Will China be strengthened by adversity?

Just to stop the current run of first postings...

China could face severe civil unrest during the current downturn, to the extent that it will put them squarely at odds with the West with regards to their civil rights actions.

Wales to China, what an exciting life you lead, getting to go to Wales I mean.

This is going to be an interseting set of articles, which will hopefully bring home the scale of the global economy and the effect of its current woes on real people.

We look forward to more.

Thanks Robert.

"But for most of the companies here - which make stuffed cuddly tigers, glittery fairy stickers for little girls, non-stick pans and hand-made cuckoo clocks - the big fact of life right now is the shrinkage of the US and European markets."

Says it all really. The measure of progress/growth is whether someone bought more cr*p than last year.
Sigh . . we are all doomed.

Hi Robert,

I hope somehow you can turn this trip into a series of short clip of videos or a BBC program. It's better for me to actually see the condition than reading from your vivid description.

Regards
Joe

It is too easy to forget that the real long term issue is not economical sustainability but environmental sustainability with such a large centrally managed economy. China has proved it can play the post free market global capitalism game as well as anyone but it is not what the World needs.

There is not much to admire about the Chinese model and absence of political and democratic rights is no less important than the widespread exploitation of workers paid (in the Computer Weekly quoted example) 41 cents an hour for keyboard assembly with little welfare provision to compensate.

I would value a series of articles by Robert that gives a balanced view of the so call Chinese miracle!

How will the goverment cope with you in China.

Look out for all the bad news stories comming out while every is arguing about bankers pensions and Robert is on the other side of the world.

Chinese Sunglass Manufacturers will change output now, producing even more disposable umbrellas.

Let a thousand tinsel fairylights bloom INSTEAD.

What has happened to the legacy of the Gang of Four ?

What was it all for !

We are all drumming our fingers in the dark.

Chinese takeaway anyone ?

In the long run, China's rise and rise is unstoppable.

But in the short-term, a setback, even if only a 'blip' in the greater sceme of things, will be disproportionately damaging for them.

The 'communist' government's compact with its people is: you keep your heads down, work hard, and don't get involved in politics - and you can become wealthy. The people have seen this more-or-less coming good for them: they will all know someone who's made a lot of money.

But when the reward is (temporarily) no longer there, the lack of a regular political outlet / democratic safety-valve will manifest itself in violence. it's already started.

This was predictable - indeed, predicted - more than a year ago, when it became clear that 'de-linking was a myth.

Don_Kuan: Or perhaps do a Twitter thing like Stephen Fry does on his "Last Chance To See" trip with pictures and video clips?

Robert, the most important thing for the world is whether China plays with its currency or not.

If it holds the Yuan down, then we could have a world wide depression. On the other hand, if they buy gold and stop buying US treasuries that will also cause a depression.

China holds the key to what will happen in much of the world over the next few years.

it needs to happen fast, things are coming apart at the seems in the UK

Should be enlightening Robert.

Its funny to see how successful organisations and now countries, such as China, are so often 'knocked' for being so successful.

Criticisms of China include, environmental, poverty and rights issues.

No-one stops to think without China to trade with, not only would Chinese children be starving, but many in African countries with new Chinese involvement.

Our (UK) answers have been not only to criticise, but put sanctions in place in Africa, which are meant to bring unpopular (with the British Establishment) governments to heel, but instead simply destroy that nation's ability to trade and fend for itself.

We then criticise China for trading with those nations, giving them money in exchange for goods. Some does find its way to the poorest, even in sanctioned countries, despite what our Gov says.

To state that China should put its rights issues first, is to not understand anything.

The UK was (and in some ways still is) just as poor in its 'rights' records when waging 'trade' and 'opium' wars in the Far East and Africa during the previous centuries and now, when we look at how British society is still struggling to eradicate even the basics such as 'child poverty' and some workers legal rights to a minimum wage and hours standard. We can't even manage to regulate our own financial systems and yet we are quick to point to developing world nations and 'shout about corruption' and 'good governance' or 'accountability'.

We then have the cheek to call ourselves civilised and criticise nations such as China.

I look forward to China becoming, not just another ruthless world superpower, but perhaps a wiser global central member of the world banking and trading systems.

After all, China was trading long before most Anglo Saxons climbed out of the caves!

Finally, without powerhouses such as China, we'd still be in the 'dotcom' recession of the late 1990's and all those flat-screens, computers, broadband devices, kitchens, appliances, solar energy devices, for example, that are now deemed to be 'lifestyle essentials' just wouldn't exist.

p.s. the idea of video clips sounds great to supplement 'Peston's China' (sounds better than Peston's Picks!

Will China reduce its reliance on low-cost, low-skills industry and will the government put in place a social security and tax system that delivers a less unequal distribution of the fruits of growth?

Have you already decided the ills within the Chinese economy? Pre-conceived ideas trumpeted as a mantra in the West may not be what you find if you manage to actually get into the chinese system.

Surely China should become an economy that supports itself and isn't run for the benefit of those western nations who have exported their manufacturing to this cheaper industrial climate?

Hope that you enjoy your trip to China

Have you left a capable deputy here to comment on everything here or are we all safe because Crash is off to party with Obama?

...as does whether or not their central bankers - as well as a handful of other central bankers in the far east - continue to keep the western financial system from falling off a cliff by buying our securities and the store of value in our currencies. We are indeed in uncharted territory Robert, but in more ways than one.

It is inevitable that in a recession manufacturing is hit. The only difference is that we have outsourced it to another country.
It doesn't stop it being Gordon Brown's fault!

There is one very important thing that Robert has overlooked is the price of commodity has fallen dramatically. Things like gas, oil, steel, etc, is now much less than they were this time last year. When the world economy was riding high commodity price was very expensive and China was the biggest buyer and often had to compete with other countries to get them. Now that demand and prices has fallen the Chinese are snapping them up at a bargain and nobody is competing with them. The recent trips by Chinese leaders in Central America, Middle East and Africa is to secure business contract for natural resources at a discount to China.
Some say the current economic crisis was instigated by China, if it is true then buying up commodity for cheap could well be a very good reason.
If things gets too desperate the Chinese can always deamnd back the $2 trillion it has in US bond, that could end USA as a superpower overnight but also the collapse of the world economy.

Robert

I think it's a no brainer.

They will develop their own internal economy to produce more stability.

They will establish more of their markets in economies that come out of the depression fastest.

Once these are established they will not be reliant on the "developed economies"

At which time

What price the green back as the reserve currency?

