America is overtly involved in several wars in Arab countries with varying degrees of success, but it is
an undeclared war waged by a communist country that is about to destroy her. America may well lose
this war, because Americans don't even recognise that a state of war exists.
The war is economic and the Chinese communists are winning it. Here's what a Nobel Prize winning
economist has to say:
Two economists, Michael Spence, a Nobel prize-winning winner and Sandile Hlatshwayo, a researcher at
New York University, have taken a careful look at jobs offshoring and concluded that it has ruined the
income and employment prospects for most Americans.
Their March, 2011 research report is titled, "The Evolving Structure of the American Economy and the
Employment Challenge" and can be read on the web: search the title. The quotes below are taken from
the Executive Summary of the report. Note that tradables can be exported, nontradables are items like
services which can't be exported. (The high points of the report are summarized in plain English after
"1. Employment growth in the U.S. economy between 1990 and 2008 was substantial, on the order of 27.3
million jobs, off a base in 1990 of 121.9 million.
"2. Virtually all (97.7 percent) of the incremental employment stems from the nontradable sector.
"3. The leading employment sectors are government and health care, in that order, both on the
"4. Given the pressure on the government budgets, continued gains in government employment seem
unlikely. Equally, health care absorbs a large enough fraction of GDP (on the order of 16 percent) that
expansion in that sector is at least questionable. An aging population may require more health services,
but the government’s ability to finance the expansion is in doubt.
"5. Growth in other nontradable services that generated employment gains—for example, retailing—
has been driven in part by debt-financed consumption. After the financial crisis, the prospects for job
growth in these sectors are duller.
"7. The loss of employment in the manufacturing sector was caused by the out-migration of
functions in global supply chains...
"10. Given the prospect of slowing employment growth in nontradables and rising competitive pressure
on tradables, major employment problems in the near future are a certainty. Even if the nontradable
sector is able to continue to absorb the growth in the labor force, pressure on wages and salaries will
be downward, and consequences for income distribution unavoidable.
"11. The postcrisis shortfall in domestic demand is causing stubbornly high unemployment even as the
economy begins to recover some of its growth momentum. In principle, foreign demand, especially from
the high-growth emerging economies could make up some of the difference. But it probably will not
"12. To create jobs, contain inequality, and reduce the U.S. current-account deficit, the scope of the
export sector will need to expand. That will mean restoring and creating U.S. competitiveness in an
expanded set of activities via heightened investment in human capital, technology, and hard and soft
infrastructure. The challenge is how to do it most effectively." (Michael Spence and Sandile Hlatshwayo,
"The Evolving Structure of the American Economy and the Employment Challenge," 2011, p. 4, 5).
The entire report is substantially more technical than the parts I've quoted, but what the report says,
with many charts and advanced technospeak, is that high paying manufacturing jobs have been lost to
other countries, these jobs have been replaced with lower paying service jobs and wages will start
going down. Also, high unemployment will continue and government, health care and retail hiring will
lag because the people and the nation are mired in debt. The report concludes that America must
export more goods, "the scope of the export sector will need to expand... The challenge is how to do it
Under the Obama administration, the challenge of manufacturing more goods for export has not been
met at all. The trade deficit that his administration has ignored is undermining America's global
dominance. Additionally, the Chinese are using trade as a weapon to destroy America.
Peter Navarro is a business professor at University of California at Irvine, a CNBC contributor and the
coauthor with Greg Autry of "Death by China: Confronting the Dragon — A Global Call to Action." Here
are excerpts from an article that he published in The Los Angeles Times.
"Every business day, American consumers buy $1 billion more in Chinese exports than American
manufacturers sell to China, and China alone accounts for about 70% of America's trade deficit in goods,
excluding oil imports. This "Chinese import dependence" has led a democratic America to owe the
largest communist nation in the world more than $1 trillion, while China holds more than $3 trillion in
foreign reserves, most of them in U.S. dollars." (Peter Navarro, "How China unfairly bests the U.S." The
Los Angeles Times, Op-Ed, June 21, 2011). Note that the $1 billion is every business day. The amount per
calender day in 2010 was over $800 million.
"We must puncture the myth that China's main manufacturing edge is solely its cheap labor. Indeed,
while low labor costs are a factor, when you carefully research the biggest source of China's
manufacturing advantage, it is actually a complex array of unfair trade practices, all of which are illegal
under free-trade rules.
