I think we may be missing something here.
With the ongoing Establishment-managed debate whether Red China should or will re-value its currency upward to alleviate for some of the losses in the US dollar, there's another outcome that only gets a passing reference.
We've read recently that the Chinese government, the PLA (People's Liberation Army), is acquiring Noranda, a Canadian-based resources company. While our financial media presents this acquisition as a purely "capitalist" venture inherent to a free market, these Chinese front companies are merely extensions of the Communist government. Of course, some of these newly acquired dollar riches fall through the cracks to the Chinese citizen, but the Chinese elite is the major beneficiary by a long shot.
In their recent book Big Dragon — China’s Future: What it Means for Business, the Economy, and the Global Order, business consultants Daniel Burstein and Arne de Keijzer portray China as an emerging economic behemoth. "In our assessment, China will become the world’s largest economy sometime in the 2030s," they write. "During the first half of the next century, it will increasingly emerge as a superpower in every sense — economically, politically, militarily, culturally, technologically. But China will be different from any great power the world has ever seen. The political-economic system it will evolve — a unique hybrid of many influences, including elements of socialism as well as capitalism — will also be different from any system the world now knows."
While us gold bugs salivate over a Bill Gates or Warren Buffett buying up the world's silver, I think it more likely that IF China has been selling its above ground silver, they are more inclined to buy the mines elsewhere, and not the product. As we've preached all along it is CONTROL and not ownership that is critical to the monopolist mind. The cash "hoards" of the Gates' and Buffetts' are but pocket change for tooth fairies, and dwarf when placed alongside the truly buying potential of the PLA. Last year we ran a trade deficit with China in excess of $160 billion - one year alone! With the Chinese purchase of Noranda, gold bugs say to themselves, "Damn, why couldn't they be buying gold mines! Don't they know that those that have the gold, make the rules?" Yes, they do know that. But, they also know that those that control the strategic and tools for war can control all the gold in the world. The US found that out at the end of WWII with the Bretton Woods Agreement with only the US$ pegged to gold. Noranda is just such an asset that mines a good many of those materials used in war. A fair question might be how much of our own defense, or ability to bully the world, must come from the Noranda's of the world? As far as I can see in our trade imbalances, we no longer manufacture anything the world anybody wants. Here, on our own soil, that is. Yes, our monopolist corporations with US taxpayer underwriting are raking it in just fine, thank you, as they re-export those goods back to us and purchased by the workers who formerly made them!
Acquiring and controlling the world's supply of raw materials for waging war is one thing, but what if the PLA should begin to gain control of our food supplies? Few of us have even heard of Cargill Inc. Those that do probably have even less concern that they control nearly half our country's grain and other food supplies. As long as our farm states get their farming subsidies, and idle farmers can sit on their front porches rocking away to retirement, who should care? Be assured Cargill never could have achieved what they have by hard work and the American work ethic; their monopoly partners have been the Establishment elite within our government. Cargill, along with Archer Daniels Midland, has nearly complete control of the world's grain, elevators, rail, and transportation systems. I think you can now begin to see that being big is not always best, in fact it is suicidal. We need our small regional farmers. We need our smaller oil companies. We need our smaller retailers. We need our smaller shirt and stocking manufacturers. And, yes, we need our smaller bankers. And, above all else, we need a smaller government. Those are our strengths.
During our own Civil War we learn that the South had no substantial manufacturing infrastructure. They were dependent on Europe, primarily England, for cannons, muskets, uniforms, rails, machinery, and other heavy industry materials. The transportation costs necessary to bring these necessary goods to southern ports - through a Yankee blockade - made their import practically impossible. Private blockade running schooners could turn a bigger profit by bringing through lower bulked, higher valued goods like luxuries such as silk, jewelry, small tools, and other sundry items of the period. Gone With the Wind's Rhett Butler would tell you that. The North on the other hand was able to gain a tremendous edge by having the warwaging infrastructure already in place: textile mills, pig iron factories, rail system, a sailing fleet, coal mines, and just about any other industry necessary.
We know China is making agreements with South American countries. Venezuela's Marxist President Hugo Chavez has already inked a deal to sell oil to China. Could Mexico's PEMEX be next on China's shopping list? At one time, 1978 I believe, it was said South Africa had nearly 90% of the world's gold reserves. I haven't seen anywhere close to that percentage being bandied about these last several years. Maybe they do, and maybe they don't, but with an economic depression plaguing SA's mines because of a powerful rand and not able to bring the gold to the surface, it's a sure thing those assets are a ripe plum waiting to be plucked. Again, for the PLA short term profit is not the motive behind their purchases, they buy or control assets for their strategic value.
Dollars-to-donuts they're looking at the world's aircraft industries. Could United Technologies be a prospect? Boeing? Oh, that's right, Boeing makes only "commercial" aircraft. Boeing management once it is assured of job retention, and labor unions promised their paychecks would continue to flow, would have no problem with that. The defense of America, however, would have a grave problem. Okay, so you say Red China harbors no evil plans like I've portrayed, but other world oppressors might, and could easily reach agreement with China to remain "neutral", and not sell any of our own critical materials back to ourselves. Could it be that the real reason behind our shortage of plate armor for our troops in Iraq is we can't get it in timely manner from a foreign supplier? Oh, oh, can't go there!
The PLA's financial planners have to tread carefully though. Go too quickly, and they might create a sudden backlash from their prey, America, that comes to realize they are at great risk. For right now though with PLA collaborators in America calling the shots, the PLA can chip away at assets in Canada and countries to the south of the border.
For the rest of us scrambling to do business with China's PLA, it's best to be advised that "them that sup with the devil, best have a long spoon!"
- - Charleston Voice Bill Rummel, Editor