Saturday, March 21, 2009

Check Out "NoCo Surrounds Them"!

I'm now doing some posting over at "NoCo Surrounds Them" to help out Glenn Beck's Go take a look...

Unqualified Proof

How to explain this apparent contradiction? I'm afraid it is easy. As I mentioned during the presidential campaign, Mr. Obama was seriously unqualified for the job of president. He had no practical experience in running anything, except political campaigns; but worse, his background was one-dimensional.
He is a free soul, but he is also the product of environments in which even moderately conservative ideas are never considered; but where people on the further reaches of the left are automatically welcomed as "avant-garde." His whole idea of where the middle might be, is well to the left of where the average American might think it is. To a man like Obama, as he has let slip on too many occasions when away from his teleprompter, "Middle America" is not something to be compromised with, but rather, something that must be manipulated, because it is stupid. And the proof that it can be manipulated, is that he is the president today.

Disaster For Bond Holders


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It is my observation that the ranks of garden-variety liberals are composed in large part of sketchily-informed idealists. The ranks of radicals on the Left (which is a very different thing) are composed of some idealists mixed with a goodly proportion of manipulative, angry, ruthless, power-hungry tyrants. All of this is in the service of a better world, of course.

I’ve written previously about the message of the Nicholas Gage book Eleni. It tells the sobering tale of what can—and often does—-happen when political idealists meet up with the roadblocks of reality and yet remain stubbornly dedicated to their plans rather than abandoning them. Those mushy idealists can turn into manipulative, angry, ruthless, power-hungry tyrants quite easily, and do so with depressing regularity:

The book delineates, step by careful step, how over the course of time these people compromised and hardened until they were all but unrecognizable

Everybody's Asleep


furrow your brow and fume. No, not like a camp waiter when you send back the arugula salad drizzled in an aubergine coulis. We’re looking for primal, righteous anger: You’re outraged, OUTRAGED that bonuses are being handed out at companies the American taxpayer is bailing out. Yes, to be sure, the bonuses were specifically provided for in the legislation, but, like all busy senators and congressmen, you don’t have time to read every footling trillion-dollar bill before you vote in favor of it. And yes, true, the specific passage addressing these particular bonuses was, in fact, added to the bill in your name, but that was nothing to do with you — you just did that because the White House asked you to, and just because their people called your people and some intern in your office drafted some boilerplate with your name on it is no reason for you to be denied ten minutes of grandstanding on MSNBC. It’s an outrage to suggest you’re anything other than outrageously outraged!

Mobocracy: ACORN Edition

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Just in case people didn’t figure out what the end result of all this faux outrage over AIG bonuses would be, New York Magazine reports on the latest in liberal-populist tourism.  Community organizers for Connecticut Working Families Party want to send busloads of outrageously outraged people to the doorsteps of AIG executives’ homes … and claim that they don’t want to put them at risk.  Riiiiiiiiiiiiiiiiight:

The Connecticut Working Families Party this weekend has organized a bus store that will make stops at Wilton, Connecticut, AIG office as well as the security-patrolled homes of AIG execs who are fearing for their lives.

Remember when Bill Clinton accused conservative talk radio of fomenting hate?  What does he have to say about his colleagues in the Obama administration and the Democratic Party?  (via King Banaian)

Update: What a shockCWFP is an arm of ACORN. (h/t: Instapundit)

Moral OHazard

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The above segment is interesting in so many ways. First, as noted, in the first paragraph, Obama seems to be advocating federal usury laws. It was usury laws in California in the early 1970s that prevented me from getting a credit card with a limit of even $250. Second, Obama seems to be saying that high interest rates are the problem. Most people have thought that the bubble was due to low interest rates. Third, Obama seems not to understand, or maybe care about, moral hazard, as his toaster analogy shows. If your getting overextended on your credit cards means that you're not protected, you're less likely to get overextended on your credit cards. Consistent with that lack of understanding of moral hazard, in laying out, fairly well, actually, how AIG got in a heap of trouble, Obama never said a word about the fact one reason AIG could take such risks is that politicians like Obama and McCain would bail them out if things went bad.

