Big Trouble in Big China by Richard Fernandez The World Bank report on China’s prospects stresses several key challenges facing its economy which are perfect background material for the current political crisis gripping the country. The executive summary says China must reform to keep growing: remove government distortions in resource allocation; fix the growing income gap between the bosses and the peons; start innovating as opposed to copying; rein in the unsustainable pollution and stop playing a zero-sum economic game with the rest of the world. It concludes that China can continue to grow very rapidly, but the easy days are over. The hard slog has begun. In a fine, it is a case of “reform” or implode.
The Epoch Times, a publication which focuses on Asian affairs, analyzes the banking section of the World Bank report and concludes that if you thought Fanny and Freddy’s intervention in the housing markets were good ideas, then you’ll love China.
“Despite the many reforms introduced so far, the Chinese financial system remains repressed, unbalanced, costly to maintain and potentially unstable,” according to the recently released 400-page World Bank Report “China 2030.”
The report suggests that China’s financial sector is constrained by state ownership and regime interference. The Chinese state uses the financial sector to enforce its policies, preventing lending institutions from becoming a true market force.
“Banks have been used as instruments of the government’s macroeconomic and sectoral policy goals and have not always been in a position to lend prudently. While this may have facilitated accomplishment of policy goals, it has also exposed banks to a greater risk of deteriorating loan portfolios,” according to the World Bank report.
The Congressional Research Service issued a report on the stability of the Chinese banking system in February, 2012. It concluded that while “China’s banking system has been gradually transformed from a centralized, government-owned and government-controlled provider of loans into an increasingly competitive market … others are concerned that many of China’s banks may be insolvent and that China may experience a financial crisis.” In other words, there may be bomb ticking in their somewhere. But open source analysts don’t know for sure.
According to these commentators, efforts to resolve a serious accumulation of non-performing loans (NPLs) only disguised the problem. In addition, China’s NPL situation may have been worsened by its November 2008 stimulus program and the emergence of “local government funding platforms” that generated an estimated $1.7 trillion in local government debt. A financial crisis in the city of Wenzhou revealed the previously underappreciated risk associated with China’s “underground” banking activities. Some analysts fear that a sharp decline in China’s property values could precipitate a financial crisis that could effect the U.S. economy.
This is the background against which the Bo Xilai saga is being played out. The Party boss was dismissed and his wife arrested for the murder of a British businessman. The whole Politburo transition process has been thrown into turmoil. The Economist characterizes the political crisis as the “shattering of the facade”. The fracture lines described in the World Bank and CRS reports are mirrored in the recent political showdown. In the Economist’s narrative, Bo Xilai emerges as the champion of Big Communism from the Chinese version of Chicago whereas the prime minister, Wen Jiabao, comes off as someone trying desperately to steer China away from the oncoming meltdown.
Mr Bo’s opponents (presumably led by President Hu Jintao and the prime minister, Wen Jiabao) have shown unexpected strength by purging Mr Bo so thoroughly. But their battle is not over. Mr Bo was much loved by a “new left” force in Chinese politics which admired his big spending on public welfare, especially social housing, and his fondness for state-owned enterprises. On April 3rd Mr Wen expressed unusual frustration with the state’s grip on the financial system, saying the state banks were a “monopoly” that must be broken. Progress, however, will be tortuous, notwithstanding the battering the left has suffered as a result of Mr Bo’s fall. Powerful interests, especially state firms, remain an obstacle. Political reform, which Mr Wen has repeatedly called for, is even less likely to make headway in the months ahead. Officials are fearful of any adjustment that might upset stability before this year’s leadership changes.
Much mess is left to be cleared up in Chongqing. Mr Bo’s crackdown on crime, although widely admired by ordinary Chinese, created suspicions among private businesspeople. They thought that he was looking for ways to seize their assets so as to use them for more public spending. One property now in the Chongqing government’s hands is a 20-hectare (50-acre) villa and golf-course development, with a near-finished Hilton hotel. Its former owner (as well as of another Hilton in central Chongqing), Peng Zhimin, was jailed for life last year for various offences, including bribery and prostitution. It remains unclear how the government will dispose of this vast, confiscated wealth.
It seems clear that China, far from being the rock upon which a world economic recovery can securely be founded, is itself wrestling with many of the issues facing Europe and America today. Malinvestment and bubbles. Houses proved to be like tulips after all.
China’s plight can only be bad news for Europe. Louis Woodhill, writing in Forbes, notes that “Spain Is Headed For a Major Economic Crash”. The new government raised taxes, as President Obama wants to do, in order to reduce its deficit but that only resulted in killing what was left of business. “If people want to know what life looks like in the ‘Prohibitive Range’ of the Laffer Curve, all they have to do is to visit Athens. Greece is literally falling apart. Unfortunately, by raising taxes, Spain is making exactly the same mistake that the Greeks made.”
