BLOOD FOR OIL GONE AWRY

Isn't this the sorriest of outcomes with the loss of American blood and treasure in Iraq—to be scooped by the yen-manipulating Chinese and the increasingly belligerent Islamic Turks? Can someone tell us how much oil are we now getting from Iraq? Word is China has also bought into the Alberta Oil Sands, a major supply to the US, while the libs scream for a boycott of Canadian "dirty" oil..

Fred Kagan writes in No Blood For Oil:

One would have thought that leading Democratic senators who claim to be interested in finding other sources of funding to replace American dollars in Iraq, in helping Iraq spend its own money on its own people, and in lowering the price of gasoline for American citizens, would have been all for it. Instead, Senators Chuck Schumer, John Kerry, and Claire McCaskill wrote a letter to Secretary of State Condi Rice asking her "to persuade the GOI [Government of Iraq] to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq." The Bush administration wisely refused to do so, but the resulting media hooraw in Iraq led to the cancellation of the contracts, and helps to explain why Iraq is doing oil deals instead with China.

Go figure...

CNOOC Ltd., the Hong Kong-listed unit of China National Offshore Oil Corp. has partnered with the state-run Turkish Petroleum Corp. (TPAO) to win a contract with Iraq to develop the lucrative Missan oil-field in southern Iraq, marking CNOOC's first upstream access to Iraqi oil following its two major rivals, CNPC and Sinopec.

According to CNOOC, the 20-year contract includes an increase of Missan's production capacity to 450,000 barrels per day from the current 100,000 barrels a day within six years. CNOOC has agreed to price every additional barrel of oil produced after capacity rises by 10 percent at US$ 2.30.

CNOOC will be the operator and hold 63.75 percent of the interest. TPAO will have 11.25 percent interest while an Iraqi drilling company will hold the remaining 25 percent....

The other two major Chinese oil companies, CNPC and Sinopec, have also gained a foothold in the Iraqi oil industry. In November 2008, CNPC and China North Industries Corp. set up a joint venture and signed a 20-year development contract for Al-Ahdab Oilfield....

BIG OIL'S LONG GOODBYE TO THE DOLLAR

In an article by Robert Fisk published in THE INDEPENDENT, the crisis of the American dollar in oil dealings is explained a little deeper than was known the last time we visited this topic. More former allies have agreed to leave the dollar, thus hastening its demise.

IN THE MOST PROFOUND financial shift in recent Middle East history, Gulf Arabs are planning—along with China, Russia, Japan and France—to end all dollar purchases for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place—although they have not discovered the details—are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil—yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power—along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system—which has prompted the latest discussions involving the Gulf states.

Read it all.

But here is a more sober take from a poster whose handle is Solomon2, posting on Debbie Schussel's blog covering the same story within the context of a book review. This leveled advice smiles upon the survival of dollar, but cautions that all is not well. Read on...

It is possible for these parties to destroy the dollar, but by doing so they would sacrifice a great deal of their own wealth (in dollar-denominated assets) and future income (because of the worldwide depression caused by such a crash.)

After WWII the U.S. accounted for 50% of the world’s GNP. Thus there was really little alternative to using the dollar—that the British pound held its own for two more decades can be attributed to the economic influence of its fading Empire. Now the U.S. represents under 30% of world GNP and is no longer the world leader in providing capital, so it makes sense to revive the 1970s mechanism of the SDR for capital growth. Eventually the dollar will come down and manufacturing revive compared to the financial and services sector. It’s all quite natural—though we will have to get used to the fact that we cannot enjoy the benefits of great seignorage much longer.

CHINA CONTINUES TO LEVERAGE RESOURCES

SHANGHAI—Chinese companies have been on a shopping spree in the past month, snapping up tens of billions of dollars' worth of key assets in Iran, Brazil, Russia, Venezuela, Australia and France in a global fire sale set off by the financial crisis.

