Asia-Europe Meeting

A while back I was sitting in my friend Zhuang Jian's villa outside of Chengdu, drinking some rare pu'er, smoking herb and chatting with a collection of people there. Zhuang always had artists, musicians and vagabonds over because his house was our dream: plum, peach and cherry blossoms, tea and incense, old bamboo and potted plants, artwork and a magical view.

Anyway, I was there with two Chinese homies from the Hemp House, a French girl up from Chiang Mai to cook for a while and another Frenchman who wanders the earth collecting songs from minority groups like the Miao and Yi in China and selling the CDs for their and his profit.

I guess I didn't look like much, in my sweatpants, broken sandals and Sixers jersey. So he was disdainful of anything I said and basically kept to French for a lot of the night. Suddenly, my man Boogie who was chillin in the corner said my full name for some reason and this caught the Frenchman's attention. He turned to me and was like: Yo, are you the Sascha Matuszak, writing for Antiwar.com and such? I was like hell yeah. And then his demeanor took a 180 degree turn and he started being all pally-pally with me.

He told me I should write about how China will take over the world someday. He said he had it all written down for me and that he had been meaning to send it to me all this time, but wasn't sure of himself cuz he thought Sascha was actually some professor or something. hahaha. I have actually heard that one before. People who read my stuff then meet me are like ummmmm What? hence this blog.

I continuously digress.

The Frenchman's Blueprint for Chinese takeover went a little something like this (in late 2007):

US economic collapse followed by bailout of ridiculous proportions by cash-heavy China
Bailout puts Western banks and financial institutions in Chinese hands
Chinese VC (Venture Capitalists), backed by their State, go on a shopping spree through the US and Europe
Domestic protests in US quelled by police and military to appease MNCs who see Chinese capital as just more cash (Nationhood starts dying in the West ...)
Bailout continues for several years as WTO, IMF and World bank find themselves without legitimacy or cash and look to China to prop them up, which they do happily
UN is next in line, looking for handouts from the rich Chinese

and so on.

A Velvet Revolution if there ever was one.

Now China will naturally be affected by the Economic Crisis, but no one has as much cash as they do (USD1.9 trillion in reserves) so no one will be able to ride it out like the Chinese. Plus, the failures are coming from abroad, which in the short term means that Chinese manufacturers and exporters etc will suffer from a credit crunch, cash crunch and order crunch from the Western companies that held up China's export oriented economy.

So for the next 2 years or so, China's economy might slow down a bit, but what this really does is clear the path for all of the Chinese VCs to step in and fill the void. It clears the path for Chinese businesses of all kinds to expand as their Western rivals contract ...

And so I come to the crux of the matter: Europe and much of Asia are headed to China with hat in hand hoping for love from China. Now, I can't even begin to describe how wonderful this is for the Chinese. The world is as it should be: foreign dignitaries coming to the center of the earth to seek advice, compassion and sympathy from the stable, benevolent patriarch Zhong Guo.

I added a few links to my list of digable sits today:

I highly recommend All Roads to China, China Law Blog and Silicon Hutong for those who want to learn more about China.

Opportunities

I trust myself now more than ever. I thought to myself the death of Wall Street could only be a boon for me and mine. I had a feeling there was an air of excitement building up ... i felt guilty saying it, but i did anyway.

peep this video, an Addendum to the Zeitgeist movie that tore into the 911 myth, the Jesus myth and the Fed. They bring the right message at the right time. They got me thinking about further schooling ...

By the time this crisis is over and my hair is thin and gray, my daughter's sons will ask why it took me so long.

What Germans are saying

My homie Himmler from the 19th Step sent me this long article in Der Spiegel. Its in English.

Most people i know will be nodding along with this article, hollerin out like YEAH and YOUKNOWWHATIMSAYIN or whatever you yell out when you catch someone's vibe.

Of particular interest is Part 3, where Spiegel goes into the Economic Crisis and lays it down pretty clear and concise, giving us a look at the risks of shunning History:

As long ago as 1936, John Maynard Keynes recognized the risk that "speculation may win the upper hand" in the markets. Its influence in New York, the British economist wrote, was "enormous," and the situation would become serious "when the capital development of a country becomes the by-product of the activities of a casino."

It goes through the Bush Administration's many many ... ahem .. miscalculations and gives a projection of a future without America the Bully. They speak of the Fall.

But for me this is the fall of my young talented son; the setback that will make him a man. I will be there for him and help him shake it off. And if vultures come to pick at him in his weakest moment, I'll be there with an Army of Me.

