• China currently owns about $700 billion worth of our Treasury bonds — by far the most in the world.
• According to reports, State Department officials had originally proposed that India be included in the itinerary of Clinton’s current first official tour abroad, but she struck it out.
• Gold is hovering around a $1,000 an ounce, which is within striking distance of a record.

The US cannot ignore the Chinese. The battle between the dragon and the elephant has come to a head. There is a tectonic shift in international relations. China has woken up and for the first time in a couple of centuries can dictate terms. Kruschev is probably sitting up in his grave to take notice. He once said “We will bury you”. Karl Marx predicted that “capitalism would be sent to the dustbin of history”. Mao Ze Dung called the US “a paper tiger”. The British once said referred to China with the prodigious warning “Don’t wake the sleeping giant sleep“. Well according to the signal—the Red Dragon in Beijing has woken. Those who thought that Communism was dead and Capitalism is kicking butt take a look at four cities–Beijing, Moscow, New York and London. There is celebration in two and malaise in two. The world take note.

Closing her maiden overseas trip as chief diplomat, Clinton urged Beijing to keep buying U.S. government bonds despite their declining value. And she defended the Obama administration’s economic stimulus spending package, saying the added debt load, though “drastic,” would benefit China.

Her plea was a reminder of the shifting balance of power between the longtime Western superpower and the Asian giant that finances its consumer and government spending with $1.9 trillion in foreign currency reserves.

In an interview with Yang Lin of Shanghai-based Dragon TV, Clinton said the Chinese understand that the United States “has to take some drastic measures” with the stimulus package to restore American spending, The Los Angeles Times, By Paul Richter, February 23, 2009

While President Barack Obama is funding bailouts, spending US Dollars like it is going out of style other realities are creeping into the picture. In a sign of the times, America is at the doorstep of the Chinese money lenders literally on its knees asking for help from the Chinese in propping up the government. Everything has a price.

But now, as a senior U.S. official, Clinton was recognizing a difficult reality, and pleading with China to continue the status quo. On Saturday, when the subject of Chinese bond purchases came up during a joint news conference with Clinton, Chinese Foreign Minister Yang Jiechi stopped short of promising to continue the purchases. He said instead, as Chinese officials have before, that his government would continue to buy the bonds if they continued to offer the best combination of value, low risk and liquidity. The Los Angeles Times, By Paul Richter, February 23, 2009

For the first time, the center of gravity on finance has moved away from New York. From this day onwards, it will not always be the New York or Zurich bankers that dictate how the world will be structured.It’s not as if the switch has been turned on and the Chinese are in control–that reality is about 3 or 4 decades away. For now there is stoic quite celebration in “the Middle Kingdom” in the fact that some of the decisions will be made in Beijing.  This report in the New York Times is a poignant reminder of where the world of US-China relationship is headed. One never thought that we would see a US Secretary of State in Beijing literally begging the Chinese for “loans” (actually buying Treasury bonds). Its a new world–let the begging and groveling begin.

BEIJING — Hillary Rodham Clinton said she wanted to spend her first trip as secretary of state listening. But she ended up saying a lot, and in blunter terms, than many of her pinstriped predecessors. The Clinton Straight Talk Express made its last big stop in Beijing on Sunday, with Mrs. Clinton explaining to a Chinese talk show host why China had better keep buying United States Treasury bonds. “It’s a good investment, it’s a safe investment,” she told Yang Lan, the host of a show on Dragon Television.

The Chinese government, she said, has an even more compelling incentive to keep buying: it needs the United States to recover as a market for Chinese goods. To jolt the economy back to life, she added, the United States needs to be able to take on more debt. “We are truly going to rise or fall together,” she said. “We are in the same boat and, thankfully, we are rowing in the same direction.” Treasury Secretary Timothy F. Geithner could not have said it better.