They fought arithmetic and arithmetic won. Today the Spanish government can collect at a higher rate, if it can find anyone solvent enough to pay taxes. Jose Guardia at Barcepundit remarks on the irony: “¿ESPAÑA se hunde por culpa de astutos villanos o de simples estúpidos?” — who sank Spain? The players or the useful fools? How about the useful fools led on by the players?
The Eurozone’s “big bazooka” response to its own crisis may have momentarily stopped the deficit hydra in Greece. But it only moved the locus of trouble to even bigger countries. Spain is teetering on the brink. Can the Eurozone call China for help? If it called right now it might get a busy signal. China has big troubles of its own. Europe might want to sing:
There’s a message in the wire, and I’m sending you this signal tonight. You don’t know how desperate I’ve become And it looks like I’m losing this fight. In your world, I have no meaning, though I’m trying hard to understand. And it’s my heart that’s breaking down on this long-distance line tonight.
But who’s listening? How do you say, “hasta la vista” in Chinese?
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"Breitbart Disciple Exposes Red Influence in Congress
Apr 12th, 2012 by TMH
By: Cliff Kincaid Accuracy in Media
Rep. Allen West's comments about alleged communists in Congress have led to what West calls "A lot of buzz and inaccurate reporting" in the media. Some reporters have nitpicked West on whether he has concrete proof of actual card-carrying members of the Communist Party USA in the Congress.
Politico called him a McCarthyite and actually quoted a spokesman for the Communist Party as saying that West didn't know what he was talking about.
But the alternative media, led by www.rebelpundit.com, have been covering the story of how the international communist movement, responsible for about one hundred million dead, is very much alive and has collaborators in the U.S. Congress. Rebel Pundit is the work of Jeremy Segal, a disciple of the late Andrew Breitbart who produced the recent video of Rep. Danny K. Davis being honored by the People's World at the Communist Party U.S.A.'s headquarters in Chicago for a lifetime of "inspiring leadership."
Davis serves on the Homeland Security Committee where his subcommittee assignments are the Subcommittee on Transportation and the Subcommittee on Oversight. He is also a member of the Congressional Progressive Caucus.
When Segal started questioning the congressman outside the party headquarters, CPUSA members and a Davis handler wearing an Obama jacket tried to intervene to protect Davis from further questioning, with one person calling Segal "disgusting." Segal protested, "Don't touch me!"
But rather than highlight the case against Davis, who has represented the Chicago-area 7th Congressional District of Illinois since 1996, Chicago Tribune columnist and editorial writer Steve Chapman called West "an embarrassment to the party" for his anti-communist remarks and suggested that he be condemned or expelled from the GOP caucus in the House.
In a brief telephone interview, Chapman, who is labeled a "conservative" by the Townhall website, told AIM that he had never heard of or seen the Davis video, which was originally released through a Breitbart website on March 12. He said he would determine whether it is newsworthy if a link to the video was emailed to him.
It has been done.
Although the Davis video got some coverage locally in Chicago, on Fox News and by Investor's Business Daily (IBD), Segal said he wants to see more media pick up the story, especially because of its national security implications. "This is something that should be front page on the Chicago Tribune," he said. Instead, however, Tribune columnist Chapman claims no knowledge of the video and bashes West for using inexact language in calling attention to the problem.
"I believe there's about 78 to 81 members of the Democrat Party who are members of the Communist Party," West had said. "It's called the Congressional Progressive Caucus." Though serious, he was apparently using the term communist in a loose way, to suggest a far-left or radical "progressive" approach, and also to identify what have traditionally been called "fellow travelers" of the CPUSA.
Indeed, there is abundant evidence of members of Congress cooperating and collaborating with the Communist Party and its front groups, with Davis being only one concrete example. But the major media won't cover the information because of their apparent fear that such coverage would itself be labeled McCarthyite.
Unafraid of the negative attacks, Segal reports "from the belly of the beast" in Chicago and was inspired by Andrew Breitbart to become a citizen journalist. "I became a disciple of Andrew's in the media battle we're in." His Davis video is the biggest yet and has the potential to highlight communist influence in the Congress as well as the Obama Administration, since Davis and Obama are long-time friends.
Rep. West clearly understands the media war as well and said about the controversy over his comments: "The press wants to write gotcha stories and talk semantics, but just look at the words and actions of the [Congressional] Progressive Caucus. You can call them socialist, Marxist, communist or whatever you want, but the point is, they oppose free markets and individual economic freedom, they want to redistribute wealth, and they want to see the nation fundamentally transformed. Their policies are destructive and I will stand up to them regardless of the critics. Members of this Caucus lavished praise on Fidel Castro following a 2009 visit, just to name one example. The Communist Party USA claims the Progressive Caucus as its 'ally.'"
