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“Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals, first on the North American continent, then in the Western hemisphere, and finally globally.” Robert D. Blackwill and Ashley J.Tellis, Revising U.S. Grand Strategy Toward China, The Council on Foreign Relations Special Report, March 2015

“It is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia.” Xi Jinping, President of the People’s Republic of China

The United States will do whatever is necessary to maintain its dominant position in the world. Less than two years ago, no one thought that Washington would topple a regime on Moscow’s doorstep, insert a US-backed stooge in Kiev, arm and train neo-Nazi extremists in the Ukrainian Army, instigate and oversee a vicious war of aggression in the East, threaten to deploy NATO to within five hundred miles of the Russian capital, reassemble the Iron Curtain by building up forces, weaponry and missile systems in E. Europe and the Balkans, and repeatedly provoke a nuclear-armed adversary (Russia) by launching asymmetrical attacks on its economy, its financial system and its currency. The reason Washington pursued such a risky strategy is because EU-Russian economic integration posed a direct threat to US global hegemony, so steps had to be taken to thwart the project. The US used all the tools at its disposal to drive a wedge between Brussels and Moscow, to sabotage the plan to create a free trade zone from “Lisbon to Vladivostok”, and to prevent the emergence of a new rival. Washington powerbrokers did what they felt they had to do to preserve their lofty position in the current world order. Now their focus has shifted to the Asia-Pacific where they intend to take similar action against another potential rival, China.

According to the Economist, China’s Gross Domestic Product (GDP) will surpass that of the United States by 2021. In other words, if present trends persist, China will become the world’s biggest economy in less than a decade. But what are the chances that present trends will continue if Beijing is embroiled in a conflagration with the US; a conflagration where the US turns China’s trading partners against Beijing like it did with Moscow, a conflagration in which more of China’s resources are devoted to national defense rather than economic growth, a conflagration in which oil shipments from the Middle East are interrupted or cut off completely?

If any of these things were to happen, China would probably slip into recession dashing its chances of becoming the world’s biggest economy. The point here is that China’s rise is not inevitable as many people seem to think. It depends on things that China cannot completely control, like Washington’s provocations in the Spratly Islands which are designed to slow China’s growth by isolating Beijing and drawing it into a confrontation that saps its energy and depletes its resources.

There was an interesting article on the US Naval Institute’s website titled “Asymmetric Warfare, American Style” that explains in part what the Pentagon may be trying to achieve by harassing Beijing over its harmless land reclamation activities in the Spratlys. Here’s a clip from the article:

“In the nuclear age, guarding the homeland from an unlimited counterstroke is about more than merely preventing invasion. Forestalling nuclear escalation means keeping the scope and duration of combat operations low enough—and thus unprovocative enough—that Beijing would not countenance using doomsday weapons to get its way. It is important, then, for Washington to limit its efforts through the type and amount of force deployed, staying below the nuclear threshold. American strategists’ goal should be to design operations that insert “disposal” forces….to support allies while making life difficult for China’s People’s Liberation Army (PLA)” (Asymmetric Warfare, American Style, Toshi Yoshihara and James R. Holmes, US Naval Institute)

This, I imagine, is the objective of the current policy; to inflict maximum punishment on China without actually triggering a nuclear war. It’s a tightrope act that Secretary of Defense Ashton Carter feels he can manage judging by the way he has gradually increased the pressure on China and then watched to see what the reaction is. And there are indications that the Carter method is working too. On June 16, China’s Foreign Ministry announced that it planned to complete land reclamation projects within days. While the announcement is a clear stand-down on Beijing’s part, it did include one face-saving proviso that “China would follow up by building infrastructure to carry out functions ranging from maritime search and rescue to environmental conservation and scientific research.” The carefully-worded statement will be taken by Washington as a sign that Beijing is looking for a way to end the crisis without appearing like it’s caving in. China’s reaction is likely to convince Carter that his approach is working, that China can be bullied into making concessions in its own backyard, and that more pressure can be applied without risking a nuclear war. Thus, rather than ending the dispute, the Foreign Ministry’s announcement has paved the way for an escalation of hostilities.