The deals have allowed China to lock up supplies of oil, minerals, metals and other strategic natural resources it needs to continue to fuel its growth. The sheer scope of the agreements marks a shift in global finance, roiling energy markets and feeding worries about the future availability and prices of those commodities in other countries that compete for them, including the United States.

Just a few months ago, many countries were greeting such overtures from China with suspicion. Today, as corporations and banks in other parts of the world find themselves reluctant or unable to give out money to distressed companies, cash-rich China has become a major force driving new lending and investment.

On Feb. 12, China's state-owned metals giant Chinalco signed a $19.5 billion deal with Australia's Rio Tinto that will eventually double its stake in the world's second-largest mining company.

In three other cases, China has used loans as a way of securing energy supplies. On Feb. 17 and 18, China National Petroleum signed separate agreements with Russia and Venezuela under which China would provide $25 billion and $4 billion in loans, respectively, in exchange for long-term commitments to supply oil. And on Feb. 19, the China Development Bank struck a similar deal with Petrobras, the Brazilian oil company, agreeing to a loan of $10 billion in exchange for oil.

On Saturday, Iran announced that it had signed a $3.2 billion agreement with a Chinese consortium to develop an area beneath the Persian Gulf seabed that is believed to hold about 8 percent of the world's reserves of natural gas.

Even as global financial flows have slowed sharply overall, China has dramatically stepped up its outbound investment. In 2008, its overseas mergers and acquisitions were worth $52.1 billion -- a record, according to the research firm Dealogic. In January and February of this year, Chinese companies invested $16.3 billion abroad, meaning that if the pace holds, the total for 2009 could be nearly double last year's.

Worldwide, the value of mergers and acquisitions transactions so far this year has dropped 35 percent to $384 billion. By comparison, the United States had $186.2 billion in outbound mergers and acquisitions in 2008 and Japan had $74.3 billion.

China's state-run media outlets are calling the acquisition spree an opportunity that comes once in a hundred years, and analysts are drawing parallels to 1980s Japan.

"That China started investing or acquiring some overseas mineral resources companies with relatively low prices during the global economic crisis is quite a normal practice. Japan did the same thing in its prime development period, too," said Xu Xiangchun, consulting director for Mysteel.com, a market research and analysis firm.

It's not just Chinese corporations that are taking advantage of the economic crisis to help others while helping themselves.

The Chinese government also has come to the rescue of ailing countries, such as Jamaica and Pakistan, that it wants as allies, extending generous loans. Even Chinese consumers are taking their money abroad. In a shopping trip last month organized by an online real estate brokerage, a group of 50 individual investors from China traveled to New York, Los Angeles and San Francisco to purchase homes at prices that have crashed since the subprime crisis.

Read it all.

CHINA CRACKS DOWN ON ISLAM

(AHN) - The Chinese government is attempting to limit prayer time and areas of worship for practicing Muslims in the northwestern part of the nation, which some see as an effort to control the growth of Islam. Posted signs outside some mosques reportedly direct Muslims not to go longer than one half-hour in prayer and also not to pray outside of them, as well.

Khotan residents are also prohibited from worshipping at moques outside of their town, reportedly angering some citizens. People who are upset with the rules do not express their concerns, however, for fear of retribution from the government. China's rules on Islam stretch from public into other facets of life, as well, as only official versions of the Qur'an are acceptable to use and Imams are forbidden from teaching from the book in private.

Read these comments on the topic.

STOCK CRISIS HELPS CONSUMERS

THE COLLAPSE OF COMMODITIES that drove oil prices back below $70 a barrel Thursday is reverberating through the world economy from Texas to Timbuktu.

While falling commodities prices are helping struggling American consumers and businesses with dramatically lower energy costs, they are devastating rising stars such as Brazil, Russia, Dubai and Australia. Even China, the engine behind the commodity boom, is faltering, though it remains one of the only emerging-market juggernauts that still has growing surpluses of cash to keep plowing into U.S. financial markets.

