Native Americans, refugees from US-initiated wars, Floyds and children separated from their parents at the border will remember
the US as the greatest “human ...
The masks covering the true face of the US were taken off one after another through the seven stories the Global Times had
published over the course of the past few weeks. These masks are engraved with words such as peace, liberty, security, unity, science, humanity, and global order, hiding the country's true visage that has been distorted with lust, greed, and subjugation.
The masks covering the true face of the US have been removed one after another through the seven investigative stories the
Global Times published over the course of the past few weeks. These masks are engraved with beautiful words such as peace, liberty,
security, unity, science, humanity, and global order, hiding the country's true visage distorted with lust, greed, and subjugation.
Fanning the flames to create turmoil, using economic and financial hegemony to sanction opponents, and forming cliques to create
political isolation - the US is using its hegemony to undermine the international order.
In fact, the US government's approach is quite similar to Voldemort's -
they both believe in power, recruit followers, use violence, and repeatedly want to kill competitors in order to maintain supremacy.
With its stock market jumping, the dollar strengthening, and global capital flowing in, the US is again reaping profits but bringing financial shockwaves to foreign countries, whether they are what it claims are rivals, like China, or allies, like the EU, by tightening its monetary policy, experts observed.
As the Fed policy tightening accelerates, analysts said that the US is increasingly turning into a world "damager" instead of "protector" when the country finds its global responsibilities clash with its own national interests, and the world is paying the price for the US' domestic problems, like surging inflation.
In recent days, the side effects of US monetary policy, particularly the Fed's hawkish push for raising interest rates, have spread to multiple regions of the world and multiple financial areas.
The US Dollar Index is turning up sharply, at one point touching a ceiling of 100.19 on Friday, the highest level since May 2020. Accompanied by the rise is the weakening of global currencies including the yen, the euro and the yuan.
Global stock and bond markets are also sliding. The 10-year US Treasury yield topped its Chinese equivalent on Monday for the first time in 12 years.
The benchmark Shanghai Composite Index slipped by 2.61 percent on Monday, the Hong Kong-based Hang Seng Index dropped by more than 3 percent, and the Japanese Nikkei 225 was down 1.81 percent on Tuesday.
Contractions on global financial markets are generally considered to be a result of the Fed's move to increase interest rates recently, the first time in more than three years. Investors are betting on more aggressive rate hikes in the coming months after Federal Reserve Chair Jerome Powell vowed tough action to rein in inflation during a recent speech at the National Association for Business Economics.
The US government has stepped on the gas to drive up interest rates to contain inflation. The US Consumer Price Index jumped by 8.5 percent on a yearly basis in March, touching a 40-year-high due to rising oil, food and housing costs. The growth beat market expectations of 8.4 percent.
However, Chinese experts criticized the US for shifting the burden of its own economic problems to global markets.
"The US is letting global markets pay the price for its own crisis of inflation, depending on the dominant role of the US dollar and the integration of the global economy," Li Haidong, a professor from the China Foreign Affairs University, told the Global Times.
According to Li, the countries holding massive US dollar assets will feel the pinch from Fed's tightening, but the blow will be even more vital for countries that have a vulnerable social system, as the US action might bring havoc to social stability there.
He also said that when the US government sees a clash between its global responsibility and its own interests, it does not feel guilt in choosing the latter.
"The US' role in the world is turning from that of a protector to a kind of damager, as it thinks that globalization is bad for its own interests," Li said.
Even countries that are in the same league as the US won't escape the US' profit-seeking moves, experts said.
Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times that the US is adding fuel to the flames of the Ukraine crisis, in order to strengthen its position in the so-called Western alliance, as well as further enhance the role of the greenback after investors saw Europe was not secure.
A direct consequence of this strategy is a weaker EU, both businesswise and politically, as the region's independence is undermined, while the military chaos also hurts the region's energy supplies and the euro's attraction to international investors.
Xi said that US monetary policy shifts will put pressure on the Chinese mainland's financial markets, especially as the mainland expands connections with the Hong Kong stock market, which is more vulnerable to US financial volatility.
However, Xi stressed that the impact on the mainland markets won't be severe because of capital flow restrictions, and China's independent monetary policy will not be swayed by external factors like the US Fed's decisions.
Since the military conflict between Russia and Ukraine began, the international community has grown increasingly aware of the roles the US and NATO have played behind the crisis.
From launching color revolutions around the world to leading NATO's eastward expansion to hem in Russia's territorial space; from imposing sanctions on "disobedient countries" to coercing other nations to pick sides… the US has acted like a "Cold War schemer," or a "vampire" who creates "enemies" and makes fortunes from pyres of war. The Global Times is publishing a series of stories and cartoons to unveil how the US, in its superpower status, has been creating trouble in the world one crisis after another.
This is the fourth installment.
Supporters of Pro-Russian groups protest during US Secretary of Defense Lloyd Austin' visit in Bulgaria on March 19, 2022 in Sofia, Bulgaria. Photo: AFP -Anti-government protestors wait at the entrance of a barricade in front of the Dynamo Kiev stadium in Ukraine on February 23, 2014. Photo: AFP
On the evening of December 25, 1991, the hammer and sickle flag representing the Union of Soviet Socialist Republics was slowly lowered over the Kremlin, and the flag of the Russian Federation in white, blue, and red was raised on the same flagpole.
The change of flags signified the official disintegration of the Soviet Union, which had existed for 74 years, as well as the end of the 44-year Cold War.
There were no ceremonies held in Moscow that night, just the dull tolls of bells from Spasskaya Tower from across the Kremlin. Meanwhile, on the other side of the Pacific, Americans proclaimed internationally how they had defeated the Soviet Union and won the Cold War victory.
It has been 31 years since this period in history, and several major changes have taken place in the world order and international patterns. However, these have not dispelled the arrogance of the US enraptured in the title "winner of the Cold War" and its overconfidence in the "maker of history" conclusion.
