Ronnie Allen was the kind of man that had the charisma, gift of gab, and natural talent to be the center of the room.
He was at the top of his game during the golden years of pool. In his own words, “I’m called ‘Fast Eddie’ ’cause I shoot fast, talk fast, and bet fast. I’m the best one pocket player in this country, bar none. I’m so good I can’t even get a game unless I give it away first.”
A couple decades ago, he was hanging around a pool hall, playing anyone that dared to challenge him even with a large handicap.
One day, true to his nature, Fast Eddie yelled out, “I’ll give anyone in here 11-8 for a $1,000 a game!”
From the back of the room, someone yelled back, “I’ll take that bet!”
Allen had seen this man hanging around the pool hall, but he never even played. He just quietly hung around watching the games in a disinterested fashion.
Everyone simply knew Allen would come out on top. He was dominant, aggressive, and incredibly experienced.
Allen lost $10,000 to Vernon “Burnie” Elliott that day. Walking away from the hall, he grumbled, “HELL, I didn’t even know he could play pool.”
I hate to be the bearer of bad news, but we’re just like Allen and — to make things even worse — this is hardly a game.
Computers Vs. Trash
It is hard to fathom where we were as a nation when the USSR officially dissolved in 1991. There wasn’t a single nation with even half our share of global GDP.
Within three years NAFTA was up and running. The year after that, the creation of the WTO further entrenched America’s ability to capitalize on our unprecedented global economic dominance.
At least, that’s what we thought at the time. In reality, we opened up a flood gate for an unprecedented flow of wealth and value out of the country.
Manufacturing, long in decline at this point, went from supporting nearly 18 million Americans in 1998 down to 12 million in September 2009. The recent “resurgence” in American manufacturing has only added 500,000 jobs back.
According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.
We cannot even collect taxes on money being made by U.S. corporations. According to securities filings from 307 corporations, at least $206 billion was added to offshore profits last year. The total comes to $1.95 trillion in corporate profits outside the U.S. and marks an 11.8% increase from 2012.
When NAFTA was pushed through Congress, the United States had a trade surplus of $1.6 billion with Mexico. Last year, the U.S. had a $54 billion deficit with Mexico.
Quietly hovering around at the back of the room while the U.S. hogged the attention was a country that we didn’t even think could play the game.
Year after year, it has brutally beaten us at our own game.
Back in 1985, our trade deficit with China was a paltry $6 million. Cheap plastic tchotchkes don’t add up to much. Oh, how much that has changed.
Last year, we sold $120 billion of stuff to China. We bought $438 billion of stuff from China. That $318 billion difference is two-thirds of the total U.S. trade deficit and the largest ever recorded between two nations in all of history.
The tables have completely turned. While the top two Chinese exports to America are computer and communications equipment, we’re literally sending them trash. Oil seeds, particularly soybeans, and scrap materials are our top two exports to China.
This isn’t some abstract concept to grasp. That was $318 billion that was drained from the U.S. economy and its people. Over ten years, the total comes to a staggering $2.5 trillion of American money moving into China’s pocket.
Within a couple decades, the U.S.A. will be reduced to playing second fiddle:
The End Game
At least in pool, you’re normally given a chance to win some money back. It is a common courtesy, after cleaning someone out, to go easy on them for a couple games so they can save face and get a bit back.
We’re not going to get that opportunity. China is going after real, tangible assets that will guarantee future growth and global hegemony. This money is off the table for any reversal of fortunes and trade balance trends.
Since 2000, China has bought more than 4.6 million hectares of international land, according to the Land Matrix Global Observatory. In 2009, it owned just 2 million hectares.
A major driver is food security. China contains 20% of the world’s population but only 9% of arable land. The land deals included a 3 million hectare swath of farmland in Ukraine several years ago. That is about the size of Belgium.
The deals aren’t limited to arable land for food production though. Mining companies and operations, along with undeveloped mineral rights, are being snapped up as well. Any strategic commodity is a target.
China is even buying American land directly from us, through personal sales and corporate deals.
Through the purchase of Smithfield Foods, China now owns an additional 460 farms and became the top employer in dozens of towns.
There is even a proposal in New York state for a 600 acre, multi-billion-dollar project called “China City.”
Phase one is for a 600 acre development including room for Chinese businesses, homes for immigrants, a Chinese high school and college, a casino, and a theme park. The ultimate goal is for a 2,000 acre development.
China’s wild success is causing a problem though. It is sitting on $2 trillion of rapidly depreciating U.S. dollars. It would take years or decades to find enough worthwhile land available for sale and close deals that could absorb it all.
China had to find another tried-and-true way to turn its giant pile of cash into real wealth. It picked the best option and is now buying gold at a blistering rate.
Official Chinese gold reserve holdings haven’t been updated by the PRC’s Ministry of Commerce since 2008 when reports put the figure at 1,057 tonnes.
In March of 2013 alone, even as gold declined 10% below 2011 highs, the Chinese acquired 223.5 tonnes, bringing the total for the prior 12 months to 1,206 tonnes.
In yet another short-sighted move, Western central banks and companies have been more than happy to sell it to them.
The U.S.A. thought it was the best player in the room and was overly confident. With its trade surplus with the U.S. growing, land grabs, and a quiet yet massive flow of wealth from the West to the East, it is now obvious that China has been brutally beating us at our own game.
