Wednesday, February 04, 2009

Competition time

In my post below, I speculated on why Chinese Premier Wen Jiabao mentioned the word 'gold', in an unprompted manner in a recent interview. The good Mr. Wen faces a number of problems. Let's spell them out again:

=> He is currently Number Three in the Chinese Politburo (yes, it would be nice if he was Number Six, but that is Vice-President Xi Jinping)

=> Premier Wen Jiabao would like to be Number One

=> He is probably as cunning as a fox who has just been appointed Professor of Cunning, at Oxford University

=> He is currently sitting on approximately $1.5 trillion dollars worth of US government bonds

=> He would like to invest approximately half a trillion dollars in extending the Chinese road network, to open up the interior

=> If another Asian or Middle-Eastern country starts a financial avalanche, by flipping its US government bonds for a profit, then China's $1.5 trillion dollars worth of bonds may turn into dust overnight

=> If China starts a financial avalanche, by flipping its bonds for a profit, then it will probably get the first $100 billion away, but the next $1.4 trillion dollars worth of bonds may also turn into dust, due to the sheer volume of the sale

=> At some point, somebody is going to start selling their US government bonds, to turn a profit, which will bring the US empire to its financial knees

=> This may happen literally overnight, though you have some control of the timing on this event, either by causing it yourself or by delaying the actions of others by your publicly visible actions

So how do you get out of that? You are damned if you do and damned if you don't, but whatever you do, you need some money right now to build your bridges and your roads otherwise interior population resentment will force you down in the Politburo pecking order. This is Achilles and Hector all over again; the irresistible force up against the immovable object. Or is it?

To have a bit of fun, I thought I'd challenge you to a competition. Given the conditions above, how would you get to be Number One in the Politburo? You can only do this if you can turn a profit on your $1.5 trillion dollars worth of bonds, but you must get them all out of the door, without risking China's financial future. Tricky.

(BTW, you can't just blame the person who got China into this hole and have them shot - this is considered cheating - plus, it's only a holding strategy and doesn't really advance you anywhere.)

Can you beat this plot line?

=> You organise a world tour

=> On your world tour you speak to all the world's leaders, particularly those who need your financial support

=> You arrange to keep buying their bonds, to hold the market up, but only in return for their gold reserves to be shipped to Shanghai, at special preferential rates, and for the bonds you currently hold to be swapped against gold, which also has to be shipped to Shanghai - all of this shipping must be kept totally secret, otherwise the avalanche will begin

=> You drain the Bank of England and Fort Knox of whatever gold they have remaining after 70 years of inflation

=> In this process, you probably spend another $1 trillion dollars, though you accumulate $2.5 trillion dollars worth of gold at today's prices, or as close as you can get it, before the price curve starts dipping away into decision-time territory

=> As soon as you have the gold safely stashed inside a massive bunker 'somewhere' in Outer Mongolia, you pull the rip cord on the dollar

=> You sell your bonds for whatever you can get for them - you have, after all, been accused of manipulating the dollar, by the US Treasury, so you may as well get hung for a sheep as well as a lamb

=> Once the US, UK, and other economies thus affected have completely collapsed, you introduce a Gold Yuan, based upon all of the gold you now have in your treasury

=> With the Gold Yuan, you buy up the rest of the world, who are grateful for your largesse

=> Deng Xiaoping's plan is thus fulfilled, with China as the world number one nation

=> You get promoted to being Number One in the Politburo (though it would be fun if you could be Number Two, first)

I think that just about sums up my plan for world domination. If you can think of a better one, I shall genuflect at your knee.

(Yes, I know this sounds a lot like the plot for Goldfinger, but I've got a lot of time on my hands at the moment and I'm probably spending too much time working through my old Sean Connery back catalog! :-)

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