Indexes of major commodities from copper and wheat to coal and corn have plummeted more than 40 percent since setting record highs in early July, led by the halving of oil prices. The big drop in energy costs helped give Wall Street a lift Thursday, sending the Dow Jones Industrial Average up 401 points.

While the price plunge has brought welcome relief from commodity-fed inflation that surged to 5.8 percent in the United States, it has hurt some U.S. energy investors, farmers and mining companies while causing a collapse in income for major commodity producers like Brazil, Russia and the Middle Eastern oil exporters, most of whom depend on the revenue from commodity exports not only to drive growth but to fund government.

As the commodity bubble burst in July, revenues abruptly fell, leading to precipitous drops in the financial markets of emerging countries. Those declines accelerated with the recent rout in global markets. The economic outlook has dimmed for countries that once boasted double-digit growth, while their brimming coffers of foreign reserves have stopped growing.

Brazil's international reserves fell by nearly $1 billion in one day this week to $203 billion, while the drop in revenues of oil producers like Russia has been even steeper, sinking the country into a deep financial crisis. Russia's 25 richest oligarchs reportedly have lost an astounding $240 billion from the crisis in commodities and other financial markets.

Within a matter of months, Dubai, an oil-rich emirate in the Persian Gulf, has gone from boasting it would become a major new Middle Eastern financial center serving businesses around the world to having to be bailed out of a financial crunch with a $15 billion cash infusion from its sister emirate, Abu Dhabi.

Read it all.

This is all good. Now we need American leadership to rebuild American industry and infrastructure, financing it however it can be pieced together. I am not an economist. I am a patriotic American who is tired of sending billions of dollars elsewhere to prop up other nations and despots, nations who generally despise us for it, yeah, just like the Republican candidate for the top spot said.

UNDERSTANDING CHINA

There is a new book out that should form part of the canon of those who wish to combat the simplistic urges of the Marxist-Maoist movements in this country with inconvenient facts and common relationships that help sort out fictional fantasy from reality on the ground.

The author of China House, Lawrence Klepinger, explains:

The self-proclaimed desire of the Chinese government to “crush” the current Tibetan uprising is only the tip of the proverbial iceberg. The horrifying effect of 60 years of Chinese communist rule is just now beginning to unfold. From unlawful land acquisitions and unfathomable slave labor working conditions to forced abortion, outright murder, rape and pillage by communist officials themselves, the world is only now starting to open its collective eyes. When it finally wakes up it will be horrified at what it sees.

As one reviewer, Dr. Michael D, Kruse, puts it: "China House is a straightforward, non-technical, popular attempt by an ex-resident of China to show us the dark side of the latest and possibly greatest of capitalism's glittering prizes. Using anecdotes, personal examples, conversations with Chinese people and, where available, documentary sources, the author makes a compelling argument for holding the "New China" at arm's length. He systematically exposes the government and business corruption, the failure of the health, education and (communist) agricultural and industrial systems, the "cosmetic" laws, the rape of the environment, the lying and cheating that seem endemic even in everyday business transactions, the suicide of children under unimaginable examination stress, the abuse of women and ethnic minorities, the lack of personal and political freedoms, in short, the utter betrayal of the people by the party and government that swore to protect them, and links all of these evils to blatant justifications in the wording of the Chinese Constitution itself.

"However, China House is not a racist polemic against the Chinese. The author is scrupulous in his efforts to show that the greater underlying evil that spawns this welter of lesser demons is a familiar one and not at all as exotic as the oriental locations. It is the greed of multinational (but mostly Western) companies, in the guise of "globalization". The author lists dozens of Western companies (and he names names) that have their snouts deep in the troughs of cheap labour and enormous markets that make the "New China" so attractive to the foreign investor. He paints a broad canvas showing how Western multinationals collude with the "communist" authorities to exploit both the Chinese worker and the Chinese consumer. It is a disturbing portrait. It is the reason, he claims, that "all free democracies willingly divert their attention to the other side of the room. If China were to become democratic and free-enterprising at the same time, there would be no way that the USA, let alone other Western countries, could compete."