Speaking of Mr. Geithner, Mrs. Clinton cleared up the question of how the two of them were going to divide China policy. Speculation about who would control China policy has crackled since it became clear she was not ready to cede it to the Treasury Department, as happened during the Bush administration. Mrs. Clinton said she and Mr. Geithner would share leadership of a high-level consultation between China and the United States that would be balanced between strategic issues like North Korea and economic concerns. The New York Times. A Clinton Listening Tour, but China Gets an Earful By MARK LANDLER Published: February 22, 2009

This has dramatic and long term implications on Asia and the world. Parag Khanna in his seminal book said it best “India has missed the boat”. The reality hasn’t hit home for most Indians— Superpower status was beyond reach!

Dollar courting yuan

But there is another aspect in Obama’s new foreign policy that worries India even more. Obama’s China policy renders obsolete the Indian strategic calculus built around the US containment strategy. Hardly two to three years ago, the Bush administration encouraged India to put faith in a quadrilateral alliance of Asian democracies - the US, Japan, Australia and India - that would strive to set the rules for China’s behavior in the region.

According to reports, State Department officials had originally proposed that India be included in the itinerary of Clinton’s current first official tour abroad, but she struck it out. As things stand, Clinton meant every word of what she wrote last year in her Foreign Affairs article that “our [US] relationship with China will be the most important bilateral relationship in the world in this century”.

In a major speech at the Asia Society in New York last Friday before embarking on her tour of Asia, Clinton said, “We believe that the United States and China can benefit from and contribute to each other’s successes. It is in our interests to work harder to build on areas of common concern and shared opportunities”. She argued for a “comprehensive dialogue” and a “broader agenda” with China.

The Washington Post cited State Department officials as saying, “It is symbolically important that Clinton is the first secretary of state in nearly 50 years to intensely focus his or her maiden voyage on Asia”. The story is easily comprehensible. The US needs to have new opportunities to export more to China; it should persuade Beijing to accept a realistic dollar-yuan exchange rate; and, it should convince China to keep investing its money in America. But what is unfolding is also a phenomenal story insofar as a new chapter in their mutually dependent relationship is commencing where the two countries become equal partners in crisis. This was simply unthinkable.

Dennis Blair, the newly appointed director of national intelligence, in his testimony before the US senate intelligence committee on January 22, struck a fine balance when he said,

While the United States must understand China’s military buildup - its extent, its technological sophistication and its vulnerabilities - in order to offset it, the intelligence community also needs to support policymakers who are looking for opportunities to work with Chinese leaders who believe that Asia is big enough for both of us and can be an Asia in which both countries can benefit as well as contribute to the common good.

However, this is precisely where a serious problem arises for India. In the Indian perception, South Asia and the Indian Ocean just aren’t “big enough” for India and China. Asia Times. India grapples with the Obama era By M K Bhadrakumar. M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

The West careening from a debilitating financial crisis needed Chinese money and Pakistani soldiers. Without Chinese credit the US would be kneeling in front of the world. Without Islamabad’s active support, Washington would not have an exit strategy from the graveyard of Empires.

On Monday, President Obama hosted an economic summit where he talked about trying to cut the current deficit from $1.3 trillion to $533 billion by the end of his term. That story doesn’t make sense. He just doubled the deficit and now he’s going to cut it in half?

Unless you understand the next puzzle piece: While Obama was spending $787 billion here at home, Hillary Clinton went to China hat in hand to convince them to keep buying our debt. She said, “We are truly going to rise or fall together.” This story made the rounds, but unless you know the next story it also doesn’t make sense.

Last week, one of China’s leaders revealed that Hillary Clinton is exactly right and he can’t stand it. He was so frustrated about our financial mismanagement that he said — and this is an actual quote — “We hate you guys but there’s nothing much we can do.”

So now the last piece: Gold is hovering around a $1,000 an ounce, which is within striking distance of a record.

That means one of two things: Either people don’t trust that the dollar is going to keep its value due to our spending or they don’t believe that the U.S. can stop the inevitable consequence of running our printing presses 24/7 — which is massive inflation.