Carter’s approach to China is not particularly unique, in fact, it has a lot in common with the Soviet containment strategy propounded by the late George F. Kennan who said: The U.S. “has it in its power to increase enormously the strains under which Soviet policy must operate, to force upon the Kremlin a far greater degree of moderation and circumspection than it has had to observe in recent years, and in this way to promote tendencies which must eventually find their outlet in either the breakup or the gradual mellowing of Soviet power.”

While it’s clear that US policy relies heavily on coercion, the US is being far more reckless in its dealings with China than it was with the Soviet Union. Sec-Def Carter made his demands on China (to end all land reclamation activities) without ever seeking a settlement through normal diplomatic channels. This suggests that the US doesn’t really want peace, but wants to use the Spratly’s for some other purpose, as a pretext for ratcheting up the tensions, for demonizing China in the media, for cobbling together an anti-China coalition in the region, and for encircling China to the West.

Keep in mind, that the so called pivot to Asia –which President Obama referred to as the United States “top priority”– is, at its heart, a plan for economic supremacy. The foofaraw in the Spratlys is just the military component of the broader “Grand Strategy” which is aimed at dominating the prosperous Asian markets for the next century. Carter admitted as much in a speech he gave at the McCain Institute earlier in the year where he said the rebalance was about “access to growing markets” ..”to help boost our exports and our economy”…”and cement our influence and leadership in the fastest-growing region in the world.” These are Carter’s own words, and they help to explain why the US is hectoring China. Washington needs an excuse for intensifying hostilities in the South China Sea so it can use its military to achieve its political and economic goals. At the same time, any retaliation on China’s part will be used as a justification for upping the ante; for deploying more troops to the region, for enlisting proxies to challenge Beijing in its own territorial waters, and for tightening the naval cordon to the West.

The Obama administration is fully committed to the new policy, in fact, there was an interesting report in last week’s Washington Times about the sacking of high-ranking government officials who were insufficiently hostile towards China. Here’s a clip from the article:

“The Obama administration appears to be in the early phase of a policy shift on China. Tougher rhetoric and policies, most recently demonstrated by remarks in Asia from Defense Secretary Ashton Carter, coincide with the departures of two key officials long known for advocating more conciliatory policies toward Beijing…

Paul Heer, who for years held the influential post of national intelligence officer for East Asia….was known for a steadfast bias that sought to play down the various threats posed by China in favor of more conciliatory views (while) A second major personnel change was the departure last week of the White House’s senior China specialist, Evan Medeiros, who ….was regarded by critics as among the most pro-China policymakers in the White House’s highly centralized foreign policy and national security power structure.” (Ashton Carter’s remarks suggest an Obama policy shift on China, Washington Times)

This is what’s going on behind the scenes. The doves are getting their pink slips while the hawks are sharpening their knives. If it looks like the uber-confident Carter is setting policy, it’s because he is. Obama seems to have been sidelined while the Pentagon is calling the shots. Does the name “Seven Days in May” ring a bell?

So what can we expect now that foreign policy is in the hands of a hawkish neocon who believes that the US must preserve its dominant position in the world by quashing all potential rivals?

What we can expect is more military adventurism, more needlessly provocative displays of force which increase the probability of another world war. Carter’s belief that the military can be used to achieve political objectives suggests that he would not be opposed to implementing a risky plan to lure China into a conflict that would exhaust its resources while “tying down significant portions of its war-fighting capacity”. Authors Yoshihara and Holmes describe this very scenario in the piece sited above. Check it out:

“Landing forces in China is a clear nonstarter, but introducing ground troops at select points along Asia’s offshore island chain or in continental Southeast Asia would help fulfill Washington’s modest goals. A limited maritime campaign would afflict China with a nagging “ulcer,” much as the Duke of Wellington’s 1807–14 campaign in Portugal and Spain…inflicted on France what Napoleon termed a “Spanish ulcer.”…

Consider one scenario–The Ryukyu Islands, a chain stretching from Japan’s Kyushu Island to Taiwan, stand out as a prime candidate for waging war by contingent. The islands straddle critical sea lines of communication connecting the Yellow and East China seas to the open waters of the Pacific…..the archipelago’s strategic location offers the United States and Japan a chance to turn the tables on China. By deploying anti-access and area-denial units of their own on the islands, American and Japanese defenders would slam shut an important outlet for Chinese surface, submarine, and air forces into the Pacific high seas. Effective blocking operations would tempt PLA commanders to nullify these allied disposal forces. Such exertions, however, would tie down significant portions of China’s war-fighting capacity while depleting manpower and matériel…