Another reviewer named Klaus Kaltenthaler disagrees in some areas: "In this respect the book is a good eye opener and should be read by anyone getting ready to deal with China in any official way. However, many other publications should be consulted to afford the uninitiated student of China a more balanced view.

"The author, coming to China with all the Western values we have have come to expect and even take for granted, shows great compassion with the Chinese people in the face of the official abuse by their own government.

"However, I do not share the author's view that multinational corporations are in China to exploit the cheap labor market in order to produce ever cheaper products for the unsatiable Western world. Many companies have been trading with China for more than 100 years and are now investing in industrial production sites in China in order to serve the ever growing domestic market which otherwise could not be supplied with continuing imports. In the process of industrialization China not only acquires new and previously unobtainable expertise, but also obtains companies that are managed in a modern and worker friendly environment with individual incomes much higher than are achievable in a purely Chinese state-owned or even private company. Thus international cooperation and the exchange with other countries, training of employees abroad, et cetera, are possible. They can be the seeds for an admittedly slow, but steady improvement of the working conditions for all Chinese companies while at the same time benefiting the Chinese economy.

"Given the mutations of China throughout the millenia and centuries, adjusting to the ever changing world around them to survive and gain advantage, I do not see the possibility of an imminent downfall of the Chinese communist party system, but a continuing change and adjustement whenever China sees advantages for their long term goal of proving their own superiority to the rest of the world."

Nothing less is expected of, We the People, of the United States of America, writes Klepinger.

I tend to agree. And despite the fact that an ashcan of experts argue that untold number of even more experts are required to understand an alarming situation, I agree that an informed public is vital to a fully-conscious American citizenry. Fantasy is for children and intellectual misfits. Cold reality among the bold sandbox bullies is far more harsh a consciousness, but right preferable especially in critical and crucial times when the lives of millions of families are at stake like so many marbles in what is shaping up to be yet another geo-political slugfest.

WHY CHINA WANTS WAR WITH AMERICA

The news is grim. Yet another deathly scandal involving poisonous imports from China. Thanks to the vain-glorious global capitalists who shipped the bulk of American industry overseas, much of it to China, we have been poisoned by plastics, paints, food, and now medical supplies coming from the world's most populated nation. And then there is the enormous trade imbalance the US suffers at the hands of the Chinese.

The United States and China share the most imbalanced bilateral trade relationship in the world. The United States imports more goods from China than it exports to a tune of $202 billion dollars each year. All told, China alone accounts for nearly 26% of the United States' $725.8 billion trade deficit.

China's quest for superpower status can turn trade partnership into nothing less than World War III.

Ed Timperlake and Jed Babbin think this is a recipe for war. In their book—Showdown: Why China Wants War with the United States—these two former defense experts lay it out for us. They detail China's aggressive military buildup, revealing how it has been even more rapid than that of Nazi Germany before World War II. They also expose China's military and commercial maneuvering to outflank the United States—much as the Soviet Union tried to do at the height of the Cold War.

But Babbin and Timperlake, both of whom are military veterans, do much more than just offer expert analysis. In a dramatic style worthy of Tom Clancy, they take you into the field with Navy SEALs and Air Force bomber pilots, invite you inside the war councils at the White House and the Pentagon, and peer within China's own Politburo in an exciting—and all too likely— series of war scenarios stretching from a Chinese invasion of Taiwan in 2008 to its extension of total control over the Pacific region within a few years. This is by no means an exercise in fiction: these disturbing, gripping scenarios are based on the latest and most reliable intelligence—and they make clear that China is an immense and immediate threat to America's national security.

If we don't stop China now, the coming war could engulf the entire world (particularly since the Chinese post-Communist regime is happy to make common cause with the forces of the worldwide Islamic jihad). Provocative, thrilling, exhaustively documented and sobering, Showdown is a wake-up call for our elected officials—and for everyone who loves America.

