The current trend in the world of finance and politics is toward consolidation of power into the hands of a few large financial intuitions like Goldman Sachs. Over 40 US states have turned over control of unemployment payments to the largest private banks such as Bank of America, JP Morgan Chase, and Citibank. Recipients of benefits are often forced to have a bank account and a debit card at these banks in order to receive their benefits.
The state of Kentucky handed over control of all their revenues and financial transactions to these same banks which caused the global financial crisis. Handing over large accounts of public money are among the many gifts and support measures provided by US government entities to prop up and rescue too big to fail banks.
So how do these mega bank show their gratitude to the American People for throwing them a lifeline during the financial crises that began in 2008? A little known fact is that last year Citigroup, JP Morgan, and many other large international banks were engaged in promoting China’s renminbi currency to be accepted in place of the dollar in world commerce. The financial times of London ran an article on August 26, 2010 entitled “Banks back switch to renminbi for trade” which states:
“A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China. HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.”
“We’re now capable of doing renminbi settlement in many parts of the world,” said Chris Lewis, HSBC’s head of trade for greater China. “All the other major international banks are frantically trying to do the same thing.”
“HSBC and StanChart are among a slew of global banks – including Citigroup and JP Morgan – holding roadshows across Asia, Europe and the US to promote the renminbi to companies.”
These moves toward internationalizing the Chinese renminbi to replace the dollar would require approval from global corporate giants. Ironically the American icon McDonald’s became the first foreign company in the world to sell corporate bonds in renminbi.
CHINA IS TOP POLICY ISSUE FOR UNITED STATES
Considered unimportant to many, the pivotal political event for global politics this year was the Jan 2011 State visit to the U.S. by Chinese President Hu. US negotiations with China primarily concern the dollar’s competition with China’s currency, the fate of the dollar, and what will be the future world reserve currency. Leading into the January 2011 State Visit, the New York Times ran an article which discussed President Obama’s earlier 2009 Asia tour and its overall failure.
“In Seoul, instead of getting hammered on its currency, China managed to persuade Europe to join it in rejecting core elements of Mr. Obama’s strategy of stimulating growth before focusing on deficit reduction. In addition, several major nations accused the Federal Reserve of deliberately devaluing the dollar in an effort to put the costs of America’s competitive troubles on trading partners, rather than taking politically tough measures to rein in spending at home. The result was that Mr. Obama appeared on the world stage as a leader of a country losing ground to a rising China. Administration officials are determined that this will not happen during the visit to Washington this week.”
This ‘determination’ alluded to by Obama administration officials would evidence itself both in the Arab revolts and the harsh criticism of China during the Chinese President’s visit to Washington. The criticism came through top officials such as Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner. It is quite unusual diplomacy to openly criticize the policies of a head of state while they are concurrently a guest in your country. What was further unusual was the extent to which US Officials, corporate leaders, and political elites simultaneously attempted to make a powerful and friendly impression on the Chinese President. This seemingly contradictory policy was made mention of in a New York Times article.
“David Rothkopf, a national security expert who worked in the administration of President Bill Clinton, said: “There’s been this well-orchestrated and clearly well thought-out campaign, over the past two weeks, involving the secretary of state, Treasury, defense and commerce making strong statements regarding currency, the trade imbalance, human rights and China’s military stance.” He added, “So you’re welcoming the leader of the most important rival power in the world into the capital, and the way you pave his entrance into the city is laid with these four big thorny issues”
During the State Visit on Wednesday Jan 19th the Chinese President attended a meeting where he was surrounded by a large show of American corporate might. Such was actually an indication that the US was trying to mask its weakness and really needed something important from China. The list of executives in attendance was unprecedented and included all of the following:
* Steve Ballmer of Microsoft
* Lloyd Blankfein of Goldman Sachs,
* Jeff Immelt of General Electric
* Paul Otellini of Intel
* Ellen Kullman of Du Pont
* David Rubenstiein of Carlyle Group
* Aris Candris of Westinghouse Electric Corp.
* John Chen the former Sybase Inc. chief executive
* Muhtar Kent of Coca-Cola Co.
* Greg Page of Cargill Inc
* John Thornton of HSBC Holdings
* Andrew Liveris of Dow Chemical Co.
