From last Sunday’s Washington Times (of all places) via News Dissector and Prensa Latina:
Bush's Agencies Punch Gift Horse in the Mouth
COLLEGE STATION, Texas — The Bush administration has adopted a new counterintelligence strategy that calls for “attacking” foreign spy services and the spy components of terrorist groups before they can strike, a senior U.S. intelligence official said yesterday.
National Counterintelligence Executive Michelle Van Cleave said in a speech here that the past policy of waiting for intelligence threats to emerge “ceded the initiative to the adversary.”
“No longer will we wait until taking action,” Miss Van Cleave said during a conference hosted by the Bush School of Government and Public Service at Texas A&M University. “To meet the threat, U.S. counterintelligence needs to go on the offensive, which will require major but achievable changes in the way we do business.”
The Bushies seem to be going on the offensive in every aspect of their foreign policy. Van Cleave brandishes the old “threat of terrorism” boogie man, but this would be the policy they would follow if they were actually concerned with concealing their own actions from foreign governments. If they were really concerned with fighting terrorism, better ways they could do it would be by banning the sale of .50 calibre weapons, pursuing Halliburton for their unreported 3 month loss of nuclear material and adequately funding the police force.
Agencies attending the conference specifically referred to Russia and China. You really have to question the wisdom of making such threats against a country the US is currently as deeply beholden to as China:
Tim Bereznay, a senior FBI counterintelligence official, said Chinese intelligence activities are a major threat — specifically, Beijing’s covert targeting of U.S. weapons technology.
Counterintelligence against Chinese spying “is our main priority,” Mr. Bereznay.
<snip>
Talk about biting the hand that feeds you. The US is in massive debt to China. The only reason the US is not in even greater debt is that the dollar investments of Asian banks are keeping interest rates down. China are well placed to pull the rug out from under the US economy any time they like. Until recently it hasn’t been in its interests to do so. The agencies’ comments coincide with that situation changing. William Pesek analysed the situation for Bloomberg on January 28th:
China also has been in the news as traders speculate that Asia’s No. 2 economy may pull the plug on dollar-denominated debt. Such a move by the second-biggest holder of U.S. Treasuries after Japan could send shockwaves through global markets.
Fan Gang’s Comments
Hence all the fuss over comments by Chinese economist Fan Gang. Fan isn’t a government official; he’s director of the state- owned National Economic Research Institute in Beijing. The connection seemed close enough for traders who found great relevance in Fan’s comment that China has lost faith in the dollar, to which its currency is pegged.
“The U.S. dollar is no longer, in our opinion is no longer, (seen) as a stable currency and is devaluating all the time, and that’s putting troubles all the time,'’ Fan said, speaking in English, at the World Economic Forum in Davos, Switzerland. “So the real issue is how to change the regime from a U.S. dollar pegging to a more manageable reference, say euros, yen, dollars — those kind of more diversified systems.'’
Paul Donovan, London-based senior global economist at UBS AG, seemed to speak for many traders and investors when he said: “This in fact is a scenario we consider to be highly likely.'’ Certainly more likely than, say, China letting the yuan trade freely.
Turning to the Euro
Again, Fan isn’t a Chinese policy maker, and it’s unclear how close he is to the economic decision-making process. Still, his views have a certain logic to them. Irony, too. The U.S. has been using its might to bully China into revaluing the yuan. Yet it seems it is U.S. weakness — a fragile dollar — that may be the catalyst.
<snip>
Confidence in the dollar wasn’t enhanced this week by President George W. Bush’s record budget deficit forecast of $427 billion for this fiscal year. It belied assurances that the White House will bring one of the world’s most worrisome economic imbalances under control.
All this has investors turning to the euro. Once Asian central banks do, the dollar’s woes will worsen. By buying vast amounts of Treasuries, Asian central banks are delaying the rise in U.S. yields that would typically accompany a falling currency. If Asians pull the plug, U.S. rates could skyrocket.
Reckoning Approaching?
Central banks here don’t buy U.S. debt out of altruism. Hoarding dollars is necessary to hold down currencies to boost Asian growth. Yet dumping dollars would result in stronger Asian currencies and, by extension, Asian gross domestic product.
<snip>
Still, the day of financial reckoning that investors fear may be getting closer.
<snip>
Asian central banks like China’s have become America’s bankers, financing its excesses through good times and bad. It’s now up to Asia to decide whether to extend the U.S.’s line of credit. The U.S. should be warned that the odds are moving less and less in its favor.
more....
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