Abundant, survivable, inexpensive weaponry such as the Type 88, then, could coax China into exhausting expensive and scarce offensive weapons for meager territorial gain and uncertain prospects of a breakthrough into Pacific waters. Relatively modest investments in disposal forces could spread Chinese forces thin—helping the allies reclaim command of the commons as envisioned by AirSea Battle…

In the best case from Washington’s standpoint, Beijing might desist from ever attempting to upend the U.S.-led order in the region…

The allies’ capacity to foreclose Chinese military options—and give China a debilitating ulcer—offers perhaps the surest way of deterring Chinese aggression before it happens…

Would a puffed-up neocon like Carter be willing to initiate a plan that would weaken China militarily while forcing it to “desist from ever attempting to upend the U.S.-led order in the region” again?

You bet he would.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [email protected].

(Republished from Counterpunch by permission of author or representative)
• Category: Foreign Policy • Tags: American Military, Ash Carter, China 
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  1. J Yan says:

    Soulless nihilists like Ashton Carter have no concern for anything except the mineshaft gap. Yesterday’s warmongers, like Kissinger, smashed small countries mercilessly but at least respected the great powers and understood the impossibility of winning a nuclear war.

  2. Sam says:


    Thanks for the great article, Sir. YOu are right, except for 2 points:

    1. The real reason for the conflict with Russia is not US desire for domination per se, but Jewish and Israeli interests (as detailed below), with USA as proxy.

    2. The people controlling Ukraine are NOT neo-Nazis, but their opposite, the neo-Ashkenazi (i.e. the Judaists). Poroshenko is a Jewish puppet.

    You can understand why USA is itching for a nuclear war with Russia if you realize that USA is a banana republic under Jewish control.

    The Judaists own and operate all 3 branches of our govt. and the media. They own and operate Obama whom they installed as a Manchurian President.

    Judaists see Iran and Syria as a threat to Israel that must be eliminated, and Russia supports both of them, so they are going after Russia and Putin directly. They have been unable to neutralize Iran and Syria despite arming ISIS and despite 50 year of wars, Israel is not yet the ruler of the Middle East, thanks to Iran and Syria, who are supported by the superpower Russia. So they are looking for a final solution—finish Russia once and for all, to make the Middle East and the world safe for Israel, where Israel can kill and terrorize the Middle East and then the whole world with impunity.

    Putin does have several options. He can cut off gas to Europe. He can warn Washington not to arm Ukraine and if they refuse, bomb the govt. buildings in Kiev and attack it with cruise missiles and invade it and destroy the Jewish puppet Petro Poroshenko, have him tried for his crimes and hung and take over Ukraine. He can arm Iran and Syria with nuclear weapons, close the Straits of Hormuz, etc.

    The Judaists are cutting their nose to spite their face.

    • Replies: @Wally
  3. pyrrhus says:

    Nice try, but not going to happen….the Chinese will simply bide their time as the US rapidly weakens, and will move when the time is right. The US and Japan will not dare to actually obstruct navigation in international waters, since that could cause economic collapse.

    • Replies: @Kiza
    , @annamaria
  4. “Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals, first on the North American continent, then in the Western hemisphere, and finally globally.”

    Could have been written by Gore Vidal himself!

    Obama: “to help boost our exports and our economy”

    What exports? Treasury bills and weapon systems?

    Obama seems to have been sidelined while the Pentagon is calling the shots.

    I don’t buy that for a minute. Didn’t Obama appoint Carter? Hasn’t Obama consistently been calling for an ‘Asia pivot’ since 2010? While it is possibly true that he does not see eye-to-eye with the neo-cons on the middle east, there’s no evidence of any serious difference of opinion with them on Russia or China.

    Get ready world–it’s Oceana versus Eurasia!

    • Replies: @ltlee
  5. Kiza says:

    You are right and you are wrong.

    Yes, China will not bite the US bait in the South China sea. This is why they are backing off their land reclamation. If Carter wants to interpret this as China scared of his tough talk, let him. Every year that China avoids war against the US and its satellites, it becomes stronger and the Western alliance becomes weaker. No matter how keen or not the US is to stay below the nuclear threshold, China will keep buying time. The gas pipelines, the roads and the railways on the land-route (new Silk Road), which the Western alliance cannot control, are all being built. Another ten years, and the sea-routes will be doing less than 50% of Chinese imports and exports. The Yoshihara and Holmes strategic analysis appears quite weak because it assumes a dumb opponent, it is more wishful thinking and propaganda than deep analysis.