What price Trillions of Dollars of US treasuries?

What price the UK pound?

P.S

Can you look into something that is just appearing on the radar?

US Judges are asking for the original note before foreclosing on US mortgages.

These notes cannot be provided as they have been packaged up in Mortgage Backed Securities.

Do the UK banks hold a lot of US MBS?

As UK tax payers are we now exposed to all of the UK housing bubble and to the cost of all of these US mortgages that cannot be foreclosed on, held by UK banks via MBS?

If so then we really are in huge trouble.

There is a 1 day conference in Cambridge today:

"Will the Credit Crunch hit Asia in 2009?"

Sometimes I don't know what economists are smoking. Do we have to wait for countries to collapse like Eastern Europe to acknowledge how deep the problem is?

Asia will definitely be hit and hit the Hardest! It has none of the social and economic resilience that was built up over decades in the west.

Spawning poverty and widening gaps in social equality, massive unregistered job losses, unreformed laws and constitution...

"Will the credit crunch hit asia?"

the question is:

"why are our economies managed and studied by these people?"

With R.P.'s change of focus to China, I'm sorry but I just can't help but think how some of the 'failed' bankers in the US and UK (the Sir F brigade) would have faired under a Chinese Government?

I wonder what their "reward" might have been?

I somehow do not think it would have been a big fat pension.

Of the products you mention, non-stick pans might actually be considered real. The rest are frippery at best, environmentally harmful and socially unnecessary. This is surely the kind of "manufacturing" that needs to die off. Its purpose of economic return is too remote from its purpose of actual usefulness.

What the socio-political consequences of the correction will be, who knows, though if history is anything to go by, they will include uprisings, the disintegration of civil society (another "Warlord Era", anyone?) and war (my money would be on Russia to divert attention from its internal ills by a foreign adventure or two). It isn't going to be pretty. Still, at least there won't be too many people wasting their time, money and resources on electronic back massagers.

Robert,

'all those glittery fairy stickers' are essential items here in the UK.

Didn't you know? Downing Street has placed big orders.

GB, AD and especially Mandelson, love them.

They're great to 'gloss over' any issue especially the cracks in the economy, the banking system and our issues with China.

We've been told the (global) problems started with America in America.

Well, as Flash is in America, shouldn't we change the locks and leave Flash there?

He can get a job with his pal, Tony, at JP Morgan - at least he won't then add to the jobless stats in the UK when he is not elected next time!

If we change the locks, perhaps the problem (himself) won't spread so badly around the world to China and they (and we) might all be spared more misery and pain (of another Labour term in office)!

Are you really there to 'follow' the money Robert? Will noone in the treasury tell you where the government's money is coming from, so you're following a hunch?

The Chinese economy is very interesting, but did you have to go there, right now? Were there not enough stories for you to tell about the UK business situation?

I appreciate that, as business editor, you need to investigate all kinds of stuff, but a jaunt to China? We know their exports are our imports, that their currency is low, but frankly, I'm more concerned about happenings here than there.

Oh well, enjoy your trip. I'll be off to other blogs for a while.

Hey, Robert, you forgot to mention that the US has awarded China eminent domain of its assets.

This is vitally important because its one of the reasons that China might go to war against the West -- to recover debt we deliberately defaulted on.

Hi Robert

China is experiencing widespread drought at present which will probably lead to harvest shortfalls.
I understand the Chinese Govt. is buying food (wheat etc) from other countries, many of which are themselves experiencing drought e.g. Argeintina, Brazil, southern and western USA etc.
Presumably the Chinese Govt. are anxious to avoid famine and civil unrest, but their buying capacity and needs could well impact price and supply for the rest of the world.

I also understand that farmers outside China have been affected by limited credit offered by the banks last year, so as to buy seed etc and that this may also contribute to harvest shortfalls and farm bankruptcy rates.

I'd be interested in your thought on all this and on also the price and availability of food generally on the global markets this year.
It is likely that several countries will see food shortages and civil unrest this year, whilst other countries see farmers going bankrupt.

sanityf4all #11.

Couldn't agree more. It always amazes me when western powers try to patronise what in their minds are evolving nations, businesses and peoples. How dare we do that when as you quite correctly put:

"The UK was (and in some ways still is) just as poor in its 'rights' records when waging 'trade' and 'opium' wars in the Far East and Africa during the previous centuries and now, when we look at how British society is still struggling to eradicate even the basics such as 'child poverty' and some workers legal rights to a minimum wage and hours standard. We can't even manage to regulate our own financial systems and yet we are quick to point to developing world nations and 'shout about corruption' and 'good governance' or 'accountability'."

Since when has our measure of success (now unfortunately crumbling around us as a testament to its abject failure) been the 'gold standard'. Please note that it is we who are dragging China with us, not the other way around.

"After all, China was trading long before most Anglo Saxons climbed out of the caves!" - and indeed will continue to do so once we have succumbed to a fit of consumeristic pique. They have evolved, i am not too sure if we have.

The west has much to learn from the 'so called' developing nations in survivability, resilience and adaptability. Where will we be when our 'Kwik Fit', 'easy sourced' life is unnatainable. I mean for goodness sake we dont even have mechanics anymore!!!

At least China knows it is a one party state unlike Britain which pretends its a demoracy.
China can make decsions without trying to be something it isnt, the UK makes decisions to save Browns political future.

Robert

Find out what they are going to do with their surpluses, other than wrap up Rio Tinto's ores and Brazil's oil/gas. Find out if they will buy Western debt issuance to pay for the US/UK bail-outs and stimulii?

China will one day switch from being a low cost manufacturer for the West, to being a designer and producer of goods with which it will compete against the West.

After WWII, Japan started off by copying western goods, such as British motorbikes and cars, and then succeeded in wiping out the British motorbike and car industry altogether. Where is Austin, Morris, Alvis, Riley, Rover, Hillman, Triumph, MG, Frazer Nash, Bristol, Jensen, Wolseley, Royal Enfield, BSA, Velocette, Norton now?

China is a beneficiary of the Anglo Saxon economic model which involves transferring productive capacity out of the UK in order to allow more room for financial services.

That won't work any more.

If there is to be any form of stable trade system in the future we need a level playing ground.

Manufacturers in China should be paid the same as other countries. Also, raw materials should cost the same for all countries.

Manufacturing company growth would then come down to innovation and quality and not price.

Innovation is what is needed to take us away from fossil fuel dependency.