Medicine Redux

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In 1998, Geithner was the Under-Secretary of the Treasury, Larry Summers, who is now President Barack Obama’s head of the National Economic Council, was the Deputy Secretary of the Treasury and I, who now work for the UN, Adelaide University and a consultancy firm, was the Minister of Foreign Affairs of Australia. That year we all met in Washington.

I was worried. Indonesia’s economy was tanking and the country sought help from the International Monetary Fund. The trouble was, the IMF’s medicine was so drastic I feared it would cause total collapse of Indonesia’s economy and cause political and social chaos on our doorstep.

Downer says the same men are now in Washington. He continues:

Today, Geithner’s the economic boss man in Washington and Summer’s once more calling many of the shots. But this time I’m a spectator. If I wasn’t, I’d fly to Washington again and this time tell them they’re endangering not just Indonesia but the U.S. itself.


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Paul Krugman has seen the new Treasury plan (the “Geithner plan” as he calls it) that addresses the problem with the banks and he finds it wanting:

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess.

Indeed. And an amazing admission by Krugman who was as sure as anyone in the tank for Obama that he’d be “the answer” to all of our problems. Instead he’s discovering what a lot of Obama supporters are discovering - Obama’s an empty suit who is more interested in the perks and rewards of the office

When Krugman isn't in the tank for Ogabe anymore then that's pretty much the final warning klaxon. Hang on to your seat...

If You Can Keep It

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This is a must see 10 minutes on what you would have slept through in civics if it had been taught properly. Time to make up for it. Now.

Bananas Update: El OJefe

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"But you don't understand," the Colombian said. "We've seen this before."

"He's right, my good friend," the Cuban said. "We Latin Americans know the pattern. Believe me we do."

The American tried to shrug off the Latin Americans' warning. To his consternation, he found that he couldn't. Peron, Fidel, now Chavez, they insisted. The emergence of misrule, corruption and economic stagnation in Latin American nations follows a particular sequence or progression. Now the sequence was unfolding in the United States.

"It starts with a cult of personality," the Cuban explained. "One man declares himself the jefe, the caudillo, the big leader."

"After the cult of personality," the Colombian explained, "what comes next is nationalization."
"The last step?" asked the Cuban. "Censorship.

A cult of personality, nationalization and censorship.

And we're about to have the currency to match.

Friday, March 20, 2009

What's The Holdup?

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It was understood at the time that our fledgling central bank had played an activist role in fueling and prolonging the twenties boom - that presaged The Great Unwind.  Along the way, this critical analysis was killed and buried without a headstone. 

I believe the Bernanke Fed committed a historic mistake this week – compounding ongoing errors made by the Activist Greenspan/Bernanke Federal Reserve for more than 20 years now.  I find it rather incredible that Discretionary Activist Central Banking is not held accountable – and that it is, instead, viewed critical for the solution.  Apparently, the inflation of Federal Reserve Credit to $2.0 TN was judged to have had too short of a half-life.  So the Fed is now to balloon its liabilities to $3.0 TN, as it implements unprecedented market purchases of Treasuries, mortgage-backed securities, agency and corporate debt securities.  And what if $3.0 TN doesn’t go the trick?  Well, why not the $5 or $6 TN Bill Gross is advocating?  What’s the holdup?

Your Servants Have Become Your Masters

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Time to fix it.

And if you want to know just how far we've sunk, you can only mail the string and tab of the teabag to the scumballs or else they'll toss the letter away for fear of hazardous substances. Not environmentally correct you see.