Standing at the start of the third decade of the 21st century, people can witness how American politicians still view every country considered to be a threat through the Cold War lens. They are still keen to incite ideological hostility and battle their own imaginary enemies, which makes the dissipation of the dark Cold War clouds virtually impossible. The shadow of the Cold War has spread from Washington to Beijing and Moscow.
From disintegrating the Soviet Union to designing the "Ukrainian Trap" step by step with the intention of achieving the strategic goals of "eliminating" Russia, suppressing Europe, containing China and maintaining an absolute hegemony, the "strategic master plan" adopted by the US can kill many birds with one stone in order to dominate the world.
The US is still a schemer that harbors a Cold War mentality.
US plays 'central role' in political demise of Soviet Union
"NATO is a defensive alliance that has never sought the demise of Russia," said US President Joe Biden, defending the eastward expansion of NATO in a speech he delivered in Warsaw on March 26, but turning a blind eye to the "not one inch eastward" pledge that NATO had made in the 1990s. Biden's words were not a complete lie, as there's little possibility of trying to eliminate (or, achieve the demise) of a nuclear world power with more than 17 million square kilometers of land and a permanent seat on the United Nations (UN) Security Council.
A physical "demise" of Russia is almost impossible. Nonetheless, the US-led NATO has been attempting to "eliminate" Russia in the past decades in various aspects including politically, economically, culturally, and ideologically, in order to keep dividing and weakening Russia, observers noted. Having acted out a similar script on the Soviet Union, the US is now looking forward to an encore performance on present-day Russia.
"The American role in the political defeat of the Soviet Union... was indeed central," Zbigniew Brzezinski, a renowned US geopolitical expert who served as President Jimmy Carter's National Security Advisor from 1977 to 1981, pointed out in his book Second Chance: Three Presidents and the Crisis of American Superpower. "The defeat of the Soviet Union was the consequence of a forty-year bipartisan effort that spanned the presidencies," he wrote. "...almost every US President made a substantial contribution to the outcome."
A prominent example of this "effort" was the US' Strategic Defense Initiative, also known as the "Star Wars program," which was proposed by then US President Ronald Reagan in March 1983. The US proposed the program to try to maintain its nuclear superiority, hoping to bring the Soviet Union's economy to its knees through space arms races.
The US announced the end of the program after the collapse of the Soviet Union in 1991. The release of the secret Central Intelligence Agency (CIA) documents in the Cold War era showed that the "Star Wars program" that the US had hyped was no more than a calculated strategic deception.
Another "Cold War tool" resorted by the US was its foreign propaganda machine system, such as the Voice of America (VOA). Founded in 1942, VOA began to serve the US' Cold War strategy after WWII, and became the main tool for the US government's promotion to the Soviet people of, not only the American way of life but also the principles of the "free world."
In the 21st century, the US still wields its ideological "soft knife," playing up its color revolution intrigues under the disguise of "democratic values" to countries such as Ukraine, Georgia and Tunisia, which only brought about three instances of political turmoil, mass impoverishment and war.
US engrossed in creating purported enemies
The end of the Cold War between the US and the Soviet Union did not bring about an end to the US' Cold War mindset, which continues to haunt the White House, Capitol Hill, the Pentagon and the CIA even today. American politicians view the international situation through a "zero-sum game" and "ideological competition" mindset, and keep seeking out purported enemies - now Russia and China.
It is truly a reflection of the US' geopolitical strategic ambition when former US President Barack Obama said that "Russia is a regional power that is threatening some of its immediate neighbors" or when the incumbent, Biden, said Russia is the country that most "threatens [the] security" of the US while China is US' main competitor. There has long been an anti-Russian consensus among America's political elites.
After the collapse of the Soviet Union, Russia had pinned great hopes for the West. But as former US Secretary of State Mike Pompeo said, "We lied, we cheated, we stole… we had entire training courses" and "It reminds you of the glory of the American experiment." That encompasses reasons why an ambitious schemer cannot be trusted.
https://youtu.be/DPt-zXn05ac
From 1999 to 2020, NATO increased its membership from 16 to 30 through an eastward expansion, completing the 3,000-kilometer-long strategic encirclement of Russia.
Since 2014, Russia has been slapped with 5,532 sanctions, according to sanctions monitoring database Castellum.ai, followed by Iran, Syria and North Korea. And Moscow has been subjected to 2,778 new sanctions in less than two weeks since Russian President Vladimir Putin ordered troops' advancement into Ukraine.
At the same time, the US has been trying to undermine Putin's domestic authority, paving the way for a potential "color revolution" in Russia.
Who set the 'Ukraine trap'
Analysts point out that the current situation in Ukraine is a trap that the US has spent years digging into and is determined to draw Russia into.
To prevent Russia from becoming a threat to US hegemony again, the US has promoted two "color revolutions" in Ukraine, first by putting the pro-West Viktor Yushchenko in the presidency in 2005 and then forcing pro-Russian president Viktor Yanukovych out of office in 2014.
Since August 2021, the US government has been speculating about Russian troops along the border with Ukraine and the possibility of an "imminent invasion" of Ukraine, which further provoked Russia.
It is almost certain that not only does the US want to deter Russia, but it also wants Russia to send troops to Ukraine, said Tang Shiping, a professor at the School of International Relations and Public Affairs at Fudan University, adding that the real purpose of the US' actions was to force Russia to use force against Ukraine.
Supporters of US-backed Ukrainian opposition leader wave flags during a rally in Kiev, Ukraine on November 28, 2004. Photo: AFP
The tactic of weakening Europe's strategic autonomy by putting it in a dangerous situation, a tactic that the US always used during the Cold War, is being played out again in the Russia-Ukraine conflict. In this gradual escalation of the situation in Ukraine, the US continues to provide funds and weapons to Ukraine and impose a full range of sanctions on Russia. The sense of crisis created by the US has also strengthened Europe's dependence on the US and NATO, thus greatly enhancing the US' chokehold over Europe, experts noted.