    But, unlike what you say, the US and Japan will eventually lose patience and will eventually cause a confrontation, which will end up in a maritime blockade of China by US, Japan and other satellites.

    It is funny how no Western strategist mentions that Russia and China have created a continental defensive envelope, a unique one in history. They can protect each other’s back, whilst concentrating forces in two relatively narrow arcs, one in Europe and one in Asia. The Western alliance will harass them, but it will never be able to attack because it would be absolutely decimated even in a purely conventional war. Neither Russia nor China have forces far from home. Whilst the Western alliance will be focused on Russia and China, countries in Africa and South America will gain the greatest degree of independence ever.

    A stand-off will drain Russia and China, but the US is not the same one which won the cold-war in 1990s. It is a shell of the former self, eaten from the inside by corruption, thievery and hidden bankruptcy (accounting crookery).

    Overall, the tactical advantage is on the US side, but the strategic advantage is on the China+Russia side. My estimate of the winning chances is 33% US : 66% Russia-China, but I do not expect a nuclear war. Yet, when idiots play with fire, it often burns them. When it becomes obvious that the US is losing, will it collapse peacefully just like the USSR or will it launch? Sour loser that it is and full of crazy neocons, again my guess is 60% chance that the US will launch as the final goodbye before collapsing into anarchy.

    • Replies: @Tom Welsh
    , @annamaria
  6. Tom Welsh says:

    As I recollect, the last time the USA messed with the PLA the USA came off with a bloody nose. And that was when the PLA had nothing but a lot of soldiers, fairly primitive weapons, and healthy patriotism. The Chinese chased the Americans all the way from the Yalu River right back into South Korea, and gave them such a hiding that MacArthur even wanted to use nuclear weapons to stem the tide.

    Today’s PLA has come an awfully long way, and is more than a match for the US Navy in China’s own backyard. Also, don’t forget the tight military alliance with Russia. Any conventional warfare will certainly lead to the loss of numerous expensive American warships and aircraft, manned by servicemen and women whose deaths, in any numbers above single figures, would cause a political cataclysm in Washington. So does this mean the USA will try to fight China through irregular partisan warfare? Don’t make me laugh.

    • Replies: @MisterCharlie
  7. Tom Welsh says:

    “…the US and Japan will eventually lose patience and will eventually cause a confrontation, which will end up in a maritime blockade of China by US, Japan and other satellites”.

    And how would they enforce such a blockade? China has a huge length of coastline, together with a host of small fast ships and boats and plenty of people willing to man them. If the Americans send in ships to stop or sink those vessels, they will be confronted by Chinese naval defence forces. If the Americans want to use their favourite methods – overwhelming air power – they will find that, for the first time ever, they do not control the skies. Their planes would be shot down as fast as they approach the coast, and if their carriers get too close they too could be in danger.

    Also, of course, from a strategic point of view, China will increasingly be able to get what it needs overland. Meanwhile, any attempt by the USA to blockade China will be seen by an overwhelming majority of the world’s people as a ruthless, high-handed piratical exploit, strongly reminiscent of the European and US attacks on China in the late 19th century.

    • Replies: @Kiza
  8. Kiza says:
    @Tom Welsh

    “…And how would they enforce such a blockade? China has a huge length of coastline, together with a host of small fast ships and boats and plenty of people willing to man them…”

    Simply, the blockade will not be along the Chinese coastline at all, then in the narrow between South Korea and Japan for the new Northern Russian maritime route and in the wider gap between Vietnam and Philippines in the South China Sea near Spratlys for the South Asian route. The blockade will primarily target large and slow oil tankers and container ships, not the nimble and fast merchant ships, to shut off Chinese imports and exports. Did you see a recent article about China making plans to use its huge civilian fleet of ships in military situations? This suggests that China is getting ready for a maritime blockade by the US and its satellites.