Tell it like it is Robert (as only you can)
Can't wait to read it.

(matthew said)
In the same way, the last will be first, and the first will be last, because many are called, but few are chosen.

and if you want to be one of the chosen few
you've got to get ready

The wicked man, I know, will really never...
get away from the fire.
It is only good things last forever;
And there's my father's salvation.

What happened to the younger generation?
Led away by the boy called Satan.

How western leaders must be looking enviously at the Chinese model.
Whilst I'm no particular fan of Marxism, the idea of strong central control now seems attractive.
With western economies brought to a state of collapse by uncontrolled banks betting the crown jewels on hopelessly over-priced property, Chinese "control" is in strong contrast to our governments' lax attitude (officially known as "light touch").
"Light touch" now translates to economic meltdown, which probably can't be escaped by taxation alone.
China has a "real" economy, based on manufacturing and material output, whilst we mess around with City gambling and unrealistic property speculation.
Unfortunately for China, it is selling most of its' products to our duff economies.
The very nature of "money" is brought into question by this collapse, and perhaps governments should be looking for a new way forward. The Americans call it "voluntary simplicity".
As we can't "manufacture" our way out of this hole, what can we do?
The other problem now is that the low wages paid in other countries are encroaching more and more on the West, as the world gets smaller.
Will we always be able to work for £20 per hour, when the rest of the world will do the same job for £3.

Good to see you are in China. Hope you will also visit India before long. You have summed up most of the issues very clearly. Will you be able to assess whether and how China may evolve quickly away from its dependence on being the world's low cost and mostly low value manufacturer. How is it moving up the value chain? What about moves to increase the services component of GDP? What about China's own ability to develop, apply and protect its own intellectual capital? Hopefully too you will take a look at transparency particularly as regards ownership structures, the interface between private and public in this peculiar model of capitalism and the role of the state-owned banks. I for one am all for engagement with China and not for standing aside despite the obvious issues of human rights which cause othwers to stand off. Your assessment of regional issues both within China and the wider region-notably Taiwan- would also be interesting. Happy hunting....looking forward to what you catch.

"How it responds to these lean times matters to all of us".

You could level that comment against any country, government, industry or company.

And it will certainly sort the men from the boys.

I wouldn't be surprised if China makes a better fist of it than GB has done.

#7 "What has happened to the legacy of the Gang of Four?"

I presume you mean Blair, Brown, Mandelson and Prescott? ;-)

#25 "the UK makes decisions to save Browns political future."

Like a disastrous bank takeover because of a Scottish byelection.

#12 "Surely China should become an economy that supports itself ....."

So should we all - as much as possible. If we can make it at home, isn't it crazy to ship it half way around the world?

To PortcullisGate:

The original mortgage is not affected by packaging at all, so if you had the documentation before securitising you will have it afterwards.
Packaging really only affects the balance sheet status of a given mortgage.
If a mortgage sold to another finance institute or the servicer (who is taking the money from the borrower) changes and data transferred, well you might experience loan history loss, but not the original documentation (hopefully:)

How will it respond?

Like every other society in history for whom circumstances combine fortunately.

It will extend it's commercial, intellectual, political and military sphere as far and as fast as it can to advance trade and claim markets and raw materials. It will seek to secure it's trade routes - and will establish an empire.

How will it achieve this? Any way it needs to, just like we did. Will it care about upsetting any applecarts in the process? Er, no.

Will this be a problem for us (ie: the Anglo-Saxon hegemony that has existed since Trafalger)? Yep, certainly will.

Could we do much about it? Yes, we could but we probably won't. Like every other empire, we've had our day. it was great fun. But, what the hell; we can't be arsed any more.

Your description of the pointless goods that are so vital to the chinese ecomony leads me to a more fundamental observation.

Do our global problems not stem from the fact that in the modern world our ability to produce goods so efficiently means that only a few people are actually needed to sustain the essentials (food, clothing, etc) that we all need?

So what do the rest of us do? We invent reasons to work: we now have people making back massagers; marketing guys who make money by convincing us that we need back massagers; people making lots of laws so that we need lots more lawyers; too many insurance companies selling us insurance that we don't need, etc....

If we only produced the essentials (and were satisfied with only the essentials) then everyone would only need to work a couple of days a week.

Then we could all put our feet up!

I know this sounds a bit Utopian, I'm just trying to get to the heart of what were doing.... It just feels like were being driven like cattle: working more than ever and more miserable than ever.... For what?

36. At 10:38am on 02 Mar 2009, paroma wrote:
To PortcullisGate:

The original mortgage is not affected by packaging at all, so if you had the documentation before securitising you will have it afterwards.
Packaging really only affects the balance sheet status of a given mortgage.
If a mortgage sold to another finance institute or the servicer (who is taking the money from the borrower) changes and data transferred, well you might experience loan history loss, but not the original documentation (hopefully:)

XXXXXXXXXXXXXXXXXXXXXXXXXXX
paroma
Thanks for your answer.

It seems that the note holder has to come forward. So if this has been sold on and on who is the note holder?

https://www.nytimes.com/2009/03/01/business/01gret.html?_r=2&ref=business

Robert, please bring back a few of those electronic back massage gizmos and use them to apply a "truly horrible" massage to the brains of our Nu Labour politicians.

Also, bring back some of those robotic lawn-mowers and use them to run down the banking and FSA fraternity.

Might solve our problems.

Will certainly justify your trip to China.

:)

Robert, I can't see how China can be insulated from the mess we're in. Then again, having that strong state may well limit the sort of stuff we're enduring. I suspect there'll be political/cultural splits in the not too distant future if this global depression continues. I suppose what I'm saying is: who can predict what's going to happen over there, everything's up in the air at the moment.

This comment was removed because the moderators found it broke the house rules. Explain.

They've always got their rice and tea to full back on, which is more than we have, unless you count producing food to put in cars.

Robert I'm very pleased that you have left the incestuous hot-house that is Westminster politics for a little while and gone off to the Far East. Most of us are fed up with the bankers and bonuses story, though it is important too.

I think the short answer to your own question is a simple

YES, BUT AFTER A SEVERE BLIP

They are very vulnerable to the ongoing and huge drop in international trade and they will have internal hardship and upset, as will many, perhaps even most countries. But economic decisions are still largely down to central-planning.

So they put a stimulus package together in ?November and I believe that it is already under way in spending $80bn on new high-speed rail lines etc. Imagine how long it would take to get an infrastructure underway here, or even in the US!