Complex security issues should not be dealt with in a simplistic approach of determining whether "friend or foe" or "black or white," said Chinese State Councilor and Foreign Minister Wang Yi during a virtual meeting with the High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell Fontelles on March 29, 2022. "Facts have proven that the outdated Cold War mentality and camp confrontation leads nowhere in Europe, let alone the acts of taking sides and dividing the world," Wang noted.
Dragging the Cold War to the 21st century
"After 1991, the Cold War did not really end, as the US and NATO have not stopped strategically hemming Russia's territorial integrity. In recent years, the US has also regarded China as its main competitor, trying to shape an external environment that is not conducive to China's development through various means," Lü Xiang, a research fellow on US studies at the Chinese Academy of Social Sciences in Beijing, told the Global Times.
American politicians not only harbor a "Cold War mentality," but also continue to promote a new "Cold War strategy."
Robert Gates, former secretary of defense, wrote in the Washington Post on March 3 that "A new American strategy must recognize that we face a global struggle of [an] indeterminate duration against two great powers that share authoritarianism at home and hostility to the United States."
The two countries Gates refers to are undoubtedly Russia and China. Containing them and ensuring that no one can shake US' hegemony has become the core of the US' current global strategy.
"NATO members have demonstrated their loyalty to Washington by vowing to follow its orders aimed at ultimately containing Russia," the Russian Foreign Ministry's spokesperson Maria Zakharova said on March 24, adding that Washington once again "disciplined" its allies by pressuring sovereign countries and erasing Europe's strategic autonomy.
Supporters of Pro-Russian groups protest during US Secretary of Defense Lloyd Austin' visit in Bulgaria on March 19, 2022 in Sofia, Bulgaria. Photo: AFP
In terms of China, the US government has introduced the "Pivot to Asia" and the "Indo-Pacific strategy," and has united with Japan, India, Australia, and other countries in the region to consolidate small strategic cliques such as "QUAD" and "AUKUS," trying to contain China from multiple directions.
Wu Xinbo, dean of the Institute of International Studies at Fudan University, summed up that the competition between the US and China will be all-rounded, involving governments and societies; in-depth competition could lead to a serious weakening or even decoupling of China-US ties in the fields of industrial chain, science and technology, and people-to-people and cultural exchanges; in terms of intensity, competition is extraordinary.
"Since President Joe Biden entered the White House a year ago, he and his top advisers have insisted they are not looking for a return to the superpower competition between the United States and the Soviet Union that dominated global affairs for nearly five decades. Yet one year into his presidency, Biden's actions have indicated otherwise," a commentary published on the US National Interest website stated, adding that in all areas of US foreign policy, the Biden administration has a Cold War-style mentality.
"The Cold War was not a golden era of foreign relations, but instead was a tragedy that cost millions of lives around the world. Washington cannot fall for feel-good nostalgia about its Cold War victory," it stated
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In Japan, the customer service agent was extremely nice and friendly, but declined his request politely, saying it was against the policy. In Japan, you are rude if you try to change your appointment when the prearranged date is near.
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In Korea, the customer consultant was not particularly friendly, but she changed the delivery date for him anyway. In fact, in Korea it is possible to change your appointment even until the last moment. Koreans are quite flexible about such things. Besides, Koreans are well known to do things quickly, too. Indeed, everything is so fast in Korean society that it surely is convenient to live there.
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Then the journalist wrote that in the United States he could not even talk to the customer service representative. Presumably, when he called, the answering machine put him on hold forever. In my recent experience, I had to wait about 40 minutes before I was finally able to talk to a customer service representative. Although it varies depending on the companies and calling hours, putting a customer on hold for about half an hour seems to be common in the United States these days.
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The Korean correspondent’s comparison of Japan, South Korea and the United States made me smile because it revealed the radical differences among the three countries. Indeed, Japan is a country where people are polite and friendly, and yet they do everything “by the book”. Additionally, in Japanese society it is seriously frowned upon to put someone to much trouble or to take up much of anyone’s time. You should not make yourself an annoyance or nuisance, either.
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South Korea is a country where the people do not always live by the book strictly and thus can be flexible. Although such elasticity may cause problems sometimes, it certainly is convenient for ordinary people’s everyday lives. In addition, Korean society is speedy. Everything is so fast, so you do not need to wait for a long time. Some foreigners like it so much that they decide to live in Korea much longer than they originally planned.
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Compared with Korea, everything is so slow in the United States. For example, when you apply for a driver license or transfer from another state’s license, it usually takes a month to receive the license by mail. In South Korea, you can get your driver license within 10 to 15 minutes. When you submit a paper to an American journal, it takes at least a year to get published. In Korea, it takes only a few weeks.
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Recently, an American friend of mine called a company to paint his house. The company told him that the paint job had to wait for about a year. He also called an electrician to repair an electrical problem in his study. The electrician informed him that he had to be on a waiting list which stretched for about three months. Granted, the Covid-19 pandemic and the current housebuying boom in the United States has had significant effects on supply and demand, but it still is too long to wait.
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In Korea, painters or electricians would come right away when you call them. As for a doctor’s office in Korea, one can drop in anytime, even without an appointment. In the United States, you may have to wait for several months unless it is an emergency.
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In the 1970s, when I lived in the United States, America was a truly advanced country. Everything was so admirable and commendable. At that time, the social system of America was superb, and American society was reasonable and rational. Living in the United States at the time was indeed convenient and pleasurable.
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Half a century has passed. The problem is that the American system has not changed much since then, while other countries have changed rapidly and radically to suit the hyperspeed electronic era. As time goes on, therefore, the once-efficient and impeccable American system has become relatively inefficient and slow.
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Perhaps the American people may not realise it because they have been living in such an environment for a long time. However, in the eyes of young foreigners who are used to speedy procedures and dynamic changes in their country, obviously many things seem to be very slow in the United States.
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In America, when you are a regular customer, not a new one, things are much better. For example, when my toilet began leaking a few days ago, the plumbing company initially set up an appointment to install a new one two weeks later. When notified of the urgency, however, a technician came immediately and took care of it. Thus, it all depends.