    The US does have significant superiority under water, thus this will be primarily a U-boat war with some air and ship skirmishes. The US will keep aircraft carriers far away from the Chinese coast and its tens of thousands of Silkworms. At the moment, the US has complete air superiority, but this will be annulled once China gets S400 and maybe even S500 from Russia. Due to their truly huge operational range and extreme kill rates, the US will have to fly at least 1000 km away from the Chinese coast.

    In summary, I see maritime blockade as a viable option for the US alliance in the near term. In the long term the real war will be the financial one, that is the replacement of US$ as a reserve currency by Yuan. Therefore, Yuan is the strongest weapon China has in its arsenal, the one which could collapse US by sending much of US$ back to US.

    • Replies: @Tom Welsh
  9. Muse says:

    Oh my, how will I get my new iPhone and running shoes once the blockade is in place!

    • Replies: @Kiza
  10. Kiza says:

    Even if there is no blockade in place, the iMoron 29 will cost US$785,489.37 because all these US$ would come back and cause huge inflation.

  11. annamaria says:

    Yes, the advantageous patience versus the bloody cynicism of the impatient plutocrats.

  12. ltlee says:
    @Seamus Padraig

    “I don’t buy that for a minute. Didn’t Obama appoint Carter?”

    Can Obama appoint himself the Pentagon chief?

    • Replies: @Seamus Padraig
  13. annamaria says:

    “…the US is not the same one which won the cold-war in 1990s. It is a shell of the former self, eaten from the inside by corruption, thievery and hidden bankruptcy (accounting crookery).”
    In short, the US has been spilling blood and wasting money while fighting the wrong enemies. The true enemy is the home-grown plutocracy that hollowed out the democratic institutions and treasury, while preventing the US from technological advancement with regard to infrastructure and alternative energy.

    • Agree: MisterCharlie
    • Replies: @Ace
  14. @ltlee

    Although a SecDef must be approved by a Senate vote, he first has to be nominated by the president–just like all cabinet officials. To be sure, that doesn’t prove that some other party wasn’t influencing Obama’s decision; but at least officially, he was Obama’s pick.

    I just get annoyed at how many liberals will whine about the administration’s policies, while still trying to represent Obama himself as some totally helpless victim, as Whitney seems to be doing here. I realize a US president isn’t quite a sun king, but he has to held accountable for his own cabinet picks, if nothing else.

  15. Tom Welsh says:

    Well, your reply is interesting from a purely naval point of view. But surely the real problem with such a blockade would be its complete illegality?

    Also, wouldn’t the US government have to compensate Walmart for cutting it off from all its goods?

    • Replies: @Kiza
  16. @Tom Welsh

    Tom Welsh, in praising the PLA in the Korean War and in general, neglects to mention how General Matt Ridgway turned it all around in short order and stopped at the 38th Parallel only because when Ridgeway asked, Truman said No, don’t take it to the Yalu. Check it out in Hanson’s book, The Savior Generals.

    • Replies: @Astuteobservor II
  17. @MisterCharlie

    the chinese did amazingly well in the korean war considering they had no navy or air power. and the army had no tanks.

    • Replies: @MisterCharlie
  18. “Puffed up neocons” is the correct term for these strategists of the paper tiger. If USA’s neocon apparatchiks (corrupt overseers of America’s decline) had anything like the cajones necessary to seriously contain the PRC, they would have taken Vietnam up on her offer of recent years to enter into an alliance to bolster the puny Vietnamese navy in her efforts to defend against Chinese expansionism. In short, when in the first week of May 2014 the Chinese navy ran out the Vietnamese coast guard (police) boats that were attempting to protect Vietnamese fishing fleet (operating on fishing grounds that were traditionally fished by Vietnam), that would not have even happened with US Navy presence – which had been promised by USA. Subsequently, when PLA ship rammed and sank the Vietnamese fishing boat (also in May 2014), that would never have happened too. But instead, what actually happened is that the US Navy – on orders from the neocons running the NSC – was ordered to abandon the Vietnamese and to tell them to beg China for mercy. And then insult was added to injury when the US Navy (clearly under orders of the neocons who run the NSC) at that very time (May 2014) invited China into RIMPAC 2014 – ultimately allowing a PLA spy ship in, even though it had never been invited but actually crashed the party.

