The other day, I wrote that it's getting harder and harder to find fictional movie villains that don't violate political correctness and that the only real country left you are allowed to use is North Korea.  I felt a brief pang of conscience after writing that.  "I'm being unfair," I thought.  “After all, the remake of Red Dawn at least has the Chinese as the invading force.”

Once again, I underestimated the amount of stupidity in the world.  Today comes the announcement that for fear of offending foreign consumers, the enemy in Red Dawn has been changed to—wait for it—North Korea.  All of the advance marketing for the movie, which was pretty extensive, is being completely redone. The film—which was already shot—is now being digitally altered. Fictional America is at war with North Korea.  Fictional America has always been at war with North Korea.  There wasn't even any protest from Chinese-Americans or the Chinese government.  They caved unilaterally. 

Of course, this also screws up the story.  A Chinese invasion in America could at least allow movie critics to write things like "the fact that this movie is even made suggests concern within the American subconscious about being displaced as the sole superpower."  Now the movie is just stupid.

At least a Soviet invasion during the 1980’s made some kind of sense. The only explanation here will be Evil. Even more than in the original, I expect the main targets of the invading force will be schools, unoccupied vehicles, unarmed children, and other key military targets.

As an aside, I note here that John Milius, who was the screenwriter for the original Red Dawn, also wrote the backstory for the new video game Homefront.  Homefront allows you to fight in the "Second American Revolution," against the North Koreans that are occupying San Francisco for some reason.  It should be noted that the initial villain in Homefront was also the Chinese but that was changed too.

Alexander Dugin has said that North Korea must be supported because it is standing in opposition to the global American empire.  I agree it must be supported, but for a different reason.  If North Korea falls, we won't have a single actually existing country left we can use as a movie villain.

 

As Jim Rickards explains, the ongoing "yuan revaluation" controversy must be understood within the context of the collapse of the dollar. 

This isn't the first time Rickards has theorized that in order to save the dollar, the Treasury and Fed will have to resort to some kind of gold backing -- and at levels that would shock most CNBC watchers: $5,000-10,000 an ounce.

This might be true... but I've always believed that it's more likely that the U.S. would experience a total economic collapse than its leaders would be willing and able to do the right thing. In all other cases of governments rescuing a doomed fiat currency by returning to gold, there were institutional memories of sound money. For instance, during the Bolshevik Revolution and ensuing Civil War, Lenin's regime had debased the ruble into oblivion. When the Bolsheviks sought stability in the 20s -- and reluctantly returned to many aspects of capitalism -- they introduced a gold-backed money to replace the ruble, the "chervonet." (The name itself once referred to pure gold coins of foreign mintage.) Today, the American Treasury and Fed are filled with wonks who are convinced that gold is a ridiculous, barbarous relic as well as once-and-future investments bankers whose entire profession is predicated on fiat money and centralized credit creation.  

Put another way, we can't count on our leaders being as sensible as the Bolsheviks.            

 

US-China clash over yuan escalates, risking superpower stand-off

The Telegraph

16 Sep 2010

“We are very concerned about the negative impact of (China’s) policies on our economic interests,” he told a Congressional hearing on Beijing’s use of exchange intervention for trade advantage.

“The pace of appreciation has been to slow. The undervalued renminbi helps China’s export sector. It encourages out-sourcing of production and jobs from the United States. By continuing a rigid exchange rate, China is impeding the adjustments needed to secure sustainable global growth,” he said.

The tough talk comes amid concerns that the global currency order is unravelling, with countries breaking ranks in a `beggar-thy-neigbour’ use of 1930s-style devaluation to help exporters and shore up their economies.

Japan became the latest country to intervene this week, carrying out massive dollar and euro purchases to weaken the yen. Sander Levin, chair of the US House Ways and Means Committee, called the move “deeply disturbing”, chiefly because it muddies the political water and lets China off the hook.

Mr Geithner’s ire follows a move by US trade chief Ron Kirk to file two cases against China at the World Trade Organization, alleging bias against US steel producers and credit card companies. Mr Kirk said he was “fighting for the American jobs threatened by China’s actions.”

Trade expert Gary Hufbauer from Washington’s Peterson Institute said the tensions risk triggering a dangerous clash.” The US and China are now adversaries, not enemies, but if the Obama administration pushes this trade agenda the way it is now doing, we will end up antagonists,” he said.

{snip}

There are few saints in this global currency game. Sterling has dropped by 20pc since the credit crisis, a side-effect of low interest rates. The US Federal Reserve has been “steering” the dollar lower. But the Anglo-Saxon duo they at least have trade deficits.

It is very different when surplus states such as China intervene to prevent trade adjustment. They are in effect exporting surplus capacity, and starving the world of demand. This is a recipe for global slumps.

Japan’s leaders say privately that China’s actions have begun to threaten their country’s industrial base, forcing Tokyo to respond with its own solo intervention or stand by as its exporters are asphyxiated and its economy tips into a deflationary spiral.

The twist is that Japan itself has a large trade surplus -- though for different reasons -- so it is in effect passing the unwanted parcel to the US and Europe rather than allowing the global system to come back into equilibrium.