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By such comparisons, we can learn many intriguing things about other countries. – The Korea Herald/Asia News Network
Super Imperialism: The Economic Strategy of American Empire with Michael Hudson
https://youtu.be/NK0ls5hV_5Y
The Rise and Fall of Great Powers? America, China, and the Global Order
When the meek are weak, they suffer because they must. But when the strong are insecure, that is when war begins.
AS tensions over the Taiwan Strait mount, everyone needs to think through whether war is inevitable.
Leon Trotsky once said: “You may not be interested in war but war is interested in you.”
And if we slip into war by what World War I historian Barbara Tuchman called the “March of Folly”, can the great powers step back from mutual nuclear annihilation?
When the world’s unipolar power incurred more pandemic deaths (at last count 752,000) and got defeated in Afghanistan by tribal warriors, no one should be surprised to ask whether America (and by extension Western civilisation) is in a decline.
The prestigious US magazine Foreign Affairs devoted three issues this year to: “Can America Recover?”, “Decline and Fall – Can America ever Lead Again?” and “Can China Keep Rising?”
For those reading the endless barrage of invectives against America’s rivals, it certainly feels like the Cold War has returned with a vengeance.
However, for Greta Thunberg and fellow climate activists, surely the world leaders’ priority is to work together to address our looming climate disaster.
Why are alphas fighting in a burning planet? Shouldn’t we call “time out” to see how to address collectively the urgent and existential issues of human and planetary distress?
Next month, the World Economic Forum is meeting in Dubai with an agenda to move from a Great Reset to a Grand Narrative Initiative “to shape the contours of a more prosperous and inclusive future for humanity that is also more respectful of nature.”
Grand Narrative may sound like a media story but the reality is that the masses are unlikely to buy an elite-driven dream until they are part of the conversation.
Take Harvard historian Samuel Huntington’s “Clash of Civilisations” narrative. Written in 1996, Huntington seemed prescient in predicting the clash between Western civilisation and the rest, namely, Sinic, Japanese, Hindu, Islamic and Latin American.
He asked poignantly: “The central theme for the West is whether, quite apart from our external challenges, it is capable of stopping and reversing the internal process of decay. Can the West renew itself or will sustained internal rot simply accelerate its end and/or subordination to other economically and demographically more dynamic civilisations?”
Huntington basically reflected the worry of British historian Arnold Toynbee (18891975) that since civilisations are born out of primitive societies, the key is whether the elites can respond effectively to new challenges, internal or external.
Toynbee saw clearer than other Western historians like Gibbon (Decline and Fall of Roman Empire) that collapses are not necessarily due to barbarian invasions but whether the ruling elite can overcome their own greed or interests to address the new challenges.
In pure economic, financial, technology and military terms, few question that the West remains superior in almost all aspects, except in population numbers.
According to the Maddison projections of population and GDP, the rich countries (essentially Western Europe, plus Western offshoots (the US, Canada, Australia and New Zealand) and Japan would be 947 million people and 36.3% of world GDP by 2030, whereas Asia (China, India and other parts of Asia) would have a population of 4.7 billion and 49.6% of GDP.
This reverses the 2003 position when the West (including Japan) accounted for half of world GDP, compared with one-third for Asia.
The dramatic reversal is due to the rise of China, India and the rest of Asia to higher-middle-income levels by 2030, mainly through trade and catch-up in technology.
In the coming decades, roughly one billion rich West must contend with the rising powers of China (1.4 billion), India (1.3 billion) and Islamic countries (1+ billion), which have cultures and ideologies very different from the West.
If the planet heats up as expected, expect more Latin Americans, Africans and Middle East poor arriving on the West’s borders to migrate.
At the same time, with the American demonisation of Russia and China pushing them closer together, the United States is confronting at least three fronts (including the Middle East) amid a fractious domestic arena, where political polarisation prevents policy cohesion and continuity.
This current situation reminds Islamic countries following their great historian Ibn Khaldun (1332-1406 AD) of the cycle of dynastic and empires that Islam went through.
When the social cohesion or bonds (asabiya) is strong, there is state legitimacy and empires rise. When it is weak, dynasties fall and empires are lost.
After the Jan 6, 2020 insurrection in Washington DC, many are inclined to believe that fratricidal tribalism is happening now inside America.
Similarly, Chinese macro-historians Sima Qian (Records of the Grand Historian, 146-86 BC) and Sima Guang (Comprehensive Mirror for Governance, 1019-1086 AD) also recorded that empires fall not so much from external invasion but internal decay.
In Yale, historian (Rise and Fall of Great Powers) Paul Kennedy’s terminology has the United States arrived at the point of “imperial over-reach”, when the country’s global ambitions and responsibilities exceed its financial and industrial capacity.
After all, the US government debt has reached as high as the end of World War II level without even starting World War III.
But all historians know that rise, decline or fall is never pre-ordained. The past is not a scientific linear predictor of the future. The unipolar order has weakened, without any grand bargain between the great powers on what the new order should even begin to look like.
Any grand bargain requires the incumbent hegemon to admit that there are equals and peers in power that want the rules of the game reset from the old order.
This does not mean that anyone will replace the United States soon because everyone wants to buy time to set their own house in order after the pandemic.
In short, before any Grand Narrative, we need a whole series of conversations with all sides, from the weakest to the most powerful, on what individually and collectively the post-pandemic order should look like.
There can never be one Grand Narrative by the elites until there are enough dialogues between the many.
When the meek are weak, they suffer because they must. But when the strong are insecure, that is when war begins.
By ANDREW SHENG. Andrew Sheng writes on global issues from an Asian perspective. The views expressed here are the writer’s own.
MAN and nature are running out of time. That’s the core message of the UN Inter-governmental Panel on Climate Change ...
Moral vacuum at the heart of modernity, now embodied in US laws!
` In short, historically it was the Church that gave the moral blessing
for colonisation, slavery and genocide during the Age of Globalisation.
The tragedy is that the Doctrine of Discovery is now embodied in US
laws.
According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement,the household debt level remains elevated.
With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.
