Thursday, December 30, 2010
Two “Ms” Will Help the USA/G-II
During the global financial chaos, Australian Prime Mister Kevin Rudd stated that China could help strengthen global financial stability. “The current instabilities that are concentrated in the U.S. should not be taken as a signal to China to retreat from integration and globalization (Japan Times, October 7, 2008).” Similarly, Larry Summers, the former US Treasury Secretary, called that China (or Middle Kingdom) and the Middle East states would be “the balance of financial terror.” That is, two “Ms” (Middle Kingdom and Middle East states) will be the major creditors to help the USA. Currently, the Middle Kingdom controls $518.7 billion, and equal to about half of the total $1.2 trillion of foreign reserve assets. The oil-rich states are also snapping up T-bills in the amount of $173 billion. By far the biggest chunk of the debt is still owned by the Japanese, about $593.4 billion (Independent, 5 October 2008). Today, we have global financial system (meaning Wall Street can effect every financial system in the world), however; we do not have the unified governments (meaning every country has different financial backgrounds). Therefore, we can not have a unified solution during this global meltdown today.