own expense, still
is the untouchable item on our agenda. We are spending more
and more, not less and less. Our military costs are greater than the
costs for military for the entire planet! This is pure insanity.
Japan loves this. And nickels and dimes us in
negotiations over payments to the US military. It is at only #2
billion a year, a laughable sum. And they screamed like bloody Mary
while negotiating this. They wanted us to pay for defending them by
taking more loans with them! So...last summer, the G7 had a series of
hysterical meetings whereby frightened allies tried desperately to
figure out how to keep this goofy status quo going. They want the US
to run up giant trade deficits with THEM and protect them militarily
while paying all the costs.
Here
is my July 4, 2007, story about all this:
Japan and the oil pumping Arabs are hosing the planet with liquidity. This liquid is red ink mostly from the USA. But the flood of money pouring into the coffers of these two entities far exceeds any trade so where does it come from? Time to talk about magic numbers and infinity! Also, Writers assure us that a weak dollar is a good dollar but doesn't explain how we can kill the dollar faster than Japan can kill the yen. And reporters continue to try to understand hedge funds. They are getting more and more suspicious as hedge fund hell hounds foam at the mouth, bite investors and then die suddenly. And Moody's raises Japan's credit rating.
Here is a cartoon from July, 2007, showing Rato
the Rat chewing out China about currency issues and interfering with
IMF powers to pry into China's affairs: 
Sometimes very small matters that barely make the news end up determining the fates if billions of people's lives. I sense the arcane banking accords, the Basel II understandings and the Pillar I, Pillar II and Pillar III developments are part of the triggering mechanism that is going to play a key roll in the coming financial and political confrontation of the depressed and dying US and Japanese economic systems. As I keep pointing out, the world's #1 and #2 economies cannot both be running dying currencies simulatneously without explosive results. Today, I am going to compare an interview with the head of the Chinese delegation to the IMF and the head of the IMF itself. Ouch! They tell totally different stories about negotiations!
So they all decided CHINA should fix this. By
cutting China's trade and strengthening the yuan, Japan and Europe
could continue to flood the US with exports but China would bite the
bullet. So the IMF, the World Bank, the EU and Japan all howled,
with the US, at China. In the US, most
economic bloggers were fixated on the need to raise the value of the
yuan. So by spring, China began to raise the value of the yuan.
Instead of supporting this and expanding it so the US ceased our
trade deficit and overspending, everyone redoubled their howling at
China. The more China raised the value of the yuan, the more everyone
screamed at China! There was NO REWARD.
When China protested and pointed out the obvious:
Japan's weak yen against the dollar and the euro was an even greater
problem, everyone told China to shut up. Japan was very, very happy
about this and merrily flooded the currency markets with trillions in
red ink. This money was used to balloon not only world stock markets
but gold markets, commodity markets, property sales, mergers and
acquisitions, everything that could be bought was sold at
astronomically rising prices. Because this flood of Japanese loans
were heading rapidly towards infinity. By July, Japan was openly
teasing China about this. They even boasted, they would drop the yen
to 130 to the dollar by October. China
blew up and began countermoves which worked since the
yen rose in value to a peak of 89 yen to the dollar before the
Japanese surrendered to China. This
meeting yesterday is them signing a peace treaty with China. Now,
China and Japan will be playing on the same team.
AGAINST THE US.
Here is my July 8, 2007 report:
I found yet another interesting international agency that is filled to the gills with economists and political personages. The Bank for International Settlements moves in synch with its fellow school of fishes. It doesn't deviate in any significant way but it does have staff who admit they have very little idea, what is going on and where it will all end up. This, I presume, is due to a childish level of naivety and a total lack of understanding the nature of empires and what caused them to collapse and how others may look friendly but are really rivals seeking advantage and even killing off fellow countries and economies in this pursuit for dominance. Here is the annual report of this latest group of internationalists seeking to see the future.