IN recent weeks, global markets were roiled by the mere mention of a four-letter word, debt. From China’s Evergrande Group’s near collapse, as it sat on a mountain of liabilities, to the United States government’s need to raise its debt ceiling.
In Malaysia’s case, we too have not much choice either but to raise our debt ceiling as we look at ways to re-generate the economy with a higher debt room of 65% of gross domestic product (GDP) from 60% currently.
It seems like debt has become one dirty word for investors for the time being, as we all know there is a price to pay when it comes to debt as there is no such thing as a free lunch.
For the US, there is no doubt that they have constantly raised their debt ceiling over the years to ensure they do not default on their obligations.
According to the US Treasury website, since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the nation’s debt limit.
Currently suspended, the US debt ceiling was reset on Aug 1, 2021, to US$28.4 trillion (RM118.9 trillion). For the US, failure is not an option as it will lead to a catastrophic chain reaction to not only the financial market but to the economy as a whole.
According
to Treasury Secretary and the former Federal Reserve (Fed) chairperson,
Janet Yellen, (pic) the US has never defaulted on its debt before and
she was “confident” that the issue would be addressed, despite warning
the Congress that the deadline for the debt ceiling is “around Oct 18”.
According to Treasury Secretary and the former Federal Reserve (Fed) chairperson, Janet Yellen, the US has never defaulted on its debt before and she was “confident” that the issue would be addressed, despite warning the Congress that the deadline for the debt ceiling is “around Oct 18”.
For now, while a nine-week stopgap funding bill has been endorsed by the President on Thursday, which in all likelihood will avoid a government shutdown at least up to Dec 3, 2021, the threat of a US defaulting on its debts remains.
While the US is able to continue to print money by simply passing the law to keep borrowing, the US, just like any other country, cannot go on borrowing forever. With a greater supply of money, sooner or later, interest rates will have to rise as the increase in money supply will likely fuel inflation.
After all, the Fed too expects rates to start rising in 2022 and much more in 2023 onwards.
In the last Federal Open Market Committee just over a week ago, the 10-year and 30-year US benchmark rates have already moved 17 basis points (bps) and 21 bps to 1.50% and 2.06% respectively – as the market begins to price in expectations of the Fed’s tapering move as well as worries if there is going to be lengthy impasse between the Democrats and the Republican or grand old party (GOP) to raise the debt ceiling.
Having said that, as the US has been running budget deficits for the longest time, it would not be too far-fetched to assume that given time, the US will need to raise the debt ceiling yet again in the future.
Hence it was also of no surprise when Yellen commented on Thursday that the debt ceiling ought to be permanently abolished.
In any government’s financial management, it’s either shortfall or revenue, mainly due to inadequate tax collections or excessive spending, which are also a function of debt service charges, and to a certain extent, over-priced development spending or operating expenditures.
With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.
So is the rest of the world. In fact, according to the Institute of International Finance (IIF) in its Global Debt Monitor report published on Sept 14, 2021, global debt, which includes government, household and corporate, and bank debt increased by US$4.8 trillion (RM20 trillion) to reach a new alltime high of US$296 trillion (RM1.24 quadrillion).
In essence, over the past six quarters, as the pandemic has caused significant damage to the global economy and unprecedented response from governments, total global debt has expanded by US$36 trillion (RM150.7 trillion) or 13.6% from just about US$260 trillion (RM1.09 quadrillion) as at end of 2019.
Money has to go somewhere
When a debt is raised, be it by the government, a company, or a household, it has to go somewhere. For most governments, debts are mainly raised for development expenditure, and if it is allowed by the constitution, on operating expenditure too.
Debts raised due to the pandemic perhaps has become the norm globally as well, as the government has no choice but to raise the required funding to support the economy.
In the US, the Fed also buys US treasuries and agency mortgage-backed securities and this effectively makes its way into the financial markets.
So while the Fed has expanded its balance sheet by more than 100% since the pandemic, the liquidity it has provided has caused significant gain not only in traditional asset classes but into everything else. Home prices are rising, commodities have boomed and markets are buoyant and cryptos have soared.
In the case of Evergrande Group, many are left wondering if it was a case of a “too-big-to-fail” company. Evergrande became a property developer largely by borrowing.
As a group, they also ventured into other businesses, which among others include electric vehicles, Internet and media production, theme park, football club, and even into mineral water and food production.
Evergrande’s massive business empire, grown out of debt means, while it has substantial assets, it also had huge liabilities. As Beijing has been strong in putting its house in order in the form of new regulations and guidelines for many industries, Evergrande too was not spared.
As early as August last year, the Chinese government had introduced a “three red lines” test for developers to meet if they wanted to borrow more.
This was firstly, liability to asset ratio of not more than 70%; secondly, net debt to equity ratio of not more than 100%; and thirdly cash to short-term debt ratio of more than 1.0.
Hence, the writings were already on the wall on Chinese developers more than a year ago that the regulators were serious in addressing debt-driven growth pursued by these companies. In Evergrande’s case, the debt hit the ceiling.
Why do we go into debt?
Debts taken by individuals are rather straightforward. Of course, there are good debts and bad debts. For most of us, it is for the purchase of big-ticket items like a roof over the head, and for mobility purposes, where most of us own a car.
Of course, we also indulge ourselves with material stuff, either from our savings or credit cards that we will pay off when the time comes. Some of us, due to lack of income or due to financial mismanagement, take on bad debts and that’s where the trouble starts as we are unaware of the consequences of rising personal debts and high-interest cost.
Stories of debts owed to money lenders are common within our society while Bank Negara statistics also show that one of the fastest-growing debt profiles among individuals is personal loans.
This has remained relatively high and has increased by 87.4% over the last five years alone to about Rm73.7bil as at end of August 2021, while its share of the banking system loans outstanding has increased from 2.7% to as much as 4.0% now.
According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement, the household debt level remains elevated.
For a company, debts should be part of capital management as companies need to not only sustain their business operations but look at opportunities to grow and expand their market share, either via acquisition or via borrowings. However, similar to what we have seen in Evergrande’s case, companies too must observe their own “three-red-lines” to ensure they have the right mix and remain vigilant of its exposure.