Put this puzzle together and the picture becomes clear: Time is running out and the key to it all is China.

Here’s why I say that:

China currently owns about $700 billion worth of our Treasury bonds — by far the most in the world. And though the Chinese haven’t said that they’d completely stop buying our debt, they did say they would only keep it up as long as the bonds continue to offer the best combination of value, low risk and liquidity.

That’s why the economic summit was held today, why Hillary Clinton went to China and why the price of gold is high.

Most economic experts say that China has to keep buying our debt — at least in the short-term — because it protects their investment. And while there might be some truth to that, I don’t have much faith in the so-called “economic experts” anymore.

So now China has a decision to make: When do they cut their losses and decide to stop throwing good money after bad?

Our decision: When do we change our behavior? What do you think? Send your comments to: glennbeck@foxnews.com, Putting Together the Pieces, Monday, February 23, 2009 By Glenn Beck

The die has now been cast–dump India build the strategic relationship with China and work with Pakistan to somehow harmonize the irreversible gains made by the Taliban in Afghanistan.

Bruce Reidel, General Patraeus, Barack Obama, David Brown, David Milliband etc. all see Pakistan and Afghanistan as one entity–”PakAf”. Even sober journals like Newsweek quoting stalwarts have begun to seriously recognize the reality of the union and have been writing about the proposal to formally merge Pakistan and Afghanistan into one entity.

So why not just get out? As always, it’s not so simple. If the Americans pull their troops out, the already shaky Afghan Army could collapse. (Once they lost U.S. air support, South Vietnamese troops sometimes refused to take the field and fight.) Afghanistan could well plunge into civil war, just as it did after the Soviets left in 1989. Already, the Pashtuns in the south regard the American-backed Tajiks who dominate Karzai’s administration as the enemy. The winning side would likely be the one backed by Pakistan, which may end up being the Taliban—just as it was in the last civil war.

Some argue this wouldn’t be such a bad outcome, if the Taliban could be bribed or persuaded to not let Al Qaeda set up terrorist training bases on Afghan territory. According to one senior Taliban leader, a former deputy minister in Mullah Mohammed Omar’s government who would only speak anonymously, some Pakistani officials are urging the insurgents to do something like this now—in return for talks with the Americans. On the other hand, Islamabad could be playing with fire. Given the longstanding ties between the Pakistani and Afghan Taliban, a jihadist state on its border is a threat to Pakistan, too. And here, U.S. national-security interests definitely do come into play. Newsweek. With Ron Moreau and Sami Yousafzai

Why the US gave up India as a Strategic partner? The answer to this complex question can be summed up in a Clintonian cliche “its the economy stupid”. The Obama Administration has taken a page out of the Nixon playbook–build a relationship with China at the expense of India. The Bush administration had tries to build up India as a counterweight to China with a strategic partnership with India “as a natural ally”.

The relationship between the “worlds largest democracies” has been sacrificed once again for the sake of the almighty Dollar and the other small irritant in West Asia–aka “defeat in Afghanistan”. India finds itself on the wrong side of history once again. For the first half century of its existence Bharat supported the Evil Empire. Then in the 80s when the USSR imploded and Yogoslavia imploded, the Indian policy makers worked overtime to come up with a strategy of survival on this third planet from the sun. Egged on by a Democratic Congress, Mr. Clinton encouraged India to explode a nuclear device. The Pokran explosions had a affect on India like the world has never seen. It allowed the youthful nation to being thinking big–beyond the confines of reality and beyond the realm of imagination. Within a decade of meager growth, Indian had not only proclaimed themselves a Superpower, but also convinced themselves of the death of Pakistan, the subservience of Bangladesh, the destruction of Lanka and the erosion of Nepal as a political entity. In this dream world, Bollywood stopped filming movies in India and brought world capitals, skyscrapers and modern amenities into the theatres and homes of ordinary Indians. Pretty soon a fog enveloped the nation–they actually started believing the Bollywood baloney and got swollen heads. Like the Michelins man full of air, the Superpower began to think of its borders beyond Uzbekistan and its Navy beyond the Pacific and Atlantic.