They have also gone shopping and are buying up companies and assets all over the world; like a kid in the pick n' mix section of Woolies

So I would imagine that when the dust settles in say 5 years from now, China will have virtually caught up to the US in total GDP......

The world changes fast so it won't be that long before their emphasis will have moved away from making crap for Walmart to more complex and higher quality items

Whilst you're there I'd be very interested to hear what you can gather about the strains on the US-China relationship and if China will withstand them; it is hugely important that the US and China increase co-operation, especially on things like climate change technology (CCC etc) and resist the siren song of protectionism.

You should probably go and look at a school or two. From what I know, the average young Chinese person is highly motivated - it's scary when compared to our post-industrial louche ways!

I believe they also sentence business people convicted of 'white collar' crimes to hard labour or even death in some cases.

China also has a proud tradition of piracy, though England is still top dog in that respect.

This comment was removed because the moderators found it broke the house rules. Explain.

Will China be strengthened by adversity?

Unemployment benefit, income support, housing benefit, invalidity benefit encourage the British not to work.
Chinese people do not have these so will have to work to survive.
We have lost the work ethic in Britain and will end up as a debtor (sub-prime) nation.

What's more depressing is that China's industrial revolution wasn't a revolution at all. It was just doing the same thing on a grander scale. They didn't replace horses with water or steam - they just used more horses. We need a new direction, something that will REVOLUTIONIZE the workplace. Something so mind-blowing that in 100 years people will be talking about the day that the Global Workforce changed tack. But that doesn't appear to be China's role - they are building the same roads, cars, factories and boats that we've already invented but on a grander scale. China's rise is the most boring, depressing and completely unnecessary rise in power we've ever seen. "..and this led to the Great Chinese Nation producing MORE disposable nose-hair removers than any other nation on earth." This can only be eclipsed by the future Indian Empire, later to be described by the tag "it was so Great it was often said that a telephone never hung up in The Indian Empire." Future generations can be taught in school, about how the great Indian pioneers were revered around the Globe for their ability to stop a 3 network contracts from being terminated.

Yet again, the West has to lead and let others follow. This is a chance for the UK to smash, once again, preconceptions about the work place - what natural resource do we have that we can sell to other countries? This world is now so stagnated that it needs a new formula - a new way - we must smash the system and create a new global order.

Yet Chinas economy still grew by 8% last year. They may of been affected by the credit crunch but they are still growing unlike the rest of us.

Also china now basically owns america which means they are now and certainly will be the worlds new dominant super power.

Peston has not mentioned 3rd bubble- jobs!

In his book he does not credit vc with funding startups- very important engine for economy, and scarcely discussed that stars pay for dogs- do the maths, some have to suceed wildly to pay for the 14 out of 15 that fail.

Can we first agree that both China and India need double digit growth just to stand still due to the drain on their economy from all the infrastructure development being carried out? Infrastructure that is desperately needed if China is going to develop into a stable and sustainable country. You would see that China’s population range from abject poverty through to obscene riches. So to answer the question will China be strengthened by adversity the answer has to be no, not in the near term. All that is going to happen is that the much needed works are going to be delayed, postponed or even cancelled with the vast populous suffering.
Much of what we take for granted as our key services are yet to be established and without continued investment at a scale we can’t envisage the basics such as drinking water just will not be available. I can not remember who said that water will become the new oil but I fear that this could well be the case in China.

To PortcullisGate :

I'm more familiar with UK process compared to US, but US processes usually simpler.

The issue you described has nothing to do with securitising the loan, more with sloppyness:)
These loans are regularly traded, wholesale sold and bought and mightbe packaged into a bond. You transfer the data around and the papertrail too and if you are not careful you end up at the wrong end of the stick.
Lot of litigitaion are going around everywhere in every direction in this field.

It is not the bondholder actually but the assetmanager (who has the mortgage) or in Us the servicer who does everything ends up in trouble because they are the one who foreclose or litigate with the borrower.

What the bondholder will see that the underlying asset 'gone missing' (the loan is not legally enforcable), so he can sue the issuer for false representation...

If the world was ready for all this globalisation then financial traders wouldnt have sold junk-credit to foreigners.

But, selling junk to foreigners is what people do - its human nature (albeit not very admirable).

It seems that many globalist economists have forgotten about human nature. But human nature will enable China's progress, and also hold it back.

China will prosper - but dont hold your breath for some kind of modern and open super-state. They'll be twenty years in pseudo-dictatorship yet.

Where i just worried about the environment! The Americans amusingly cite our early start with the industrial revolution as the reason that the UK is the world worst polluter not them! The coming depression may well keep us at 'number 1' for a while ..... this is a good thing!

Many of the commentators here seen to thinks that China is run like France from the capital. But it is far from so as Robert hinted. It is in fact from the economic development point of view much more like the USA. And I hope he will meet some of the economic power brokers in the provinces. His itinerary ought to include Xiamen and Fuzhou in Fujian Province. Fujian province has few natural resources so has developed a industry based economy which is less dependent of consumer goods. The citizens are pretty rich too and the mountains are worth an excursion.
Maybe he will also pop into a Tesco if he can find one to look at an example of British investment in China and get an insight as to how it is done. I am told investment is slowing a bit.

To PortcullisGate:

Based upon my understanding the issuer (who issued the MBS) is the note holder as he is the one who owns the underlying asset.

totally agree with 46.

China will recover quicker and reduce its exposure to western financial influence in future.

I think we should be very nice to them at present

China's "success" over the last few years has been grossly one-sided. They've been running an enormous trade surplus, and spending the proceeds on US government debt.

We all know that running a huge trade deficit (like the US and the UK have been) is not healthy. We should also be clear that having a huge trade surplus is NOT the sign of a healthy economy. (Germany, please also note.) It is the sign of an unbalanced economy, with too much supply and not enough demand, and an undervalued currency. The imbalance in China has been wrecking Western industry, and the result will be that when trade balance is restored, we will all (including the Chinese) be poorer than we could have been.

#29 moneywhatmoney

"If there is to be any form of stable trade system in the future we need a level playing ground.

Manufacturers in China should be paid the same as other countries. Also, raw materials should cost the same for all countries."

Ever heard of the free market? We have never had one, but if we did people would be able to trade globally with sound money i.e. gold. Prices would reflect true worth very quickly and the price distortions created by central bank interest rate and currency manipulation would end.

The days of the west buying garbage with money borrowed from China etc are over, they will quickly realise that we are not going to pay them back.