Does Malaysia have the room to borrow more?
For Malaysia, with a higher debt ceiling of 65%, the government is effectively allowing itself to have some headway to borrow an additional Rm75bil to support the recovery momentum that most economists now expect will be much stronger in this fourth quarter period and 2022 and as we prepare ourselves for the post-pandemic period.
While we have created this room to enable us to borrow more, we must be mindful to borrow responsibly as debts that are taken today will be borne by future generations.
We also need to chart our way out of this debt-dependency black hole that we have been in since the Asian Financial Crisis of 1998 and get out of this conundrum.
While debt-to-gdp is just a denominator that is divided by a numerator that is steadily growing, we must find ways to manage our overall federal government debt and plan to reduce them post-pandemic.
That is a whole new topic altogether, and next week, this column will explore strategies that Malaysia can deploy to reduce its debt dependency.
PANKAJ C. KUMAR Pankaj C Kumar is a long-time investment analyst. The views expressed here are his own. Source link
US federal debt crisis uglier than Evergrande trouble
There is much buzz amongst global investors recently about two possible debt defaults, though they are of different proportions in their would-be impact on global equity markets. One is the US federal government's rivers of borrowed money running dry and in urgent need of replenishing. The other is a major Chinese property developer which has run into financial trouble, because the company veered off the road by squandering too much on making electric cars and sponsoring a football club.
As US federal debt default looms, US Treasury Secretary Janet Yellen is facing her biggest test in her eight-month tenure to convince reluctant Republican lawmakers to agree to raise the US' national debt limit, which is currently set at $28.5 trillion. The stakes are high, because if Yellen's effort fails, the US financial system will collapse.
Yellen has called Republican leaders to convey the economic danger which lays ahead, bluntly warning that the Treasury Department's ability to stave off default is limited, and the failure to lift the debt cap by late October would be "catastrophic" for the country and the world.
Six former US treasury secretaries last week sent a letter to top US lawmakers, warning them a default would roil financial markets and blunt economic growth. According to US media reports, Yellen last week also warned the nation's largest banks and financial institutions about the very real risk of a default. She has spoken to chief executives of JPMorgan Chase, Bank of America, BlackRock and Goldman Sachs, briefing them the likely disastrous impact a federal default will produce.
To make things worse, both Democrats and Republicans in the US are at each other's throats now over US President Joe Biden's new $3.5 trillion spending bill, which proposes heavy tax raises on rich families and corporations, and has met fierce opposition from Republican lawmakers. Whether they will compromise on the debt limit, by making a last-minute deal with the White House to reduce Biden's giant spending plan remains to be seen.
Market analysts say if the US government defaults on its colossal debt, a financial system crisis of a magnitude larger than the 2008-09 debacle could occur, which is estimated to lead to an evaporation of $15 trillion in wealth and loss of 6 million jobs in the US. The capital market is now on tenterhooks facing a potential financial time bomb.
Last week, the US' major media outlets also focused their reportage on a possible default of a leading real estate developer in South China, but by all metrics, it is a risk of much smaller scale. The case is being closely watched by China's financial authorities and will never be allowed to develop into a systemic risk.
With regard to the privately-run property developer Evergrande, many fear the knock-on effects of the company's imminent difficulty to pay back principals and interests of borrowed money, including corporate bonds and bank loans. But, even if the city of Shenzhen with its deep pockets, where the company is headquartered, refuses to bail out Evergrande, one bankrupt company can hardly impact the stability of China's financial system, and the risks linked to this possibility have been widely overblown by a hyperventilating media.
Executives at Evergrande are launching a last-ditch rescue effort, trying to sell the company's electric car subsidiary and other assets in China and abroad, including the Guangzhou Evergrande Football Club. It is also selling its housing projects scattered in dozens of Chinese cities at a discount to speed up its cash flow. Whether the company is able to stave off a debt default remains unknown.
Evergrande said on Wednesday that it would make an interest payment on an onshore bonds due Thursday, but the company didn't say whether it had plans to make a $83 million coupon payment due on its US dollar bonds within a month.
The city government of Shenzhen, or the central government in Beijing, has not rushed to bail out Evergande most likely in the belief that the company itself is to blame for the predicament - too much leverage and squandering of borrowed funds ploughed into auto making and other fringe businesses and budgeting largesse. Authorities probably want the case to serve notice to investors at home and abroad, that they need to do their due diligence and enforce accountability on debtors.
However, the central government is almost certain not to tolerate a possible bankruptcy of Evergrande to spill over to draw down the broader Chinese economy, as the central bank has done numerous pressure tests since the 2008 global financial crisis, which was caused by the sub-prime housing debts in the US. Last year, the central bank required property developers to bring down their debt levels below certain thresholds before they are able to borrow more money from financial institutions. And, many Chinese commercial banks have ascertained their exposure to Evergrande is restricted.
So, debt-beleaguered Evergrande is unlikely to produce a firestorm and disrupt China's financial system. In addition, both the government and the central bank have plenty of policy tools, including easing overall monetary policy, to tide over Evergande if it goes under. But of course, the last resort is to bail it out and restructure the company, as China has done with other troubled corporations like HNA, Huarong and Baoshang Bank.
The author By Wen Sheng is an editor with the Global Times.
Xinjiang PV enterprise refutes unfounded Bloomberg report on irresponsible accusation of ‘forced labor’, plots ‘industry stifling’ in Xinjiang, this time targets solar energy industry - Global Times
First it was cotton; now it's Xinjiang's solar panels that are being targeted. Both are pillar industries of Xinjiang in Northwest China, and they have become the target of what appears to be a malicious campaign launched by Western anti-China forces to destroy Xinjiang's rapidly ascending economy and ultimately obstruct the development of China.
These forces behind the campaign position themselves as saviors and claim to counter a "genocide" in Xinjiang, but what they are doing is essentially attempting to wipe out the industries and the bread and butter of over 25 million people in Xinjiang, locals, businesses and experts said.