If Britain and the US launch decide to a launch fresh blast of monetary stimulus, they in turn may succeed in passing the parcel back again. Economists say this is not a healthy way to run a global currency system.

This might be the biggest news item of the year:

It Looks Like U.S. Government Bonds Aren't Supported By China Anymore

Business Insider

By Vincent Fernando

August 20, 2010

Earlier this week we highlighted how cut its holdings of U.S. government bonds by the largest ever monthly amount in June. Expanding this thread, it should be noted that China's U.S. debt ownership has fallen to $843.7 billion in June from $938.3 billion in September 200,9 according to U.S. Treasury Department released Monday. This equates to nearly an 11% reduction by China.

Yet interestingly, the 10-year U.S. treasury yield has fallen over the same period, despite the meme that China's voracious U.S. debt buying supports keeps America's bond yields low. (Note that China's U.S. debt holdings encompasses more than just ten-year U.S. bonds, however. )

Now, obviously China continues to support the market by owning a vast quantity of government bonds, in fact the most of any nation as of June, but China's reduction in treasury holdings since September 2009 seems to imply that U.S. treasury yields can fall, and thus treasuries rally, even as China pares back its ownership substantially (11% is a lot for less than a one year period).

This makes the U.S. government bond rally, or bubble depending on your view, even more peculiar. You can't blame it on China propping the market with its standard dollar-recycling activities anymore, it seems.

Geithner, Summers, Bernanke, and Co. should be careful what they wish for.

Global markets fear US Treasuries sell-off as China ends currency freeze

By Ambrose Evans-Pritchard
The Telegraph, 20 Jun 2010

Global markets are braced for a possible sell-off in US Treasury bonds after China said over the weekend that it will allow the yuan exchange rate to adjust against the dollar, ending a two-year currency freeze that has led to trade clashes with Washington and Brussels.

China's Central Bank said the economic recovery had opened the way for a return to "flexibility" but ruled out an immediate one-off rise in the yuan. The currency will be allowed to fluctuate within a widened band of 0.5pc each day against a basket of currencies.

The yuan is now expected to rise slowly against the dollar, although it may fall if the euro weakens further. "There is at present no basis for major fluctuation or change in the exchange rate," said the bank.

The policy shift is a goodwill gesture towards the US and Europe before next week's G20 meeting in Canada as a rising yuan helps Western industries compete against Chinese imports. US Treasury Secretary Tim Geithner welcomed the step but said "the test will be how far and how fast they let the currency appreciate."

For a long time now, Washington has been labeling China a wicked “currency manipulator,” and forecasters have followed with regular predictions that this will be the year that Beijing finally ends its peg and allows the yuan to float upwards. It's apparently now happening, and Washington is excited about the prospect of getting its turn at having a relatively weak currency and expects that such a move will rescue American manufacturers and exporters.

As the theory goes, if a country’s currency is just weak enough, then its products will be relatively cheap, and the country will gain a comparative advantage. (Rarely mentioned is the implication that prudent savers will be destroyed.)

We’ve finally found all that white privilege we’ve been hearing about.  It’s on the other side of the world.

NOT LONG AGO I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave...

As we waited for the ceremony to begin, a foreman standing beside me barked at workers still visible on the construction site. They scurried behind the scaffolding.

“Are you the boss?” I asked him.

He looked at me quizzically. “You’re the boss.”

Actually, Ernie was the boss. After a brief introduction, “Director” Ernie delivered his speech before the hundred or so people in attendance. He boasted about the company’s long list of international clients and emphasized how happy we were to be working on such an important project. When the speech was over, confetti blasted over the stage, fireworks popped above the dusty field beside us, and Ernie posed for a photo with the mayor.

This reminds me of Richard Lynn’s closing prediction in Eugenics: A Reassessment.  Apparently, the technology for selectively inserting superior embryos is coming soon and he sensibly believes that the first country to embrace such practices will rule the world.  This will probably be China and when they colonize whites they’ll keep them around out of cultural appreciation for their past accomplishments.  The status of whites will be like that of the Greeks under the Romans or the Arabs under the Ottomans.  We’re seeing the beginnings of this in the white man trade.  Being fronts for the interests of another ethny shouldn’t be too big of an adjustment for more than a few European Americans though.  Many, such as the gentiles who are among the main public faces of neo-conservatism, have plenty of experience.

While I attended an economic conference last week in Shanghai, I found it notable -- but not surprising -- that two former Secretaries of the Treasury, John Snow and Hank Paulson, as well as current Treasury Secretary Tim Geither, and former President George W. Bush were then in the country at the same time. The fact that so many key American power brokers (myself not included) were in China simultaneously is no coincidence. In an overly indebted world, the $2.5 trillion that China holds in foreign reserves is acting as a center of economic gravity, inexorably pulling all market participants into its orbit.

When a 10-ton elephant plods through a village of grass huts, the big question on everyone's mind is: which way is he going to turn next? With China, that fundamental question translates to guessing when Beijing will make changes to the value of the yuan. These decisions will determine the overall direction of the global economy, and will set the path that everyone must follow. Unfortunately, no Americans, even those who travel hat-in-hand to China, have a seat at the table where these decisions are being made.