I see the current debacle as affecting many of the rich more so than the poor like us! They have borrowed heavily and will suffer massively. Those who sold to them, however!!!

Excellent post, as usual!

Europe built up substantial wealth and funded its many colonial adventures off the backs of child labour and sweatshops – so why shouldn' they?
We weren't exactly saintly in our dealing with them either – didn't Eng/US go to War with China to basically force drugs on them in the 1800s? Why should they feel the slightest compunction about selling us dodgy toys etc?
And many chinese workers may feel its ok to suffer through appalling work practices for the idea that their own children will not have to.
The problem is if as Jim Rogers says they are looking at the American way of life and saying I want that – someone else is going to have to be them now? I don't want it to be MY grandchildren. I do not beleive there are sufficient resources on the planet for us all to live like 'the girl next door' of Amercian movies. I do however beleive that there are enough resources for most of the worlds population to live healthy dignified lives.
This is not a problem that can be solved at the state level. State to State interference gets interpreted, quite understandably as colonial paternalism part II.
Howdever, for now, most manufacturing in China is outsourced from Western Co.s – these companies cannot cry paternalism, nor can they invoke an oppressed past. While we still can we must shame and use every means to coerce these Companies into the humanity – the personhood they wish to claim for their legal advantage.
So many science fiction novels got it wrong – they thought robots would be the soulless but sentient monsters able to wreak havoc – wrong – that would be the Megacorp. But we, each one of us controls part of the Megacorps food supply. We have to train them like the beasts they are, play nice and you get your dinner, shit on the carpet and you get ignored in the corner.
So many times we are threatened and coerced by the spectre of MARKET FORCES, as if they are some inate inhuman thing. We need to take back the notion that we are the market and the market can only be as unhumane as we can be ourselves.
End of homily. Go now in peace from the Church of Fair trade of St Rebecca and spread the word.

W
However

I agree with you about the vulnerability of the banks due to leverage and fiat money. Moving money from those banks is exactly where they are most vulnerable.

Whistleblowerirl,

I didn't know that about the Chinese policy banks comparison with World Bank lending. Thanks.

It is exaclty what you would expect them to be doing. China has all that US debt – why not put it to use US debt to undermine US influence? Perfect policy. 800 billion dollars of debt bought by the Chinese is now being used to undermine America's power and influence. The same will go for our debt too.

China banks lend more than World Bank –

"Two Chinese state controlled banks have lent more to developing countries than the World Bank, according to a report.

The China Development Bank and the China Export Import Bank offered loans of at least $110 bn (£69.2 bn) to governments and firms in developing countries in 2009 and 2010.

The research was undertaken by the Financial Times newspaper.

Between mid-2008 and mid-2010, the World Bank's lending arm issued loans of just over $100 billion(£63bn).

The two Chinese banks do not publish a detailed breakdown of their overseas loans, so this research is based on public announcements about specific deals from them, their borrowers or the Chinese government.

That means the figure arrived at for the amount of Chinese lending is more likely an underestimate than an overestimate because some – more sensitive – loans will not have been made public.

The Chinese lenders are so-called policy banks – they have a mandate to further whatever Beijing sees as its national interest.

One of China Development Bank's specific tasks is to try to alleviate and, where possible, eliminate bottlenecks in supplies of raw materials or land for China's economy.

…The Chinese government, which is sitting on $2 trillion (£1.26 trillion) of foreign exchange reserves, has ample amounts of cash to fund loans which help promote its strategic objectives."

http://www.bbc.co.uk/news/world-asia-pacific-12212936

http://www.ft.com/cms/s/0/488c60f4-2281-11e0-b6a2-00144feab49a.html

Regards,
http://whistleblowerirl.blogspot.com/

Legal, elegant, quiet but devastatingly effective.

Withdraw all savings from major banks. Open accounts in small local banks or cooperatives if you must or just hold on to the cash. Close all credit lines. Pay off all debts. If you really want to push the boat out, invest US$50 (fifty Dollars US) to buy one coin and one ingot each of gold and silver.

Of course. This course of action does not come without consequences. But these are consequences that impact your life style rather than your life or that of the more excitable segments of society such as students.

Crash the banks and paralyze the political class.

Incidentally, if we don't do that, the likely outcome is a war of global proportions. Not because there is some foreign evil that resents our life style but because our leaders know that this is the end of the road and the money (credit) is finished. If anyone is threatening our life style, it is our leaders.

Lets crash the banks and make our politicians accountable.

Luckily for us, when the efficiency of DBFM is next to zero and due to the magic of fractional reserve banking, we, the little people, have infinite leverage against the establishment. Leverage that is thoroughly legal thus safe… although if the dutch have anything to do with it, even this avenue may not be legal or safe for long:

http://www.zerohedge.com/article/guest-post-legislation-proposed-criminalise-calls-run-bank

Society only begins to feel the tangible effects of this transition when credit markets begin to shrink. Shrinking credit markets mean shrinking social expenditure which must necessarily be accompanied by a curtailment in personal economic and personal freedoms.

This is when social unrest and, eventually, revolution ensue.

Once more in bullet point format.

As shown by Tobin's Q or by the Money Multiplier, there is such a thing as the efficiency of money.

Debt Based Fiat Money (DBFM) is predicated on inflation.

DBFM has a diminishing marginal utility which must necessarily result in gradually waning economic and political power. Thus DBFM within an open society based on democratic principles must mathematically result in a statism with a heavy corporatist component. Call it the China Syndrome if you will.