Calls for more Government, central controls and price fixing are exactly what communists like Obama and Brown want.

Gordon finds the concept of elections so annoying and a distraction from him saving the world.

I do not recommend giving your freedom to politicians and bankers. Totalitarianism always ends badly.

Robert it seems that within a few hours of your leaving the country our stock market has staged a new capitulation!

AIG bailed out for the 4th time so far; could be the current record. But we're still waiting for the Lloyds Grp announcement that they will soon have to become majority public owned in order to get their toxic assets insured.

Does all this acivity in your absence mean that your comments really don't directly control the level of mullering that we suffer daily?

Answers on a postcard from the 'everything would be fine if we only concentrated harder and believe' brigade please!

One has to also remember that a lot of the governmental decisions on how the economy is structured in China is based on "stability of power for the party" not on how best to improve the country.

Due to the fact that China is catching up and some random nature of economics, it has seemed to work so far. The fundamental reasoning and the foundation of China's deep challenges remain. That is the reason for problems. It is not pessimism, it's just so many people have blindly shunned facts.

38 (SpookyDillows)

I think life is enhanced by lots of things beyond the basics of survival. Actually this gives me a lot of hope in the UK's own economy, because most of the best things in life are not manufacturing but service products.

Having someone make you a delicious cup of coffee on the way to work...creating a new and beautiful design for furniture...providing insurance to help people feel safer...and yes, even giving your daughter a sparkly fairy sticker which help to make her happy, just for an hour or two. All things that make life better.

Not to mention the fact that we get a lot of satisfaction from actually working, never mind from the outputs of it.

There's a widespread misconception that our economy should somehow be based on manufacturing lots of big metal objects. I completely disagree. Here's the basis of my argument:
https://www.knowingandmaking.com/2008/12/economic-misconceptions.html

#33 "...the interface between private and public in this peculiar model of capitalism and the role of the state-owned banks."

Peculiar ?? Damned peculiar, if you ask me !! Just which country tries to run a capitalist economy with state-owned banks ?? Just look at the "free" capitalist banks of the West - Northern Rock, Lloyds Banking Group, RBS, etc. They should be the ultimate model of free capitalism the world over !!

And why should the state have to subsidise failed business models ?? Let them fail and die a natural death !!

Now, over in China....

I wonder what solution to this global mess Mr Malthus would be propounding?

Global nuclear war?
A terrorist release of bird flu?
The Blade Runner scenario?
Make serious efforts to get the elites (the top drawer scammers) off the toxic planet - to the moon, or further?
Make Fast Freddie UN Sec. Gen?

If only it really was a funny situation....

Meanwhile, back in the UK, the fiddling continues and the City still burns.

55. At 11:37am on 02 Mar 2009, paroma wrote:
To PortcullisGate:

Based upon my understanding the issuer (who issued the MBS) is the note holder as he is the one who owns the underlying asset.

XXXXXXXXXXXXXXXXXXXXXXXXXXX

Thanks again

It all looks like a happy hunting ground for the briefs.

If they can't unravel all of this or the cost is so high then surley the assets are worth even less so we the tax payers are further exposed than just the UK bubble?

Robert,

My feeling is that China whilst being affected by the current situuation, will still emerge as the industrial and financial superpower of the future, simply because : - There are far more of them as a working population and secondly their attitude to honestly, loyalty and financial; correctness will always be different.

The current pension debacle in China - No Chance !!

We shall see.

Heading South
==========

Worried,
The woman pointed
At the line graph
And said that the
Economy is heading south
And that's a bad thing.

I said:
South is good
South is warm
South is languid and relaxed
And possession-free
And full of love.
I said that
I'm looking forward
To kissing adieu to the cold
Frenetic northern work ethic
I'm happy to just relax on a beach.

And I smiled and concluded:
You can fret about it
But personally I'm looking forward to
Heading south.

58. At 11:45am on 02 Mar 2009, truths33k3r wrote:

"Calls for more Government, central controls and price fixing are exactly what communists like Obama and Brown want. "

If Brown is a communist then so, presumably, is Cameron, given that their economic policies are effectively identical. In fact they're all communists and we're trapped in a global communist conspiracy, initiated by Margaret Thatcher.

If you really belive that, my friend, you need help.

The questions you are going to ask will tell us something. Make sure you have the balls to ask a few more:

Why has China been allowed to manipulate its currency?

Why are they allowed to subsidise exporters?

Why is the Chinese record on product safety so poor?

Why do they blatantly breach other companies' intellectual property rights?

Why do they have to adhere to much less stringent environmental regulations?

Why does the Chinese government take all the Dollar (and Euro) income from it's exporters and give them back Renmimbi?

We all know about the above - why does the BBC simply choose to ignore it?

I must admit, I am heartily sick of having to compete with Chinese companies who aren't necessarily more efficient, but have everything loaded in their favour.

#58 truths33k3r

"Calls for more Government, central controls and price fixing are exactly what communists like Obama and Brown want"

1 - You need to look up the word 'Communist' before you start applying it to people who are clearly not.

2 - Neither Gordon Brown nor Obama want to impose price controls nor increase Government control - they both hoped that the free market would solve all their problems (al la Friedman + chicago boys)

Sadly - the tool wasn't suitable for the job and it has FAILED them, over and over again.

Any system with so many exceptions cannot be worth pursuing.

Come on Capitalists - explain this contradiction.

"The market should decide which companies survive and which ones fail as it's the most efficient way of doing things"

"The banks cannot be allowed to fail as it will be catastrophic for the Economy"

Oh dear - you cannot answer it because there is no answer - it's a contradiction.

Our Government is also showing it cannot learn from it's mistakes - by nationalising the Post office.

Don't believe that 'we cannot afford it' line from HM Gov - they have deliberately run it into the ground by lack of investment just so they can announce how they are to 'save it'

Have any of the "privatise everything" crew considered that now that most of our utilities and ex-public services are in mostly foriegn hands that when sterling completely collapses there's a good chance the strong Euro will ensure increasing prices for the UK whilst in the midsts of recession?

We have put this country into the same position as Iceland and Japan with regards to control over our imports....and look what's happened to them...

Protectionism isn't even an option, we have sold off our most useful industries.

, sanity4all
"The UK was (and in some ways still is) just as poor in its 'rights' records when waging 'trade' and 'opium' wars in the Far East and Africa during the previous centuries"

Im sorry sanity4 all but your arguement only attacks corporations and by inference globalisation.
We know companies act in a psychotic manner, and the opium war was instigated by the Honourable east India company not the British government, so rather than berate the UK governmant you are in fact attacking BIG Business, which i dont think was your intention.