Details of the run-up to war with China:

How China is already working to increase the number of America's enemies and decrease the number of America's friends

The growing social problem in China that could weaken the regime's grip on power—or could lead straight to World War III

The unholy alliance between Communist China and the warriors of the global Islamic jihad—and how it could result in a war with the United States over Middle Eastern oil

A little-noted front of the global conflict between China and the United States: Latin America (especially oil-rich Venezuela)

Why a Chinese attack on Taiwan would spark a conflagration in the Pacific larger than anything since World War II

How the Communist Chinese have carefully gauged how to liberalize the Chinese economy while maintaining Communist control of the government

An anti-Communist revolution in China? Why this is extremely unlikely, even though the internal threat to the Beijing regime is substantial

Cyber-warfare: its many forms, and why Japan and the United States are so vulnerable to cyber attacks from China

How China spends billions a year on the most modern aircraft, missiles, submarines, and electronics that it can obtain—and steals what it can't buy, through its enormous espionage campaign against the United States, a story Fox News only broke today

A second Korean War? Why it's likely—only this time, the madmen in North Korea have nukes

Disquieting similarities between the rhetoric of the Chinese regime today and that of the Japanese in the run-up to World War II

AHMADINEJAD HURLS MORE THREATS

Iran's thug-in-chief Mahmoud Ahmadinejad said on Thursday his country's objective was to destroy what he called corrupt western powers. "Our objective is to annihilate all corrupt powers that dominate our planet today," said Ahmadinejad.

In Washington yesterday, U.S. Secretary of State Condoleezza Rice "called incentives offered to Iran in 2006 to curb its nuclear program 'very generous' but would not say whether she was open to sweetening them." She said she "could not substantiate Iran's statement that it ha[d] begun installing 6000 new centrifuges at its uranium-enrichment plant and faulted Iran for not having accepted what she called a 'reasonable' offer" of incentives by the five permanent members of the U.N. Security Council and Germany aimed at discouraging Ahmadinejad's government from advancing its nuke-development program.

Those "jizya incentives" should be stopped, immediately and permanantly, Ms. Rice, with all due respect. Graft does not work with these people. In fact, this payola scheme is just one more reason why these Islamic thugs call this government corrupt. Hence, this mention. Ahmadinejad also "advised" western powers to repent or, "otherwise Iranians will hoist their flag on the roof of their buildings."

Money cannot buy off heir religion of peace. When is the State Department going to understand this most basic fact about Islam?

Russia. China. Are you listening?

'Corrupt powers', in Islamspeak, means ALL non-Muslim polities that reject Islam, that refuse to pay jizya, that have their own non-Muslim rulers, and insist on living by their own laws and their own ideas rather than grovelling to the Arab/Muslim uebermenschen. Polities whose women run around 'uncovered'. Entities whose people paint, and sculpt, and dance in mixed company, and make music.

The Russian people are mostly Russian Orthodox Christians; most of the rest are atheists. By definition, Islam wants Russia converted, dhimmi, or dead. Russian, you are in the crosshairs. Not just the USA and Israel, you!

China is officially atheist, having suppressed jihadists in the western provinces. Among China's population are Christians, and Buddhists and Taoists who are anathema to Islam. China in Ahmadinejad's crosshairs. And he really does not care if he survives a nuclear exchange. Got that? He really does not care.

Bear and Dragon—wake up. Give room to the Eagle and the Lion of Judah, and smash Iran's nuclear project already—before you find yourselves with millions of dead, and poisonous radiation blowing all around the world. Ahmadinejad, we are convinced, considers the nuclear bomb as the means by which he will 'clean' the earth—just like Mohammed said, 'the earth was made a place for me to clean'.

He and the ayatollahs are hurrying, with slobbering haste, to create as many nukes as they possibly can; and then they will use them, first on Israel, then on the west, then on everyone else; and if others retaliate, we don't think they care—the driving agenda is 'slay and be slain' in the cause of "allah" [may its name be erased].