Everything You Have

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“A government big enough to give you everything you want, is strong enough to take everything you have.” - Thomas Jefferson

David Boaz has written a great post explaining why selective taxation, like we saw yesterday as the House passed a 90% tax on AIG bonuses, is a form of tyranny:

Everybody’s angry. But anger doesn’t make good law. And there are real questions about both the wisdom and the legality of such legislation. Bloggers like Conor Clarke, Megan McArdle, and Eugene Volokh have asked if the bonus tax is legal or constitutional. And thank goodness for bloggers who ask the questions that members of Congress and print journalists seem to ignore!


If the Pelosi bill is actually enacted into law (which I still think is doubtful) and upheld by the courts, there is no limit to the arbitrary power of Congress.
If Congress can appease a howling mob of demagogues by enacting discriminatory tax legislation against a group of people who are, for the moment, politically unpopular, even though the vast majority of them have nothing to do with the supposed problems that have given rise to popular outcry--imagine, say, Congress enacting a surtax on the incomes of all homosexuals in response to a notorious case of homosexual molestation--then the idea that the Constitution affords us any sort of protection against arbitrary government power is an illusion.

The Game That Never Ends

Helicopter Ben Bernanke’s Federal Reserve is dropping trillions of
fresh paper dollars on the world economy, the President of the United
States is cracking jokes on late-night comedy shows, his energy
minister is threatening a trade war over carbon emissions, his treasury
secretary is dithering over a banking reform program amid rising
concerns over his competence and a monumentally dysfunctional U.S.
Congress is launching another public jihad against corporations and

As an aghast world — from China to Chicago and
Chihuahua — watches, the circus-like U.S. political system seems to be
declining into near chaos. Through it all, stock and financial markets
are paralyzed. The more the policy regime does, the worse the outlook
gets. The multi-ringed spectacle raises a disturbing question in many
minds: Is this the end of America?
We see the system up close, law-making that is riddled with
slapdash, incompetence and gamesmanship.

Got Gold?

I'd like to take a few moments to talk about the Federal Reserve's latest act of irresponsibility in a continuing series of irresponsible actions (i.e., buying $300 billion in longer-term Treasurys, an additional $750 billion in mortgage-backed securities and -- just for grins -- $100 billion of government-sponsored-enterprise debt).

As a friend noted, Wednesday was the functional equivalent of Pearl Harbor for the U.S. dollar and fiat currencies in general. He said -- referencing that people might pay less for their mortgages -- that they'll pay much, much more for everything else. I would certainly agree.

I discussed this with my good friend Jim Grant, who is one of the foremost authorities on the history of central banking. Jim pointed out to me that when Nixon closed the gold window in 1971, it was a unilateral ending of the world's currency regime, whereas Wednesday marked the announcement of the intent to destroy the world's reserve currency.
Got gold?

It Is Happening

In turbulent times, it's good to know some things never change. After a week in which President Obama thanked himself for inviting him to the White House, compared AIG executives to suicide bombers, and did the first Presidential retard joke on national TV, I was impressed to find that Slate is bravely keeping up its Bushism Of The Day feature.

Four more years!

Yes, a lot of Democrats are saying to themselves, This isn't can't be happening!

... but doesn't exist for Dems since they never read anything but the first few paragraphs of a NYeT story...

Stuck On Stupid Stimulus

How come when I put my AmEx bill on my Visa, it's stupid, but when the government does it, it's stimulus?

Mobocracy Update

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"The country's in the very best of hands", Johnny Mercer

So the Democrats are encouraging Americans to man the barricades in outrage at protest at bonuses to AIG executives, while the White House frantically rearranges the deckchairs, hanging Chris Dodd and increasingly Tim Geithner out as bait to a public that is staring in disbelief as an administration they elected on the basis of its supposed intellectual and ethical firepower has done more to wreck the economy in eight weeks than the Bush administration did in eight years.

Nevermind that the people who crashed AIG are long gone, and it is the workers who have been brought in to clean up the mess who now work under armed guard, fearful for their safety. What was that about the Right always stoking anger and violence in the community again?

In short, the events of the last week do not have the hallmarks of democracy, but rather mobocracy. Which is the very thing the Founders worried about.