Readers sometimes email me about my reports not
explaining things thoroughly. This BIS report is one that everyone
should carefully read. Like all the international systems we have
today, it was set up to rebuild Japan and Europe and now exists to
keep the status quo running...a status quo that is destroying the US
economy. This is very simple: Europe and Japan benefit if the US is
forced to pay the price of the G7 alliance! They won't change unless
we force them to change. But we don't want to stop, either. We
imagine the IOUs we are building will never be billed to us. We will
have infinite debt! But this is false and already is causing global
inflation and the collapse of the entire G7 banking system. This is
why yesterday's meeting is so ominous: JAPAN,
CHINA AND OTHER ASIAN EXPORTERS ARE PREPARING FOR THE LOOMING US
BANKRUPTCY AND ECONOMIC COLLAPSE!
Let's go back to last September. The yen is now
very strong. The Japanese Carry Trade has utterly vanished. Since
late July, the G7 banking system has collapsed due to 'no liquidity'.
NO ONE bothers telling us who generated all the previous liquidity,
of course. This is simple: THE TOP G7 BANKERS ARE ALL LYING BASTARDS.
They lie about everything. Note how, on a weekly basis, I bring news
about these guys either lying about obvious facts and figures as well
as their pathetic attempts at hiding information by curtly telling us
that we have no need or any right to know anything!
SEPTEMBER
20, 2007: Japan and China's Banks Have Secret Meeting Yesterday!
Today, we must discuss Risky and Safety, the devil and angel within all of us. The Bank of England is accused of NOT hiding bankruptcy at Northern Rock. Seems the politicians want the public kept in the dark. The drop in US interest rates roil world banks and suddenly, Japan and China called a truce and had a very SECRET meeting to discuss the US banking system and the world FOREX markets and Saudi Arabia threatens to drop the dollar as reserve currency but I bet the Dragon will visit the king there and have further discussions. Gads, the US and UK empire is collapsing and the wars we are losing are causing world oil prices to rise and are we ever in a bad fix here! And the Chinese will fix this, for certain.
*snip*
The fantasy that banking would be more stable and safe if it is SECRET is the key to the business of making wealth out of thin air: the magicians can't operate in the open, they have to have darkness surround their actions! This is true about all wealth-making systems. For example, people who do the actual digging up of wealth in the form of minerals in the earth must go into dark caves and deep pits and do very dangerous work. Some of the most poorly paid people on earth are the army of semi/full slaves who are at the very roots of the wealth system. They die terrible deaths, digging up the gold, silver, coal, iron, diamonds of this earth. Aside from them, there are the farmers who labor in foul or fair weather, doing hard labor who produce the other half of wealth. And then the artisians, vacillating between slavery and guild powers, taking all the raw materials and crafting them into tradeable goods: the basis of civilization
I knew that the Japanese would resume
negotiations with China over forming an all-Asian
currency union. They hoped to leech off of the US system
forever. But when the entire US banking system began its huge
collapse last summer, they could see the writing on the wall. So long
as Japan defied China and demanded China play the G7 game, China
would buy yen and get others like Iran to force Japan into doing
business in yen, not dollars. Since Japan signaled their surrender
last month, the value of the yen has dropped and Japan has become
very, very mute within the G7. A series of high-profile Chinese flew
to Tokyo and had very secret meetings. The Japanese treated the
Chinese with great respect including ceasing their nationalist
actions like worshipping war criminals who massacred Chinese. Now the
negotiations are bearing fruit. For China.
Here is another story about this meeting last
September, 2007:
From
the above article, the official news story:
Bank of Japan Governor Toshihiko Fukui met with his Chinese counterpart Zhou Xiaochuan on Thursday to discuss a wide range of international economic and monetary issues, BOJ officials said.
Although the BOJ officials did not disclose the details of their talks, the U.S. subprime mortgage crisis and its repercussions across the world are believed to have been high on their agenda.
Fukui briefed Zhou, governor of the People's Bank of China, on why the BOJ decided not to raise interest rates at its Policy Board meeting Wednesday as well as his take on the outlook for the Japanese economy, according to the officials.
