China not a threat? Oh yeah, I forgot China's a country forged on the principles of human rights and democracy.

Maybe you should consult the people of Taiwan, Tibet ,members of Falun Gong, and free speach activists currently imprisoned in Chinese jails before you publish this drivel. You sound almost like corporate media -- maybe you should quit the blog biz and go work for Fox or MSNBC.

Chinanotathreat - If it was your intention to completely misrepresent Jame's post in your comments, congratulations, you've succeeded.

Why don't you read it again?

On China, I think there is a growing misunderstanding in the U.S. of what is going on in China. Currently (KEY WORD) China is just a booming economy with no real military power. Sure, I can hear Mr. Sterling's hair raising from here, but until they can get a fleet of warships out to sea, they aren't going to be more than a regional power. As well, with the continuous rising cost of fuel and steel, the Chinese bloom may be much quicker than some suspect. Currently fuel and steel are a huge drag on the U.S. economy, and we have fuel reserves. The Chinese are throwing money at the issue currently, but as price continues to rise, demand for Chinese products shall fall as their prices rise. Unless some price stability returns to the steel and fuel markets, all of our economies are going to slow, it's just a matter of time.

The U.S.A. has the largest manufacturing base on this planet, bar none. We make more than the entire rest of the world in fact according to Material Handling Management a few months back. India is cranking big time, but no one sees them as a threat? Why not, they have the bomb, the talent (engineering, manufacturing, and general brain power), and the desire to rule the world. Hell they were colonized by the British, some of that "The Sun Never Sets on the British Empire" must have worn off on them.

Jame, you are right, we should get involved again in the region, and we need as many friends as we can get these days.

I think (Western) people don't see India as a threat because it's transparent, it's not terribly aggressive (toward us), and internally it's fucked up like Dean Martin on New Year's Eve. China is equally fucked up, but its leadership sneaks around and is psychotically passive-aggressive.

Muslims, of course, would likely put India at #3 on the hit parade behind the U.S. and Israel, and ahead of the UK.

No wait, Dean Martini was messed up New Year's Eve? Did I miss something, what gives it away?

India is not a messed up as you might think - they have an agenda, just like the Chinese. The difference is in their execution. India is more like a cat than a dog - they sneek up behind you and pounce. Excluding Pakistan, in which case they are pretty messed up. The Chinese are still working their 500 year plan, so wait a few centuries and see where they end up.

Thankfully, Clinton gave the Chinese all of our nuclear reseach info, which probably took 50 years off the 500 year plan. Good planning their Bubba.

Finaly, don't buy Toshiba, they sold out the U.S.'s technology for silent submarines to the Chinese and Russians back in the 90's.

Hey, you must have been the fun kids to hang with at school or college or wherever the hell you were. How many more generalisations can you guys squeeze out? It would have been a very non-specific world you inhabited together.

Here's another generalization: anybody named "Eurof" is a weenie.

China poses a number of challenges for the US. I am not a believer that war is inevitable or that China is an enemy. But it is a competitor, and it does see itself as the natural power in Asia, which means it is keen to supplant the US in this role.

(As an aside, this is not necessarily in China's own interest. China has been a free rider on the US role as the balancer of power; the external stability we provide has allowed China to transform its economy over the past 25 years. Moreover, the US is now seen more than ever as essential to rein in Taiwanese nationalists.)

Taiwan clearly represents a flashpoint for a potential clash. Opinion within China on how to deal with Taiwan is diverse. Some hardliners argue the 'red lines' have already been crossed and actively push for war. The majority is more pragmatic. But red lines do exist, and Taiwan's leadership must be careful not to cross them. The US plays a vital role in ensuring Chen Shui-bian's administration doesn't get out of control.

But the risk of a miscalculation on either side of the Straits is real. And yes, under certain circumstances, China would engage in military action - if not outright invasion, it could impose a naval blockade, or shell Taiwanese military outposts with missiles.