You mention trade wars, to which are you referring? Again, the African land grab was instigated by Individuals such as Sir Cecil Rhodes against official Imperial policy, and British expansion in Malaysia, borneo, Burma and India again was pushed through by The HEIC.

No official British policy was set up to expand the Empire after the Napoleonic War and the only real trade wars Britain had been involved in were the dutch wars in the c17th and the American war of independence which was caused by trade restrictions and taxation to pay for the very empire we had wrested from the French.

I am sorry but your arguements and therefore conclusions are incorret.

So - I thought that the chineese were eminently smarter than the average joe - apparently not.

If they are still producing non-essential goods they are going to come un-stuck!

It seems obvious if we are not buying their goods they are going to feel the 'pinch' also.

Unless of course, Crash has decided to sell Royal Mail to them in exchange for some nice new Jags.

Robert,

re: blog 16, 'original mortgage notes'

This is indeed where the problems multiply for the RBS type 'insurance of toxic debts' occur.

Has anyone actually definitively defined what and when a 'default event' has occurred for each and every type of toxic debt that brown has committed the ever poorer taxpayer to underwrite?

I read that circa 66% of the RBS toxic debt is 'foreign'.

I wonder under what legal jurisdication some or all these toxic debt contracts were written?

As I understand the arrangements the UK taxpayer could well be liable to pay RBS 90% face value of the debt then try and recover it some time after next monday.

Or will RBS actually try to recover the debt first to get their up to 10% of face value then hand it to the government?

Again brown and darling has landed the taxpayer with the worst of all worlds by wanting to bypass the most effective and least costly route of nationalisation and/or pre-pack administration (by far the most cost effective way).

I note that james baker on the FT today was urging the US to nationalise their financial institutions.

It is truly bizarre the Labour have become allergic to public ownership.

What would you do?

it's a no brainer...

do as little as possible and hand over the virtually impossible and costly tasks to us the taxpayers.

Already pundits are talking in costs to the taxpayer of £100 billion just for the RBS scheme, and given their track record it is likely to be at least double.

My only comments this time are
1) that I will not buy masses of useless dross merely to "support an economy". The stuff just fills up people's homes and costs time and petrol to take to the rubbish tip.

2) this entire "crisis" is based on people not buying enough stuff (most of which they don't want anyway) so unless the situation can be reversed: people coaxed into transferring as much of the far east into their homes as they can, then they'll have to get by on less and expect less (and probably be happier for it).

....just an additional note for all those fools who think they're clever and can beat the system of Capitalism.....

RBS last week - up 30%

RBS this week - back to where it was

https://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/87122/one_month.stm

Remember all those people who worried about the FTSE falling below 6000?

....well try below 3000 - or even 2000.

This is the measure of how over-inflated the Economy was - maybe even twice as much as it's real value.

.....and still Grodon blames this all on an 'ill wind blowing in from the West'

He obviously doesn't realise the world is round and the wind from the west is our own wind coming back round.

I have run out of adjectives that will pass moderation for this man, his Government and the system he presides over trying to convince us it works.

#56 - based on our business dealings with them it will not matter how nice we are - they are not into the touchy feely stuff unless it suits them - if we truly are at the mercy of the Chinese and not them at our mercy then we it will not turn out well for us.

Mr Pirate - what's the waters like round China - I guess probably a bit too busy for any chance of piracy.

Will be interesting to see what happens to AIG shares this pm when Dow Jones opens - they're already down at 42 cents from a high of 500 earlier on this year - not sure how far they can fall from there before they are worthless - I guess 42 cents is the answer!! and HSBC has lost much more than that in a morning coz they only made £6 billion last year??????????? As AIG has just lost $61 billion in 3 months (that's 61,000,000,000) or $663 million a day!!! then it only takes them about 14 days (taking Xchange rate into account) to lose what HSBC makes in a year.

These are extraordinary numbers.

As you say - the mullering is gathering steam even in Peston's absence.

#57 "(Germany, please also note.) It is the sign of an unbalanced economy, with too much supply and not enough demand, and an undervalued currency"

Eh ?? Come again ?? How badly is the Euro undervalued ??

Please say, rather, that the debtor nations *OVERVALUED* their currencies in order to finance a sybaritic lifestyle !! And now, rather like the prodigal son in the Biblical parable, they are discovering what that means !!

As mentioned above, the Chinese *CAN* equalise the exchange rate simply by dumping USD and GBP debt instruments !! However, that equalisation will not be one of upward revaluation of the Yuan but a downward revaluation of the USD and the GBP !!

A barrel of oil can reach $500 each but the Chinese will still pay the same number of Yuan for it !! Similarly for the Japs in their Yen !! No so for the Yanks and the Brits in their dollars and quids !!

China developed in terms of export trade in USD so as such China is tied in, with exports hit as hard by the recession as the drop off in spending everywhere.

To all those on this post complaining about 'fair and free trade' not being so because of the Chinese.

Wake up to the fact that:

The west bought loads of stuff from China that we didn't need because it was cheap and money was easy to come by.

The Chinese make things by the bucket load and live on less than a dollar a day.

The imbalance is simply a side effect of our 'false and affluent lives'

I would also point out that if this was a 'china problem' then why did the US have large trade deficits against:

The OPEC countries
The EU
Just about everyone - except Britain.

The answer is - GREED.

You can see how the cumalative effects of a greed based society eventually affect things at the national level.

The Chinese are not greedy and therefore have the upper hand.

Just like my neighbour - who has been lauding it up for the last 4 years as his property business allowed him to by a Porsche Carrera whilst I have been using the same car for the last 9 years.

I have had to look at it for the last 4 years p[arked outside my house, but yesterday I watched it with glee as I saw him place a 'for sale - priced for a quick sale' sign in the window.

I am China - he is the West - and I hope they're laughing at us now because we deserve it.

I have also deduced from the US's visit that money is officially more important than human rights abuses.

That just about sums up the western Economies - let your people die, so long as you keep up your GDP - that's all that matters.

#59 "Does all this acivity in your absence mean that your comments really don't directly control the level of mullering that we suffer daily?"

Or do rats and sinking ships come into the picture ??

#60 "One has to also remember that a lot of the governmental decisions on how the economy is structured in China is based on "stability of power for the party" not on how best to improve the country."