"The most potent of China's "weapons of job destruction" are an elaborate web of export subsidies; the
blatant piracy of America's technologies and trade secrets; the counterfeiting of valuable brand names
like Nike and Chevy; a cleverly manipulated and grossly undervalued currency; and the forced transfer
of the technology of any American company wishing to operate on Chinese soil or sell into the Chinese
"Each of these unfair trade practices is expressly prohibited both by World Trade Organization rules as
well as rules established by the U.S. government, e.g., the Treasury Department has sanctions against
currency manipulation (which, alas, the Obama administration refuses to use against China despite
campaign promises to do so)." (Ibid).
"All of these real economic weapons have led to the shutdown of thousands of American factories and
turned millions of American workers into collateral damage, all under the false flag of so-called free
trade." (Ibid). (For details of the "collateral damage" and my recommendations for fighting it, see my
article of quotes from manufacturing and outsourcing expert Richard McCormack, on the website click
No. 124, "Quotable Notables" and select Richard McCormack, directly: www.amoroden.com/ richardmc.
"The second myth we must expose if we are to ever reverse the job-killing trade deficits we now run
with China is the idea that free trade always benefits both countries. That doesn't hold true if one
country cheats on the other. Instead, when a mercantilist China uses unfair trade practices to wage war
on our manufacturing base, the American economy is the big loser." (Ibid).
These tactics that China is using to undermine the American economy are only part of the problem. The
Chinese are also trying to tighten the screws on America by raising interest payments on the national
debt. The Chinese are leading the battle to get the credit rating of the American Government
downgraded from AAA.
Some investment funds are required to invest in only AAA rated bonds. If the U.S. Government loses its
AAA rating, these funds will be forced to dump their government bonds. The Federal Reserve will have
to increase interest rates to find investors to absorb the dumped bonds. Interest on the national debt
was almost $414 billion in 2010. Currently the national debt is over $14 trillion. A 1% increase in the
interest rate on that amount is over $140 billion dollars.
In the past year, Dagong Global Credit Rating Co., Ltd., the only Chinese agency that gives national
ratings, has lowered the bond rating of the American government twice. Most recently on November 9,
2010, Dagong Global downgraded the sovereign credit rating of the U.S. by one level to A+ from
previous AA with "negative" outlook.
On June 10, 2011, the president of Dagong Global Credit Rating Co. Ltd. said that Washington had
already defaulted on its loans by allowing the dollar to weaken against other currencies and eroding the
wealth of creditors including China.
On June 8, 2011 the German Bad Homburg Feri EuroRating & Research AG downgraded the agency's
credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing
deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal
measures, and weaker growth prospects.
On April 18, 2011, Standard & Poor’s put the U.S. Government on notice by lowering the outlook on its
bonds to “negative” for the first time. Currently S&P is maintaining the AAA rating, but warned the U.S.
Government that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to
reduce budget deficits and the national debt.
Note that the assault on America's credit rating was led by China. Our trade deficit with China was over
$273 in 2010 and is over $81 billion in the first four months of this year. China, while posing as America's
friend, it bleeding our economy to death. Apparently China is hoping to set off the same kind of
implosion that cost the USSR its superpower status.
China is also spearheading a movement to replace the dollar as the world reserve currency. The
advantages that America derives from being the world reserve currency are not only prestige, but also
a world demand for dollars that keeps the price of borrowing down and supports the ability to pay debts
with newly printed money. To some extent the dollar's role as the world's reserve currency has
lessened the financial problems America is currently experiencing. Loss of the dollar's world reserve
currency status could cause an international selloff of dollars resulting in both higher interest rates on
the national debt and higher prices for all imports.
Xu Hongcai is a department deputy director at the China Center for International Economic Exchanges, a
top government think tank. ""Xu's paper, "Reform of the international monetary system under the G20
framework," was published in Chinese on the center's website this week (www.cciee.org.cn)."
""Nations around the world have no way of restricting dollar issuance by the Federal Reserve. The
current international monetary system lacks both stability and fairness," Xu wrote."
""He said the global monetary system had fallen into a "dollar trap."" (Simon Rabinovitch, "China
economist blasts dollar dominance on eve of G20," Reuters, Mar 30, 2011).
"Xu also suggested that the Special Drawing Right, the IMF's unit of account, should gradually be built
into a global reserve currency, although he noted this would still be a long time off.
