They're dashed clever these oriental types and they grow up in a culture in which loss of face is a serious matter. Whenever an established position needs to be altered you will not witness an admission of error or even of change of mind, the switch will be effected either by sacrifice of the career and reputation of the person nominated to take blame or by a series of gradual shifts of emphasis, each explained as an incremental development of existing policy in the light of new circumstances.
Their approach mirrors that of most modern western European politicians, these days only the rarest instance arises of an overt and admitted change of mind. Here in the UK we saw a sea-change in the mid and late 1990s as the spin machine of the Blairite Labour opposition pounced on any division, indecision or flip-flop on the part of the incumbent Conservative government. It was a well-organised (but patently dishonest) approach and it presented the image required for electoral purposes. Since then a united front and a consistent position have been seen as fundamental to the prospect of gaining political power, it allows only limited scope for a change of mind, indeed I would suggest the only exception is when both main parties have to abandon a previously advocated stance because of external factors.
The main players of the EU are even less inclined to change their positions, albeit for a different reason. No ballot box can oust them but they are on a mission to remove all powers from individual EU member states and create a single political system under the dictation of the EU oligarchy. In order to achieve this they must appear strong, so strong that national governments have no realistic chance of challenging or overturning the position the EU's permanent rulers have decreed to be correct. Perhaps the greatest exemplar of this is the Euro. The Euro is the means by which the aim of unified political control can be achieved. For some us it is also seen as the means by which unified political control can, should and will be defeated but that is not the topic for today.
Buttering-up the locals publicly is a necessary part of international diplomacy, often accompanied by quiet expressions of criticism being made behind the scenes. Criticising the locals publicly is an inevitable part of international power-grabs, often accompanied by soothing words of support to incumbent politicians in private until they are no longer of use. When it comes to business, the ideal situation to find is one in which others are acting in a way that will be of enormous benefit to your business in the long term. In that situation you would be mad to point out their errors, so you adopt your public diplomatic hat and say nothing else, safe in the knowledge that it will deliver you economic power that you could not achieve by criticism. That is what China's Prime Minister, Mr Wen, is doing very successfully during his short tour of Europe. We are told (here) he said "China will consistently support Europe and the euro." Well, yes, of course, he would be mad to say anything else. Supporting Europe is a fine sentiment that is totally without substantive meaning. The final three words are, however, in a different category.
Why would China want to support the Euro? A strong Euro zone full of throbbing economies making lots of goodies to sell to China would undoubtedly provide all the benefits history proves to arise from efficient, competitive production but the same would arise from those throbbing economies having their own individual currencies - as it did throughout the industrial era until the Euro was established. Portugal, Italy, Ireland, Greece and Spain (the PIIGS) are living proof that the Euro does not have magical powers and cannot turn idleness into profit or house-price bubbles into genuine wealth. The economies of these countries are not throbbing and nothing about the Euro can make them throb. If truth be told they would probably not throb outside the Euro but they would have the chance of stability at their own sustainable level of economic activity. Out of the Euro these countries can offer China greater trading opportunities than they can while still inside but that is not of any great interest to Mr Wen.
Mr Wen is playing the second half of the game China played during the boom years of 2003-7. Then China cashed-in on the additional money (I stress money, not wealth) sloshing about Western Europe due to the expansion of credit beyond sustainable levels. That it was not sustainable made no difference to China, it sent us washing machines and we sent it money. Washing machines lose value far faster than money, they need to be replaced so China says thank you and sticks another wad in the bank. Now that the PIIGS are having to face up to their earlier folly and are unable to ease their situation by devaluation, they need to raise money. The EU considers it necessary to keep them in the Euro zone and the only way that can happen is by increasing their debt enormously in the short term in the vain hope of something coming along later to allow repayment. One thing can come along in pretty short order, namely Chinese money. After all, China has lots of money in the bank that came from the PIIGS in exchange for washing machines and other jolly delights of modern life.
Buttering-up the locals is easily done when you have lots of money. The course chosen by China is to buy Euro currrency bonds issued by the insolvent PIIGS, to send a signal of confidence that is in fact nothing of the sort because they are safe in the knowledge that those bonds are essentially backed by all Euro zone economies (including Germany) due to the EU's need to support the Euro project. All the while the PIIGS will remain insolvent unless they can raise large sums of money. China is awash with the profits from years of washing machines, that is all very well except that cash can only fall in value over time whereas turning cash into capital assets stands a chance of giving a positive return over the longer term.
China's plan is to buy capital assets at below par value, a plan that is easy to achieve when the current owner is desperate for cash and is willing to hold a fire sale just to get something in the bank. It happened with the MG Rover site in Birmingham and it will happen with state-owned and privately-owned land and businesses throughout the EU. The UK and most of those in the Euro zone gave them the money to do so by creating credit we could not afford and spending it on Chinese goods, now that we need additional money (either because we are illiquid or because we are insolvent), the very money we created is being used to save us however in return we must give capital assets we can have no hope of ever recovering.
Of course China supports the Euro. Maintaining the Eurozone with its current participants means there are five countries (the PIIGS) in such dire need that there are rich pickings for Mr Wen and his merry men.
When Mr Wen says his country will support the Euro he is not giving it a Good Housekeeping Seal of Approval, he is shouting as loud as he can that the Euro is a disaster and must be scrapped to prevent the wholesale transfer of capital assets to his country.
They're dashed clever these oriental types.