    The “Pivot to Asia” was sacrificed for the sake of the Ukraine misadventure. The neocons have always been Eurocentrists to the core of their very European-born being … and they have been tight allies (probably joined through Hong Kong bank accounts) with the PRC’s bosses (the Standing Committee) at least since Kissinger’s “secret” trip to Beijing in 1971. And what has been the effect of prioritizing the Ukraine misadventure and hostility toward Russia? The effect has been to drive Russia into China’s arms – probably irrevocably. A lot changed in 2013-2014 and the neocons were either caught completely off-guard (intelligence failure) or have simply continued willy-nilly their de facto alliance with the PRC Standing Committee (strategy failure continued regardless of its manifest failure). Today’s tight Russia-China alliance did not exist until that most recent (2013-2014) betrayal of America by the Eurocentric neocons who are allowed to run “our” NSC.

    Yet none dare call it treason.

  19. @Astuteobservor II

    acuteobservor says: “the chinese did amazingly well in the korean war considering they had no navy or air power. and the army had no tanks.”

    The China Communists were very well practiced in, and understood well, the art of human sacrifice. It completely unnerved and stymied the UN (USA) commanders … but not any more once Ridgway took command. USA wasn’t really stopped at the 38th – except by Washington’s orders. (MacArthur or nuclear threats had nothing to do with it.)

    • Replies: @Astuteobservor II
  20. @MisterCharlie

    so your reasoning was the un/us combined force was defeated by their soldiers alone? their sacrifices? I am glad you agree with me 🙂

  21. Wally [AKA "BobbyBeGood"] says: • Website


    You say what everyone knows, but are afraid to say.

    They prefer the word ‘neocons’.


  22. Giuseppe says:

    Thanks, you have thoroughly scared me: the neolibs are fully the equals of the neocons. Hope I can sleep tonight, Ashton Carter is one freaky dude.

    Bring back the liberals’ candlelit peace vigils, in those bygone days of W.

  23. China can do a simple relatively inexpensive thing to stifle the Psychocon’s machinations.

    Build 2-3,000 MIRVed strategic nuclear weapons and call the United States’ bluff.

    An alpha-male animal could get its way by baring its teeth and making other gestures – until it couldn’t. The nukes bring about the couldn’t.

  24. astuteobservor: I do agree with you that the Chinese or Korean-Chinese did well considering the asymmetry in the air and in other technological respects. But our agreement is almost meaningless as a generality: for one thing, we have to divide the Korean War into its various stages. For another, (and this is in the context of the various stages), we need to take note – which we UN/US initially failed to do – that the PLA was, going way back into the origins of the Sino-Japanese war(s), in part a Korean force, originating in the struggle of Koreans and Chinese against their common enemy – so the North Korean units were almost inseparable from, were part of, the PLA when they were unleashed on the south in 1950. Then, of course, there are all the embarrassments having to do with the horrible corrupt dictatorship of Syngman Rhee. So, I hope you are not trying to take my partial agreement with you too far. For one thing, I would never agree that the US/UN force was ever defeated and I even have to wonder where you got that idea, which amounts to revisionist history!

    • Replies: @Astuteobservor II
  25. Kiza says:
    @Tom Welsh

    Hello Tom, I have not written anything which the US military analysts do not already know and better than an amateur like I. But they still write pleasant and superficial articles like the one Mike quoted.

    Regarding legality, when did illegality stop the good ol’ USA? Was the maritime blockade of Japan in 1941, the starving of its citizens of food and the economy of oil legal? Yet, we only hear the US screams about Pearl Harbor. Until a few years ago, I really believed that Japan attacked the US fleet, minus the hidden aircraft carriers, unprovoked. But this same US fleet was starving Japan under some excuse (not that Japan was not imperially ambitious and killing the Chinese in millions). On top, FDR needed an excuse to get into the war, the war which benefited the US immensely. Was this US maritime blockade of Japan approved by any world body? It is such an irony that Japan will now be doing to China what the US did to them. If any nation sank to the moral bottom of the Pacific, it is Japan. But some would say that Japan was always like this.

    As to Walmart and the Fruity iMoron, those will be the least of the US worries if China uses its US debt in the right way against the US. The financial moves will be at least as important as the military moves.

    I have written about this topic before: should the US have attacked only China or only Russia first, instead of attacking both at the same time?