Are foreign investors vultures? I would appreciate any comments on this:

The wealthy state-owned funds of China, Singapore, Dubai and Kuwait control assets of almost $4 trillion (€2.76 trillion), and they are now in a position to buy their way onto Wall Street in a big way.

But they have remained reserved until now, partly as a result of poor experiences in the past. The China Investment Corp., for example, invested in the initial public offering of the Blackstone Group, a private equity firm, and invested $5 billion (€3.45 billion) in Morgan Stanley. In both cases, it lost a lot of money.

But time is on the side of the Chinese. American stocks are becoming cheaper and cheaper. And the longer the crisis lasts, the weaker American objections to buyers from the Far East will become. In fact, it is quite possible that they will soon be celebrated as saviors.

Live and Let Die?

Imagine you are at a Texas Hold-Em table and a very rich banker steps up with a collection of cash from all corners of his derivative-laced empire. He bets hard on a 6-3 unsuited (bad bad hand) and loses it ALL.

And then, because his losses would mean he can't play anymore, he asks everyone else at the table to bail him out. Would anyone do it?

Imagine for a second that Company X is facing some liquidity issues and needs to tighten its belt for a while to get things flowing again. What is the very first thing Company X would do? Lay off workers. Company X would not think twice about putting 25 year vets of the company out on the street to fend for themselves in order to "keep the company competitive." It hurts to be on the other end of things ...

Now all of these big investors and bankers are telling the average Joe that, if he doesn't pony up for the Wall Street gamblers that lost their cash, then credit flows will halt, bringing the economy to a standstill. Because bankers are too scared to lend in a dangerous environment. Not because there is no credit, or because they are forbidden or unable to lend, but because it is TOO RISKY for them to lend in this volatile environment.

ie it is too risky for the thief to rob when the cops are out and about, but it wasn't too risky to lend when the cops were absent. Now that the bankers have been "caught" they don't want to lend. But they were happy to when risk was "someone else's responsibility."

An economist, naturally, will tell me I am simple minded and don't understand the intricacies of finance, or the global implications of Wall Street's collapse.

Well I actually have read a bit of Adam Smith and Max Weber and, according to these pillars of our so-called free market capitalist system, Wall Street must die. In a free economy, the Fed has no place, bailouts are anathema and those who gamble on unsuited 6-3 hands are doomed to fall by the wayside AND BE BOUGHT UP by those who did not bet on crazy risky ridiculous hands.

And the taxpayer who bet hard that his credit card would always be there for him, that his double mortgage on a house WAY out of his league would be -- eventually -- paid for by the magic hand of appreciation must also suffer the consequences.

It is easy for me to say all of this, because i don't have a credit card and i have earned my pithy cash on a freelance basis for most of my life. But i don't buy expensive things and i always have enough to get by, because i know that a bad bet on my part means homelessness. So i watch my ass. And i guess i believe that medicine that works probably tastes like shit. In the end, a live and let die approach to the US economy would result in a stronger economy. And the years in between -- well I moved here because i am ready to grow cabbage in my backyard with all the rest of the Americans. I could have easily stayed in China and avoided all of this ...

Anyway.

An economy such as ours today is not unprecedented. Read people, and see that the 1920s only had different fashion, different toys, different slang ... for years people have been telling us that living above our means, charging everything and so on will come back to bite us. And now it has. But no one -- least of all the bankers and traders and financiers who made it all possible -- wants to bite the bullet.

Chinese are known for saving their cash and living way BELOW their means (well most of them anyway, of course the whole nouveau rich dont apply). Here in Portland Intel has a big R&D center staffed with a grip of Indians. These kids make 100k a year, live four to a room, eat at home, drive Civics and send their money home to mama. Not too cool, right? but pretty damn smart, no?

China sent a planeload of cash -- a plane load of cash -- to Seattle to buy planes and another to South Africa to buy a stake in a bank. When is the last time a business in the US paid for something with a big pile of cash? Economists say business aint possible unless you have credit ... true, cuz ya aint got no money in the bank ...

Now i see late night scam-ads telling people: sell yer "worthless" gold and get cold hard cash. HAHAHAHA. oh jesus. sell gold for "cold hard cash."

This happened once before, when FDR told everyone in the US to hand over their gold. The only difference between the 1920s and 1930s and now is the slang, the medium and the face ...

History is meaningless to those who pay no attention to it, it holds all meaning for those who do ...