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Are We On The Verge Of An Economic War With Russia And China?

Has our exploding national debt become an economic weapon of mass destruction in the hands of the Russians and the Chinese? Have increasing tensions between East and West put us on the verge of an economic war with those two superpowers? Those who are convinced that the Russians and Chinese would never work together to collapse the U.S. economy should really consider what former U.S. Treasury Secretary Henry Paulson is saying in his new book. Paulson's new book is entitled "On The Brink", and in it he claims that the Russians contacted the Chinese in 2008 and proposed that both nations dump their Fannie Mae and Freddie Mac bonds at the same time in a bid to force a bailout of the largest U.S. mortgage-finance companies by the U.S. government.  Fortunately, China declined to go along with Russia's proposal at the time, but this revelation just underscores the economic danger that the United States has gotten itself into.

You see, if the Chinese and the Russians had done that, it would have set off mass panic in the financial markets.  It would have been an unmitigated economic disaster.

Due to our greed and our reckless spending, we have gotten ourselves into a situation where China and Russia have a tremendous amount of leverage on us.

Near the end of 2009, China owned U.S. Treasuries worth approximately $789 billion, and Russia owned U.S. Treasuries worth approximately $128 billion.

If China and Russia decided to dump their Treasuries in unison it could literally devastate the U.S. economy.  Already the Federal Reserve is having to "purchase" the vast majority of all new U.S. Treasuries.  The talking heads on the cable networks claim that this kind of "Ponzi scheme" by the Fed cannot continue indefinitely, but the U.S. government is continuing to spend recklessly and nobody else is stepping up to buy our new debt.  So what would happen if China and Russia suddenly decided to dump nearly a trillion in U.S. Treasuries on the market?

Don't think that it can't happen.

Already, the Chinese government has reportedly ordered its reserve managers to dump all "riskier securities" and to hold on to only U.S. Treasuries and U.S. agency debt that comes with an implicit or an explicit U.S. government guarantee.

So is this a prelude to even more dumping to come?

The truth is that tensions between the United States and China are escalating rapidly....

*Barack Obama recently promised to get "tough on trade" with China, and the Chinese government responded to that notion very angrily.

*Senior Chinese military officers have suggested that the Chinese government should sell some U.S. bonds to punish the U.S. government for the latest round of arms sales to Taiwan.

*Barack Obama has attempted to pressure Chinese President Hu Jintao to raise the value of the Yuan, but the Chinese are not giving an inch.  In fact, there are reports that the Chinese regard Obama as weak.

*The Chinese government is reportedly extremely upset that the White House has announced that Obama will meet with the Dalai Lama in the next few weeks.

The vast majority of the American people have no idea what is going on, but the truth is that the Chinese people, and especially the Chinese military and the Chinese government, are very pissed at us.  Just consider the following quotes....

Luo Yuan, a researcher at the Chinese Academy of Military Sciences:

"Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease."

Chinese Major-General Yang Yi:

"This time China must punish the U.S."

Huang Xiangyang, a commentator in the China Daily newspaper:

"When someone spits on you, you have to get back."

Nationalism is surging right now in China, and attitudes toward the West and toward the United States are taking a turn for the worse.

In facat, one new poll taken in China recently has revealed that more than half of Chinese citizens now believe that China and America are heading for a new cold war.

But China was so weak a few decades ago.

How could this happen?

That sad thing is that we have done this to ourselves.

It was us who allowed the Chinese to artificially keep their currency so low for so long.

It was us who struck highly imbalanced trade agreements with them.

It was us who allowed our corporations to shut down factories in the U.S. and open them up in China.

It was us who insisted on "free trade" with China even as the human rights abuses over there continued to get worse.

It was us who kept running out to the big box stores to keep buying cheap Chinese-made products when we could have bought more American-made products.

It was us who kept voting for politicians who promoted "globalism" and "free trade agreements" when we should have known that globalism would ultimately have some very painful consequences.

It was us who kept giving China access to advanced military technology and allowed Chinese generals to sleep over at the White House.

It was us who kept pumping money into China and then asking them for loans when we knew all along that they were one of our biggest strategic enemies.

It was us that has allowed China to become the second-largest economy and the number one exporter in the entire world.

If it was not for the stupidity of the United States, the biggest Communist nation on earth, China, would not be an economic and military powerhouse today.

But it is.

And we did it.

In addition, most analysts in the United States seriously underestimate Russia.

Russia (not Saudi Arabia) is now the number one oil exporter in the world.  Their economy has been humming like a machine for most of the past decade, and they are rapidly modernizing and expanding their military.  Russia has made it known that they intend to play a major role in world affairs and that they do not intend to be pushed around by someone like Barack Obama.

The sad thing is that the majority of economic talking heads on the cable channels are still convinced that Russia and China will never use the economic time bombs that we have put into their hands.

They are convinced that they would be "shooting themselves in the feet" by taking us down.

While that may be true, the truth is that there comes a time when other matters become much more important than losing money on some investments.

For both Russia and China, the United States is still the number one strategic enemy out there.  They do not look at the United States as a true friend.  If it comes to a point where it suits their purposes to pull the trigger on an economic war with us, then that is exactly what they will do.

For more on the potential for economic war with Russia and China, check out the excellent video below....

