Commentary on Political Economy

Monday 18 July 2011

The Chinese Politburo and US Treasuries

The kind of idiocy that passes for analysis (one could call it "intelligence", as in "secret service") is abundantly on display in this NYT article on Chinese Poliburo treasury holdings (it is not "China" that buys US bonds; it's the Communist Party!).
The writer is suitably ecumenical - in fact, the piece is positively "anodyne" with its innocuous "journalese" and, above all, the tiresome mantra about "too big to fail". Essentially, it argues that the US and "China" are now in a symbiotic relationship (I would say "parasitical", with the CPA as the parasite): it is "Mutually Assured Destruction" all over again - if the Chinese murderers pull out, the US collapse, and if the US collapse, the Chinese economy goes down with them.... and so on. The value of the article is all in stressing that the Chinese bandits have nowhere else to stash their loot except in the US. Its weakness is that it does not explain why this is so, except to state the obvious: that the US financial markets are the only ones big and deep enough to absorb the vast mass of capital flowing into them. Yes, but..... Yes, but this begs the question: why can't the Chinese dictatorship develop its own money and capital markets? WHACK!!
THAT is the crunch! Because the Chinese "bandits" cannot be trusted with the world's capital! Indeed, the Chinese leadership do not even trust "one another" - they do not trust the Chinese government! - with their "hard-earned money"! To be able to trust their country, the Chinese fascists would have to build and enable a far more egalitarian society! But then, if they did that, much of the "profitability" of Western capitalist multinationals (everything from LVMH to BHP and Rio to Volkswagen and Siemens) would surely collapse! So you see in what kind of bind capitalism finds itself at this juncture! (Incidentally, the article correctly dismisses the European and Japanese markets as receptacles for global capital.) Indeed, one could argue that if the Chinese executioners began selling treasuries, there would be plenty of buyers from elsewhere ever more desirous to protect their capital from just the kind of "shock" that Chinese selling of treasuries entails!! Chinese Politburo selling would be.... a "self-defeating prophecy"!
But let me abandon this argument and raise one more, far deeper question: if indeed greater capitalist "investment" (use of social resources) is not possible because it is not "profitable" to employ and produce for people, may it not then be said that we have reached the ultimate "barrier" for capital? The one at which social resources cannot be utilised because with higher incomes available.... workers would cease to work? In other words, is not "work" as defined in capitalist society the ultimate "barrier" to capitalism itself? Cheers.

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