There are other flashpoints. China's need for energy resources could stir trouble in central Asia or Russia's thinly populated far east. Border disputes with Russia and India remain. And there is the Spratly Island dispute.

While there is no reason to think China is about to embark on military adventures, these could one day become more serious. China's domestic policy (which drives foreign policy) is increasingly under the influence of hardcore nationalism. Although this often takes the form of a renewed sense of pride and confidence, its dark side is raw xenophobia. It reminds me of Europe on the eve of World War One. Should economic difficulties or other events create a bad climate, the authorities may decide the survival of the Communist Party depends on appeasing such sentiments. Whether that points toward aggression against Taiwan, Japan or other nations, who knows? I'm just speculating but the possibility is real.

Whether a conflict emerges or not, China knows its size and clout makes Asians nervous. It knows that, because it is not as strong as America, it would need external political support if it engaged in brinkmanship. Therefore it is assiduously wooing Southeast Asia. It wants to decouple Asian security links to the US. And so far, it is off to a good start - in part because Southeast Asia also needs to engage with China, but in part because the US is distracted and usually manifests itself in our military guise. There's nothing wrong with having a visible military presence - it's useful - but it's just one dimension.

Jame, excellent points. The increasing pressure on China is not it's ability to produce, but in the constraints on it's domestic raw supplies (bauxite, steel, etc.) See, we are in, eurof-ag-reement that in order to avoid generalities and get right down to the business of the issue, I am going to write a book.

First, I'll assume you have a grasp of the Macro and Micro Economic forces at play here. As well, as either a European or a fan of Europe, I am sure you have a fine grasp on the history of the world. Shall we take the example of WWII? Let's for a second just so I can amuse myself.

What happened when Hitler came to power? Jobs for everyone, a radical economic expansion and militarization. When the German, and world economy took a turn South (due to what again and where are fuel prices currently?), what did Adolph do? Invade his neighbors. How quickly did he roll through Poland, France, etc? Hours to maybe a week. Why? Because Europe had either lost the will to fight, or just were a bunch of pussies waiting for the USA to come in and drag their sorry asses out of another mess. At least with the exception of England, that actually fought the Germans, and Russia that punished their own with a scorched earth plan that crushed the invaders. But, I digress. I will point to a few little treatise on parts of the topic though, http://reformed-theology.org/html/books/wall_street/chapter_04.htm
http://www.army.mil/cmh-pg/documents/mobpam.htm

"The stability of Germany was shattered by the Wall Street Crash of October 1929 and the nationalists who had spent 1925 to 1929 in relative obscurity, rose to the political surface once again. They had no intention of accepting either Versailles or the Locarno treaties and the Leagueís weaknesses in this decade had also become apparent. The League could only function successfully, if the politicians of Europe allowed it to do so. Hitler and the Nazis were never going to give the League a chance once they had gained power."

Despite all the glowing "the world economy is booming" garbage (and it is right now, at least in some of the West, and in Asia), the world economy appears to be headed for the wall. The wall being the point where supply price elasticity and demand are going to diverge due to supply line constraints (be they increased security, lack of capacity in transportation - getting there rapidly,) or lack of natural resources. When and if this occurs, many fear, China, North Korea, India, or even the USA (depending on if you exclusively read the Guardian or not) are going to begin to bang the war drums. Economics is the oldest reason for war you schmoe. That is the general point of this discussion, at least from my point of view. We must engage our friends and competitors so they do not become our enemies.

Sanford, I'm not sure I understand everything you are trying to say. I don't understand the link you are trying to make between Weimar Germany and contemporary China. If you are making the argument that the status quo is threatened by the rise of a new power, then I think Bismarck and Wilhelm are more relevant.

Also, the Nazis did not in any way cause the economic depression; the depression did, however, contribute to the rise of Naziism. And may I gently remind you that while Europe's powers did not uphold the principles of the League of Nations, the League was incapacitated from the start by America's refusal to join it in the early 1920s.

