business

[ujjwalrules]

hi
China's Increasing Threat

Last July, the Blanchard Economic Research Unit (BERU) published a report titled, The Chinese Connection. That report explained in detail that Red China was moving to penetrate the U.S. securities markets, posing a direct threat to both U.S. national security and your financial security.


The threat to U.S. national security is seen in Chinese efforts to raise money in the U.S. securities markets for state-controlled corporations directly involved in Red China's massive arms build-up. The threat to your financial security comes from the fact that Red China is the 3rd largest holder of U.S. Treasury debt. If and when the Chinese choose to liquidate their massive Treasury holdings, the stability of the U.S. financial markets could be jeopardized.


Then in October 1999, BERU published a report that described China's plans to disrupt the West's financial institutions in the event of major conflict breaking out. The report stated that according to the London newspaper, The Telegraph, "senior members of China's People's Liberation Army are openly urging the Beijing government to abandon conventional defense strategies and prepare a 'dirty war.' They advocate terrorism, biochemical warfare, environmental damage and computer viruses as a means to pitch the West into political and economic crisis."


The article went on to say that "the blueprints for the 'dirty war' say the Chinese army should infiltrate and sabotage key pillars of Western society, including banks and the public sector...The increasingly global world economy is pinpointed as a weak point which could be exploited."


Such threats to our economy and financial system may seem far removed in the post-Cold War world, but the world is a rapidly changing place that is not without danger. Right now it may be hard to believe that the West's financial system could be endangered by Red China, but an approaching economic crisis may give them the impetus.


According to a recent intelligence update from Stratfor.com, an intelligence consulting firm in Austin, TX, signs are emerging in Southeast Asia that strongly suggest a relapse of the economic crisis that struck the region in 1997. Could this new economic crisis spread to China?


Stratfor.com's update stated that in 1997, China was hit hard by the "Asian Contagion," but managed to survive. China made some short-term policy changes, but has failed, over the past three years, to find a "fundamental solution" to its economic problems. "A new tidal wave of Asian economic problems could cause massive problems for China this time," the update concluded.


Should this new economic crisis cause massive problems of China, the communist leadership may decide that this is an advantageous time to attack Western economies. By defaulting on their debt obligations, China could ease their economic pains and at the same time hurt Western financial markets. If that should happen, the first victims could be American investors who will be left holding billions of dollars of Red Chinese paper. Many investors learned the hard way with Russia, that communist countries can be poor credit risks.


During the chaos of an economic crisis, China may also take the opportunity to attack American financial markets directly. Should China dump its Treasuries, it would touch off an unprecedented financial crisis in the United States. Bond prices would fall, interest rates would rise, and the stock market would decline.


You would feel it in your pocketbook. Your credit card payments and mortgage payments could rise. The value of your stock and bond holdings would decline and your retirement fund would suddenly be worth a lot less. If you are close to retirement, the Red Chinese could be in a position to torpedo your retirement plans! You need to protect your savings with financial insurance. That financial insurance is gold.


Gold has served as a safe haven during periods of political and economic crisis. Should the Red Chinese follow through on their threats to disrupt our financial system during an economic crisis, no category of paper investments will fully insulate your portfolio. Gold is the only asset that could provide true security in such a scenario. Gold is the truest form of financial insurance and cannot be threatened by a "dirty war