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FX Trading – Sick and tired of “sanction of the victim”

“It is a moral crime to give money to support ideas with which you disagree. It is a moral crime to give money to support your own destroyers.”

                                                                        Ayn Rand

Is it a stretch to say the Chinese wish to destroy the United States? Maybe! But it isn’t a stretch to say that China wants to become the primary global economic and military power in the world. It is why the G-20 was so fresh with irony. We have China and Germany teaming together for the “sanction of the victim” — the United States. Even though it is US liquidity that is keeping both their economies afloat, now that Germany has become attached at the Chinese hip.

You know what they say boys: Be careful what you wish for … it may come true! I guess it doesn’t translate well into either Chinese or German.

Bashed, indeed, Mr. Obama was at the G-20; and for a lot of good reasons. But, the reality is this problem in the global economy is first and foremost a global imbalance problem with China and Germany (to a lesser degree) as the two spoiled children creating a problem they fail to admit.

German Finance Minister Schauble, tell us again how that single currency regime, structured primarily by your country to your own benefit by creating a captive market for your industrialists knowing all too well by locking the other countries into a system whereby they cannot adjust to compete with Germany’s efficiencies, i.e. the straightjacket of the euro, is working for you?

Oh yes, you are correct Mr. Schauble — it is working very well. Germany is sucking the air completely out of the eurozone as the others are wheezing on life support. Nicely done! And you hammer the US for liquidity generation? That is fresh!

Why so fresh? Well it is US liquidity and ability to take on China’s huge manipulated trade surplus that is creating the demand for Germany’s industrial orders, Mr. Schauble, in case you hadn’t noticed. Ahh … no good turn goes unpunished, does it Mr. Schauble?

But not to be outdone in the hypocrisy department, China, always one to love sanctioning its victims, tries to turn the G-20 into a US bash fest. And because the so-called leaders of most other countries are a bunch of weenies, afraid China will turn its power on them with even more predatory practices should they speak up, remain quiet as doves cooing in their pens.

One again, in case the rest of the world hasn’t noticed, the US in all its so-called fx manipulation has once again taken on the bulk of Chinese exports, keeping the game alive through both US demand and the Fed’s QEs.

We can’t remember China ever complaining about the dollar’s decline when demand was brisk before the credit crunch. We can’t remember China complaining about US consumers spending like drunken sailors and over leveraging then. But much seems to have changed since US demand has fallen after the credit crunch. But much is still the same because it is the US demand that is keeping the commies in power. It is the US demand that is still delivering the goods to the powerfully politically connected spoiled brats known as the “Princelings.” And it will be interesting to see what happens to these “industrial wizards” once the US finally gives them what they are asking for — less liquidity.

How come nobody seems to mention China’s massive quantitative easing program which on a relative scale was much larger than that of the US? Because my friends, the vested powerful interests inside and outside the US who make huge money inside China would be showing the emperor with fewer cloths than he currently appears.

“Chinese credit expansion was 9.6 trillion yuan in 2009 and will be 7.5 trillion yuan this year from 5.8 trillion in 2008. This immense credit goes to the state-owned enterprises at 5.5% interest, lent by state-owned banks that amass captive household savings at 2.25% deposit rates.”

                                                                        Leto Research

China GDP growing at 10% and they pay 2.25% to depositors? Talk about incredibly suppressed market interest rates, Batman! And the US is typically the recipient (rightfully so) of bashing criticism for its artificially low rates. Just close your eyes … push the China-Cheerleading stuff and the “US is always the bad guy” stuff you hear from the financial press out of your head for a moment … then think of the massive displacement of capital inside the Commie Kingdom; it will end badly. The only question is when. And we know the answer to that riddle.

It ends badly when the leaders of the US government reach around and finally find some spine!

This maybe a bit egocentric; it may sound a bit like your typical ugly American yahoo; it may sound like yet another philistine in the wilderness that has not come to grips with the new power structure of one world order; it may appear my blue-collar roots are showing; to all that I plead guilty as charged; proudly so. But I am sick and tired of watching the US enrich poor Asians on the backs of blue collar workers and the rest of the middle-class so platform companies, and the powerfully politically connected can enrich themselves and their shareholders as they transfer massive industrial power and research to a country that wants to bury them. And then they dicker around the edges of econometrics bull$*&^ wondering why the US has a structural unemployment problem. It is to laugh, but so pathetic it makes you cry.

So when does it all end badly? When the US finally erects very high tariffs against Chinese goods flowing into the US economy — that’s when. The latest election cycle should make it very clear to the Chinese that this game is about over. The victims are sick and tired of being sanctioned.