Wednesday, January 11, 2017

Scandal and China

So, the incoming President has his own big sex scandalAllegedly, the President-elect, while in Moscow, hired two hookers to pee on each other.  I feel gross typing that sentence, but there you have it.

When it comes to scandals of this sort, neither the truth nor the weight of the scandal is what matters.  The assorted Clinton scandals did not destroy the Clinton Presidency; the assorted Obama scandals did not destroy the Obama Presidency.  I find all these scandals confusing and, worse, boring, and I refuse to articulate them here.  Google them if you wish.  I find this latest Trump scandal similarly boring (though definitively gross, if true).

Whether or not Whitewater or [insert Obama scandal here - he wasn't born in this country, right?] or this Russia hooker allegation is true is beside the point.  Far more substantive scandals have been thoroughly ignored in this recent election cycle.  The important thing is that now the President-elect has an albatross around his neck for the entire time he governs, just as Clinton and Obama did.  It will bog him down and distract him.  Whitewater and Monica Lewinsky and ACORN and you name it didn't prevent Clinton and Obama from being re-elected, but it sure did take the wind out of their sails from time to time.  Bad news for Donald Trump!

Meanwhile, in the world of substantive news, let's check in on China.

While President Trump seeks to Make America Great Again, China has publicly declared its intention to kick our behind when it comes to renewable energy.  Much of the below should be taken with a large hunk of salt, because rhetoric is rhetoric, but still (emphases added mine throughout):

China intends to spend more than $360 billion through 2020 on renewable power sources like solar and wind, the government’s energy agency said on Thursday.

The country’s National Energy Administration laid out a plan to dominate one of the world’s fastest-growing industries, just at a time when the United States is set to take the opposite tack as Donald J. Trump, a climate-change doubter, prepares to assume the presidency.

The agency said in a statement that China would create more than 13 million jobs in the renewable energy sector by 2020, curb the growth of greenhouse gasses that contribute to global warming and reduce the amount of soot that in recent days has blanketed Beijing and other Chinese cities in a noxious cloud of smog.

Damn.  That's real money.  That's not a joke.  China could go much, much bigger of course, than $90 billion a year on renewables.  But that's a lot more direct investment on renewables that the United States has put up, or is planning on putting up. 

There are problems of course.  Part of the reason coal consumption is down in China is because the economy is in a slump; if the economy picks up, coal consumption might skyrocket back up.  China, having a massive population, has correspondingly massive energy needs.  $360 billion might not cut it.

Still, this is the sort of big infrastructure plan that the world needs to be thinking about.  13 million new jobs!  If they pull it off, that'll be Making China Great Again, for sure.

As America prepares to build fences, China is, rhetorically at least, stepping up to the "global leader" plate, with President Xi Jinping attending the World Economic Forum at Davos, Switzerland for the first time.  All this really amounts to is networking on the highest level, but if America pulls back from "global leadership" and becomes more isolationist, it cedes this space logically to China and others.  Whether that is "good" or "bad" is a complex question with many interpretations (and a topic for another post sometime).

China cannot, factually, take over the #1 Superpower role without having a reserve currency that can challenge the dollar, something it does not have:

He pointed to China’s push in recent years to have the renminbi counted as an international currency. That has been undermined in the past year by efforts of the Chinese central bank, the People’s Bank of China, to withdraw large quantities of offshore renminbi from circulation. The bank has been doing that in order to try to prop up the value of the renminbi and limit capital flight from China, including the transfer of money to Hong Kong by wealthy Chinese.

“The People’s Bank of China continues to claim that renminbi internationalization is important, and of course, at Davos, President Xi may continue to pay verbal homage to that agenda because it would be an important sign of China’s ascendance on the world stage,” Mr. Shih said. “Yet, in the past year, we have seen renminbi deposits outside of mainland China decline by hundreds of billions of renminbi.”

The flexible, dependable dollar is still number one. (Incidentally, here's a very interesting, if meandering, look at what a reserve currency is and how it has functioned historically by Martin Armstrong, who may be a bit crazy in some regards, but certainly is smart, and who makes good points here.  The article on Armstrong is compelling reading which I may revisit sometime soon.)

With that said, China is sending its aircraft carrier out to make saber-rattling noises in the Taiwan Strait, and Taiwan is responding in kind.  China is not a mood to throw its weight around, and is not screwing around about it.

I find the unfolding tension in the Pacific and the civilizational race or win or lose the battle against global climate change a lot more thrilling than peeing on hookers, don't you?

See you tomorrow!

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