Further, according to the same source, the Chinese are keen to spend their soon-to-be devalued mountain of dollars on hard assets, such as iron ore mines, etc.

If this is true then we are in a whole new ball game.

No US President could get away with telling the US people that he wants to follow. The US people expect to lead…

I was kinda thinking myself that Obama’s speech could have been for the masses, whereas we will have to judge him by his deeds. Yet there is a position between leading and following. Obama gets high marks for inclusiveness and a collaborative approach. This is what Wallerstein has been recommending for the US for years now as reflecting the realities of power as well as being pragmatically sensible. I guess we’ll see how Hillary handles things.

I notice that Satyajit Das on LNL said that the Americans would be going to the market for $1.8 trillion, about four times previous loan raisings. He said that there was no automatic reason why the Japanese and Chinese would show up with their cheque books.

The basic problem is that Obama has not renounced the inflated language of a former hegemonic power. In his address, he said to the world: “Know that America is…ready to lead once more.” The world wants the United States to participate. It precisely does not want the United States to lead. I don’t think that Obama really understands that yet.

I think things are going to be quite a bit different by 2030, and probably in ways that will challenge any lingering ideas of automatic ‘progress’.

Brian: we’ll see. I remain an optimist, and still do so despite the events of the past year.

That was about 50 years ago, but seems like the blink of an eye. OTOH the way Brisbane and our ‘lifeworld’ was way back then seems like about 200 years ago.

I think things are going to be quite a bit different by 2030, and probably in ways that will challenge any lingering ideas of automatic ‘progress’.

It’s true that while the US is the world’s reserve currency they can make others pay for their consumption – what de Gaulle called the “extraordinary privilege” of paying their debts in their own currency (of which, of course, they can print as much as they like). The trouble is that this approach – debauching your currency to make your past IOUs to foreigners worthless – is as good as a default in its effects. Done just once, it would very rapidly lead to the greenback losing its reserve status.

So either way, PJK is right on this – it looks like the end of the US’ ability to shape the structure of world finance to its own advantage.

.And if you ask why will they keep buying US bonds , as LO mentioned what else would these countries buy of comparable safety?

Murph, I’ve listened to the interview maybe half a dozen times. Keating was factoring in the notion that the Americans would have to cop a fair dose of inflation and was concerned about these ’safe’ bonds halving their value over say 4 or 5 years.

But certainly the Chinese in particular have a stake in keeping the American consumer economy afloat so they can sell their stuff.

But the risk of sovereign default in Europe was something Tony Jones mentioned as being spoken about in Europe. The Japanese, as I understand it, in the 1990s kept throwing money at the problem to find that it didn’t work. Apart from them being in deep sh*t again now, it seems that the Brits are not well-placed.

Behemoth, there are some dreadful but realistic scenarios from about 2030 over contestation over water and failing food production capacity, for example in the arc from Pakistan to northern China and the grain belts in North America, which I’m almost bound to post about this year sometime. My ambition is to live until 2030, when I’ll be 90 to see how things are shaping up. There’s a fair chance that I’ll be happy to move on then.

Seem!!!?? Who isn’t trying to game the current situation? It’s a chaotic time ahead. Or as Sean O’Casey memorably phrased it “a state of chassis”.

In the coming confusion, Australia has two cards to play. A transparent and trustworthy business and IP law system and too much food to consume locally.

Of course water may be tricky. On the other hand we’re a lot close to the South Pole’s iceypole wonderland than most other countries. I can see it now “Australian Idol Live” from an iceberg being chivvied up the Derwent.

Anyway, as I’ve mentioned before, keep an eye on Antarctica. It’s the global resources geo-political canary. The moment tentacles of nation-states or economic blocs start taking potshots at eachother across the icefields there, it’s time to swallow your gold coins and head for the FNQ hinterlands with a crate of Aeroguard and a well stocked Kindle with a solar panel.

And then go all Randall Flagg.

I’ve just been looking at the All Ords chart here. The market closed at 3449 today. That’s about 50% down from the 6850 it was on 1 November 2007. As late as 19 May last year it was at 6035.

Now it seems to be trying to form a base at the level where it peaked in 2002. Let’s hope it does because the next line of support seems to be 2670 which it first reached in 1997 and bounced off in March 2003.

If you were smart and got out of the market (I didn’t) no-one can tell you right now whether it’s time to get back in, but the evidence seems to be that people are tipping their toes into the water.

Potentially disruptive geopolitical implications of the global financial crisis were brought into sharp focus in tough speeches delivered by Vladimir Putin and Wen Jiabo at the World Economic forum in Davos last week.

Behind the pledges of governments to co-operatively stimulate collapsing economic and financial activity, a high-stakes contest for enhanced global influence is being played out by powers seing opportunities to further undermine the damaged global leadership of the United States.

Russia and China are not alone. French President Nicolas Sarkozy has also pushed for a greater role for France during trips to world trouble spots. But the Davos speeches by the Russian and Chinese premiers were clear declarations of geopolitical ambition at the expense of the US.

This is, of course, hardly surprising. Russia and China, with India, are rising and dissatisfied powers and geopolitics, like nature, abhors a vacuum. Putin and Wen merely moved opportunistically to emphasise their ambitions at the expense of a weakened and disliked competitor.

He says that there were no senior Obama officials in Davos.

He also points out some of the hypocrisies in Putin’s speech and warns that it is important to resist the siren calls of authoritarian regimes claiming special insights.

Importantly, he reckons that the Russian and Chinese have different geopolitical agendas wrt to the US. That is, they are not in cahoots.

And neither has the capacity to replace the wounded hegemon.

But it does seem that they are both gaming the situation to their advantage. So the question of who will buy the bonds might become a chip in the game.

If Chinese officials started pulling assets out of the U.S. and touched off a run on the dollar, their vast remaining dollar holdings would plummet in value.] So we’re trying to help, at least by not aggravating the problem.
.
But I think at the end of the day, the American government needs to talk with people and say: “Why don’t we get together and think about this? If China has $2 trillion, Japan has almost $2 trillion, and Russia has some, and all the others, then—let’s throw away the ideological differences and think about what’s good for everyone.” We can get all the relevant people together and think up what people are calling a second Bretton Woods system, like the first Bretton Woods convention did.

http://www.theatlantic.com/doc/200812/fallows-chinese-banker
.
Thing is of course that the World Bank and the IMF are props for American hegemony. Gao’s little kumbayah might really be a declaration that China is willing to use its position to convert the BWIs into truly global organizations undermining the apparatus of American hegemony.
.
And there’d be a lot of states around the world who wouldn’t exactly shed tears of blood at the prospect. Altho’ I’d wager they’ll feel positively nostlagic for US hegemony when faced with Chinese or Russian overlords.
.
Whatever. I’m not sure that printing more money is an option. And not just because of inflation. The US reserves held by others will necessitate a reaction. A demand of repayment in Euros? The US has been living in debt and the bill’s in.