Unlike the campaign against Xinjiang's cotton, which was led by political forces, the latest campaign against the photovoltaic (PV) industry appears to be pushed by forces within the PV industry that have been overwhelmed by Chinese firms, including those in Xinjiang, for years, in an apparent ill attempt to use politics to crack down on what they can't compete with in the market, analysts pointed out. Such a shift in trend poses a serious threat for other industries in Xinjiang and around the country and demands forceful countermeasures, they said.
As the debate on the so-called forced labor issue in the Chinese solar energy industry has been hyped up lately following the West's groundless smearing on Xinjiang cotton, Chinese experts and solar energy insiders warned that the US is setting a trap and a pattern, step by step, to destroy Xinjiang's competitive industries, even with an aim to bring about the collapse of Xinjiang's economy and local people's livelihood.
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Once finding the approach of giving a bad name to the Chinese industry useful by citing "human rights abuses" or "forced labor," capital and interest groups may copy the smearing and boycott approach to stifle Xinjiang's industries, experts warned.
The Global Times interviewed a local polysilicon giant and found that the so-called forced labor in the region's PV industry is simply another lie created by certain media outlets, US trade groups and politicians.
"The workers from ethnic minority groups are mainly hired online, from universities and colleges, talent markets and by employee referrals. They enjoy paid annual leave, home visits with subsidies, wedding cash gifts, year-end bonuses and holiday gifts," Zhang Longgen, deputy chairman of Xinjiang Daqo, one of the four major Chinese polysilicon manufacturers, told the Global Times, denying any employment from Xinjiang's vocational education and training centers as reported by Bloomberg, the New York Times, POLITICO and so on.
Xinjiang Daqo's production accounted for around 15 percent of the global market share in 2020. "Silicon wafer producers are the customers of polysilicon. Around 97 percent of the global silicon wafers are made in China. All our products are sold in China," Zhang said.
"The ridiculous thing is that the US forcibly distorts facts and smears all the good things we have done that benefited the ethnic minority groups in Xinjiang," Zhang said.
By doing so, the US would strike a blow to China's, even the world's, solar energy sector and hurt the interests of ethnic groups in Xinjiang, he said.
At Xinjiang Daqo, 18 out of 1,934 workers are from ethnic minority groups. The average monthly salary at Xinjiang Daqo is 7,300 yuan ($1,118), compared with the average monthly salary of 6,617 yuan in Xinjiang's non-private sector and 3,825 yuan in the private sector in 2019.
"The proportion of labor costs in our company is less than 7 percent, so polysilicon manufacturing is not a labor-intensive industry," Zhang pointed out.
Dismissing a Bloomberg report on Tuesday which said "there's no freedom to refuse to sign factory contracts" for workers in Xinjiang, Zhang said some Western media's reports on Xinjiang came out of the reporters' "fertile imagination."
"Forced labor is not only unethical but also illegal in China. We have examined our suppliers recently and found no behavior of 'forced labor,'" Zhang said, adding the company's employee turnover rate is less than 3 percent.
"Anyone who tries to put a label of 'forced labor' on the Chinese PV enterprise should show their evidence. For example, who is forced to work in which enterprise? Without giving any testimony, such a claim is very irresponsible," Zhang said.
In a Bloomberg report, it said "guards in brown camouflage ordered away would-be observers" at the Xinjiang Daqo facility. The company told the Global Times it has been always open for visitors, but the coronavirus reduced such activities in the past year. "Bloomberg contacted us before Spring Festival this year, but China's epidemic control and prevention was strict at that time. That's why we didn't host it.
Echoing Zhang, a 39-year-old ethnic Mongolian worker named Bajin, said the so-called forced labor has never existed in the factory since he came to work for the company in May 2011, and none of his friends have ever complained about being forced to work in Xinjiang.
"I work eight hours per day and get two days off per week. I feel workers from ethnic minority groups at our company can even get extra care from our supervisors. So the Western countries' smearing is intentional to disturb ethnic unity in Xinjiang as well as our country's fast development," Bajin told the Global Times.
"For people at my age in Xinjiang, we all long for a good life, by farming, working or running our own businesses to improve our life quality. 'Forced labor' doesn't exist," he said, adding he earns 9,000 yuan per month as a production safety management staff member.
Smearing campaign
Zhang said he had smelled the conspiracy in the air for months, as he noticed that the share price of the US-listed Daqo New Energy Corp, the parent company of Xinjiang Daqo, dive from $130 to the current $67, dropping by approximately 52 percent in just two months.
Another Chinese PV giant Jinko Solar also suffered from short selling at the US stock market.
"We expressed strong condemnation to the groundless and irresponsible media reports that turned things upside down," Zhang noted.
The pace interestingly is in line with a report released in a publication by consulting firm Horizon Advisory in January, which claimed that "forced labor" is being used in the Chinese PV supply chain.
On top of that, the Solar Energy Industries Association (SEIA), the US national trade group, urged its members to move their supply chains out of Xinjiang. More than 170 companies have signed a nonbinding pledge to avoid the so-called forced labor.
Xinjiang produces around 45 percent of the world's polysilicon supply - a type of upstream raw material in the photovoltaic (PV) industry, according to Dai Yanling, a veteran PV practitioner in China. Requiring intensive energy, such material is largely churned out in places that have large amounts and cheap electricity, thermal power and PV energy. That made Xinjiang, Southwest China's Yunnan, as well as North China's Inner Mongolia appealing in polysilicon manufacturing. China accounts for more than 85 percent of the world's polysilicon supply.
"Polysilicon manufacturing is not a labor-intensive industry anymore. Labor costs are not a key factor," Dai said.
US Senators Marco Rubio, Rick Scott and others introduced the so-called "Keep China Out of Solar Energy Act" at the end of March in quick succession, banning US federal funds from being used to buy solar panels from companies based in China.
It is clear that the US has a map to crack down on China's PV industry, as it first started from a trade group's instigation, then to a further upgrading by US politicians, and "the reason behind it is that China's rapid growth in the solar energy sector moved the cheese of US companies," Dai said.
