Tuesday, May 31, 2005


Several weeks ago in the Chinese news I read about plans to use the stream of American money for buying oil reserves in preparation for the inevitable showdown between China and Japan/America.

Aside from my blog, nearly no one noticed this startling news so the Chinese released it yet again.
The Chinese newspaper quoted Li Yang, a senior economist at the Chinese Academy of Social Sciences and a former member of the monetary policy committee under the central bank, as saying the plan to use foreign exchange reserves to build up strategic oil reserves is reasonable.

But Li said the biggest obstacle to the plan is coordinating the actions of various government ministries and departments.

China had foreign exchange reserves of $659 million as of the end of March. Some economists have recommended that China diversify its reserves, which are still heavily weighted in U.S. dollars.
Maybe the Americans are truly asleep at the wheel. Maybe the Chinese should send Bush a memo saying, "Mao determined to strike at the USA this year." Well, indeed.

The reserves, by the way, are $659 billion not million. This is the mystery money that matches the USA trade deficit, the budget deficit, the Pentagon budget/war amounts. Isn't that peculiar? I would suggest the Fed created an extra trillion dollars which is why they quietly voted to raise the debt ceiling to $8 trillion last month in Congress. This phantom money sloshes around the globe and it is directly impacting on global oil prices. On top of this, the desire to spend money subsidizing American appetites is fading in China. The peculiar attacks on China by Japan has alarmed and annoyed the Chinese who know a cat's paw when they see one.
China already plans to build a strategic oil reserve, though this plan is believed to be making slow progress.

Niu Li, a researcher on global oil issues with the State Information Center, was quoted in the Shanghai Securities News Tuesday as saying the government should speed up this plan to shift reserves into oil in order to reduce investment risk.
The USA is already building reserves even as this drives up the world price of oil. Innocently, we pretend our country has nada to do with world oil prices choosing instead, to finger the Chinese who use much less than we, an action which fools only Americans. This seems to be the whole point to much that goes on in DC these days. Not to persuade or inform anyone but to misinform the average American. Confused and befuddled, even as the web now after years of diligent work by us Hubble Peak prophets, is finally lighting up with interest, the media and the rulers continue to mess with people's heads such as the silly press conference Bush blundered through today, announcing nearly nothing and denying everything. Usually, Presidents did these question sessions when they had something new to add to the public discourse.

But that was back when we had a democracy.