At first, Japan pretended they had no problems
when the other G7 banks were collapsing. Then the real truth came
out. Japan is being hammered by all this. China also holds a lot of
crummy US paper. But China also holds the world's biggest FOREX
reserves which are probably about $1.5 trillion now. After
September's secret meetings, Japan began to raise their own FOREX
reserves to over a trillion dollars, too. Now, both working in
tandem, can control the value of the dollar and protect their
investments. But only if they work together! I said this last year:
Japan can't float the US Titanic by itself. It needs China to do
this.
Finance ministers of China, Japan and South Korea also agreed to continue support for the Asian Bond Markets Initiative (ABMI), aiming at the development of bond markets in the ASEAN+3 countries.
"We believe that the ABMI has contributed to recent bond market developments in the region both by accelerating market reform of each country and stimulating policy cooperation among the ASEAN+3 countries," the three finance chiefs said in the statement.
The Dragon is very happy today, I might add. They
won this long struggle with Japan. Japan is now
aboard their boat and won't stray again. Last fall, I pointed
out that a huge shift has happened: China and
Japan do more trade with each other than either does with the US!
This is a historic and important shift!
Here is my commentary about all this, from my
September, 2007 story:
Oh, this is when I really wish I was a ghost who could walk through walls! To enter the Top Secret Vault run by the Dragon to hear what that creature said to Miz Japan! What did they talk about? The world banking system?
HAHAHA! I have an ugly feeling, I know what was said. 'We want Taiwan. You want Safety. America's navy is doomed if they go bankrupt. We can bankrupt them any time we wish now. You know this and you know what your fate is,' snarled the Dragon.
'So sorry! We, the LDP, want to keep ruling Japan but we might lose power! We want peace with you, dear Dragon. How can we do this?' says Miz Japan, flirting behind her open fan and holding her sleeve very cocquettishly.
'Between us, we hold over $12 trillion in US wealth, money, bonds, stocks and other things,' says the Dragon, hauling out its acabus and clicking the wooden markers up and down as it adds up everything. 'I don't like losing this investment. I doubt you want to lose, either. As you know,' continued the Dragon, giving Miz Japan a very dark look, 'I have an interest in buying yen suddenly. But if you want to cooperate with me, we can keep the foreign demon bank accounts running for a while longer but you must do as I say and not run off and double deal me when the G8 meet, understand? No more calls for me to change the value of the yuan and we will let the yen drop in value against the dollar again.'
Here is my July 16, 2007 story about how China
became the world's #3 economy. The cartoon is from then:China
Will Be World's #3 Economic Power This Yea
History is the story of the rise and fall of empires. Most economic web pages like to track money making opportunities. Mine is all about the earth, humanity and history. We are a speck around one of the smallest stars in the galaxy and our galaxy is very small compared to all the others moving near us, all flying towards some unknown fate in the future. We are seeing the slow degrading of the US global empire and like all previous imperial collapses, ours will shake the power relationships of the world. Proof that the world is seeing a profound change is the news today that China is displacing Germany as the world's #3 economy. As far as industry is concerned, it has displaced the US already. This is very significant news.
Here is the news from ASEAN's headquarters
concerning this new deal:
China,
Japan, South Korea, ASEAN Agree on Wider Currency Swap Arrangements
An ADB analyst remarked that Wednesday's accord was a step towards setting up an "Asian Monetary Fund," although such an institution might never actually be created. In a joint press conference, the 1O ASEAN and three East Asian financial ministers also called for a review of the quota of Asian countries in the International Monetary Fund (IMF) "to properly reflect the current realities and their relative positions in the world economy." The 13 ministers said an economic surveillance system would be put into place along with the Chiang Mai Initiative framework, to detect irregularities early and apply swift remedies. They also said a collective decision-making mechanism would oversee the current system of bilateral swap arrangements "as a first step towards multilateralization."
