Posts Tagged ‘Cheng Siwei’

China Alarmed By Obama’s Deficits, Shocking Irresponsibility

September 8, 2009

It’s sad that a communist regime quotes our own founding fathers to us, because our President and the party in power has so blatantly ignored their wisdom.  But that’s what happened, as you will see reading the following article:

China alarmed by US money printing
The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

By Ambrose Evans-Pritchard, in Cernobbio, Italy
Published: 9:06PM BST 06 Sep 2009

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.

“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

China’s reserves are more than – $2 trillion, the world’s largest.

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,” he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said the Fed’s loose monetary policy was stoking an unstable asset boom in China. “If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

“Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down.”

Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.

“This is where Greenspan went wrong from 2000 to 2004,” he said. “He thought everything was alright because inflation was low, but assets absorbed the liquidity.”

Mr Cheng said China had lost 20m jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.

China’s task is to switch from export dependency to internal consumption, but that requires a “change in the ideology of the Chinese people” to discourage excess saving. “This is very difficult”.

Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

“The US spends tomorrow’s money today,” he said. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

Yet the consequences are not symmetric.

“He who goes borrowing, goes sorrowing,” said Mr Cheng.

It was a quote from US founding father Benjamin Franklin.

Ever heard the phrase, “own worst enemy”?  That’s the United States, to itself.  Or more particularly, that’s the president of the United States, to the country he’s supposed to be helping.

China can seriously screw us financially; they could literally bankrupt us.  They don’t want to do that, because hurting us would hurt their investment in us.  Yet the subtitle of the article drives the point home: “The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy.”  We are pursuing such a fiscally reckless policy that China will be compelled to cut its losses – and truly leave us high and dry.

What Obama is doing is going to gut the U.S. currency, and China is being forced to act like a rat jumping off a sinking ship.  And just to make sure nobody fails to understand: WE’RE the ship that Obama is sinking.

Democrats – flagrant hypocrites that they are – actually had the chutzpah to demagogue Bush for his “fiscal mismanagement.” A lot of Bush’s spending WAS in fact irresponsible – but Democrats complaining about government spending is very much like Stalin complaining about Soviet gulags; it simply flies in the face of any and all reason.

When you realize that Obama’s 2009 deficit – just one year of his spending – is higher than all 8 years of Bush’s deficits COMBINED, it ought to tell you just how shockingly irresponsible Obama and the Democrats are, as well as what appalling hypocrites they are.

Just imagine putting Nancy Pelosi and Howard Dean in a time machine, and launching them six years into the future so they could see that – under total Democrat control – they would spend more than eight times more than George Bush spent in his VERY WORST YEAR.  And then realize that such is the loathsomeness of their characters that they would return to their own time and STILL demagogue Bush for his spending.  It’s just what they are. Hypocrisy is their defining characteristic, to go along with their naked demagoguery.

The danger that the Chinese point to is crystal clear.  Even key Obama-ally Warren Buffett is publicly demanding that Obama and the Democrats cut their spending to avoid massive inflation.

I would argue – in disagreement with Buffett – that we didn’t need to launch into such massive government spending (although we sure bailed out Wall Street-types like Buffett by doing so, didn’t we?).  In the initial panic, the Bush team reacted by spending, as though we could patch the holes of our debt-ruined economy by stuffing them with borrowed money.  But already, by the time Obama launched into his even more massive stimulus, it seemed readily apparent that the government wasn’t getting much of a bang for its buck – unless the “bang” was the bang of a future debt-induced economic implosion.

Think about it from this angle: do you know how small businesses are actually the driving engine of our economy and our job creation?  Well, 98% of small businesses didn’t receive any money from the Obama stimulus at all.  If fact, the National Endowment for the Arts – which recently displayed it’s pro-Obama ideological partisanship – received more stimulus funds than the small businesses that drive our economy.

By selecting Bush-appointee Bernanke to serve another term as the Chairman of the Federal Reserve, Obama was implicitly embracing most of the very Bush policies he had personally and repeatedly demagogued during the campaign.

And now in Obama’s spending we have the very worst of Bush — times EIGHT.

The Chinese are quoting Benjamin Franklin to point out America’s insanity under Barack Obama.

I would suggest another Franklin quote as well: “When the people find that they can vote themselves money, that will herald the end of the republic. “