It is true, however, that Asia's rising powers, particularly China and India, are desperate for resources. This has caused commodities prices to rise. Oil prices have risen dramatically, but only part of this can be attributed to Asian demand. Saudia Arabia's oil minister, for example, says fears of terrorism disrupting supply lines has added $10-15 to the price of crude.

Moreover, while Asian demand reflects vulnerability, it also reflects the tremendous growth and progress taking place in these markets. Resources are a problem, but not a crisis; strong demand reflects strong consumption and investment (much of it from abroad), not weakness.

If the world economy is 'headed for the wall', as you put it, the reason is not because China and India are transforming themselves in the workshops of the world. The primary cause of global imbalances in the macro economy is the United States' massive indebtedness and unwillingness to save. We have leveraged ourselves to a degree never seen before. Our household and government spending binges are financed by Asian central banks' foreign reserves, which are invested in US Treasuries. For most Americans, wealth has been created either on paper (in the stock market), or in housing prices.

Stock markets at least have a multiplier effect as an allocator of capital, so these gains are real, both for investors shrewd enough to sell at the right time, and for the economy as a whole. But the time to sell was January, 2000. Since then consumers have been buoyed by rising housing prices. These are nice, but provide no knock-on effect to the wider economy, as there is nothing being created, there is no value add to economic growth. It's all on paper. I'm not a doomsayer on US property, because the market is too big and diverse, but many professional investors think parts of the US housing market - i.e. the big urban financial centers - are in a bubble. One day these prices will fall. Without savings, consumers will find themselves in deep doo-doo.

There are a few ways to correct the imbalance. One is to depreciate the dollar, which is the least painful (in the short term) strategy. But take this too far and you risk Asians dumping dollars; they are already diversifying into euros and other currencies. Better yet is to cut government spending and consumption, and increase savings. Not politically popular, but the longer we prolong the day of reckonging, the harder the adjustment will be.

There is a risk that these institutions will dump their dollar assets if they fear the dollar will crash, or if they fear US financial assets become riskier (the ultimate fear is a US government default, which is unlikely but no longer considered impossible, and if our current fiscal policies continue, increasingly possible).

Sorry to be very long winded. My point is that China is not the world's economic problem. It poses challenges, but it is also a massive opportunity for Western and Japanese companies - many of which have benefited tremendously from offshoring and outsourcing, which in turn has translated into falling prices for consumers. While Beijing does need to make the renminbi more flexible and stop pursuing naked mercantilist macro policies, this issue is secondary to America's indebtedness.

Sorry, forgot to add that the consequence of a run on the dollar is that in order to stem it, the Fed would have to jack up interest rates, which could send the economy into a recession (or worse). A gradual decline of the dollar is useful; it makes imports more expensive so we buy less of them, improving our current account. A currency crash, on the other hand, would mean all those IOUs issued to American borrowers (corporate, consumer, government) would suddenly come due, with no refinancing available. Since we are far too indebted to meet those IOUs, there would probably be defaults; at best, the cost of borrowing would skyrocket, and the economy would go into recession, or worse.

The dollar has not been allowed to fall against Asian currencies because China and Japan bolster their units in order to maintain export competitiveness. Although exports are important to their economic growth (which in turn fuels American exports), artificial levels can not be sustained forever. Meanwhile the euro is bearing the brunt of dollar weakness, to a degree that is unhealthy for all sides.

I do in fact understand the economics of the situation. Another thing I understand is the general non-manufacturing sector's lack of understanding in what the USA manufactures. Our industrial production outstrips the entire rest of the world, including China, India, and whomever else you want to throw in there.