"If you will not fight for the right when you can easily win without bloodshed; if you will not fight when your victory will be sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a small chance of survival. There may even be a worse case: you may have to fight when there is no hope of victory, because it is better to perish than to live as slaves."
—Winston Churchill

CHINA, LEAVE THOSE MONKS ALONE

TIBET IS NESTED between the two ancient civilizations of central China and India, but the tangled mountain ranges of the Tibetan Plateau and the towering Himalayas serve to distance it from both. The Tibetan language is a member of the Tibeto-Burman branch of the Sino-Tibetan language family.

Tibetan history is characterized by a special dedication to the Buddhist religion, both in the eyes of its own people as well as the West. Tibet is nicknamed "the roof of the world."

While the Chinese leadership continues to claim that Tibet has always been a part of China, Tibet has a history of at least 1300 years of independence from China. In 821, China and Tibet ended almost 200 years of fighting with a treaty engraved on three stone pillars, one of which still stands in front of the Jokhang cathedral in Lhasa.

The treaty reads in part: Both Tibet and China shall keep the country and frontiers of which they are now possessed. The whole region to the East of that being the country of Great China and the whole region to the West being assuredly the country of Great Tibet, from either side there shall be no hostile invasion, and no seizure of territory... and in order that this agreement establishing a great era when Tibetans shall be happy in Tibet and Chinese shall be happy in China shall never be changed, the Three Jewels, the body of Saints, the sun and the moon, planets and stars have been invoked as witness.

The three stone pillars were erected, one outside the Chinese Emperor's palace, one on the border between the two countries, and one in Lhasa.

During the 13th and 14th centuries both China and Tibet came under the influence of the Mongol empire. China claims today that Tibet and China during that time became one country, by virtue of the Mongols domination of both nations. In validating this claim, it must first be remembered that virtually all of Asia was dominated by the Mongols under Kublai Khan and his successors, who ruled the largest empire in human history.

Second, the respective relationships between the Mongols and the Tibetans and between the Mongols and Chinese must be examined. These two relationships were not only radically different in nature, but they also started and ended at different times. Tibet came under Mongol influence before Kublai Khan's conquest of China and regaining complete independence from the Mongols several decades before China regained its independence.

China is acting like an over-sized cur dog once again with regards to the Tibetan people. What is their problem? We would like to know. What do they think they need from Tibetans that will enhance its stature domestically or internationally?

China, leave those people alone. You've got enough problems dealing with the industrialized air you breath already, managing your conversion to a market economy, policing the typically irate Muslims in your southwest provinces, and increasing the liberties of the billions of people who wish to be proud Chinese citizens.

MUTUALLY ASSURED DECEPTION

Sheikyermami says, "When the Ayatollah Khomeini came to power in Iran he immediately set upon the useful idiots who were assisting him in what they believed would be some kind of socialist revolution. When the Russians pulled out of Afghanistan they left an operator named Najibullah behind. Google 'Najibullah' and check what happened to him, which is likely what would happen to Karzai, the darling of the West."

Word to that. V S Naipaul—in Among the Believers—spent time with the earnest Persian socialists—the people who read the leftist and Soviet literature and truly believed in people's revolution and all that. Khomeini took them—and their Russian sponsors—for a ride.

The Jihad mobsters used left-speak, communist speak, anything available to persuade the Ruskies to hand over weapons, money, et cetera. In other places, other times, they used different, Western-style jargon to persuade the West to hand over weapons, money, et cetera. The 'Palestinians' were particularly clever at this maneuver—until Hamas ripped the mask off.

Frankly, the driving force has been Islam, Islam, Islam all along.

I would BET my bottom dollar that just as America and the EU are being fed a truckload of taqiyya and kitman, so too are the Chinese and the Russians. Just because the Russians and Chinese are users of propaganda, doesn't mean they are any more immune to an ancient and lethal system that is 1200 years older than theirs is. Living in an fog of lies makes you more, not less prone to be deceived.