In spite of all the diplomatic shock and awe, the United States did not achieve what seemed to be its primary objective which was to have China eliminate protections on its banking sector and currency. Richard Adams of the UK Gaurdian presented a time-line of events and quotes from the State visit and press conference with the Chinese and American heads of state. The quotes of President Obama are a good indication of what the US was requesting from China in private discussions:
“The currency issue is a part of the problem, the RMB [renminbi] is undervalued,” says Obama, more bluntly. “President Hu has indicated that he is in favor of moving towards a market-based system,” …” but it’s not happening fast enough. Anyway, it will be a win-win for both countries once the renminbi floats”…
“We want to sell you all kinds of stuff. We want to sell you planes, we want to sell you cars, we want to sell you software,”
HENRY KISSINGER ON CHINA
Henry Kissinger continues to be an important figure on US policy toward China and has been for the last 4 decades. He was in attendance for the State Dinner with the Chinese President, and was reported to have also had a private meeting with the Chinese President. He has been influential on policy and in numerous appointments of the Obama administration. Dr. Kissinger released a book in 2011 entitled “On China” His writings and statement provide a great insight into what may be guiding present decisions on US military and foreign policy.
On Oct 12, 2009 Kissinger posted an article advocating that Obama has no real option but to support the Af-Pakistan surge which General Stanley McChrystal lobbied for. Obama ended up agreeing with this position. Carefully reading between the lines of one of Dr Kissinger’s articles we find clues as to why US has made such a large commitment and sacrifice in Afghanistan. He wrote:
“The special aspect of Afghanistan is that it has powerful neighbors or near neighbors—Pakistan, India, China, Russia, Iran”
In January 2009 just 8 days before Obama was inaugurated Henry Kissigner laid out his thoughts on the importance of China to the United States entitled “A Chance for a New World Order”
“As the new U.S. administration prepares to take office amidst grave financial and international crises, it may seem counterintuitive to argue that the very unsettled nature of the international system generates a unique opportunity for creative diplomacy…”
“The Atlantic partnership will need to work towards a common design if it is to survive….This is why the U.S. relationship with China is so central…What kind of global economic order arises will depend importantly on how China and America deal with each other over the next few years.”
IT’S ALL ABOUT MONEY AND BANKING
In the context of Dr. Kissinger’s assement, the promotion of the Chinese renminbi currency by JP Morgan, Citigroup, HSBC, and other western banks cited earlier makes perfect sense. The actions of these banks appears to be a preliminary good will gesture to China in hopes they will agree to share control of the renminbi with the ‘Atlantic partnership’ else share control over a new world reserve currency.
As Dr. Kissinger indicates, a deal with China on financial issues is required by interests in the United States. This seems to explain why U.S. political leaders have been tolerating the large trade imbalance with China and helping facilitate the transfer of American technology and manufacturing jobs to China.
But it seems the needed deal with China was not achieved during the State visit in January 2011. Since the carrot approach with China wasn’t working, it seems the stick approach was implemented. Tunisia, Egypt, Libya, and the other Arab revolts were a timely message to China that the Atlantic partnership will not go away quietly. China’s growing economic and political ties in North Africa and the middle east region were going to be undermined until Chinese elites came to the realization that they must make a deal.
Goldman Sachs played an integral part of the unusual State Visit diplomacy as evidenced by its reversal of position in calling on investors worldwide to pull out of China while the January 2011 State visit was underway. Facebook and Google played a key role in supporting the Arab revolts and the timeline of events is suggestive of a connection between the Chinese State Visit and the Arab revolts. The day the Chinese President left Washinton DC was the very same day Google Executive Wael Ghonim posted the Facebook call for a January 25 protest by Egyptians.
The underlying issue is that the Atlantic partnership is bankrupt and China believes that its currency deserves to be the new unit of trade in the world. The time is upon us where the US dollar can no longer be maintained as the worlds reserve currency. China holds the key to determining if the bankrupt financial institutions of the West will live or die. China is poised to become the new financial center of gravity in the world as the value of the dollar fades. Therefore China is holding the best cards in the game.
There is another factor that makes China vital to the Western powers. The Financial Oligarchical system of rule which dominates the Western world today thrives by occupying every country like China, which is both a military and economic superpower. It is those who control that system that want to gain a foothold in China. That is why we are seeing Arab revolts and a NATO war on Libya. It is for that agenda that the United States will continue to pay the heavy price for occupying Af-Pakistan, bank bailouts, transfer of jobs to China, and the flight of capital and industry out of the United States.
Changing the balance of power is what is needed and the ability to do so is within the power of everyday people. Abuse of power by banks with this China agenda is actually enabled by individuals who unconsciously deposit their money in them. State and local governments put trillions in public money in these same banks in the form of state reserves and pension funds. The solution to the problem is in the hands of individuals all over the world, not just in the United States. The most viable option for world peace and a global economic recovery is for people worldwide to move their money somewhere else. Remove trillions of dollars from the bad banks and instead use it to establish banks which invest responsibly and operate in the public interest. Start locally and start today.