*snip*
However, when asked if they were setting up an Asian Monetary Fund, Japanese minister Sadakazu Tanigaki replied, "only the Chiang Mai Initiative was discussed". The ministers said the initiative had been very helpful in maintaining the financial stability of Asian countries even if there had been no repeat of the 1997 crisis. Masahiro Kawai, special adviser to the ADB president, who monitored the ASEAN-plus-3 meeting, said the ministers wanted to increase the effectiveness of the Chiang Mai Initiative which now covers 16 bilateral swap arrangements. He called it a "step towards multilateralization," adding that a "de facto Asian Monetary Fund," may eventually be created.
See how they do a frontal assault on the IMF? The
IMF is going broke, of course. For it is based on the dollar. As the
dollar dies, the IMF dies. This new Asian group
is going to replace the IMF...IN ASIA. They probably talk
about how the IMF is an imperialist organization that works only to
enforce European and American domination. Which is a correct reading
of its organization and goals! Now, either the IMF moves to Asia or
it dies in Europe as the dollar sinks it. The contradictory nature of
the euro shooting up while the dollar dies will accelerate! Europe
can't afford this much longer. So either the Europeans play ball with
China or they get cut out of world export markets.
Also, this article mentions the Chiang Mai
Initiative. We should look at that, too. When the US refused to
negotiate with North Korea and threw that mess into China's lap,
China fixed everything and showed Asia, who was the real boss. In
this monetary business, the same process is at work. The US has flung
the dying dollar into Asia's lap. The Japanese simply tried to keep
it strong. The Chinese will lock it out. Below is a study from South
Korea examining the new initiative, written in 2000.
Here is a cartoon from July, 2007, about the
sudden demand by Iran that Japan pay in yen instead of dollars:
[Nov 2000]
After the financial crisis touched off in July, 1997, Japan proposed creation of an Asian monetary fund as a framework for promoting financial cooperation and policy coordination in the region, which would help Asian economies prevent and manage better future financial crises. Although the proposal received a positive response from a number of East Asian countries, it was shelved at the objection of the U.S, EU, and the IMF. The idea was revived again early this year when the Finance Ministers of ASEAN countries plus China, Japan, and South Korea (ASEAN+3) agreed in May 2000 to establish a system of swap arrangements within the ASEAN+3 countries in what is known as the Chiang Mai Initiative (CMI). It involves (1) an expanded ASEAN Swap Arrangement (from 5 members to 10) and (2) a network of bilateral swap arrangements among ASEAN countries, China, Japan, and South Korea. The CMI swap arrangements will provide liquidity support for the member countries that experience balance of payment difficulties in order to prevent an extreme crisis or systemic failure in a country and subsequent regional contagion as occurred in the recent Asian financial crisis.
The objective of the study is to present a blueprint for a new network of bilateral swap arrangements (NBSA) in East Asia which will help stabilize financial markets and exchange rates through appropriate provision of liquidity assistance. As the title of this study indicates, the proposal made by this study goes beyond the agreed basic framework of the Chiang Mai Initiative. In order to propose an operational framework for consolidating the existing and proposed bilateral swap arrangements, this study will specifically focus on the issues of how the NBSA will be more efficiently and effectively managed to achieve the goal of the CMI. Attention will be paid to rationale and need for decision-making body and extended regional surveillance for better management of the NBSA.
Note that Japan launched this! Also, look at how
the IMF reacted. They hated it. Loss of power! At first, Japan tried
to host this new system. Europe was way ahead, they already launched
the euro at this same time! Japan wanted to play catch-up. But China
was very suspicious.
[Nov 2000]There has been an emerging consensus in East Asia that East Asians must join forces to establish regional financial arrangements which will help them fend off speculative attacks and, in so doing, stabilize the East Asian financial markets. However, it is still at an early stage and it is not altogether clear at this stage whether they will be able to successfully negotiate the creation of such arrangements, given the different interests of different countries with respect to regional financial cooperation. Details of the swap arrangement mechanism among the ASEAN + 3 countries will have to be worked out, and at this stage it is too early to tell whether the thirteen countries will be able to design a scheme acceptable not only to ASEAN member states but also to China, Japan, and Korea. In order to help speed up the negotiation process, this paper presented a blueprint for a further development of the CMI.
