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Tag: rmb

Thank God for the economic crisis

This post is based on my discussion with Baada yesterday. I hereby acknowledge his contribution to this post.

One of the hundred thousand random headlines that The HIndustan Times put on their front page during the last couple of weeks was a statement that China won’t hesitate to help out Pakistan in case India were to declare a full-scale war against Pakistan.

Given both historical precedents, as well as China’s perceived military might, it would be difficult, indeed, for India to attack Pakistan, unless of course there is some other external power supporting it. However, it would’ve been unlikely that the US would’ve supported India in such a war against Pakistan and China. Think current account deficit. Think external debt. Think Chinese foreign exchange reserves. The Chinese threat of economic terror on the US would’ve meant that the US would’ve left India alone to handle its two northern neighbours.

The current economic crisis has changed all that. No doubt it has fucked the US. The point is that it has fucked China even more. China, having been extremely dependent upon US imports in order to expand itself, seems to be in serious trouble now.

If China decides to sell its USD reserves now (the most obvious method of economic terror), the RMB is going to rise rapidly against the USD. And fuck China further in the exports department. RMB will also rise against the Euro and other major currencies. And China will get further fucked.

Effectively, the only way in which China can unleash economic terror on the US is by means of a suicide bomb. Thanks to the current downturn and all that, if China were to destabilize the US economy, it would also have to go down itself. This implies that the chances of China unleashing economic terror on the US in the current scenario are minimal.

Which means that if China decides to support Pakistan in case of a full-blown war, the US, as part of both its anti-terrorism strategy as well as its strategy to find a large Asian counterbalance to China, can support India. The threat of the US entering the war on India’s side will deter China from entering the war. Which means that Pakistan can’t count on Chinese support anymore. Which means that in case Pakistan does some mischief, India can consider the option of going to war. Which means that Pakistan is unlikely to do much mischief now.

So bless the flying spaghetti monster for the timing. Thank goodness this escalation in terror didn’t happen last year, when the Chinese economy was soaring, Acshully, rather than thanking the FSM, we can say that it has been bad timing by the terrorists.

Author SKPosted on December 11, 2008Categories arbit, economics, politicsTags baada, china, chinese threat, counterbalance, currencies, current account deficit, downturn, economic crisis, external debt, foreign exchange reserves, fsm, god, hindustan times, india, pakistan, rmb, suicide bomb, terrorism8 Comments on Thank God for the economic crisis

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