"Chinese central bank governor Zhou Xiaochuan said two years ago that the SDR would be better than
the dollar as a supra-national reserve currency, disconnected from the interests of any single country."
In summation, China is in a trade war with America and they are seeking to force us to offer higher
interest on our bonds by lowering their rating and they are trying to cause the nations of the world to
replace our dollar with some other reserve currency. All and all, China is on the brink of destroying
America without firing a shot. To paraphrase T. S. Elliot's "The Hollow Men," Is this the way America
ends, not with a bang but a whimper?
Who is to blame for this situation? Well, there is plenty of blame to go around. A glance at the history of
most favored nation status for China shows that an annual presidential waiver of the exclusion of
communist trading partners was required from 1980 to 1999. These waivers were given because
America could benefit from the China trade, and because China made human rights concessions.
But Bill Clinton gave the fox a permanent home in the hen house. During Clinton's administration,
China's most favoured nation status was made permanent in 2000. Clinton's granting most favoured
nation status cleared the way for China to join the WTO (World Trade Organization) in December 2000.
In 1985, our trade deficit with China was $6 million. In 1990, our trade deficit with China was over $10
billion. In 1995, our trade deficit with China was over $33 billion. In 2000, our trade deficit with China was
over $83 billion. In 2005, our trade deficit with China was over $202 billion. In 2010, our trade deficit with
China was over $273 billion. In 1985, American exports to China were less than $4 billion, last year they
were almost $92 billion. In the same years, China's exports to America went from less than $4 billion to
almost $365 billion.
George Bush deserves some of the blame for miring America in endless wars. Obama deserves a lot of
the blame for stimulus packages and bailouts and Obamacare and escalation of the Afghanistan war, all
of which worsened America's economic problems.
How can we crawl out of our economic coffin before China throws more dirt on it? First (don't laugh), we
need an efficient government.
Except for being evil, communism is in many ways superior to democracy. Communist governments can
use unlimited force against workers, they can imprison or kill those who are disobedient. They can set
policy and enforce it. Let me give you an example. In order to keep up the gross national product,
Chinese provinces are building cities that sit empty because no one can afford to rent there. (Search
China ghost cities.) If they were asked to build life size replicas of the pyramids, Chinese workers would.
Now, that's efficient.
Consider the US Government. Now, that's inefficient. Party loyalties, petty squabbling, gridlock,
competing lobbyists, special interest campaign donations, the list of inefficiencies goes on and on. Is it
even remotely possible to get an efficient government?
Actually, yes it is possible. It isn't even very hard. And you personally can help. Get out the vote in your
neighborhood and convince everyone that you talk to that they should vote Republican for all national
Remember when Obama and his Democrats had control of the Congress. They used that control to pass
Obamacare. And while I think that Obamacare is a financial disaster for America, the point is the
American Government actually got something done.
Some of the best minds in the Republican Party (I'm thinking Ron Paul) have been preparing for years to
rescue this country from its financial arrogance and folly. The Tea Party movement rose in answer to
America's financial problems. Give them the chance to fix the economy. (For a short series of Ron Paul
quotes giving his thinking on the issues, on my website click No. 124, "Quotable Notables" and select
Ron Paul, directly www.amoroden.com/ronpaul.html.)
The results of continuing Washington gridlock are almost unthinkable: higher unemployment, higher
inflation, and lower wages are the least of the problems. Higher interest rates on the national debt
could make America default on its national debt or on its obligations to pensioners.
In the proposed 2012 budget, $474 billion, the interest on the national debt, is almost 13% of the total
expenditures. And it's all borrowed. The government will need to borrow an estimated $1.65 trillion
dollars to get through 2011. They are hoping to hold deficit borrowing to $1.1 trillion in 2012, but every
extra dollar in interest gets added onto the amount the government needs to meet its obligations. The
problem is huge and could get suddenly worse if international confidence in America collapses. China is
continuing to destroy international confidence in America.
So, pray for America to survive the rest of Obama's term. Talk to your neighbors about the dangers of
gridlock and China's economic war against America. Promote a Republican landslide as the best way to
rapidly solve America's economic crisis. Register to vote and go to the polls and vote Republican.
Amo Paul Bishop Roden
PS. I rethought this recommendation after the Republican Party hid Buddy Roemer. On the other hand, I
remain convinced that Obama's actual agenda is the destruction of America. Unfolding events make
advice impossible at this time, April 2012.