Dragon rising

Amid all the intrigue about the FBI monitoring the calls of reporters, the NSA monitoring the calls of the rest of us, and the vice president's handwritten talking points that apparently led to the outing of CIA operative Valerie Plame, your blogstress has found it difficult to concentrate on bigger things, like what the heck is going on with the global economy?

Oh, mes amis, do not groan. Your loving Webwench promises to make this painless, and perhaps even amusing. But she asks your forbearance as she begins with a rather dry report in yesterday's New York Times:

Under U.S. Pressure, China Allows Yuan to Gain

By KEITH BRADSHER
Published: May 15, 2006

HONG KONG, May 15 — China allowed its currency to strengthen today past the psychologically significant level of 8 to the dollar for the first time since 1994, in a concession to political pressures from Washington and the dollar's own weakness.

The actual rise in the currency, known as the yuan or renminbi, was tiny: not quite a tenth of a percent from Friday's level. But the yuan's breaching of 8 to the dollar was nonetheless an important event that rattled currency markets already shaken by the dollar's recent weakness and a slide in United States share prices on Friday.

The dollar dropped to a two-year low against the euro and approached an 8-month-low against the Japanese yen before recovering considerable ground late in the Asian trading day..

What this means, if your cybertrix has this right, is that as the U.S. struggles with its own inflation woes, it wishes to foist some inflationary pressure on our bankers, the Chinese (who buy vast amounts of U.S. currency, the better to help us finance our national debt). In pushing the Chinese to pay more for a dollar, it would appear that the U.S. is seeking a better deal in the debt-finance department.(Forgive your écrivaine's confusion; the Chinese are being made to pay less for a dollar.)

At present, this Faustian bargain has held because China needs the insatiable U.S. consumer to keep buying its goods. But what happens on the day when the credit comes due for the consumer, the day when housing defaults on all those hyperleveraged mortgages cut into the collection of all measure of consumer debt? If our markets no longer serve the Chinese interest, would they such sell off our currency and leave us to drown in economic and psychic depression?

Frank G. of Beltway Sewer sees it this way:

The beeg picture being missed here is that American government has totally abdicated its responsibility to the electorate, and has adopted the values of a corporation.

Republicans run around decrying government spending, but spending is exactly what the government is both empowered and required to do. The government is supposed to be the guiding conscience that impels petty, parochial, local interests to pay attention to each other's needs. Roads. Medicine. Food. Housing. Energy. Communication.

Although I personally feel the clock is ticking toward the day in less than 13 years when the Chinese march in and take what they will, by that time, own, lock, stock, and barrel, it still makes me wonder why the American populus is so unbelievably stupid that they allow this process of asset liquidation to continue unfettered.

How can it be that a true revolution has not materialized where the corporations are told to stop and government is held accountable to its citizens for its actions? Dubai ports deals, Halliburton contracts, ad nauseum, are only the symptomatic tips of a huge iceberg of apathy, despair, greed, and fantasy that have overtaken the American collective psyche and rendered it (according to plan) completely irrelevant and powerless.