The country's in the very best of hands.

(Just) Words From The OTard In Chief

Dear Barry:

Our 12 year old son Tyler is developmentally disabled. Tyler's learning center has a Special Olympics program and we (along with his teachers) have been encouraging him to participate. Every time we bring it up to him, however, Tyler pushes back and becomes very withdrawn. We love Tyler very much and don't want to force him into it, but we think the Special Olympics would be a terrific experience and help him conquer his shyness and introversion. Do you have any suggestions for helping him get past this fear?

Jean and Ted in Westmont

Dear Jean and Ted:

As you know I am a big fan of the Special Olympics program, and all the good things it does for young Mongoloid-Americans like your son. Nothing inspires more than the sight of these heroic young tards hilariously giving it their all in the arena of friendly athletic competition. Extra-chromosome? More like extra-awesome!


Look At My Outrage, Not My Failure

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Not that this stopped the Obama administration from jumping on the "outrage" bandwagon this week over AIG bonuses. Greed, greed, greed, screamed Washington, hoping nobody would notice its own failure to supervise AIG over the years, its botched intervention, or the administration's refusal to come clean about where the AIG money was going.

This spectacle has left the financial community with one impression: Stay away. What healthy bank, what hedge fund, what private equity firm wants to take part in an Obama plan to sell off toxic assets, or to revive consumer lending, with the knowledge that they might be Washington's newest bonfire? Executives are already working to get out of TARP, fearful of political punishment. This despite a recession, falling house prices and growing bank losses.

Pakistan Stops The "Outrages"

Under pressure both domestic and foreign, the Pakistan government of Asif Ali Zardari has reinstated Chief Justice Iftikhar Muhammad Chaudhry.
Having become fully politicized, by "events," the judges are no longer a pillar, and while they remain a symbol, the meaning of that symbol has changed. They have instead become something like the tribal leaders of Pakistan's secular middle class, whose outlook corresponds to that of "liberals" in the West.
all the surviving district judges in Swat were sacked, or more precisely, warned that they would be beheaded if they turned up for work. Since many of their colleagues had already been beheaded, it was truly a word to the wise. They may well be beheaded anyway, in due course; but the doomed often prefer tomorrow over today. They are to be replaced entirely with Shariah courts under "qazis" or Islamic religious judges, who will now put a definitive end to such outrages as little girls attending schools.


Schumpeter, "Pay Grades", And The Cycles Of History

In his 1942 book, Capitalism, Socialism and Democracy, Joseph Schumpeter asked the essential question: “Can capitalism survive?” His unsettling answer was, “No. I do not think it can.” Schumpeter’s words were in no way meant to denigrate capitalism, instead he felt “its very success undermines the social institutions which protect it.”

History in many ways proved his views prophetic. The success of capitalism means that many are allowed to do things that have nothing to do with productivity.

What’s rarely asked is how the very people who achieve stature through something called “pay grades” could ever successfully regulate those who make millions by gaming those same regulations and regulators.
Regulations merely tell those eager to cheat or take excessive risks what they’ll have to comply with while cheating and taking excessive risks
Schumpeter may have been early in his suggestion that socialism would win out over capitalism, but this in no way detracts from his visionary predictions
More here.

ODirective 10-289 Update

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In Rand’s magnum opus, the “men of the mind,” as she calls
the nation’s producers, quit. Literally. They walk away from the
mines, factories and businesses they built as the government
tries to deprive them of their wealth through increased
regulation and taxation. (Whether financial engineering
constitutes production is an issue for another column.)

Rand’s men in Washington believe they’re entitled to the
output of these minds and the material rewards, enacting an
Equalization of Opportunity bill, which is really about equality
of outcomes; a Railroad Unification Act, to prop up weak carriers
and destroy competition; and ultimately, as the economy
collapses, “Directive 10-289,” which makes it a crime to stop

The “looters,” as Rand calls them, fail to understand that
the men of the mind may vote with their feet, refusing to work
for the benefit of others.