Deja vu in Britain or what ?? Think Crash Gordon and the fabled Lloyds TSB/HBOS "merger" !! Please note that it is still a fabled merger since what had come to pass just wasn't a merger at all !! Strange toxic assets are still crawling out of the woodwork !! But this fable of a merger did have an effect on a certain Scottish by-election !! Communists ?? What Communists ?? And just to prove it, we even have a real-life Lord in charge of centrally-planned business !!

#8 citynickdrew

How can you point us to an article on accurate predictions which starts with:

"The FTSE will suffer a very eventful year, and may well be down quite considerably by the summer, but for a variety of reasons, including a re-bound in bank shares will end the year in the 6000's just as now."

All these short term predictions are window dressing for the markets. There is only 1 prediciton you need to understand.

"Capitalism will fall under it's own contradictions"

There is a logical reasoning behind this prediction - where as the predictions on that website are no more than guesses.

U.S. TAKES 36% STAKE IN CITIGROUP
You're two months behind in your payments to yourself.

WORLD NEWS
Pakistan: Government Declares Victory in Tribal Border Region
Withdraws all its troops.
Mexican President Rejects “Failed State” Label
But statement may have been coerced by his kidnappers.

;-)
ed

Interesting article, with diagrams, in the Daily Mail on Saturday concerning links between various people. Mandelson, Rudd, Peston, Oleg, etc...

May Robert now make a comment about Yachtgate and the EU Tariff discussions?

A video broadcast from China similar to the one you did for Mandelson's and your own PR guru Rudd on his birthday could be helpful.

Might be worth getting in first as we see how Goodwin becomes suddenly expendanble when it is politically convenient.

Robert, you cannot ride the Tiger without eventually getting eaten.

Lets look at the facts:
1. China exports 6x as much as it imports to EU and US.
2. EU and US are losing industrial capacity fast as China takes it over.
3. People in manufacturing in EU/US are losing their jobs.
4. Western goods have a high Intellectual Property content. China sees no reason to pay for these goods when they can be copied for free.
5. Industry and technology moving to China will eventually mean military superiority for China - although right now they are vastly inferior in that respect. Why is this in the US interest?

Further: the Chinese business model of making goods incredible cheaply and then lending its customers the money to buy them is not particularly clever.

Further: huge infrastructure projects, buidling new cities, more office blocks going up in Beijing than the whole on Manhattan despite very much smaller economy. Sounds like a debt fuelled construction boom to me - how do those end?

What about Chinese banks - with senior management full of communist party members. They are an arm of government. Are all their loans to construction and state enterprises really OK?

How much would it take for it all to fall apart.

I agree that in 50 or 60 years time China will probably be the major world economy. But I dont think it will get there in a nice straight sequence of 6% annual growth. After so many growth years and so much distortion it is overdue a major correction - that is what markets do.

#11 sanityforall

Great post - really shows the west for the hypocrite it is.

We're told the human rights record in China is terrible (by our biased media), but all human rights abuses by the west are covered up or justified with illogical reasoning.

For example.

Torture flights
Guantamano Bay
Abu Grahib prison
Iraq
Afghanistan
Mis-carriages of justice (in China this would be described as oppressive Government locking people up for no reason)
A 'lost' generation of children - even ferrel (an MP's words, not mine)

In china they don't let their elderly die in the winter because they can't keep warm.

In china they don't allow CEO's of failed banks to walk away with £650k a year after bringing the Economy to it's knees.

In China, the men who "accidently poisoned' thousands of people in a factory contamination recently - WERE PUT TO DEATH, unlike here where we have defined a new category for this called 'Corporate Manslaughter' which usually entails a (small) fine on the company involved and everyone else getting off scot free.

So who has the best human rights record then?

Give me the bottom of a Red army boot in the face to a corporate knife in the back any day.

At least I know where it came from and why.

Which is better? The powerful un-elected Communist party members running the country, or the faceless un-elected corporate giants who laid a trap for the public and are now busilly reposessing their houses, cars and banning them ever being able to borrow money again, ensuring everyone will be enslaved for years and have to work until they die to pay back the debt.

There are always 2 sides to every story.

Peston:

"China's unique combination of a one-party state and market economy(albeit an economy still characterised by massive public-sector ownership and influence)? "

That`s a bad joke.How can anyone in this country with a straight face say that we don`t have a one-party-state(international-banker`s-puppets party)?
As for state involvement and influence in the economy,that`s another striking similarity between our two countries,with a third of the economy devoted to bloated"public services" of one shape or another.
Just like the bankers wanted.

They are worried about exporting their tinsel tat to us now...

We pay for the tat AND we pay for them to take away our recycleables, most of which is recycled into more tinsel tat for the Pound-shops --we are paying for the boats both ways.

It's a race between our laziness and our declining real wealth...when it's run we may be making our own tinself tat and sorting our own rubbish---eventually.

It's like a morality play on the seven deadly sins ...act one Greed (the bankers) act 2 Sloth (all of us, the consumers) , I leave anyone with too much time on their hands to work out Pride, Envy, Lust and Wrath...the only one we should be okay on is Gluttony...Gym Culture, Kate Moss and Posh seem to have put a lid on that one.

And by the way of a sign off comment... Does anyone believe the forecasts of the Govt on the recession (whatever they are jobs, PSBR, recovery cycle....) are always hopelessly optimistic with zero upside, zero same side and 100% downside possibilities every time??

#76 "Mr Pirate - what's the waters like round China - I guess probably a bit too busy for any chance of piracy."

Around some of the islands in the South China Sea, there are at least 7 different navies watching each other suspiciously. Therefore, any pirate wandering into those waters is so asking for it !! Darwinism will probably take place and the pirates' gene pool will be improved by just that little bit !!

Robert,

have you read the reports that Hilary Clinton on her recent trip to China took with her a signed document giving the Chinese Eminent Domain over foreclosed US property? Given that the Chinese are said to hold trillions of dollars of US debt and apparently since the Olympics ended are not so keen to hold it, the question has been raised , how would Americans feel if China ended up owning huge swathes of territory. Any comments? If this report is true it may well lead to mass civil unrest and even civil war in the US.

#82 More World News
Brown tells world "EU is united in its resolve". Notable for her absence was Angela Merkel !!

This comment was removed because the moderators found it broke the house rules. Explain.

#69 arnsbrae


Why has China been allowed to manipulate its currency?

A - Who is going to stop them, besides they learnt that trick from us (Bretton Woods)

Why are they allowed to subsidise exporters?