Next, onto Macro questions, supply constraints do what to price young man? That's right, they provide a direct upward stimulus. Currently steel is in such short supply that many manufactures are purchasing bar stock and rolled coils to offset the crushing increases in price. Effectively all that is being done is diluting the increase over time and hedging against sudden increases, but price is going through the roof. Currently they can not manufacture 20', 40', 40' HC's, 45' HC's, 48', and 53' ocean containers in China or anywhere else due to the price of steel. So how is all these wonderful things that the Chinese are making going to get to us then as the ocean containers age, and must be decommissioned? Hmmm... that's an important question, isn't it and I am certain one you have not pondered. China, and India can't consume what they make because their workers (even the one's that aren't in prison) don't make enough to purchase their own products unless they are offered at a discount. So, unlike the U.S., they can't consume what they make, so they must sell abroad. But without ocean containers, how do you move it cheaply then? So, pricing goes up because of lack of supply, increased landed costs (particularly if it must move via airfreight), and constraints on the materials required to manufacture. All of the sudden that Blow-Up Santa doesn't seem like such a good deal at $200.00 does it? See the fly right before it hits the windshield, that day is coming if steel and fuel stay high.

And yes, the debt issues. Let's hearken back to a glorious period in time when the Debt was completely eradicated under the Savior of the Western World, Darth Clinton. Fiscal policy has approximately 8 years of lag time between implementation and effect. Quickly, because I can imagine some Democrats frothing up, when interest rates go down, companies begin to invest in capital improvements. Lead times can range anywhere from months to years on larger machinery. Then, once the capital is in place, there is the training curve, and implementation curve. So, Clinton isn't the reason for the debt being paid off, but instead his predecessors (Regan, and Bush Sr.) fiscal smarts / stimulus. As well as a general bubble of stupidity that was popped in 2000, which propped up all of our Government's overspending with your tax dollars.

The dollar does need to rise; there is no disagreement here. As well, this country needs to slow down our public spending, and yes; most of that money is being spent in Iraq and Afghanistan. I preferred the days when we sent in a hit squad and executed people instead of invading, but then again, I'm financially conservative.

With regards to China's alleged stability, lets remember they conscript slave labor from prison. Next, Tiannamen Square? Falun Gong? Instead of getting into the Falun Dafa thing, here you go, read and learn http://www.gluckman.com/FalunGong.html Yes, they are secure; there are no questions about it. Those fears must be based in some reality.

When their economy slows down, and they all do, something bad could happen, just like in Germany a few years prior. Certainly the Germans were pissed at the world for tying their hands, and the Chinese are not, but the more Nationalistic the Chinese become, the more we need to look long and hard at them.

wouldnt it be awesome if OPEC switched from the dollar to the euro? that would be a big kick in the nuts.

Germany¥s Chancellor Schrˆder has been setting out his export stall in Peking this week, kissing Chinese ass with well-practised social-democratic ease.

Schrˆder now propagates the ending of the Chinese arms embargo. He must reckon that after 15 years, the Chinese have learned their lesson and won¥t use weapons for nasty repressive or expansionist purposes.

In return, he hopes Premier Wen will support Germany¥s efforts to gain a permanent seat on the UN security council.

That Schrˆder hates Bush, and the USA, and the war on terror, has been patently clear for a long time. That he would stoop so low in his search for allies as to champion removing any curbs on China¥s armaments programme - bearing in mind China¥s role as key guarantor of North Korea - is new. I can only assume that he thinks his anti-Americanism plays so well with prospective voters in Germany that it has become the only remianing plank of his foreign policy, and blithely overrides commonsense and considerations of global security.

wouldnt it be awesome if OPEC switched from the dollar to the euro? that would be a big kick in the nuts.

You know, SP, there are some very not-nice words used to describe a man who wishes ill on his own country.

Economist?

Italian?

Conservative?

ooh, I've got some too:
"not a hypocritical coward"?
"not likely to end up on a concentration camp guard tower unlike some"?
"unlikely to be racist"?
"post-nationalist genius"?

does wanting it to lose at football count as wishing ill on ones own country?

Actually, I was thinking "traitor".

I know its got a teeny-tiny parliament now, but does Wales even have its own "national" soccer team, Eurof, or does it just throw in with the English?

Soccer's a girls' sport here in the U.S.; American men don't tend to follow it that closely.

