By s.i. wells
When the Premier of China announced on October 2, 2010 that his country would support Greece by buying its debt, the opening of a new era of national conquest began. The dynamics are beyond simple. China has huge currency reserves and Greece is flat broke. When China buys massive amounts of Greek debt, it in essence becomes Greece’s largest creditor. Thereafter, if Greece does not want to “cooperate” with China, the Chinese government can threaten to dump all of the Greek debt it holds on the open market at once and thereby crash the Greek economy. If the Greek economy collapses, Greece will be tossed from the EU and left to fester on its own as it returns to Third World economic status.
One can say that China has done the same thing with the United States by buying and holding vast quantities of U.S. Treasury notes and bonds. On the surface, the transactions are similar. Beneath, however, they are very different since China needs the vast U.S. consumer base to buy the products its factories produce. If U.S. consumers shun Chinese products, it will cause serious dislocations within the Chinese economy much in the same way if China were to dump its U.S. Treasuries. This would cause interest rates in the U.S. to skyrocket, which, of course, would destroy the U.S. consumers’ ability to buy Chinese products. Sounds a lot like the cold war theory of “mutually assured destruction.”
It is not much of a stretch, however, to see that China could “come to the rescue” of the weakest European countries, like Portugal, Italy, Ireland, Greece, and Spain (PIIGS), and not risk the same internal economic destructive consequences as it would with the United States.
Frankly, it is time to sound the early warning sirens and call this action for what it is. The Chinese are hungry for conquest and they are headed to the butcher shop to buy some “PIIGS” to roast.
This economic move by China is serious. They have discovered they can be more successful in “conquering” nations with currency transactions than with military adventures. Many developed nations have gotten themselves into a highly leveraged economic bind and if they permit it, China is about to eat them for lunch. The little PIIGS are just the hors d’oeuvres.