Their approach mirrors that of most modern western European politicians, these days only the rarest instance arises of an overt and admitted change of mind. Here in the UK we saw a sea-change in the mid and late 1990s as the spin machine of the Blairite Labour opposition pounced on any division, indecision or flip-flop on the part of the incumbent Conservative government. It was a well-organised (but patently dishonest) approach and it presented the image required for electoral purposes. Since then a united front and a consistent position have been seen as fundamental to the prospect of gaining political power, it allows only limited scope for a change of mind, indeed I would suggest the only exception is when both main parties have to abandon a previously advocated stance because of external factors.
The main players of the EU are even less inclined to change their positions, albeit for a different reason. No ballot box can oust them but they are on a mission to remove all powers from individual EU member states and create a single political system under the dictation of the EU oligarchy. In order to achieve this they must appear strong, so strong that national governments have no realistic chance of challenging or overturning the position the EU's permanent rulers have decreed to be correct. Perhaps the greatest exemplar of this is the Euro. The Euro is the means by which the aim of unified political control can be achieved. For some us it is also seen as the means by which unified political control can, should and will be defeated but that is not the topic for today.
Buttering-up the locals publicly is a necessary part of international diplomacy, often accompanied by quiet expressions of criticism being made behind the scenes. Criticising the locals publicly is an inevitable part of international power-grabs, often accompanied by soothing words of support to incumbent politicians in private until they are no longer of use. When it comes to business, the ideal situation to find is one in which others are acting in a way that will be of enormous benefit to your business in the long term. In that situation you would be mad to point out their errors, so you adopt your public diplomatic hat and say nothing else, safe in the knowledge that it will deliver you economic power that you could not achieve by criticism. That is what China's Prime Minister, Mr Wen, is doing very successfully during his short tour of Europe. We are told (here) he said "China will consistently support Europe and the euro." Well, yes, of course, he would be mad to say anything else. Supporting Europe is a fine sentiment that is totally without substantive meaning. The final three words are, however, in a different category.
Why would China want to support the Euro? A strong Euro zone full of throbbing economies making lots of goodies to sell to China would undoubtedly provide all the benefits history proves to arise from efficient, competitive production but the same would arise from those throbbing economies having their own individual currencies - as it did throughout the industrial era until the Euro was established. Portugal, Italy, Ireland, Greece and Spain (the PIIGS) are living proof that the Euro does not have magical powers and cannot turn idleness into profit or house-price bubbles into genuine wealth. The economies of these countries are not throbbing and nothing about the Euro can make them throb. If truth be told they would probably not throb outside the Euro but they would have the chance of stability at their own sustainable level of economic activity. Out of the Euro these countries can offer China greater trading opportunities than they can while still inside but that is not of any great interest to Mr Wen.
Mr Wen is playing the second half of the game China played during the boom years of 2003-7. Then China cashed-in on the additional money (I stress money, not wealth) sloshing about Western Europe due to the expansion of credit beyond sustainable levels. That it was not sustainable made no difference to China, it sent us washing machines and we sent it money. Washing machines lose value far faster than money, they need to be replaced so China says thank you and sticks another wad in the bank. Now that the PIIGS are having to face up to their earlier folly and are unable to ease their situation by devaluation, they need to raise money. The EU considers it necessary to keep them in the Euro zone and the only way that can happen is by increasing their debt enormously in the short term in the vain hope of something coming along later to allow repayment. One thing can come along in pretty short order, namely Chinese money. After all, China has lots of money in the bank that came from the PIIGS in exchange for washing machines and other jolly delights of modern life.
Buttering-up the locals is easily done when you have lots of money. The course chosen by China is to buy Euro currrency bonds issued by the insolvent PIIGS, to send a signal of confidence that is in fact nothing of the sort because they are safe in the knowledge that those bonds are essentially backed by all Euro zone economies (including Germany) due to the EU's need to support the Euro project. All the while the PIIGS will remain insolvent unless they can raise large sums of money. China is awash with the profits from years of washing machines, that is all very well except that cash can only fall in value over time whereas turning cash into capital assets stands a chance of giving a positive return over the longer term.
China's plan is to buy capital assets at below par value, a plan that is easy to achieve when the current owner is desperate for cash and is willing to hold a fire sale just to get something in the bank. It happened with the MG Rover site in Birmingham and it will happen with state-owned and privately-owned land and businesses throughout the EU. The UK and most of those in the Euro zone gave them the money to do so by creating credit we could not afford and spending it on Chinese goods, now that we need additional money (either because we are illiquid or because we are insolvent), the very money we created is being used to save us however in return we must give capital assets we can have no hope of ever recovering.
Of course China supports the Euro. Maintaining the Eurozone with its current participants means there are five countries (the PIIGS) in such dire need that there are rich pickings for Mr Wen and his merry men.
When Mr Wen says his country will support the Euro he is not giving it a Good Housekeeping Seal of Approval, he is shouting as loud as he can that the Euro is a disaster and must be scrapped to prevent the wholesale transfer of capital assets to his country.
They're dashed clever these oriental types.
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2 comments:
Absolutely. The Chinese have lots of bits of paper that promise you can buy real stuff with it, but they are worried that they may end up with, well, just bits of paper. So they are looking for ways to get their hands on real wealth instead. Land, property, infrastructure etc etc.
If you can stub your toe on it, China will be wanting to get their hands on it.
FB,
I don't think so-the idea is to gain influence and get a toehold into the EU.
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