    Militarily, Russia is a match for Britain and France put together, nothing more. Only nuclear weapons put Russia into the club of important nations. But Russia has something to loot whilst China has nothing. Conquering China, the US could adopt a billion or two of the Chinese. With the loot from Russia, the West could recover the rotten (eaten out by the speculation) Western economies for the next hundred years or more. The West is drowning in imaginary wealth, paper (such as dollar) without much or anything real behind it. For example, this Swiss gold experts says that there is 20x more “paper gold” than all the gold ever mined in human history. Would it not be nice to put something real behind all this speculative paper? Well, this where Russia comes into the picture. But China is becoming economically stronger and stronger, the US military and economic advantage is running out.

    Thus, faced with the choice of attacking Russia for the loot or China for the global dominance, the US neocons decided to attack both (the familiar imperial hubris/overstretch). Naturally, this is all packaged into aggressive Russia and aggressive China (when did a bully admit that he was a bully), peppered with heavy words such as “annexation”, “free sea navigation and overflights” and the rest of the usual propaganda bull. But the basic fact is that neither China, nor Russia want a war, only US does. Russia and China now must divert resources destined for improving the well-being of their population into preparing for the defense against the US & Gang (with funny names such as G7). Apart from some miracle happening inside the US, this trend towards clash is crystal clear and will roll out in the next 10-20 years.

    • Replies: @MisterCharlie
  26. Sam Shama says:

    There is some misleading commentary here regarding global dominance and the role of finance. It is certainly worth talking about.

    For example,

    ” if China uses its US debt in the right way against the US. The financial moves will be at least as important as the military moves.”

    What is the right way, may one ask? If China sells, say $500b worth of U.S. debt in the market, what does that process entail or what effect would that have on their economy and the U.S.’s? (I always have a LOL moment when I read these half-baked ideas!).

    Here is what would happen: They would have to engage in a process called sterilisation. The sale of U.S. bonds would generate USD, which either directly or indirectly leads to deposits in their accounts in US T-bills. Or they could buy US goods and services that we would sell to them. What they would certainly do upon the sale of US Treasury bonds is issue their own short term bonds, that would raise Chinese rates, leading to an appreciation of the Yuan against all major currency pairs, including the dollar, leading to a decline in Chinese net exports and GDP, a result that China DOES NOT WANT! No matter how one looks at it, the result is the same. For the US this would have the same effect that the Fed has been engineering through QE! (we will thank the Chinese for it)

    You can think of this rather simply: if you own a large quantity of something (UST bonds in this case), the LAST thing you want to do is sell it rapidly, for that would drop the price of the asset you own, unleashing a rather detrimental effect on your OWN portfolio!

    The notion that owning gold is the right strategy is fraught with economic nonsense. Gold is an unproductive asset! You know what Warren Buffet said about gold?

    “…[] things like Gold will never produce anything, but are purchased in the buyer’s hope that someone else will pay more for them in the future.” He went on to say that the owners of assets like gold “are not inspired by what the asset itself can produce — it will remain lifeless forever — but by the belief that others will desire it even more avidly in the future.”

    What does the U.S. have in the nature of assets? Well the most important asset is the technological know-how in very high technology products. Think Nanotechnology, molecular assembly, solar and alternative energy know-how, biochemical engineering, rocketry, space research technology, agricultural know how, etc. etc. This is not even counting the fact that it has the world’s largest coal deposits in California (about 2000 years worth, which if liquefied – not that we need to – can put the ME out of business); it has more natural gas and oil than it could possibly need for its domestic purposes allowing for significant growth in demand over the next 50 years! It has arable and developed inhabitable land mass greater than any other nation or continent on earth, which is, for all intents and purposes highly immune to invasion. Lastly, and most importantly it is the magnet that attracts the best human capital on earth!

    When you can improve upon the foregoing combination of assets, do let us know, and we can think about the demise of the USD as the reserve currency and adopt something else. Gold, I leave it for those who like useless yellow metal that only has marginal value in some industrial processes!

    IMHO the Silk Road that China is building – if they can actually complete it – can be very good for the U.S..

    China and Europe (for once!) can maintain its costs and make it efficient (it will not be easy). The U.S. can watch its development and perhaps profitably use it in the future. Certainly marine transportation in trade can get reduced. However this is simply a substitution effect and no one really knows the comparative cost benefit analysis, especially as alternate energy technology will very likely render carbon based fuel and therefore its transport increasingly redundant.