*yawn*

SP finally manages to bore even himself.

no, you dimwit. your "traitor" comment bored ME.

I had momentarily regretted my "hypocritical coward" line. But I now see the error of my squeamishness.

Akshly Sterling, most of your native sports originated in Britain. Your very own baseball, in fact, originated in our "rounders", which is played in the UK primarily by pre-teen schoolgirls. Except the drug-addled Merkin atheletes who play it in your country use gloves in case the ball hurts their ickle hands. Many think that is because the ball goes faster in baseball but that can't be why because another of our games, "cricket" the ball goes a LOT faster and they don't use gloves either.

Also in your own version of rugby football -- some others cite the Eton Wall Game as its origin -- Merkin Football, the players use a lot of padding whereas people playing rugby (the real focus of Welsh sporting aspiration) don't. Also the same drug-addled pampered Merkin football players get to have a break each time the ball touches the ground. Lots of people think this is because it allows the TV networks to show more adverts. In fact it is because if they actually carried on over more than a couple of plays, the gift-wrapped players' steroid-engorged hearts would literally explode.

In both cases, no-one over here follows any of your sports, and no-one, not even girls, play them.

Alright EuroF, you have a convert. That was one of the funniest things I've seen in a long while. Having said that, are you to tell me that no one in the entire rest of the world follows our professional bowling? I am surprised indeed, but you Europeans are a fickle lot aint'ye?

Now, having said that, and having played football (round ball, not oblong) for most of my youth, you are right. No one here cares about your sports and vice versa. Well, with the exception of Skateboarding, where the world still follows the U.S., though some Europeans are getting the hang of things. And of course basketball, oh, and then baseball is fairly closely followed in South America, but that doesn't count really does it? Then there is bicycling, where a one nutted wonder named Lance rules. And I hate road racing, prefering mountain biking personally. We invented mountain biking but unless guys are dressed up in orange neon shirts, wearing skin tight shorts, Europe doesn't follow then?

And what of the European NFL, do people there really not pay it any mind? What of professional wrestling?

You are right about rugby, very hardcore, but I wonder about the sanity of playing such a game. Having said all of that, what was I getting on about?

Akshly Sterling, most of your native sports originated in Britain.

I hesitate to mention it, but there are even rumors that our language comes from there.

Sanford,
Amid your ramble about shipmaking, Blow-Up Santas and the soundness of Reagan and Bush Sr economic policies, I sensed that you weren't quite in agreement with me when I said the primary risk to the global economic system is American indebtedness.

The fact that America remains the world's largest manufacturer is wonderful but I'm not sure it is relevant to this point. I would like to make another plug here, however, for the virtues of free trade. Outsourcing to China has clearly benefited the US, just as letting Japanese imports compete did in the 1980s, and Nafta did in the 1990s. That giant sucking sound you hear is protectionism. I'm sure Sanford agrees with this point but I enjoyed my digression.

You were arguing the rising price of commodities, driven by scarcity plus greater demand, threatens the ongoing Chinese economic story. I can assure you the Chinese are well aware of this problem. It is one reason why production continues to move deeper inland, away from the prosperous coast - to source cheaper labor.

But right now Beijing's focus is on cooling the economy. That linked exchange rate of theirs is importing loose American monetary policy, creating unwise asset price bubbles. Most big infrastructure projects have been put on hold, and the government even lowered interest rates for the first time in something like a decade. The only exception is the recent announcement that China will build three steel mills that will make it the world's largest producer, all in order to meet its own needs. So I think you're looking at bottlenecks but not a crisis that will fundamentally change trade patterns. This is a long-term story that has a ways to go.

To me, the economic policies of Clinton were really in line with his predecessors. He and Bob Rubin campaigned with one eye on the bond markets in 1992, and that never changed. Reagan's deficits were the main negative legacy of his administration's economic policy - and it was a negative, because Bush Sr had to renege on his no-new-taxes promise to correct it. It remains to be seen who will restore sanity to the current, record-breaking budget. I don't think we can afford to wait for the next presidential election to start trimming.

