Taking the plunge off the fiscal cliff and the rise of global tensions

[Faith In Him]

Taking the plunge off the fiscal cliff and the rise of global tensions
Posted on July 9, 2012 by The Extinction Protocol
July 9, 2012 – ECONOMY - More and more Asian nations — led by China
and Russia — have ditched the dollar for bilateral trade (out of fear
of dollar instability). Tension rises between the United States and
Asia over Syria and Iran. The Asian nations throw more and more
abrasive rhetoric around — including war rhetoric. And on the other
hand, both Obama and Romney — as well as Hillary Clinton — seem dead-
set on ramping up the tense rhetoric. Romney seems extremely keen to
brand China a currency manipulator. In truth, both sides have a mutual
interest in sitting down and engaging in a frank discussion, and then
coming out with a serious long-term plan of co-operation on trade and
fiscal issues where both sides accept compromises — perhaps Asia could
agree to reinvest some of its dollar hoard in the United States to
create American jobs and rebuild American infrastructure in exchange
for a long-term American deficit-reduction and technology-sharing
agreement? So the future, I think, will more likely involve both sides
jumping off the cliff into the uncertain seas of trade war, currency
war, default-by-debasement, tariffs, proxy war and regional and global
political and economic instability. As Xinhua noted the last time
America faced the fiscal cliff: “The U.S. has long been facing the
same problem: living beyond its means. At present, the country has
debts as high as 55 trillion U.S. dollars, including more than 14
trillion U.S. dollars of treasury bonds. Economists agree that as the
United States’ largest foreign creditor, China should contemplate ways
to pull itself out of the “dollar trap,” as the U.S. economy is
faltering with its debt piling up and its currency on the brink to
depreciate. China must make fuller use of the non-financial assets in
its foreign reserves, as well as speed up the diversification of
investing channels to resist a possible long-term weakening of the
dollar, said Xia Bing, director of the Finance Research Institutes of
the Development Research Center under the State Council. Zheng Xinli,
permanent vice chairman of China Center for International Economic
Exchanges, has suggested that Chinese companies boost overseas
investment as a way to absorb trade surpluses and fend off the dollar
risk. -Zero Hedge