For 7 years, the negotiations have been running
and all parties have tried every trick in the book to thwart each
other. This affair could be settled only if one or another party
gained enough economic and MILITARY power to force the others to
change course. This happened only this month. The other nations are
finally admitting the US is going bankrupt, our military is
dysfunctional, the attempt at dismembering
China has failed and the US is a dying economy. Now,
Japan and South Korea must play with the Dragon of China. They
have no choice. It is that, or sink with the USS Titanic.
[Nov 2000]East Asia has a long way to go before formalizing, and putting into effect, the Chiang Mai initiative and launching other types of cooperative mechanisms. In this regard, Japan should be able to provide leadership in papering over the differences among the East Asian countries that are likely to emerge in the negotiation process. In addition, most of all, Japan should be prepared to provide a large share of the resources needed to facilitate regional financial cooperation without dominating the other countries.
Finally but most importantly, Asian regional initiative should contribute to the stability to the international financial system, as the Asian Development Bank has done for global development finance for over 30 years. A first requirement for achieving cooperative evolution with the rest of the world is for East Asians and outsiders to consult actively and candidly, perhaps with the United States in APEC and with Europe in ASEM (the Asia-Europe Meetings). East Asians need to tell the international community clearly what they are motivated to do, how they develop action plan, and how they believe it fits in with global systems. Outsiders also need to listen carefully and support them, if possible, in an outward-looking direction (Bergsten, 2000).
Japan was unable to 'paper over differences.'
China fixed these by sheer power accumulation. They have the world's
biggest FOREX reserves, by far and away. They have one of the biggest
economies. They certainly have one of the biggest populations and
their military is catching up with the US in significant ways unlike
most of the world which is not bothering to even try. China's rise is
meteoric. The US is obviously floundering and falling into a pit.
This Korean analyst was operating under the Old System. Note how he
thinks China and Japan should consult with the US and Europe! HAHAHA.
And not be secretive! HAHAHA. And they should explain clearly what
their ultimate plans are! HAHAHA. Well, I know all this but few
people bother reading me. One doesn't have to be a genius to figure
out what will happen next and what the plans are.
Like most Asian commentators and analysts working
for Western imperialists, he thinks the best route is appeasement and
bowing and scraping before the Great Imperial Powers. But the new
rulers in Asia would rather die than do this. First, you lose face.
Second, the West has this nasty habit of kicking people in the face.
We respond only to coarse and obvious goads and restraints.
Here is the news for one of the earlier joint
initiatives which Japan thought, gave them an upper hand with
China;October
17, 2005 SIGNING OF THE SECOND BILATERAL SWAP ARRANGEMENT BETWEEN THE
PEOPLE’S REPUBLIC OF CHINA AND THE REPUBLIC OF INDONESIA UNDER
THE CHIANG MAI INITIATIVE – SECOND STAGE
The Bank of Japan, acting as the agent for the Minister of Finance of Japan, and the Bank of Korea (BOK), today, signed a second bilateral swap arrangement (BSA) under the Chiang Mai Initiative (CMI). The agreement will enable both countries to swap their local currencies (i.e., Korean won or Japanese yen) against US dollars. Under the agreement, Japan commits USD 10 billion while Korea commits USD 5 billion.
Japan’s
Bilateral Swap arrangements under Chiang Mai Initiative
Japan has reached the bilateral swap arrangements under the Chiang Mai Initiative with the following countries:
(1)
The Republic of Korea
- Japan has concluded a one-way US dollar-won swap arrangement up to $2 billion on July 4, 2001, in addition to the $ 5 billion swap arrangement under the New Miyazawa Initiative.
(2)
Thailand
- Japan has concluded a one-way US dollar-baht swap arrangement up to $3 billion on July 30, 2001.This arrangement expired in July 2004.As of January 2005, Japan has agreed to conclude a two-way swap arrangement (US dollar-baht and US dollar-yen) up to $ 3 billion.
