TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Brahma Chellaney describes China’s world position:

That approach became more marked with the global financial crisis that began in the fall of 2008. China interpreted that crisis as symbolizing both the decline of the Anglo-American brand of capitalism and the weakening of American economic power. That, in turn, strengthened its two-fold belief – that its brand of state-steered capitalism offers a credible alternative, and that its global ascendance is inevitable.
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The biggest loser from the global financial crisis, in China’s view, is Uncle Sam. That the US remains dependent on China to buy billions of dollars worth of Treasury bonds every week to finance its yawning budget deficit is a sign of shifting global financial power – which China is sure to use for political gain in the years ahead.

The amusing thing about the U.S.’s complaints about China’s currency policy is the vast sums of dollars it results in for China are used to fund our drunken borrowing. Biting the hand and all that.

Chellaney is correct—China views this as the moment where they begin to pull ahead of the west in global power.

Our refusal to recognize the role government power played in the 2008-09 financial crisis only strengthens their position. We continue to try to fix our economy through government control (government spending as stimulus, home buyer tax credit which only delays the inevitable home sales contraction, prolonged low interest rates, and ridiculous amounts of borrowing to support it) under the illusion that the financial crisis was merely a resort of free markets, and thus can be controlled. All the while we are granting the Chinese Communist Party’s basic premise that capitalism must be directed by an authoritarian government hand for the benefit of society, and borrowing our way toward future disaster. We are losing our philosophical and financial edge.