Rise of the Dragon


New World Order – Is Asia’s New Bank a Threat to Western Power and the U.S. Dollar?

Alasdair MacLeod, Economist
http://financeandeconomics.org/
3/20/15

In 2002 China and Russia formally adopted the founding charter for the Shanghai Cooperation Organization (SCO), an economic block that today contains about 35% of the world’s population, which will become more … the largest internal market ever seen. …

(Now,) China and Russia have taken the lead in establishing the Asian Infrastructure Investment Bank (AIIB), seen as a rival organization to the World Bank and the Asian Development Bank, which are dominated by the United States with Europe and Japan. …

The geopolitical importance was immediately evident … . The list of U.S. allies seeking to join is growing. … The countries that are applying to join the AIIB realize that they have to be members to access what will eventually become the largest single market in the world. America is being frozen out, the consequence of her belligerence …

The outstanding issue now is China and Russia will need to … make their currencies a slam-dunk replacement for the dollar. … Before we get there China must manage a deliberate deflation of her credit bubble … . The U.S. economy is faltering as well (and) the last thing America and the dollar needs is a deflationary shock from China. …

(More)

(See this on the hurdle China faces. And this fictional account of what the bubble bursting in China might look like. But this part is not fictional: “China is now sitting on top of the greatest accumulation of bad debt and overcapacity in history.” For example, “China used more cement in the period from 2011 to 2013 (6.6 gigatons) than the United States did in the entire twentieth century (4.5 gigatons).” And this is something to watch: China won’t be able to “prop up real estate and commodity prices. Over time, because the decline in real estate and commodity prices is evidence of China’s overcapacity and those assets are collateral for so much debt, it will be China’s Achilles’ heel.”)

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About icliks

Biding my time in central ms ... yours too, if ur reading this.
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