I'd be happy to see tax reform that closed loopholes for corporations etc. and was made simpler. I live in Hong Kong, it doesn't get more simple than 15% for anyone earning more than HK60,000/year (less than $10k). Simplicity and transparency are more important than who pays what. But what are the chances?

Jame, it's not that I disagree about the current debt burden of the U.S. and its drag on the world's economy - I have a minor in Economics and worked for a few years in Accounting (imagine that) so I do understand fiscal problems. It's the nature of these conversations to get convoluted, so let me try to be clear.

1. Debt is bad, but war is good. Right? Right. Typically the short-term debt burdens that other countries and ours incur to invoke their wills on the unwilling ("I live to see my enemies crushed before me..." Conan) are righted after the war is over. Look at the economic returns of mechanization in the U.S. in WWII, France after Vietnam (sorry, couldn't resist.) etc.

2. Free trade is good, when it is truly free trade. What we have with China is not free trade IMHO. They conscript effectively slave labor to work their factories. Here we just use criminals to press license plates; there they assemble speakers, motors, bearings, etc. Until we can get China to belly up to the bar with regards to their criminal population work force, lack of unionization (Unions are bad today in the U.S., but in China, they are a requirement to protect the laborers), the imprisonment of "Political Prisoners" to quell any dissent is frightening, and then there is the dumping of bearings, etc. into the U.S. Well, that plus Chinese quality is not the same as American, European, etc. Take the example of DC motors, Hallmark (Chinese made) makes a 1HP motor that the motor brushes go bad on constantly. On the other hand, SewEuroDrive, Baldor, Pacific Scientific, AO Smith, etc. all make (in the U.S. except for SEW) motors that run forever. So, you get what you pay for. On the other hand, NAFTA has worked wonders and Mexico and Canada both put out mainly quality products.

3. Steel is the crisis, not fuel. Currently, the prices of steel are through the roof. There is a genuine impending transportation crisis looming that few outside the transportation industry even recognize. Even if the Chinese get their smelters assembled and running by the end of the decade, the lack of supply of steel is going to do a lot more than cool their economy. And my fear is that as these millions of Chinese once again become unemployed, radical nationalism may require China to look beyond it's borders to source, be it friendly or not so friendly, the natural resources it requires. That is why I believe we must engage China much more strongly in order to surround, and stop or at least check their expansion.

4. Every politician spews about cutting spending, but what would you cut? Schools? The arts? Medicare? The problem is that everyone has a special interest group that purchases what they need, and we the tax payer are left paying the bill. I agree in theory on the flat tax rate, but big business wouldn't accept it, and neither would anyone that itemizes his or her taxes for that matter. So then what do you do? How do you come up with the solution? That is the question for our generation. Well that in addition to how the hell are we going to pay for all these old codgers once they start retiring. We agree it's nice on paper, but the will is not there.

So the question is how to generate the will to pay for our sins? Plus what are we going to do with all of these old people anyway?

Sanford,
1. Not sure I grasp the argument here. Our various ongoing wars will provide a fiscal stimulus that digs us out of the hole our indebtedness has created? The US economy is not on a war footing comparable to the 1940s, and I am skeptical that it compares to the late 1960s. Moreover, WWII spending pulled us out of a depression; today we're trying to avoid a depression. I'm not sure I see the analogy.

2. Free trade is good, period. Your concerns about Chinese prison labor are way overblown. Chinese free labor is massive and cheap (although getting more expensive in places like Guangdong). Prisoners are not going to be able to produce anything of quality so I don't consider them a threat to the US economy. Foreign companies go to China because free labor is cheap AND of good quality.

I have always been skeptical of charges of "dumping" unless a foreign government is directly subsidizing export prices in order to create marketshare, which I doubt is the case with most Chinese exports. Remember, the great majority of said exports are in the employ of foreign companies, not the PLA.

