Not many Americans are aware of the important financial meeting that took place a few days ago in Yekaterinburg, Russia. The six-nation Shanghai Co-operation Organisation, composed of Russia, China, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan, met to discuss trade and currencies. Iran, India, Pakistan and Mongolia were invited to observe, but, notably, not the US.
The news of this meeting was almost completely ignored by the American media. The subject discussed – though having a possibly grave impact on us – must have been deemed too esoteric for Americans to grapple with, or the topic cannot be reduced to the entertainment standards of radio or television news. In other words, currencies, exchange rates and foreign trade cannot be made sexy or alluring.
It all underscores the fact that Americans, including the media, business, and our leadership, choose to be clueless about our standing in the world community and its long-term potential for decline.
To Congress and corporations, long-term is the next election or the next board meeting. For the President, it’s the next photo op. For average Americans, it’s the next credit card payment.
In effect, the Chinese President, Hu Jintao, and Russian President, Dmitry Medvedev, along with the four other members, were discussing the military and financial demise of the United States – at least the ultimate demise.
Strong words? Well, yes.
Why did the attendees feel the need to assure us – at least, our diplomats -- that dismantling the US financial and military hegemony is not their aim?
Let’s put the situation in their perspective.
Would you give your deadbeat brother-in-law – contractually a brother through a union of foreign trade – unlimited loans so he could build weapons that might be used against you, so that he can live high on the hog, so that he can give his vulture executive friends tax breaks paid for by your children, and so that he can export pollution from his plants – just to name a few annoying habits the arrogant brother, America, has.
China and Russia – and perhaps India, Pakistan and Iran – are saying no. They want to receive their own currency in payment when they sell goods and hopefully pay in reserve dollars when they buy, ridding themselves of the billions of dollars in American currency they now hold.
They don’t want the dollar to be the global reserve currency any more. Against the yuan, the yen and other Asian currencies, it is overvalued -- through Asian mercantile efforts, we might add. For Asians, and others, receiving their own currencies in payment assures a higher value for their exports.
Don’t kid yourself that other countries, including the Japanese and the South Koreans – both holding billions of dollars of American debt instruments, Japan alone holds almost $700 billion -- are still our friends. Friends are built on mutual respect. Respect is earned from achievement, self-reliance and humility. No one loves a has-been.
When our solvency depends on Russia, Brazil, Japan, China, Caribbean bankers, oil exporters and South Korean (combined holding over $2 trillion of our debt—and rising), there is no equal footing for friendship. It’s business.
In the past, the dollar provided a strong reserve, but now the country that issues it exudes no confidence, even among strong allies. Many countries want a “currency” divorce.
Why else did the Chinese prime minister seek assurance from President Obama that the almost trillion dollars of credit his country gives will have continuing value? Why is Russia making exclusive natural gas and oil deals with foreign suppliers.
The world is no longer our oyster!
Let’s face it. Our military strength depends on economic strength. We won WWII because of our resources, a far-sighted, feisty leadership, a highly-skilled workforce, a creative independence, a stubborn independence, and a strong productive economy.
Which of these do we still have?
How much of a basic resource, oil, do we import? What leaders are farsighted, perhaps only a few. And where is our highly skilled workforce and an education system to meet this need? Are we dependent on other countries for our livelihood? And how much of our productive capability is left after out-sourcing and bankruptcies?
In spite of the Bush “Dark Ages,” there are some signs of resurgence. Obama’s stimulus package has provided research funds for our schools, to adopt regional education ideas that work. Another plus is the creative independence among scientists and humanities, although some erosion has occurred due to plutocratic influences.
Bio-refinery projects funded by the Obama stimulus bill could signal forward-looking domestic production of what is called grassoline, an environmentally-friendly way to break the cycle of dependence on foreign oil, using domestically produced gasoline made from inedible parts of plants. This is no joke: it is a Scientific American report.
Though cooperation is still possible, other countries will look after their own interests, and we must look after our own.
Other nations are planning our demise. Isn’t it time for us to act?
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