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  • http://www.dontcomplyaskwhy.com Nemo Denovo

    As always GREAT points listed as to why we need to more diligent then ever in our efforts to monitor what is happening in our GeoPolitical sphere. It is up to US [the People] to save ourselves from the coming financial Armageddon bearing down on the average American, this can only be accomplished through our observations and best guess [for a lack of a better term]as to how things are going to play out. It is quite unfortunate that the majority of people will be caught off guard as to the total extent of the severity of this crisis until it far too late to do anything about it. Again Thanks for your hard work and efforts, and I would hope that you would give your permission for me to repost your articles, with credit and links back to your site. Have A Great day.

    Nemo

    • Admin

      Of course Nemo – as we explain on our contact page, people are free to repost our stuff as long as they include a direct link back to the original article.

      Thanks for being a regular visitor to our site – we also would encourage you to check another new blog that we have started up called The American Dream

  • Tony

    I hope so, cant we just get this thing over with already?

  • Paul

    It’s ironic. That is what it is.

    The US was planning to do something similar to the UK because of the Suez Crisis. As the UK had a lot of debt in US hands, plus the US held Sterling Bonds, it was used against the British, who couldn’t let the Sterling devalue, to end the crisis back in 1957.

    The date which marks the end of the Suez Crisis can also be used to mark the death of the British Empire.

    So the US having to play the part of the British in their very own Suez Crisis, 53 years later, is upsetting as they have not learnt from history.

  • http://www.newamerica-now.blogspot.com NewAmericaNow

    This is exactly why Thomas Jefferson was so adament about the control of money being in our hands and was dead set against central banks in any form. Once you lose control of your money you lose control of your destiny. Someone close to me said that it is interesting how we bought Manhattan for some worthless bobbles and we are now selling our nation for those same bobbles now in the form of cheap chinese goods. Thanks for always posting interesting thought provoking articles.

  • http://ceeuropeaninfo.blogspot.com/ Tony W

    My question is why should these countries — China and Russia — see the U.S. as anything other than a rival at least, an enemy at worse. Remember, it is Washington that has pushed its military alliance NATO to the borders of Russia, opened numerous military bases on that country’s underbelly, some used by the CIA as black sites to torture terror suspects, sent warships into the Black Sea, Baltic Sea. Washington along with their lackeys in Brussels seek to encircle Russia, and China, hence the weapons to Taiwan. For those countries, the currency vulnerability is one to exercise as long as it doesn’t blow back in their face. No one will ‘drop’ the dollar. What they will do is ditch it slowly, so it’s almost not noticed, like the boiling of a frog in a pot. The temperature is gradually raised and the frog doesn’t no what is happening.

  • james m. convey

    “…….Frankly having the benefit of hindsight, as well as watching Paulsen stutter and stumble through his discussion with Charlie Rose the other night, I for one am not buying his book, which would be adding insult to my own injury at the hands of this charlatan! I would therefore caution anyone, not to pay much attention to his assessments of the international brinksmanship that is and always has been Global politics and economics. In other words: “he doesn’t know what the blazes he is talking about!!” His ilk would see us revert back to cold war political policies and “superpower” thinking, which we clearly can no longer afford, rather than develop strategies to cope with the normal challenges of healthy competition from without !

    Have we become so small and frightened, that even competition in commerce can scare us into some renewed neocon evil darkness? Where is the spirit of entrepreneurial and technological genius that grew the U.S.A into the most respected economic and political regime on the planet? It is when we allow these buffoons (AKA) Paulsen, (who showed no sense of mea culpa whatsoever, for his part in the recent financial fiascos), to become our spokesmen and leaders that we falter and become as frightened little sheep! This is a cowardly approach to life and it’s challenges. The real truth is that we need to learn from this experience and not to repeat the mistakes of the past. Paulsen it seems, would have us believe that his approach and that of his old neocon masters in Washington, is still the only way to view the world. Maybe we should invade Russia next or hey, what the heck, lets go for the gusto and start a war with China!! What ever happened to simply competing. Doing things better than the other guy etc! We know we already have the biggest stick on the playground, how about we now prove we can also remain the biggest economy…………….!

  • scott

    Well this is no suprise as we have become an abominable Nation. It is our sins that have brought us to this point. Look at Abortion, Same Sex Marriage and taking God out of everything. It is no wonder that this once Great God Fearing Nation Founded on Christian Principles is now becoming the Tail Rather than the Head.
    However, be not deceived by the Russian and Chinese threats because it is the Resurrected Holy Roman Empire that we should really be fearful of. The Europeans hold more of our debt than the Chinese. The Russian anxiety is merely a detractor to the real threat to the US. The tensions between Russia and the US could be another push for the EU to come together sooner in order to mediate between the two.
    We will soon see the coming war with Iran start. This will also bring about the rise of the new Roman Emperor. These things are spoken of by Daniel the Prophet and are very clearly coming to pass right before our eyes. These events will close this age of men and usher in the Kingdom of God here on Earth. For more information on these and many other subjects please see: http://www.ashininglight.info/

  • http://LinkedIn Ruth Rachel Anderson-Avraham

    “On the verge”…? We are already there -

  • Chad Streifel

    This will not only be an economic war… Get ready for WW3. How else can you see a resolve? I want your educated opinion on what will fix this issue. Trust me, if it does come down to a war, I for one will not be a soldier (puppet). If you believe fighting for your country is heroic then take that gun of yours and do us all a favor. No, I don’t mean fight the good fight, I mean shoot yourself in the head. Anyways, proof of this economic war is shown on May 4th.

  • Thoth

    Unbridled nationalism, as distinguished from a sane and legitimate patriotism, must give way to a wider loyalty, to the love of humanity as a whole.

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