“Currency Wars, IP Trading Blocs, and the Rising China Price: Global Economic Predictions”

with Mark Anderson; interviewed by Michael Copeland, Senior Writer, Fortune magazine

Mark: Japan will do anything it takes to push their exports out. “If it falls outside of the policy, the government will come in and buy or sell more currency. China is this policy on steroids– constantly updated. Other global leaders are equally fed up with this constant intervention to help their people.

It’s much easier to cheat on the test than to actually study. It’s much easier to fake your Forex values than to actually change your GDP. ”

Every nation is doing it. Now America is doing the same thing. BUT Bernanke is doing one good thing– trying to make the banking system fluid again.


Mark: 1st attempts by Obama admin to recruit interest based on military build-up for fear. These countries have been willing to include the US as mediator. Germany’s against it. This will settle out for a while, because China is reinforcing their military, 18% compound interest, etc. The world is hoping China will agree to engage in dropping growth rates; won’t care about lost Chinese jobs, because they already lost those jobs TO china.

APEC publicly spoke out to China; strong message that they were out of control, as that never happens. “As old as it is, it’s a young country.”

Will the US dollar still be the currency of the future?

Mark: China wants a place at that table.” But, even when we shoot ourslves in the foot, the investors of the world feel more confident that that investment in dollars is politically safer than elsewhere.

Coming up to large world events, China generally does something active.

Michael: Obama did not work away from Korea with a trade agreement; deal for cows and cars. Is that about congress?

Mark: South Korea isn’t interested in buying our cars; never have been. This is part of the baseline economic policy for Korea. They’re mercantilists. Detroit isn’t ok with this.

Unneeded spending in Iraq during the last administration; earmarks. Karl Rove plan- starve the beast- program that transfers all the money to your friends, then force the deems to cut programs when they come into office.

“I think the bush administration will be remembered for transferring the largest volume of money from the federal treasury to the private sphere”

Chances of this really working are zero; very dangerous tool.
They aren’t using this because of currency wars. It’s because the bank system isn’t working. We are a consumer driven economy, but the bankers aren’t lending money and they have no intention opf doing it.

They’re switching to fees, rather than lending. Which is also because the balance sheets are so sick.

In 2007 and 2008, banks were having problems, but they’re still on the streets. That’s the point of the $600 billion.

Michael: What other spheres are together in terms of policy?

Mark: in terms of currency, no one likes China. This is good for the POTUSA to create trade alliances, when everyone is mad at china.

Long-term trend: if ip is really the cornerstone of modern civilization, you cant be as blase about it as you have been.

1/5- 1/4 of companies outside of China made a profit. This isn’t good. Microsoft has been surprisingly complacent.

Where is AU?

I love Australia– better than canada in terms of investment, top chinese trading partner, fact that you’re in a resource extraction scenario is just what china wants, protects IP for those wanting to trade with china, but protect their IP. “I think there’s a long-term good story there. And they’re really focused on tech” Reinvesting the broadband network into 1:1 computing.

Longterm willingness to prepare for the future.

Q: Steven Sprague: Without getting too far into protectionism, should US corps stay inside of their own countries?

A; Yes. They’re investing, not being patrious. China, Japan, South Korea have done great things by stealing all fo our IP, but now the other countries are getting tired out. We should reach across the water to China and point out the unsustainability of their practices. The Chinese will see that this is true, but the question is how long will take for them to come around.

There are two sets of stories about Japan. 1. Poor Japan, in depression for 20 years, etc. 2. Biggest investor in China, leader of 4-5 industries, making money off of China (according to Toshiba)

Where is the cash? Somewhere off-shore We need to have real conversations with all these countries to move forward.

Q: Virctor Perton: What would you do to redeem the depressed parts of the US?

A: No currency manipulation. No lying to people of the US. Stop allowing unfair competition. This is really simple, but it takes backbone.

We tend to feel like we’ve lost our edge, our way because the media makes us feel worse off than we are.