Dai said that before 2010, the polysilicon used in global solar energy had been monopolized by US and German enterprises, which had profiteered Chinese PV firms by forcing the them to sign long-term contracts (some are 10 years) with them.
Over more than a decade after China ramped up efforts in developing the PV industry, the price of polysilicon has dropped from $400-500 per kilogram in foreign companies before 2010 to $20 per kilogram in Chinese companies now, the practitioner noted.
Even if the US is the place of origin of PV technologies, its current PV sector lags behind when compared with developed countries like Germany, Japan and developing countries like China. Such a situation worried the US PV practitioners, Dai added.
To beat down the Chinese PV industry, the US government has taken different actions, such as in 2012, the US Department of Commerce imposed levies of 31.14-249.96 percent anti-dumping duties on Chinese PV cells while China's growth in solar energy was forging ahead.
Global Times reporters also found out over the past two years that many US business and trade representatives have cited the PV industry as a "classic case" when talking about the China-US trade frictions.b
The duties and crackdown policies have not beaten down China's PV industry, which disappointed the US.
According to the SEIA, the US PV industry was at a standstill during the Trump administration, with its PV install capacity dropping in the first two years during his term of office. After the relevant taxation reducing policy, the PV industry recovered a little in the US.
The first thing pushed forward by the incumbent US President Joe Biden was to get back to the Paris Agreement and set strategic goals in the energy sector.
Analysts said that in addition to strengthening the efforts to combat climate change, his aim was also to catch up the pace in the PV sector with other countries and even regain an upper hand, as major countries around the world embrace a green future in front of the crisis of global warming and climate change.
What also concerned the US businessmen is the US' high dependency on China in the PV supply chain, as Chinese companies have both lower costs and technological superiority, particularly in large size silicon wafers and granular silicon.
According to a report by McKinsey & Co in 2018, China's PV industry competitiveness surpassed the US by a lot. Among the top 10 global PV modules enterprises in 2020, three came from China and only one came from the US.
Zhang also cited statistics from the China Photovoltaic Industry Association to prove the country's PV supply could make tremendous contributions to the world's renewable energy transformation: Chinese raw material of silicon accounts for 67 percent of global share, wafers 97 percent, solar cells 79 percent and PV modules 71 percent.
Workers
at a cotton textile factory in Aksu City, Xinjiang Uygur Autonomous
Region, northwest China, March 29, 2021. (Photo/CGTN)
Destroying value chain
It looks like the tactics of the PV industry have some water splash.
In a list of questions regarding alleged "forced labor" in Xinjiang, several members of the Dutch parliament urged the Netherlands government to explain if it is aware that solar PV panels and other components imported from China may contain raw materials from Xinjiang, according to local media reports.
They also asked the government to explain the possible impact on Dutch and European renewable energy markets in such situation as imports of Xinjiang-produced solar modules would be suspended.
Regarding the previous action on Xinjiang cotton, and now the PV industry, which accounts for 80-90 percent of the world's PV modules supply, Chinese experts warned that other industries, such as mechanical and electrical products, electric power and petroleum, could also be the next targets, and the US government is trying to suffocate or even kill Xinjiang's outstanding industries, with the help of some other Western countries.
"It looks like the US wants Xinjiang's competitive industries to die out in the region, so far namely cotton and solar energy, but in fact, it is destroying China's participation in the global value chain," Wang Yao, a research fellow specializing in border areas at the Chinese Academy of Social Sciences, told the Global Times.
The exports of mechanical and electrical products in Xinjiang are also vibrant, and countries along the Belt and Road are the main buyers. In 2019, mechanical and electrical products championed the most popular exported goods in Xinjiang, with the export value hitting 33.79 billion yuan, accounting for 27 percent of the region's total exports.
Last but not least, they are copying the smearing approach on Xinjiang cotton onto the PV industry after the first trial was testified effective, Wang noted. "If so, China's PV sector may be kept out of the door by the US, even the world."
However, the tactics being used by US interest groups in slandering Xinjiang's PV sector is a little different from that for cotton. Unlike the crackdown on Xinjiang cotton which was initiated by politicians, the suppression of the PV sector began from companies and industry groups that initiated the accusation, then US politicians stepped in, showing the voluntary collusion between industrial capital and politicians in their mutual objective of cracking down on China's development, experts said.
Last year, amid the reports of alleged "forced labor," the US Fair Labor Association wrote a report on such a topic in January 2020. At that time, the Shanghai office of Switzerland-based Better Cotton Initiative (BCI) had examined cotton factories in Xinjiang and found no forced labor.
Clothing brands such as Adidas and H&M, which have cooperation with BCI, also conducted examinations in Xinjiang. H&M had stated that it found no clue of "forced labor" in factories in the Aksu Prefecture.
But on October 21, 2020, BCI announced on its website to cease all field-level activities in China's Xinjiang region.
Such a move was driven by pressure from outside, as well as other interests. Since member fees are the main financial source for BCI, brand members, including Nike, LEVIS, or GAP from the US, have a significant influence on BCI. The US Agency for International Development was once a council member.
After suffering pressure from multiple sources, including the US government, popular clothing brands declared they refused to source any cotton production from Xinjiang.
After seeing fruitful results of slandering Xinjiang cotton, the cards of Xinjiang human rights and "forced labor" might be a "master key" for the US to hit any industry of Xinjiang, Wang warned, saying electric power and petroleum are very likely to be the next targets.
"The choice of polysilicon is different from that of cotton, as the costs of cotton produced in China remain higher than that produced in the US, Brazil and Australia. That means, with the lower-cost advantage of PV products, this round of crackdown on Xinjiang polysilicon will not succeed," Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing who closely follows China-US bilateral trade, told the Global Times on Friday.
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According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement,the household debt level remains elevated.
A worker installs a solar power unit at the construction site of a 300-MW photovoltaic electricity project of the China Datang Corporation Ltd. (Xinhua/Zhang Hongxiang) 
