Hi Gary,
I think gold vs. dollar vs. Euro vs. Yen, trade blocs vs. globalization, Islam vs. Christianity, Hindu vs. Islam, Israel vs. Arabs, Japan vs. Asia ex-Japan, India vs. China, Pakistan vs. India, Russia vs. EU, communism vs. capitalism vs. socialism, gun vs. butter, nuclear power vs. carbon energy, Republicans vs. Democrats, Tory vs. Labor, Marx vs. Adam Smith, inflation vs. price stability, US vs. China, China vs. Taiwan, Via vs. Intel, Legend vs. Dell, Linux vs. Windows, etc. are all dots on the same continuum of geopolitical, socioeconomic and ethnic tapestry. Any issue on this tapestry is related in every way to every other issue.
This is one of many reasons I keep saying “no rights, no wrongs, only just is”.
On the link post …
<<He said there are also strong rumours that the Bank of China has become a big buyer of gold. It holds $130 billion (£92 billion) of foreign exchange reserves and as relations with the US deteriorate it is switching them out of dollars into gold.
"I suppose they don't want their reserves managed by the central banker of the enemy, Alan Greenspan," he said.>>
I believe the China official forex reserve is about 180 billion, but more importantly, there is quite a bit of private forex reserves also held at the bank, actually dwarfing official reserves at times. This is truer still in Hong Kong (official reserve about $110 billion) and Taiwan ($130-180 billion). China and Taiwan believes in gold as a reserve metal. Hong Kong does not. HK now holds a basket of currencies, and before now, only US$.
The simpler and previously truer explanation is that the Peoples Bank of China (PBOC, central bank) had always been the only buyer of monetary gold in China, by law. As China is planning on deregulating the gold industry, continuing banking reforms, and PBOC will be a seller of monetary gold to the general population from reserve in a few years time, it is not surprising that PBOC continues to stockpile more gold than required for official reserve when the getting is still good, and make a whopper of a gain later, partly to fund banking reform, partly to fund bonuses for a past monopoly job well done.
The complicated and newer reason may be well related to the US. I think Bush rhetoric, E3, and the earlier embassy bombing, has managed to energized the PRC hawkish camp at high enough levels to push through their agenda of military preparedness based on the argument “why take a chance? And besides, it is good for the economy”. This is a difficult argument to counter for the non-hawkish camp of leadership. And so, more missiles will get built at 1/3 to ¼ the generally accepted world cost, with 1980s rocketry and avionic technologies, supplemented by the occasional internet enabled nuggets of data.
What the China hawkish camp in Beijing sees is that the US may make war necessary, however, the timing of the war is at China’s choice. Once both sides are prepared, strategy will allow a bloodless victory.
What the China non-hawkish camp sees is that the development of China’s domestic continental sized economy will allow China to achieve all that Japan has achieved, be a great power, without over-dependence on export and without mania derived from export earned liquidity, and able to ignore the US on most issues.
What Taiwan sees is that they may get seriously hurt in a tussle, even if China and the US do not come to blows.
What Hong Kong sees is we may get rich several times, and then, again, several more times. Just need to know the rules ahead of time, and all the twists and turns in between times.
What the US will hopefully soon see is that much of what is Made in Taiwan, is already and/or soon will be Made in China, and to “save” Taiwan the Bushies intends to, they will have to kill Taiwan first.
What the China camps will hopefully soon see is that getting wealthier is better, and keeping wealthier sweeter still. I think the China camps see this, except the hawkish camp is using the issues to gain political power so as to gain more sweets. The non-hawkish side has to play along so as to keep power.
I suspect the US politics is as convoluted, and has as many interested parties vying for power.
For fun, I had sent this e-mail to a buddy of mine at the HK monetary authority, and it had gotten put on the table for discussion, and so I am to know I am now famous at the HKMA :(
Message 15697602
Chugs, Jay |
