Monthly Archives: March 2014

Front-Peace Evolution

The Xi Jinping administration will be obliged to restrain a number of the unemployed desperately until April, when the average minimum temperature of Northern Chinese mainland exceeds 0 degrees C. If people were left under freezing weather at night, it would be inevitable to cause deaths and riots.

On the other hand, on February 27th, 2014, North Korea tested short-range missiles onto the Sea of Japan. Furthermore, they fired two more on March 3rd, 2014. The Media say that those are for protests against annual-joint military exercises carried out at the same time by South Korea and the United States, but this is an “official” excuse.

Until recently, Beijing government did not have control of the Shenyang Military Region; the most powerful armies in China in practice. However, when wealth management products (WMP) of shadow banks, which are practically owned by PLA officers, defaulted with a burst of bubble of Chinese economy, President Xi started to restrain PLA by the meaning of saving shadow banks if armies swear to Beijing central. President Xi seems to be about to succeed in controlling the Shenyang Military Region that had been his most serious concern.

Its evidence was soon confirmed. Chang Song-taek – the second powerful leader of North Korea was arrested on December 8th, 2013 and was shot to death four days later. Chang had served as a liaison between North Korea and the Shenyang Military Region, but as nothing reaps benefit to North Korea from Shenyang anymore, he became useless in North Korea and got purged. Originally, North Korea was an obstacle for Chinese Communist central, but they had done nothing for fear of a Shenyang-betrayal.

From now on, there will be replacements of the officers of PLA by President Xi. North Korea, which can no longer be under the protection of, will take more actions to “make tensions”. It would be quite no problem if Chinese Communist central can directly control the colony, North Korea, but there is no power left behind.

The cause of this is because U.S. dollars around the world will be tapered by U.S. monetary tightening. Countries where dollars can flow are only Japan which is not in bubble economy and Germany – one of the powerful countries. Therefore, if the bubble bursts, China will face enormous bankruptcy of private companies and some of the unemployed will turn into mobs. If China confronts with that situation, Central Committee of Chinese Communist Party will have to be concentrated on efforts to maintain the regime. Then, they cannot afford to take consideration of the colony, North Korea anymore.

Nothing can be foreseen if the Shenyang will step into Beijing with the belief of Maoism again, or will go across the Yalu River to invade North Korea or not. However, synchronized with the collapse of China, I think that the Kim Jong-un administration will fall apart because North Korea is struggling with hunger even now. Therefore, starving North Korean nation will go across the 38th parallel, rush into South Korea, and end up being refugees.

In whatever scenario, unsuspended tapering of monetary tightening by U.S. will inevitably swell a number of the unemployed in Mainland China. As Federal Reserve Chair Janet Yellen stated at the hearing in a Senate Banking Committee on Feb 27th, 2014 as “the bond –buying program is likely to end in the fall”, I think that the collapse of Chinese economy will be soon apparent until this season. As a result, the independence movement will get more active in surrounding regions including Xinjiang, but these are internal problems of China.

As PLA is the army of communist and not national one, the possibility is extremely high that corrosion and collapse of Central Committee will turn into a civil war among Seventh Military Region. If so, U.S. must deploy V-22 Osprey to rescue its citizens and majority of them will evacuate. But Japanese government has to observe passively according to the principle of “non-intervention in internal affairs”. So most Japanese will be forced to turn into non-returnable refugees and many lives will be lost.

Of course, payback of all investments from Japan to China is impossible, and as for IT industries, all of the offshore offices in China are going to be collapsed. Japan “taking peace for granted” in 70 years since the end of the Second World War is to blame for those subsequences. These are what the media never broadcast and history education led by Japan Teachers’ Union is not being honest to either the truth or the reality. Now, Japanese should stop being brainwashed and have correct historical recognition as what is said by China and Korea, not like being in neutral.


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U.S. declares war against China

On January 18th, 2013, Federal Open Market Committee (FOMC) which determines monetary policies of Federal Reserve Board (FRB) led by Benjamin Bernanke – Federal Reserve Chair at that time, decided to taper Quantitative Easing.

From last September, FRB started Quantitative Easing program 3 (QE3) and bought up 85 billion U.S. dollars of financial assets a month – 45 billion dollars (4.7 trillion yen) of Treasury bonds and 40 billion dollars (4.2 trillion yen) of Mortgage-backed securities (MBS) – from the market. As buying up refers to “a lot of money is flowed into the market”, this was called “Quantitative Easing”.

However, at the committee meeting on January 18th, 2013, FRB decided to reduce monthly Treasury bond purchase to $40 billion ($5 billion less), and MBS to $35 billion ($5 billion less), starting from January 2014. Therefore, the amount of monthly purchase is reduced to $75 billion ($10 billion less). Janet Yellen; vice-chairman at that time, was inaugurated after Bernanke in February 1st, 2014, and pledged the continuity of “tapering quantitative easing policy” at U.S. Congress.

I think that this event became more than a matter of the internal U.S. economic policy, the U.S. declared war against China by the Obama administration’s will. Same as the Reagan administration led to the collapse of the USSR by starting the Cold War, the U.S. declared another Cold War against China.

The military gain came out immediately. Though February 6th, 2014 was the last day of the Spring Holiday, the wealth management product of shadow banking charged before the Chinese New Year was bought out by third parties through intermediation of the People’s Bank(central bank), in order to guarantee the principal to investors. Thereby, the Chinese government barely avoid the collapse of the Chinese Communist Party’s authority.

U.S. dollar is global key currency. The effect of U.S. monetary tightening spreads around the world. The foreign exchange reserves of China will run out eventually as $10 billion is “ebbing away” each month. In fact, the outstanding balance of the wealth management products by shadow banking is assumed as 20 trillion Chinese Yuan. This amount is equivalent to the GDP of China – this is absolutely a bubble.

If interests and principals no longer came back, no one would invest in the wealth management products. If that happens, the Deng Xiaoping line since the Southern Tour Lectures will soon get stuck because money doesn’t flow into the markets. The Chinese Communist Party has turned the 3,000 of shadow banks into “Official banks” but instead, “Official banks” must obey what the central party says.

However, that is not so easy because banks are based on collecting funds and lending money. Currently, Chinese private companies cannot borrow money from the national banks. Therefore, those companies borrow money from the shadow banks – the side jobs of People’s Liberation Army officers, but as I mentioned before, President Xi Jinping imposes a tight restriction on the shadow banks and carries out policies to control the People’s Liberation Army.

This apparently derives from the fact that Obama and Xi made a secret agreement when Xi visited the U.S. just after he took his office. The U.S. has deployed a half of commissioned nuclear-powered aircraft carriers to the Seventh Fleet and has been watching Chinese movement if the promise is being kept or not. If confusion occurs, V-22 Osprey capable of reaching the inland of China will fly from the deck to save U.S. citizens and prevent the launch of their nuclear missiles.

As the U.S. has changed a monetary policy, the bubble in China surely bursts. The private companies will be on the verge of bankruptcy because money does not flow through cities. Estimated 200 million people to be unemployed from 3 million companies, over 40 million people would turn into mobs in each place for saving their own lives. The collapse of the People’s Republic of China begins. In the next article, I would like to think about what happens next as a result of this.


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