(3)
Philippines
- Japan has concluded a one-way US dollar-peso swap arrangement up to $3 billion on August 27, 2001.
(4)
Malaysia
- Japan has concluded a one-way US dollar-ringgit swap arrangement up to $1 billion on October 5, 2001, in addition to the $ 2.5 billion swap arrangement under the New Miyazawa Initiative.
(5)
China
- Japan has concluded a two-way yen-renminbi swap arrangement up to the equivalent of $3 billion on March 28, 2002.
(6)
Indonesia
- Japan has concluded a one-way US dollar-rupiah swap arrangement up to $3 billion on February 17, 2003.
(7)
Singapore
- Japan has concluded a one-way US dollar-Singapore dollar swap arrangement up to $1 billion on November 10, 2003.
Back then, Japan was very busy tying together all
its neighbors. Then, Japan decided it was
time to go after China with the help of the US and Europe in 2007.
But this failed miserably. Now, all
that work by Japan is being usurped by China which is using all this
to build a Sino-centric system. By the way, below is an
old article from last year where I struggle to explain all these
forces. It is a good article to review:
JULY,
2007--Bank of Japan Opens The Equity Taps:
Japan and the oil pumping Arabs are hosing the planet with liquidity. This liquid is red ink mostly from the USA. But the flood of money pouring into the coffers of these two entities far exceeds any trade so where does it come from? Time to talk about magic numbers and infinity! Also, Writers assure us that a weak dollar is a good dollar but doesn't explain how we can kill the dollar faster than Japan can kill the yen. And reporters continue to try to understand hedge funds. They are getting more and more suspicious as hedge fund hell hounds foam at the mouth, bite investors and then die suddenly. And Moody's raises Japan's credit rating.
*snip*
Europe and the US and even China are turning off the taps. This is fancy talk for raising interest rates. But a miracle happens that is equal to Jesus and the bread and fish or as I like to say, his catering lox and bagels when he gave the Sermon on the Mount. Namely, out of six fish, six bagels and some cream cheese, he conjoured up, being a wizard, enough food to feed an army of people. So it is with money. How is this stuff created?
Well, it is 'fiat' chits set up to tell us the relative value of various objects and services and then everyone trades this IOUs and since this system automatically creates inflation, the government tracks who is promising whom and then adjusts intrest charged for holding money OUT OF THE SYSTEM. This is called 'interest' and the money kept out of the system is called 'savings'.
So, when there are too many IOUs on paper floating about, prices rise because people bid up the value of assets and purchases and the IOUs lent out by the savers begin to cause their savings to shrink in value so they cease saving and inflation shoots higher as no one is saving.
So, the entire fundamental basis of an economy rests upon the idea that enough people will be tempted to save money rather than send it out in to the economy. But the US is in a negative savings rate right now and on top of this, the US is the global empire and so, it can and does create global inflation when the government drops interest rates so low, no one bothers saving any money.
Well, the fiction for the last 7 years, ever since the US decided fiat money was free and gave out fist fulls of it at 1% interest, the story line cooked up by the crooks doing this was, Japan and China like to save. Well, this was a lie. And like all lies, takes time and patience to expose and undo. Now the whole planet knows that NO ONE ON EARTH is saving much of anything. Everyone is spending which is why the global economy is 'booming'. File this under 'DUH'.
The US should have shut
down the Japanese Carry Trade the minute it was beginning to be
exploited as a back door for flooding the US with debt. But it
worked alongside the super-low rates of the Fed to goose our markets
higher and higher. The Fed is supposed to stop inflation which means
stopping wild lending. Instead, the Fed
encouraged and enabled this. And our corrupt politicians
refused to understand how all this was connected with our trade
deficits and our government overspending. They STILL refuse to
understand. But the game is going to end soon. This is why the many
secret and open meetings in Asia are accelerating and they are madly
building a New World Monetary Order that is NOT
based on the dollar! And I am betting that all the oil pumping
nations will try to join this new system! All Sovereign Wealth
nations will be forced to join or lose all their wealth when the
dollar tanks.