Free The Animal

Whatever you may think of it, the simple reality is that China is fast becoming the financial powerhouse of the world and they’re partly responsible for saving our financial ass. Here’s a 60 Minutes segment that gives quite an overview. You can judge for yourself, but I instinctively like the guy. He seems pretty forthright and talks good sense. “It’s our policy not to control anything,” Gao said. “So you’ll put a lot of money in a foreign company, and not even get on the board?” Stahl asked. “You’re right.” “Why?” “Simply because we don’t want to go in and say, ‘OK, I think you should change this person or I think you should change this product line,’” Gao said. “That’s not our business.” Investing is quite a different animal from management. Here’s the standard Churchillian logic for the maintenance of peace between nations. “What if our two governments had a serious dispute?” Stahl asked. “Over Taiwan?” Gao asked. “Yeah. Now could your government come in and say to you, ‘pull your money out now?’” “It could be. But I seriously doubt that will happen. “It would hurt you, too,” Stahl said. “Definitely,” Gao said. “It would hurt me. Hurt…

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It’s an interesting thought, with some interesting aspects that add up to a certain logic about it. Asia could well be the vanguard for a new gold standard because of internal dynamics. China is exemplary in this regard in that Chinese citizens regularly save as much as 40% of their personal income. This is in large part due to the lack of a safety net in China. There is no Social Security, no guaranteed medical care, no pension benefits and so on. Many of China’s less-connected citizens seem as likely to bury their wealth in a shoebox as put it in a bank. This mindset strongly favors a physical, storable asset, like gold. Bring it on. You can already buy gold, either physically or various financial instruments and funds. It would be a pretty simple matter to create a currency, units of which could be stored in an account. You could even then have a debit-card tied to the account, cleared through Visa or whomever, and then use it for purchases, the exchange to whichever currency you made your purchase in being effected at clearing. The result is that your monetary assets remain in gold up until a microsecond before…

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The world’s 20 largest companies.

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