All that’s left for life to imitate art completely is for
these CEOs to quit. Let Barney Frank and Chris Dodd run AIG.

Today's Ogabe Bus Report

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Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal — first by their former colleagues, now by their elected leaders.

The handful of souls who championed the firm’s now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.

“They’ve chosen to throw us under the bus,” said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. “They have vilified us.” . . .

No Such Thing

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There really is no such thing as a free lunch in economics. Countries with massive budget deficits should be cutting expenditure, and not borrowing more.

Buying up your own debt is no more useful than swapping one credit card for another. It is nothing close to sound finance. It is the last act of desperation when there is nothing else left to do.

You flood an indebted banking system with money, you get inflation and the relative value of fixed debt goes down.

But this is not a magic bullet. You get inflation back in the system, and anybody on a fixed income becomes poorer as prices rise. If you are an investor, your dollars become worth less, and eventually worthless.

That is why the gold price jumped yesterday. And it is going to go a lot higher as investors reach for a safe haven. Beware being left sat on cash when you should be owning gold and silver as a hedge against desperate actions by the central banks.

Thursday, March 19, 2009

Avarice And Ambition

In short, this generation of political and financial elites has proven itself unfit to govern a great nation. What we have is a system failure that is rooted in a societal failure. Behind our disaster lie the greed, stupidity and incompetence of the leadership of a generation.

Is Obama willing to speak hard truths?

Is he willing to say that home ownership is for those with sound credit and solid jobs? Is he willing to say that credit, whether for auto loans, or student loans, or consumer purchases, should be restricted to those who have shown the maturity to manage debt -- and no others need apply?

"Avarice, ambition," warned John Adams, "would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other."

In this deepening crisis, what is being tested is not simply the resilience of capitalism, but the character of a people.

I can't remember ever having quoted anything from Buchanan. I have to give him his due on this one though...

Or Whether It's Covered At All

But don't forget, folks: Somewhere in Texas a village has been reunited with its idiot, and we now have the whip-smartest administration of David Brooks' lifetime.

ONE MORE THING: Can you imagine the Democrats' reaction if the Bush White House had given a European head of state a set of DVDs that can only be played on North American machines? It would have been conclusive proof of Bush's provincialism, lack of sensitivity to our allies' sensibilities, ignorance of the wider world, techno incompetence, failure to appreciate the superiority of European civilization, blah blah blah. That's how it would have been reported and editorialized on in every newspaper. So let's check tomorrow's papers and see whether that's how Obama's gaffe is covered. Or whether it's covered at all.


Now that the Fed has made an official announcement of hyperinflation, we all need a good laugh don't we? So here it is. Unfortunately, this is also an allegory for the level of control that Ogabe the special Olympian nonetheless has of Britney world.

French revolution ho!

How Could You Even Think That?

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"The president made an off-hand remark making fun of his own bowling that was in no way intended to disparage the Special Olympics," White House deputy press secretary Bill Burton said.

Y'see when he was joking about what a fucking failure he is at bowling, he was not, NOT, saying anything at all about Special Olympics (except for that part where the only way we get the joke is because of what we know about the Special Olympics). Spin, monkeys, spin!

That time I got a ticket for "improper lane change" and I said, "I was driving like a woman"? Totally not making fun of women drivers. At all. How could you even think that?

The Long Four Years

He bowled a 129, the president said.

“That’s very good, Mr. President,” Leno said sarcastically.

It’s “like the Special Olympics or something,” the president said.

When asked about the remark, the White House had no comment.

I wonder if NBC will edit that out, for Obama. Nothing would surprise me.

Sigh. One almost gets tired of saying it, but one must say it, still: Can you IMAGINE what the press and the Dems would do with that, had Bush said it. Can you IMAGINE what the press and the Dems would have done with the Irish PM Teleprompter gaffe (the press has helpfully embargoed the video, so Obama doesn’t have to see it playing 24/7, as Bush would have - had Bush so gaffed). Can you IMAGINE what the press and the Dems would have done if Bush had given the Prime Minister of Great Britain a lousy pack of 50 “Classic” DVD’s that didn’t work in the UK?

