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Ghost Dog

(16,881 posts)
7. Will Beijing become a tighter sub-imperial ally of Western financiers?
Thu Nov 26, 2015, 05:17 AM
Nov 2015
On Nov. 30, the Chinese yuan will join the dollar, euro, pound and yen as the world’s official reserve currencies, as recommended by the International Monetary Fund. What this heralds is the amplification of extreme uneven development and the abuse of Chinese economic surpluses, yet again, for the purpose of bailing out a corrupt, fragile world financial system.

Aside from the IMF itself, the driver appears to be the People’s Bank of China, which needs a new name now: the Western Bankers’ Bank of China. Its official statement claimed “a win-win result for China and the world.”

But here, the name “China” really means the neoliberal clique at the helm of Beijing’s economic management, and the “world” means a very shaky capitalism suffering periodic spasms in its hyper-speculative financial centers. For the last fifteen years, these centers have enjoyed a Washington backstop that was the beneficiary of Chinese official purchases of US Treasury Bills. Reaching $1.3 trillion in late 2013, that process has finally reversed, with about $100 billion in net T-Bill sales since then. But Beijing still holds about a third of its foreign reserves in these investments, representing more than a fifth of all foreign US T-Bill holdings (in turn, the $6 trillion in US T-Bills is about a third of total US foreign indebtedness – an amount so vast it can only be repaid by running the Fed printing press).

Beijing is mindful of homegrown economic problems, including its own vast overindebtedness, the secondary cities’ real estate meltdown and the $3.5 trillion collapse of the main stock markets mid-year. If London bankers are correct, when the IMF welcomes the yuan, an additional $1 trillion of global reserves could move into Chinese financial assets. That would negate Beijing’s August 2015 2 percent currency devaluation and make the whole system more balanced at surface level, yet far more chaotic underneath as a result of international contagion from a future Chinese debt crisis. Meantime, China will probably bolster the IMF’s own loan-pushing in its new self-interested currency partnership.

Is there an alternative, an opting-out of the financial death grip between China and the West? And for the other BRICS, is there a way to support the Bank of the South (which without Brazil’s support appears stillborn), or to default on ‘Odious Debt’ (as did Ecuador in 2009), or to impose tough exchange controls (as did Malaysia to halt capital flight in 1998), or to insist that state regulators get control of local financiers rather than the other way around?

...

Far better would be to turn the BRICS finance ministries and central banks over to activists trained by the current wave of student #FeesMustFall protests, European struggles against austerity, Occupy, debt cancellation advocacy and the Third World’s thousands of IMF Riots the last third of a century. Sure, we don’t yet deserve those gigs – because our counter-power has repeatedly risen and then rapidly shriveled during the neoliberal era’s contestations against corporate and banking elites. But one day we must go for it.

/... http://www.telesurtv.net/english/opinion/China-Sucked-Deeper-into-World-Financial-Vortex-as-BRICS-Sink--20151125-0024.html
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