CHINA’S NUCLEAR OPTION AGAINST THE DOLLAR

There are rumors, this is Washington, after all, that the Chinese government has initiated a campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation. Iran has already done this, and Saudi Arabia has threatened to do this, although my source in the US State Department has told me that the Saudis have already begun swapping in their dollars for Euros.

Two officials at leading Communist Party bodies have given interviews in recent days warning that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress to redress the US-China trade imbalance.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels. It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US. "Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, a Chinese official, reportedly has suggested in bold terms that Beijing had the power to set off a dollar collapse if it choose to do so. "China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

The US Senate has drafted a bill backed by the Senate Finance Committee which calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9% against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9 billion in June.

Henry Paulson, the US Treasury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation." Paulson, a China expert from his days as head of Goldman Sachs, has opted for a softer form of diplomacy, but appeared to win few concessions from Beijing on a unscheduled trip to China last week aimed at calming the waters.

So I guess it's time to stop buying Chinese.

FAIR TRADE, NOT FREE TRADE

The headlines are clear: Tainted Chinese Imports Common. Federal agencies are being swamped with trade violations by the Chinese, and we're not just talking economic policy infractions, but on a scale we are only beginning to realize, the Communists are unlawfully exporting life-threatening choices to American consumers on the prowl for a kinder, gentler hit at the meat and potatoes counter.

Dried apples preserved with a cancer-causing chemical.

Frozen catfish laden with banned antibiotics.

Scallops and sardines coated with putrefying bacteria.

Mushrooms laced with illegal pesticides.

These consumables were among the 107 food imports from China that the Food and Drug Administration detained at U.S. ports just last month, agency documents reveal, along with more than 1,000 shipments of tainted Chinese dietary supplements, toxic Chinese cosmetics and counterfeit Chinese medicines.

For years, U.S. inspection records show, China has flooded the United States with foods unfit for human consumption. And for years, FDA inspectors have simply returned to Chinese importers the small portion of those products they caught — many of which turned up at U.S. borders again, making a second or third attempt at entry.

Now the confluence of two events—the highly publicized contamination of U.S. chicken, pork and fish with tainted Chinese pet food ingredients and this week’s resumption of high-level economic and trade talks with China—has provoked activists and members of Congress now demanding that the United States tell China it is fed up.

Dead pets and melamine-tainted food notwithstanding, change will prove difficult, policy experts say, in large part because U.S. companies have become so dependent on the Chinese economy that tighter rules on imports stand to harm the U.S. economy, too.”

Let's analyze this briefly. Free marketers announce proudly, "But hey… this is alright. Capitalism and open markets. This will rectify itself. And others cringe, questioning in old liguistic patterns, “Wait a minute, capitalism in bed with communism?”

But seriously folks, we must fully realize by now that there's little difference in how the prevailing economic pie is doled out in either hybrid system that impacts the bottom line when considering the question of contaminated product. It's nation against nation, cut-throat policies are cut-throat policies, PERIOD.

Those who are concerned that China’s and the U.S.’ economies are so PERILOUSLY “in bed” with each othe miss the point. This is chemical warfare first, economical warfare second. The idea that unregulated “capitalism in bed with communism” via unregulated free markets will somehow, miraculously, “right itself” fails to consider the possible catastrophic dangers of greed and related corruptions on both sides of the market divide.

Body count? How boring, they say. After the bodies pile up, they will of course soon vanish into the fiscal ledger of last year's bottom line, and the well-crafted mantra that capitalism by its very nature will level things out again out and everybody that's anybody will benefit from it in the long run, just seems like good business.

While so-called free markets are “righting themselves”, let's be honest that Chinese officials continue to incarcerate or worse, convince bullets into the brains of their reformers, hand in hand with exporting poisons and cheap, useless products into the US. Meanwhile, body counts in both countries mount…

There is no such animal as a free market economy. We scream out for a righteous and fair market economy.