Tuesday, February 02, 2010

What are they gonna do? Make him clean blackboard erasers?

By Carl

I think China might be
overestimating its worth:

On Friday the Obama administration signed off on a $6.4 billion (£4 billion) arms package for Taiwan. China, which claims the island, had repeatedly warned against the sale and retaliated by vowing to punish US companies.

Obama may butt heads with Beijing again in the coming weeks if he meets the Dalai Lama. The two nations also have a number of trade rows including Google's threat to leave China over the hacking of political activists' email accounts.

Officials and experts doubted that Obama was seeking to antagonise China. Rather, they said he had long planned to sell arms to Taiwan and meet the Dalai Lama but wanted first to develop a good rapport with Beijing.

Maybe next time, guys, you'll get on board with sanctions against Iran, which has shown a marked tendency these past few days towards
antagonist behavior.

Here's the thing:
China holds our purse strings in their hands. We can ill afford to antagonize them unnecessarily, lest they call in that one trillion dollars in notes and bonds they hold.


That's one trillion dollars that would deflate a $500 billion annual trade deficit the US runs with China, meaning that within two years, the US would basically balance its books with China. It would devalue the dollar and by extension, the yuan (which is tied pretty closely to the dollar), and destroy the Chinese economy.

It would be a Pyrrhic victory, to be sure. Call it Mutually Assured Destruction Economically (MADE).
Is China willing to go there over the Dalai Lama, and prove him right to boot, that the Chinese political system is bankrupt and that the rise of materialism in China will ultimately destroy the nation? Is it willing to go there over Taiwan?

Short answer: no. It's not. China has many advantages over America, from the sheer mass of people to make up a brute labor force or army, to a recent history of living well below their means for extended periods of time.

It is not, however, suicidal, particularly as it sees a chance for vindication and redemption after millennia of being taken for granted, of being held captive, of being second class to the west.

Obama is correct to act with impunity here, particularly considering that his initial overtures to China were met with open hostility, diplomatically speaking. The talks with the Dalai Lama are of less concern to China than the blatant arming of Taiwan (which, unlike Cuba, still has some worth strategically). Obama is wise to position his pieces in the event that the world turns in a direction that sees America in mortal danger from Iran.

The timing of this contretemps is interesting as well: Iran has threatened something, no one knows for sure what, for February 11. That's the thirtieth anniversary of the deposition of the Shah, and Ahmadinejad (who for typing's sake ought to be deposed himself) has said he will do something that will shock the world.

That Obama is making a stand now, before the 11th, signals to me that he is lumping China's intransigence over Iran into meting out the consequences of whatever will happen in the 11th.

Nukes? I doubt it, but it never hurts to be prepared. Chemical attacks? The destruction of Israel? All unlikely, but none impossible. Certainly the IDF has operated on the assumption these past months that their nation is in imminent danger from Iran, and if there's one thing the IDF does well, it's identify danger to Israel.

And the Pentagon is
taking notice.

In the meantime, Iran is making nice with neighbors that border it to the east and north, specifically the "Stan" states, like
Azerbaijan. Certainly, we can take this as a signal of closer ties to Russia and/or China. Look for reactions from Putin (via Medvedev) in support of Hu Jintao. That will be key.

But hey, American Idol is on tonight. You don't need to know we're that much closer to nuclear annihilation!

(Cross-posted to Simply Left Behind.)

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