Two years since the invasion of Iraq

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Sun, Mar 20, 2005, 4:19 pm  //  Site Management

Shock and awe was the strategy of the Bush government. Maybe we are in shock now as our kids continue to be killed and maimed. 1,500 dead and thousands with blown off limbs. We may soon be in awe of the Shiite leaders who will take our military victory and turn it to their own agenda.

China, meanwhile, is creating itself into a power while we are looking at the Mideast. I've read little about the probably future implications of the incredible events centering around China. My thinking basically on what follows, so here goes.

China now owns almost a trillion dollars in US Treasury bonds. They are helping to finance our deficit. Happily. A couple weeks ago, they dispelled fears they might start selling them as our dollar continues to drop in value. And I say - of course they will not sell them. Holding them gives them leverage with us. After assuring us they will hold, they authorized war to regain control of Taiwan. We have defended Taiwan since 1948 when the Nationalists fled there. Our navy has sailed between Taiwan and China as a guard against invasion by China.

Now, China can ignore our navy. Maybe not this month, but soon. And of course China will not challenge our navy. Bush will pull our navy back. China can tell him to. We need China to continue buying bonds to finance the war in Iraq and the lost revenue from the tax cuts. If China starts to sell, then the dollar will drop lower, and other countries will sell in order to recoup their money.

To just sell would throw the world into chaos and China will not do that. Instead, it will continue to buy our bonds and we will continue to owe China more and more. China wants value in other ways - and we will be forced to give it - just as we forced military bases from weak third world countries during the Cold War. China will want things. And we will give. Over the next five and ten years this will become painfully clear.

What do they want first? They have it. Unlimited export of clothing to the USA. Do you remember how to boil a frog? Put it in cold water and slowly increase the heat. The frog never notices. So will China now put the slow heat to us? They are patient - and we will not notice. While we wage useless war in Iraq and spend ourselves into poverty, others are smart.

Check this one post on SFBayView.com for a similar perspective.

Related Links:

-> SFBayView.com