Another story the press isn’t actually covering…

Gonna be a long four years.

Electric Lasers Arrive

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Huge news for real-life ray guns: Electric lasers have hit battlefield strength for the first time -- paving the way for energy weapons to go to war.

In recent test-blasts, Pentagon-researchers at Northrop Grumman managed to get its 105
kilowatts of power out of their laser
-- past the "100kW threshold
[that] has been viewed traditionally as a proof of principle for 'weapons
grade' power levels for high-energy lasers," Northrop's vice president
of directed energy systems, Dan Wildt, said in a statement.

That much power won't get you a Star Wars-style blaster. But it should be more than enough to zap the mortars and rockets that insurgents have used to pound American bases in Iraq and Afghanistan. 

Of Rubicons And Cliffs

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WASHINGTON (MarketWatch) - The Federal Reserve's decision Wednesday to buy $300 billion in longer-term Treasury securities has ignited a firestorm, with analysts saying it will either cause a currency crisis or jolt the economy out of the morgue.

"We're in a car heading for a cliff and the Fed has just stepped on the gas," said Peter Schiff, the author of a best-selling book 'Crash-proof' and one of a handful of economists who worried about the economy long before it slipped into a severe recession.
Lou Crandall, economist at Wrightson ICAP, said he doesn't think yields will stay low.

"Once the initial surprise wears off, the market tends to look past public-relations moves in most cases. Ultimately, we think the market is likely to focus on the fact that the net market supply of intermediate- and long-term Treasuries is still growing rapidly even after taking the Fed's buybacks into account," he said.

The Separation Of State And Economics

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Missing Teleprompter Alert

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Maybe this is the explanation. Obama doesn’t see the banks and AIG as entities he has any control over, but rather as something akin to . . . suicide bombers:

“Here’s the problem,” Mr. Obama said, “It’s almost like they’ve got — they’ve got a bomb strapped to them and they’ve got their hand on the trigger. You don’t want them to blow up. But you’ve got to kind of talk them, ease that finger off the trigger.”

I don’t even know where to start with that. As you read that statement, and pull out large tufts of hair, which bothers you more? The comparison of banks and AIG to suicide bombers? Or the notion that the way to deal with a suicide bomber is to talk to him and ease his finger off the trigger?

The Diversion

As I explained on Bill Bennett's radio show this morning, I don't think there is anything wrong with the AIG bonuses, and the people who got them should keep them. This is based on the testimony of Edward Liddy, who said yesterday:

* All of these payments, as to AIG's troubled financial products division, are retention bonuses, not performance bonuses.
* The money is not going to anyone responsible for the implosion of AIG--those people, who were in the credit default swap area, are gone.

AIG, like GM, should have been allowed to go into bankruptcy. In bankruptcy, it could have wound down its financial products division just as it is doing now. Bankruptcy would not have affected the company's international insurance businesses, distinct corporate entities which are both solvent and profitable. Those businesses could have been sold, which is what AIG now plans to do.

Why wasn't that approach followed? Because of politics. Much of the money that AIG owed was due to European banks.

Win-Win-Win: Chinese Edition

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There is mounting evidence that China's central bank is undertaking the process
of divesting itself of longer-dated US Treasuries in favor of shorter-dated

There is also mounting evidence that China's increasingly energetic new
campaign of capitalizing on the global crisis by making resource buys across
the globe may be (1) helping its

central bank to decrease exposure to the dollar, while (2) simultaneously
positioning China to make much greater profit on its investment of its reserves
into hard assets whose prices are now greatly beaten down, while (3) also
affording it greatly increased control of strategic resources and the
geopolitical clout that goes with it. This is turning out to be a win-win-win
situation for China as it capitalizes upon the important opportunities afforded
it by the present global crisis.