By Run Tao Yan

If America does not change free trade into counter trade (balanced trade), its only other option is to keep printing money to give to China!

Translated By Yaqing Wen

19 October 2008


China - Creaders - Original Article (Chinese)

What will Obama “Change” as President?

1. McCain will not be elected

When the two parties were first nominating possible candidates, I wrote an article predicting that Hillary Clinton could not win over Obama. At the time, there were two types of responses. One believed that Hillary would be nominated, and the other believed that neither would be elected and the presidency will again go to a white man. Someone wrote to me saying: “your article “Will the Next President be a Black Man or a White Woman” implies that the Republicans have no chance. How can you say that the Democrats will win over the Republicans?"

Actually, I knew that the Republicans had no chance when I wrote the article. It’s not even because of his [McCain's] age (he would be useless even if he were young), but because of the following:

Bush has been in office for eight years, and met with a once in a lifetime economic crisis, and now the national debt is almost $11 trillion. He didn’t catch Bin Laden, the Iraq War has claimed more than 4,000 lives, and the oil prices continue to rise. Under these circumstances, according to history, the incumbent party (Republicans) would have a possibility of being elected again, but only under one condition: the candidate must have completely opposite policies and governing methods.

According to American history, after the aforesaid incumbent steps down, if the economy was good during the president's term, his vice president will have a big chance of being elected. If the economy was not good, the vice president would not be nominated, and the more radical members of the party will have a bigger chance of being elected.

Let’s use this formula with the current Republican candidate. During Bush’s term, Senator McCain was a fawning sycophant. Bush wanted to invade Iraq, McCain voted for it; he raised his hand and said, "yeah" to Bush’s budget plans. With close to a hundred proposals, he and Bush were practically wearing the same pair of pants. If Cheney were to run, would he have a chance? And what would be the difference compared to McCain’s campaign?

When independents and undecided voters ask whether McCain’s campaign is any different than if Cheney had decided to run, how can McCain prove otherwise? Not with the Iraq War, not with troop withdrawal, not with budget plans, not with environmental laws…

Reality trumps rhetoric. McCain cannot prove that he is a “maverick.” There are plenty of Republican congressmen who stood up to Bush, but they cannot get the approval of the big shots of the Republican Party, who would rather lose to the Democrats.

A friend told me, “Now that McCain picked Palin as his running mate, she’ll win over all the women who supported Hillary!”

Choosing Palin is like putting fuel on the fire. Americans can’t trust a shrewd and cunning Hilary, so how can they trust the young Palin? Her advantage is that she is young and pretty, but the female voters who supported Hilary were impressed by her abilities and not her looks. Male Republicans are thrusting their own mentality of preferring attractive women onto female voters.

2. What will Obama “Change” as President?

From the beginning, all Obama could talk about was “change,” but no one actually knows what he will “change.” We have to look to the rule according to which the circumstances trump the individual. That is to say, no matter who gets elected from which party, under these extenuating circumstances, there are certain policies that must be changed.


1. The Principle of Free Trade

At the start of American globalization, the premise was that the U.S. would be responsible for the technology and the developing countries would be in charge of low grade products. This way, the U.S. can trade high priced technology for low priced every day items. Bill Clinton was very successful with this during his term. The year that Clinton stepped down, the U.S.’s high tech exports (only high tech and not low tech household items) accounted for more than $50 billion. Today, the U.S.’s high tech export’s trade deficit is $50 billion. Surplus has turned into deficit because China and other developing countries are also mass producing high tech products to export to the U.S.

Therefore, the U.S.’s current crisis stems from globalization. Globalization is the U.S.’s nightmare. China and other developing countries have equally smart personnel, just with less technological and scientific backgrounds. Once the products are introduced to the mass production assembly line, all the secrets to high technologies are easily revealed, and the speed of high tech products from the developing countries far surpass the rate of newer innovations coming out of the U.S. This relationship is like a dam, and explains the waxing and waning of the American and Chinese economies. In the beginning, the drop height is big, but after a while, the small reservoir down stream becomes a big reservoir, whilst the big reservoir, without a steady and constant supply of water, becomes smaller.

The U.S. is rich in natural resources. The average freshwater per person ratio is more than ten times than that of China. The meager water supply of the entire country of China is enough to fill the teapots of everyone in the American South. American universities and research facilities are number one in the world. To ensure American dominance, the U.S. should not maintain a free market anymore, but instead go the way of counter trade. Counter trade means that however much money is made in America has to be spent on American products, thus reaching trade equilibrium. Counter trade solves the problem of the American financial deficit, and also prevents bullying by competitors with bigger populations.

If America does not change free trade into counter trade (balanced trade), its only other option is to keep printing money to give to China, with unimaginable results. This not only involves the deflation of the American dollar, but also the high employment rates and the eventual disappearance of the American manufacturing industry. Today, the unemployment rate in Michigan is already close to 9 per cent. Every year, the U.S. makes up for the products from China, Japan, etc. with money from more than a million lost opportunities in the manufacturing industry, but how can the U.S. make up for unemployment? Once unemployment reaches a certain point, even domestic security will be a problem.

Even then the manufacturing industries were laying-off employees. Why, then, was the American unemployment rate so low a few years ago?

When Greenspan cooperated with the U.S. government to enable globalization, they lowered long term interest rates to 1 per cent. This way, at the same time the manufacturing industry cut its staff, the real estate industry was booming. Contractors, real estate agents, real estate attorneys, banks in charge of sub-prime lending, the insurance industry, etc., were all in full swing. If these people lose their jobs, and the high unemployment rate in the manufacturing industry persists, the results would be devastating.

Whether or not Obama wants to change it, under these extenuating circumstances, the U.S. has to give up its policy of a global free market to solve the problem of unemployment.

2. Excess Consumption

The principle for American economic development is excess consumption. All of the 100 plus dissertations for the Nobel Prize in Economics were based on this supposition. When this premise must be changed, all of these dissertations will become scrap paper, just like the theories proposed by physicists who believed the sun revolves around the earth. Under certain conditions these theories are invulnerable to argument; but just like the theories about the sun revolving around the earth were proven wrong, these dissertations about excessive consumption will also be proven wrong.

Once the bubbles in the stock market created by excess consumption burst, the baby boomer generation’s 401Ks and social security will all fizzle. It will not be long until the idea of excess consumption becomes a joke. What goes around comes around and eventually the U.S. will have to pay back what they owe.

3. Transportation of Resources

The U.S. is a country on wheels. Because oil resources have been exhausted, Americans must reduce their oil consumption. The money that an average American who drives to work spends on his or her car (including payment on the car, interest, repair, maintenance, insurance, gas, and property tax) totals to about $5000 per year, and the average time spent on the road is 1.5 hours a day. Faced with the dried up oil well, the U.S. needs to urbanize again.