    • Replies: @MisterCharlie
    , @MarkinLA
  27. @MisterCharlie

    all I ever wrote was that they did very well considering their resources. there is zero need for bunching panties.

  28. @Sam Shama

    I am agreeing with most of Sam Shama’s remarks about US Treasuries and so forth, but I would point out one interesting and enlightening fact: metallurgical (or ‘coking’) coal is necessary for steel production, and while China produces it, they need to import it also. China buys almost all of USA’s coking coal, because China is the premier steel-producer of the world.

    China doesn’t just make stuff for Walmart, y’know? China is far and away the world’s leading producer of crude steel.

    • Replies: @Sam Shama
  29. astuteobservor:

    if panties were bunched, it was about this remark of yours, impugning words to me that I never said or implied:

    so your reasoning was the un/us combined force was defeated by their [PLA] soldiers alone? their [PLA soldiers’] sacrifices? — astuteobservor

    Note also that, after Ridgway turned it all around, PLA troops were surrendering in numbers that UN/US could not support.

    I really do not appreciate statement that UN/US was ‘defeated’ to myself. That’s highly objectionable.

  30. @Kiza

    Kiza says:

    Was the maritime blockade of Japan in 1941, the starving of its citizens of food and the economy of oil legal? Yet, we only hear the US screams about Pearl Harbor. Until a few years ago, I really believed that Japan attacked the US fleet, minus the hidden aircraft carriers, unprovoked. But this same US fleet was starving Japan under some excuse (not that Japan was not imperially ambitious and killing the Chinese in millions). – Kiza

    US fleet starving Japan? No, although it is true that the US fleet in combination with the UK was enforcing an oil embargo – but to say that proves that poor innocent Tojo was provoked by the wicked FDR into the Pearl Harbor raid? You’re omitting important history:

    So, Japan started the aggressive military interference with shipping, not the USA.

    In any event, Japan at the end of 1941 still had two years’ worth reserve of bunker oil, so there was no immediate provocation. It was FDR whose patience was tried by Tojo:

  31. MarkinLA says:
    @Sam Shama

    You can think of this rather simply: if you own a large quantity of something (UST bonds in this case), the LAST thing you want to do is sell it rapidly, for that would drop the price of the asset you own, unleashing a rather detrimental effect on your OWN portfolio!

    Well given that much of those Treasury bonds were purchased when the interest rates were far higher than today, the Chinese would likely book a profit on them even if it is less of a profit than if they tried to trickle it out slowly.

    The Chinese can also convert those dollars into other assets like euros and euro denominated bonds or European corporations stock. I don’t see why they need to issue their own short term bonds and raise Chinese interest rates.

    • Replies: @Sam Shama
  32. Sam Shama says:

    Hi Markin
    Its an interesting question. So yes, the market value of the US treasury bonds that China holds has indeed gone up, as interest rates in this country have fallen since the financial crisis in 2008. So we are actually in a classic liquidity trap/ Zero lower bound in short term rates. Furthermore an implication is the relative excess savings that rather rapidly soak up UST as they are issued. In fact the same situation occurs in the Eurozone as well. If the Chinese spent more and saved less, that has an expansionary effect for our economy. To put it another way, we’re facing a global paradox of thrift (efforts to save more ends up reducing the size of income and therefore a reduction in actual savings), and everyone wishes everyone else would save less.

    In case China doesn’t spend more, rather reallocates its reserves from dollars to, say, euros (european stocks/bonds)? The answer is, that’s also good for us: a weaker dollar will help our exports, at Europe’s expense.

    I should have been a bit more careful about clearly separating the Fx intervention with sterlisation that governments typically perform so as to keep the monetary base unchanged thus preventing inflationary or deflationary episodes domestically.

    you can read more here:


  33. Sam Shama says:

    Yes the Chinese are the largest producers of steel. In the end though U.S. can return to high levels of internal production if it became necessary. They have a huge internal over-investment issue, which will cause problems soon (in fact it is already happening in the form of capital outflows)

    Additionally they started losing money in monetary sterilisation operations since 2008 when US/EUR/Japan started to engage in expansionary monetary policy.

    • Replies: @MisterCharlie
  34. @Sam Shama

    Sam Shama makes good comments, complete with information.

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