A - Because they can, and again there is no-one to stop them. Another trick learnt from us.

Why is the Chinese record on product safety so poor?

A - it's no worse than the rest of the world - they're just not as good as covering it up as us. I don't know who told you they have a worse product safety record than the rest of the world, but if you look at the bottom right hand corner that survey will read "Collected on behalf of HM Government spin doctors"

Why do they blatantly breach other companies' intellectual property rights?

A - Because they do not believe in applying rights to intellectual property. I mean seriously, what are we saying - I've had a thought - which means no-one else can have the same thought ever?
This is an extreme example of Bourgoisie law - trying to assign property rights to a 'thought'. Surely it's better to share the ideas so they can be improved upon? or maybe you think it's better we all go 'golem like' and guard all our secrets closely because you cannot trust your fellow man (that's your in-bred capitalist thoughts coming out)
Here's a question - when did we make the most progress into space exploration?

a) When it was a competition US vs USSR (cold war)
b) When they worked together (post USSR)

Why do they have to adhere to much less stringent environmental regulations?

A - Because they haven't even started yet, the west has already screwed this world up - why should they now be the ones to restrict themselves? This is a typical arrogant western attitude.
"We screwed up the world, but now we're going to tell everyone else to live in caves so it doesn't get any worse for us"


How about you consider that the life the west imposed on the world for the last 100 years was in fact for the benefit of a small minority and that China don't want to do that and are going to turn all the things you have learnt on it's head.

Over the next few years the increased dominance of China will cast a bright light over the Hypocrisy of the west.

As I said in a previous post, in my humble opinion we are witnessing the beginning of the long goodbye to the current model of global capitalism dominated by the EU and the US. The problem going forward for the world economy is who amongst the developing countries can fill the consumption void. The Latin American block does not have the foundations of domestic demand for two reasons 1) The heavily skewed distributions of income in favour of wealthy elites means quite simply that they do not the buying power 2) Politically they are also not about to embark on programs of income and wealth re-distribution. Class war is simmering below the surface there. China has its own problems in generating this domestic demand as it does not have the political or intellectual traditions to foster a thriving middle class and business culture. Is not economic prosperity sooner or later limited by absences of political freedom and corruption? China is cheap labour and huge social unrest waiting to happen. India and the Asian Tiger economies are the only nations which I can see leading the way forward in the long term, but there are problems there too. In short, the developing nations are really going to struggle as they do not have the socio-political or economic traditions to fill this consumption void. I fear many lost decades. Depressed? Then look at the New Green Deal https://www.neweconomics.org/gen/greennewdealneededforuk210708.aspx - this has to be the way forward. Forget Fred Goodwin, he is history, and not where we should be looking for our answers.

now for my china comment,

they are obvisouly shooting themselves in the foot now arnt they.

a lot fo the chinese economy is dependant on export as well as import so given the fact one of its main customers THE UNITED STATES is heavlily in recession it was only a matter of time before china got dragged into the global downturn,although officially china economy is growing(if you believe it is) chinas economy is steadfastly going through the same consequences of recessions as most other countries.

slump in growth demand for exports!!
slump in growth demand for imports!!

thus causing a slump in general in certain parts of the chinese economy.

offically i beleive parts of china is actually in recession although many will dispute this or even admit its true.

The biggest producers will always suffer the most (relative) in a Global Economic downturn....

..... I suppose we now need to think ourselves lucky that we are a Net importer and with no real industry left can’t fall much lower..... strangely enough I think this recession might improve our balance of payments... how far have we fallen if it does!

....... Oh forgot, as we can’t borrow as much our Feng Shui and Hair Dressing industries are in turmoil!

Is the capitalist baton being passed to China or is this the beginning of the end of capitalism?

To even come close to providing credible guess we need a credible model of how the capitalist system works.

The fact that most economists didn't predict the recession casts doubts upon their models.
They have lost credibility, so any other predictions, e.g. growth returning in 2010, are suspect.

Where is the model that adequately explains the capitalist economy?

The old Keynesian IS-LM or AS-AD type models are static equilibrium, so anything causing disequilibrium is external to the model.

The endogenous growth models do not take account of the rate of profit - the whole reason why capitalism bothers to prduce anything.

Where's the model that shows how capital circulates in the economy and how it reproduces itself.
Indeed, how it repoduces itself in an expansive way and a declining way (recession).

How many mainstream economists are familiar with Marx's reproduction schemas?
Why does he have two departments: producing means of production and producing consumer goods?

What are the difficulties of realising expanding reproduction?

Why did Rosa Luxemburg insist that capitalism needs non-capitalist modes of production to grow and that by growing and destroying them seals its own fate?

Might Rosa have been right?

It will be interesting to read your comments on and following you visit to China. BUT .... I have a thought for you to comment upon - also your readers re Lloyds bank!

Would it not be better for Lloyds to just walk away from the deal re HBOS? 12 months ago Lloyds was a good bank - where are they now? They should walk away from the deal and leave the UK government to deal with HBOS 100%

Mea culpa ? For a couple of years or more I've been checking 'country of origin' and refusing to buy anything that announced that it was made in China. Guess there must have been a lot of others like me. Surely I couldn't, single handed, have downed the mighty Chinese dragon.
Could I ?

You take great care Robert. A wounded beast is a very dangerous beast.

87. At 1:25pm on 02 Mar 2009, e2toe4 wrote:

...
the only one we should be okay on is Gluttony...Gym Culture, Kate Moss and Posh seem to have put a lid on that one.
...

Actually, obsessive concern with diet is reckoned to be a form of Gluttony by those who worry about such things.

#71 thegrimcrim

"We know companies act in a psychotic manner, and the opium war was instigated by the Honourable east India company not the British government"

The East India trading company WAS THE BRITISH GOVERNMENT.


"The Company long held a privileged position in relation to the English, and later the British, government. As a result, it was frequently granted special rights and privileges, including trade monopolies and exemptions. These caused resentment among its competitors, who saw unfair advantage in the Company's position. Despite this resentment, the Company remained a powerful force for over 250 years."


I also believe sanity4all was referring to "actual wars over trade" rather than trade wars - which did occur in the last centuries.

E.g.

"The First Anglo–Afghan War lasted from 1839 to 1842. It was one of the first major conflicts during The Great Game, the 19th century competition for power and influence in Central Asia between Great Britain and Russia, and also marked one of the major losses of the British after the consolidation of India by the British East India Company. "

...therefore I disagree with your analysis of sanity4all