Does China Own Africa?

By: Scott Nelson
Staff Writer

The Gulf News reported this morning that South Africa has barred the Dalai Lama from attending a peace conference there later in the week.

The reason? Officials cited their relationship with China.

For years here at the Global Affairs Council, we’ve noted that China has quietly but systematically enacted a policy of engagement with Africa. From Chinese emigration and small business ownership all the way to long range state-sponsored natural resource contracting; China is moving into Africa in a major way.

Today’s announcement by South African officials shows exactly how much influence China now exerts over the region.

Why should we care?

The future will depend more and more on Natural Resources, there’s simply no question about it. As the country that burns through natural resources faster than any other country, Americans should care where their next “fix” is going to come from.

And while we twiddle our thumbs, China has quietly sewn up large sections of the world that contain the very Natural Resources we’ll need in the future.

It may not be malicious, exactly. With over a billion citizens, China desperately needs natural resources in a major way. It’s not like they’re tying up those resources just so the United States can’t get them.

But the fact remains, malicious or not, the resources we need may not be available in the future.

For years the United States has systematically ignored all things African. It’s time we woke up, before it’s too late.

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March 23, 2009 | Filed Under China, Economics, World Analysis | Leave a Comment 

When Will The Bank Nationalization Madness End?

By: Scott Nelson
Staff Writer

The Obama Administration is said to be in talks to Nationalize several large
U.S. Banks, or at least increase their stake in some of them (such as Citi).

We here at the Global Affairs Council have wondered with growing unease for some time at the Government’s intentions in this area.

Hopefully I don’t need to go into a discussion of why the Nationalization of banks is a terrible thing. We’ve commented in the past that the Government is not equipped to run a bank and would only make matters worse. Many government officials probably couldn’t even get an interview for an entry level job at a large bank, let alone run one.

Why, we wonder, doesn’t the Government simply create several new banks and loan all that money to them?

The old banks have failed, we should let them die.

The only reason we can’t do that is because of the risk of contagion and the further tightening of the credit markets due to fear of other banks collapsing.

But! If the government created several new banks (and by “created” I mean grant charters to independent private individuals not affiliated with the government in any way) and then loaned all those billions to them, there would be complete transparency. We, as investors, would KNOW that those new banks don’t have any toxic assets that could potentially wipe them out.

That would completely remove the fear that would have lead to contagion.

Investors would feel comfortable investing in these safe new banks, businesses would feel safe conducting business with these safe new banks, and the public would feel comfortable keeping their savings in these safe new banks.

The major banks have failed. Criminally failed. Banking is an incredibly easy business. You take in deposits, you save a percentage of those deposits and loan the remaining amount out, and your profits are the difference between the interest rate that you pay the depositors and the interest rate you charge the people whom you make loans to. Easy.

The fact that these major banks have screwed up something that is so fundamentally easy is all the proof we need that they should be allowed to fail. Remember the old view of the stodgy banker closing shop at three in the afternoon and playing lots of golf? There’s a reason that stereotype used to exist…because banking is a sleepy, easy profession.

Let’s stop trying to rescue banks that can’t be rescued, and SHOULDN’T be rescued. Lets let some new blood into the system and put this madness behind us.

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February 23, 2009 | Filed Under Banking, Barack Obama, Economics, Government Intervention, Nationalization, Recession, Russia, Uncategorized, World Analysis | 1 Comment 

Adam Smith Told You So…

By: Linda Beso
Staff Writer

There was a great article today in the Financial Times by P.J. O’Rourke titled “Adam Smith’s Last Laugh”

I urge everyone to read it. It discusses the fact that nothing in this current recession is new. Adam Smith expected and described this exact course of events hundreds of years ago, and explained the exact way to deal with it.

What was Adam Smith’s prescription for saving the day?

Do nothing.

In a capitalist system, when things become overpriced (think BUBBLE), the market reacts to drive prices back down.

We are seeing this today. House prices got too high, now they’re dropping faster than you can say the words “misconceived stimulus package”.

This drop in home prices is painful for homeowners. Tough luck. You shouldn’t have bought a house you can’t afford. It’s not the government’s job, according to Adam Smith, to help you out of that mess.

“But”…you say…”people will lose their homes, and we just can’t let that happen!!”

Of course we can. The people that lose their homes will just have to…*gasp*….rent.

Throughout history we’ve seen crises upon crisis just as bad or worse than this one. Think Tulip Mania. In each case, the only thing to be done was to let it work itself out and NOT let the government muck it up. Or as O’Rourke quotes Adam Smith as saying “I have never known much good done by those who affect to trade for the public good. “.

We couldn’t have said it better ourselves…

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February 11, 2009 | Filed Under Economics, Government Intervention, Recession, Stimulus | Leave a Comment 

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