West was referring to a 2009 visit to Cuba by Reps. Barbara Lee (D-Cal.), Bobby L. Rush (D-Ill.) and Emanuel Cleaver II (D-Mo.), who met Fidel Castro. Rush said about Raul Castro, "I think that what really surprised me, but also endeared me to him, was his keen sense of humor, his sense of history and his basic human qualities."
Lee began her career in the California state legislature as a secret member of the Committees of Correspondence for Democracy and Socialism, a spin-off from the Communist Party.
To go along with the new Davis material, Segal found old film footage of Obama at an event praising Davis as someone who "shares our values." His post examines how the careers of Obama and Davis came together in Chicago through such vehicles as the New Party. He said he saw this video as part of Obama's long-overdue media "vetting" process.
Summarizing the video exchanges, Segal reported, "When questioned about his relationship with the Communist Party, Davis abruptly fled the scene, refusing to answer any further questions…"
The following exchange occurred:
Rep. Davis: "I thought you're just a citizen? Why are you worried about the Communist Party?"
Segal: "I shouldn't be worried about the Communist Party?"
The sponsors of the event, which was headlined, "'Tea party' Congress can't stop the fight for equality!" were PeoplesWorld.org, the South Halsted Unemployed Action Center and the Workers Education Society. The telephone contact number is the same as that of the Illinois Communist Party.
People's World says it has a "special relationship with the Communist Party USA" and publishes its "news and views." In other words, it is an official outlet for the CPUSA.
After obtaining and posting the footage, Segal says he called the House Homeland Security Committee to inquire about whether they are concerned about a member of the committee having close ties to a political organization that used to be funded by Moscow and controlled by the old Soviet intelligence service the KGB. He tells AIM he has not heard back.
The KGB has been replaced by the Russian FSB, which operates in the U.S. and can count on Moscow-funded Russia Today (RT) television to transmit its propaganda messages.
Taking on the major media, in order to get out alternative news and information, is becoming a full-time job for Segal, who tells AIM that he was motivated after meeting Andrew Breitbart and watching him in action. He decided, "Wow. I can do this," and launched www.rebelpundit.com shortly after that.
"I don't have a heart in real estate anymore," he said, referring to his previous occupation. "I'd rather do this. My heart is in saving the country. If I could just get some way to pay my bills so I can keep going." He requests contributions, saying, "Your generous contributions are an incredible part of what keeps us on the front lines of this battle and maintaining our site. We sincerely appreciate your continued support in our effort to restore freedom, liberty and truth in the media."
The first event he covered was an anti-Israel protest, where he questioned the demonstrators about their claims that the Jewish state was waging "genocide" against Arabs. He found they couldn't explain or define what they were protesting.
He followed that up with a video of an event where people stood up in defiance and said the Pledge of Allegiance at a political forum where it had been prohibited. Segal interviewed the League of Women Voters Forum Moderator who took offense at the spontaneous outpouring of patriotism. "That ended up on Glenn Beck, and Breitbart was putting everything up I sent over there. I kept on going, working for free, still trying to sell real estate, and doing what I can do to help," he said.
The exchanges at the Davis awards ceremony weren't Segal's only exposure to CPUSA members. He previously recorded CPUSA official John Bachtell speaking to members of the Occupy Chicago movement, bringing greetings from the CPUSA.
The video about Davis is big, but Davis's collaboration with the CPUSA actually goes back many years. The second national conference of the U.S. Peace Council, a CPUSA front, was held in New York City in 1981 and featured Davis, then a Chicago City Council alderman, as a "conference endorser."
A brochure of the event included Carol Moseley Braun, then an Illinois state representative and later a U.S. senator, as a conference endorser.
The official program of the event featured:
Rep. John Conyers (now the second most senior member in the House of Representatives). Then-Georgia state Senator Julian Bond (later president of the Southern Poverty Law Center and chairman of the NAACP). Then-Rep. Gus Savage (Illinois).
Conyers gave welcoming remarks to the U.S. Peace Council founding conference held in Philadelphia in 1979. The U.S. Peace Council's third national conference was held in Chicago in 1983. Bond participated in this event as well, along with Joseph Lowery, president of the Southern Christian Leadership Conference. Information about the U.S. Peace Council's relationship with the CPUSA and Soviet intelligence was included in two House Select Committee on Intelligence reports—"Soviet Covert Action" (February 1980) and "Soviet Active Measures" (July 1982).
However, Congress no longer seems interested in communist activities on Capitol Hill. The committees or subcommittees dealing with internal security matters were abolished by liberal politicians many years ago.
If the media are not going to tell the truth, the only way to definitely resolve the controversy over the remarks of Rep. West is to restore these panels and examine the evidence. Such a probe is possible, since the Republicans control the House. But is there a political will to mount such an investigation?
Cliff Kincaid is the Director of the AIM Center for Investigative Journalism and can be contacted at email@example.com."