China agreed to significant concessions when it joined the WTO. It did so because Beijing realized the rigor demanded of WTO would force it to liberalize and make politically difficult choices - "Sorry comrade, I hate to remove your subsidy, but there's this treaty, see..."

3. China is trying to cool its economy anyway, but not because of commodity crunches. The problem in China is its inability to allocate capital efficiently. The banking system is insolvent. The government keeps the renminbi artificially low to continue the export boom, thereby importing loose US monetary policy and generating a helluva lot of liquidity. This liquidity ends up in dodgy investments such as property bubbles.

I don't know anything about the steel industry, so I defer to you on the details. Overall the rise in commodities prices is inflationary. But this is a temporary inflation. I don't think the word "crisis" is justified, except for particular industries. This inflation, however, is a short-term thing. The long-term trend continues to be outsourcing and offshoring, and the globalization of the labor pool - which is a force of disinflation.

Although I've written about the potential threat of Chinese nationalism run amok, I should add the caveat that, except for Taiwan-related problems, this is a long run thing. The Chinese have no desire, nor the capacity, for a military adventure today - and they won't for years, maybe decades.

4. Spending cuts. You're right; the reality is against a flatish tax, because the tax code is the American method of social experimentation, not fiscal spending. But since you asked, the three big items are Social Security, Medicare and Medicaid. Social Security can be reformed, and a good way to start is to raise the minimum retirement age. Healthcare costs are even more complicated and I know even less about them. One area is automation (or so I've read) and I know Congress recently pushed legislation to upgrade IT budgets, which should reduce costs over the longer run.

Corporate giveaways and pork remain considerable, nonetheless. Dave Barry is a better source on what to cut, however, than I could ever claim to be. He's also very good on anything regarding toilet standards.

This days late, but I had to respond: Willem, don't be an ass. Schrˆder probably doesn't care much for Bush, but to claim Germany is against the war on terror is just stupid. That wimpy Social Democrat risked his own govt to send troops to Afghanistan and other places. That he was just in China makes sense in a realpolitik way that should endear him to most conservatives. He can say whatever he wants on the EU arms embargo. It's Brussels that will eventually decide what happens. Plus you clearly aren't aware that even if Europe did get rid of it, the EU certainly wouldn't start selling more weapons to Beijing. Especially not anything that would end up in the Taiwan Strait. Ending the embargo would be purely symbolic. If Schrˆder can use that to get Berlin into the UN Security Council, well hey, good for him.

How naive a schmuck are you, Marc? Do you really, honestly think that the French and the Germans would bother to lift the EU arms embargo, enraging their placid peacenik citizens, and then not seek to profit from it by selling arms?

You say Schroeder can say what he likes. Well, yeah. But he also happens to be the German Chancellor, a post traditionally associated with political activity, and the stuff he says is, as a result, not entirely irrelevant to key European issues. You say "Brussels" will decide. Which "Brussels" would that be? Manneken Pis? This issue, like all the other issues which matter, will be discussed and decided by the Commission, of which Germany is the biggest net contributor. Schroeder¥s words, therefore, carry some weight.

So this not unimportant Europolitician goes public with a recommendation to ditch a policy clearly in conflict with fighting terror (North Korea, China¥s best chum, having been fingered as part of the axis of evil by Dubya - may Allah be pleased with him). And as he hasn¥t bothered to talk about it with the other Euro heads of state, he rips open a nice big fissure on the issue within Europe. In my note above I was just speculating why he should do something so monumentally stupid and, apparently, futile. If I had known of your insight, that it wasn¥t to sell arms to China but just as a "symbolic gesture", it would have seemed even more baffling and futile. My conclusion was that he is playing to the gallery and is trying to engineer a confrontation with Dubya, because he knows (elections in Germany next year) it plays well with a lot of his voters, as it did last time he played the anti-US card.

You say it is "stupid" to write that Schroeder is against the war on terror. Well, maybe. But I meant "war on terror" in the sense of an armed conflict against terror. Not in the sense of passing worthy UN resolutions and forming committees to combat terror. Schroeder is so rabidly against doing something effective for the war on terror that he won¥t even allow his officers to train Iraqi recruits there.