The Pakistani-Chinese relationship is growing by leaps and bounds. Mr. Zardari’s article in the capital’s main daily was a seminal event for China and for Pakistan.

“China is the glue holding the continent together - not only in terms of geography but in political and economic terms,” the Pakistani president said in a signed article in the state-run China Daily today. Entitled “Sino-Pakistan relations higher than Himalayas”, the article showered fulsome praise on China describing it as “an anchor of stability and peace not only in Asia but the world”.

At the same time, Zardari shrewdly played on Chinese fears about separatists in its Xinjiang province getting support from Islamic fundamentalists across the border in Pakistan. “We are determined not to allow the noxious fumes of this dangerous phenomenon and ideology to spread to other countries,” Zardari said. He claimed that “Pakistan is fighting terrorists not only for its own sake but for the entire region.”

“Given proper infrastructure, the Pakistani ports of Karachi, Port Qasim and Gwadar are nearer to the Chinese heartland than Shanghai and Hong Kong. Pakistan can also help channel energy supplies from the Gulf to China,” he said.

“The Pakistan-China friendship is a comprehensive partnership. China has been instrumental in helping Pakistan develop its civil and military infrastructure,” the article said and then went on to say that Beijing has helped in a wide range of construction projects from nuclear power plants to dams, roads and industrial estates. “The port of Gwadar on Pakistan’s Arabian Sea coast is a testament to China’s friendship with Pakistan” he said.

Relationship between China and his party, the Pakistan Peoples Party, spanned three generations from late prime ministers Zulfiqar Ali Bhutto and Benazir Bhutto to his son and PPP chairman Bilawal Bhutto Zardari, he said. Times of India. Zardari wants China to be arbitrator for India-Pakistan disputes. 23 Feb 2009, 1748 hrs IST, Saibal Dasgupta, TNN

India intoxicated by meager success is blind to real self-portrait of caste infested penury and balkanization. According to the Prime Minister Manmohan SIngh, the biggest threat facing Bharat right now is the Naxalite insurrection which encompasses more than 40% of Bharati territory. Entire swathes of land in the Northeast (7 sisters) and huge chunk of territory from Nepal down to Andhara Pradesh are in the hands of the Dalits, the Naxalites and the Maoists. Half the Bharati army is embroiled in Kashmir with no end in sight. Does this mean that the Bharati army has surrendered?

The world is moving ahead with the speed of light.

Looking ahead, Obama’s decision on Wednesday approving a troop buildup in Afghanistan constitutes a defining moment. He has put his presidency on the firing line. From this week onward, Obama’s war has begun. The war can well consume his presidency. Either he succeeds, or he gets mired in the war. Yet, the new US strategy is still in the making. Delhi takes note that it is at such a crucial juncture that the Pakistani army chief, General Parvez Kayani, has been invited to go across to Washington for consultations.

The message is clear: Washington will be in no mood to antagonize its Pakistani partner and Delhi is expected to keep tensions under check in its relations with Islamabad. Asia Times. India grapples with the Obama era By M K Bhadrakumar. Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

Mr. Zardari was at the right time at the right place.

“My party and my government want to strengthen the ties [between China and Pakistan] … and we are proud of China’s progress,” he said. “I wish one million Chinese were in Pakistan and one million Pakistanis were in China and take this relationship to another level.” Zardari offers China access to warm waters. The Daily Times

Additional Research:

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Ship Of Fools - A Must Read

Trend Alert: Global Systemic Crisis, Geopolitical Dislocation!

Reprint: Some Things You Need to Know before the World Ends

Six Escalation Scenarios to Nuclear World War III

The New World Order Evolving Theory

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