In today’s report on Von Rompuy’s meeting with David Cameron yesterday, there was a hint of something rather interesting.
Cameron also met European Council President Herman Van Rompuy. During his visit to Downing Street, Van Rompuy warned that China’s decision to buy bonds issued by weaker eurozone countries could be driven by “political” motives. Following the meeting, Van Rompuy suggested that eurozone leaders should be able to meet separately, preferably on the sidelines of European Council summits.
Now what did all that mean? Has China decided to mirror the role of the Western Central Banks. Instead of funnelling all her reserves into US Treasuries, to prop up US power, consumption and thereby her own export markets, are we seeing a hint of a change? Von Rompuy certainly can see such a thing.
China realises that the American empire, like all others that came before it in modern times, has been built on the power of central bankers to issue money from nothing, and then charge interest on it, and exert enormous political power. The Fed has been issuing QE again since November at around $100 billion a month, but all, it seems, of the money is finding its way into asset markets, propping up the balance sheets of America’s debt-ridden Wall St behemoths, desperately trying to avert the next Lehman Brothers. There’s not much left over to bail out the PIIGS.
China has a ‘little’ dry powder left, and could, of course, be starting to issue ‘new’ money of her own internationally, as western central bankers have done for centuries. China is offering to use her financial muscle to bail out eurozone peripheral countries, and that, of course will raise Chinese influence in Europe hugely. It was American money via the Marshal Plan that enabled America to control European politics after the war. China seems to be scenting a similar role in helping the support of peripheral eurozone countries.
If now, the Chinese and Japanese see that western finances are hopelessly overstretched, and that they can start to issue the funds that peripheral western economies need, they in turn will establish enormous political power in these countries, replacing the Americans and the EU, as the saviours of last resort.
No wonder Von Rompuy is worried. He knows that the only basis of his power is money, and his final backers, the US Fed, and the BIS have less resources available than they need.
Maybe David Cameron will turn to China and Japan to help Sterling, when our debts hit the buffers of market acceptability. The terms of our bailout from the Bank Of International Settlements in Switzerland, the parent of the IMF, would, no doubt, be to become members of the eurozone. The terms from Beijing and Tokyo might be very different ones, and possibly more palatable to Britain’s electorate. Keeping the western countries more independent from each other, and less of a monolithic bloc would surely be preferable to China and Japan.
It sounds from Von Rompuy’s tone we haven’t seen the last of Asian financial ‘imperialism’, and a willingness to nudge countries out of the eurozone periphery, and help keep the western nations independent of Von Rompuy’s One World Government, of which his sector, the EU, is only a branch.
Dan Hannan writes on the same subject with a similar interpretation, though, to me, not an entirely convincing explanation.