If Scroeder got into the Security Council he¥d just use it as a stage to play to the domestic audience by striking elegant anti-war poses and vetoing even the discussion of what to do about terror, just like the Frogs did. People said Bush (may Allah approve of him) was a foreign policy novice when he started out as President. Compared to Schroeder, he was, even at that stage, a Titan of insight and diplomatic finesse.

Jame, real quick, here's a little on steel from Bloomberg today. http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pauly&sid=avqRltDGeAl4 Not that this backs me up, but whatever.

War footing, etc. I think the fear of a depression is sort of premature at this point. The Fed is handling the interest question fairly well thus far. I don't know about you, but I may be looking at a 60+% increase in my portfolio. And that's excluding the one stock I've owned for the last 8 years that's up over 2000% over that 8 years.

Free trade, I agree is good, when everyone is on the same footing. In regards to China, the Chinese Government requires a company to be majority owned by a company in China to be able to operate there. So, what's free then and who reaps the rewards? Canada, Mexico, Israel, Singapore, they are doing Free Trade right. Plus, the Communist system generates graft and corruption, which is rampant in China - allegedly.

The spending crisis is going to be all these old timers and their medical bills. And then, watch out for a management crisis when all these folks retire in mass. That's another tale of woe.

Kind of slammed these days, end of the year, short month, etc.

now don't get all in a lather, willem, just because i'm pointing out your mistakes. there's nothing naive at all in what i said. is schroeder a saint? of course not. will germany ultimately follow its own national interest? of course it will. would the EU at some point maybe sell something to china? probably. is china currently interested in EU weapons? no. would the EU be stupid enough to upset the balance with Taiwan? of course not. did german special forces troops fight in Afghanistan? well yes, as a matter of fact they did. now next time do your homework before spouting off in incandescent rage.

OK, now I understand: Schroeder wants the arms embargo on China lifted, but if Schroeder gets his way, we have it on Marc¥s authority that neither France nor Germany will ever try to sell China any weapons (even though Fr&Ger are the 3rd and 4th biggest arms exporters in the world). Because Marc says that Schroeder, despite travelling to China with half the tame industrialists in the Bundesrepublik, only wants the embargo for "symbolic" reasons. And even if the Frogs and Huns did try and sell the Chinese some weapons, Marc says that they¥d be on a hiding to nothing - cos¥ the Chinks wouldn¥t want to buy any. Phew! What a relief!

for christssakes man, read the posts properly before you respond. what did i write?

"would the EU at some point maybe sell something to china? probably. is china currently interested in EU weapons? no."

let me know if you need certain parts in bold.

Marc, my dear fellow, you wrote: "Plus you clearly aren't aware that even if Europe did get rid of it, the EU certainly wouldn't start selling more weapons to Beijing. Especially not anything that would end up in the Taiwan Strait. Ending the embargo would be purely symbolic."

Next time just put in bold the bits where you contradict yourself. And please, please don¥t take the name of our Saviour in vain again.

goddamnit i'll curse as i well please. but please, please stop playing dumb, will you? i think you're just pretending to be thick now. READ THE POSTS PLEASE. you'll find nothing contradictory in them. but i'll hold your hand one last time: i said if they lifted the embargo they wouldn't start selling right away. it is all about being symbolic. i said in a following post they would probably sell them something at some point down the road. now stop wasting everyone's time. jesus.

And I suppose China will use the German and French arms in a purely symbolic way too, eh?

Oh no whoops, sorry, got it wrong again, you say that China won¥t even buy the arms if they¥re offered. (Where did you get that from, by the way?) Anyway, I see my mistake now.

But I¥d rather you didn¥t hold my hand if you don¥t mind. Even symbolically. You never know where it¥s been.

willem, i'm starting to become concerned your whole playing dumb thing just to post a retort isn't an act.