Posted on 12/05/2010 9:34:05 AM PST by SeekAndFind
"The Ant and the Grasshopper," a fable by Aesop, provides a moral lesson about hard work and saving. During the warm months, the ant works hard to store up food for the winter, while the grasshopper sings and plays. When winter arrives, the grasshopper asks the ant for food because it has none. In today's world, China is like the ant, and America is like the grasshopper.
America tends to focus on enjoying today instead of preparing for tomorrow. This trait has led to a nation of debtors. And, like for the grasshopper, our lack of savings may lead to our demise.
The grasshopper's indulgence affected only its own life and not the lives of others. In America, however, that is not the case. America's indulgence will negatively affect future generations in the form of debt.
America's federal debt is almost $14 trillion and rapidly rising. Yet the government is still spending more money than it collects in taxes. For the 2010 budget year, it spent approximately $1.3 trillion more than it collected -- the second-largest deficit in American history. For the 2009 budget year, it spent roughly $1.4 trillion more than it collected -- the largest deficit in American history.
If we don't pay down the federal debt, our children and grandchildren will end up paying for our excesses plus compound interest. Part of the American Dream is making life better for future generations. A recent poll by Bloomberg found that a majority of Americans "are not confident or are just somewhat confident their children will have better lives than they have."
While the American Dream is eroding, members of Congress fail to cut spending that would reduce our deficits and debt, and thus we continue to sing and play like the grasshopper.
America used to invest in the future. From highways to high-rises, we used to build stuff that was the envy of the world. Now we mostly consume.
Meanwhile, China is busy storing up food for the winter. China tends to focus on preparing for tomorrow instead of enjoying today. This trait has led to a nation of creditors. And, like with the ant, their savings will help them survive.
When comparing net national savings as a proportion of Gross National Income from the mid-1990s to 2005, American savings decreased from over 5 percent to nearly zero, and Chinese savings increased from roughly 30 percent to almost 45 percent.
In Aesop's fable, the grasshopper asks the ant for some food, but the ant refuses. In the metaphor I'm using here, however, China is loaning America some of its savings -- with interest, of course. In fact, China is the largest foreign lender to America.
How did China get so much money that it could loan some to us? The combination of American overconsumption and a Chinese strategy of export-led growth led to export surpluses that the Chinese monetary authorities converted into dollar-denominated reserves to prevent their currency from appreciating. In other words, we bought a lot more stuff from them than they bought from us, they kept their currency cheap so their exports would be cheap while their imports from America would be expensive, and they ended up with a lot of our dollars.
We've been borrowing money from China at very low interest rates to finance our current account deficit. The rates have been low because the Chinese have consistently intervened in the currency markets.
China's savings helped to finance America's debt habit. And the low long-term rates helped to inflate the real estate bubble, which led to the financial crisis.
That the financial crisis threatens the dollar is making the Chinese very nervous because they own vast numbers of dollars. China has currency reserves of $2.5 trillion, of which roughly 70 percent are dollar-denominated. The Chinese are exposed, and they will lose if the purchasing power of the dollar and/or the price of U.S. government bonds falls. The grasshopper's problems now threaten the ant.
Because America is experiencing record-high budget deficits and appears to be on an unsustainable fiscal course, the Chinese have been gradually reducing their exposure by cutting back their holdings of U.S. Treasuries and diversifying in other nations. But it is not likely that they will make dramatic reductions because they need a strong American dollar.
Kenneth Lieberthal, a senior fellow specializing in China at the Brookings Institution, recently said, "I don't think we're going to see any massive flight from China's holdings of U.S. debt. That would be self-defeating, and they well recognize that."
However, other nations could also become nervous and reduce their holdings of U.S. Treasuries. A sustained drop of total foreign holdings would likely lead to higher interest rates and falling stock prices in America. We are, therefore, vulnerable to foreign lenders.
It's time for America to focus on preparing for tomorrow instead of enjoying today. We can no longer behave as the grasshopper. We must become the ant.
-- Bill Costello, M.Ed., is the president of U.S.-based Making Minds Matter, LLC and the author of Awaken Your Birdbrain: Using Creativity to Get What You Want. He can be reached at www.makingmindsmatter.com.
How is China the ant when they have burnt their seed corn through the one child policy?
“During the warm months, the ant works hard to store up food for the winter, while the grasshopper sings and plays.”
In China, Bill Gates is Britney Spears. In America, Britney Spears is Britney Spears.
RE: How is China the ant when they have burnt their seed corn through the one child policy?
YEP, This is one ant colony that isn’t multiplying ...
America funds Planned Parenthood. :[
A good place to start.
Brats versus bastards.
A singleton is a brat, but in America we have a culture of bastards.
The Chinese people are only like ants in that they can’t think for themselves. I agree they have shot themselves in the foot with the one child policy, it is a nation of little princes and princesses. Let the youthful generation over there get older and in charge then haul out the fables.
Aesop was very wise man, that’s for sure.
But these analogies go only so far. America is doing what America always has done well — push major social experiments past the breaking point, and then repair them, in a way that is (usually) stronger.
China, however, is not the same. The times THEY are in are NOT a thing known to their long cultural history. This is not yet another cycle of social order and social chaos.
Nor are they saving, as also we are not spending.
Tell me, so-called wise, what is being saved? What is being spent?
I wouldn’t want to be in charge over there in another 20 years. As bad as things are here, we’re still in better shape, much better shape, than they are.
The new deficit reduction proposal by Simpson and Irksome is playing..... “Who’s on First(Abbott/Costello)..” with the Chinese..
Might work for a while.. but the Chinese will be really pissed when they discover its just double talk..
http://www.youtube.com/watch?v=wfmvkO5x6Ng
Also, China "forces" its citizens into saving, basically for the greater good of the State. China has a Communist political and control system, which is now directed towards "development." They do many things to their citizens that Americans would rightly find appalling.
So America is bested by a country that 1/2 have no running water,
crap in a bucket and wipe their backside with their hand?
” a country that 1/2 have no running water,
crap in a bucket and wipe their backside with their hand? “
Oh - ya mean like another country was back in the early 20th Century?? That country did pretty well growing out of that state affairs, over time, ‘twould seem to me......
It took alot of blood to get the chinese, people to be marching ants. Those who oposed the chinese cultural revolution, are gone...
http://www.theepochtimes.com/n2/content/view/46937/
The Terrible Winter of 1968: A Memoir of China’s Cultural Revolution
One week after my father left home to escape being beaten to death by the village Cultural Revolution committee, the people from the committee still came to terrorize us every day.’
The Communist know what it will take to complete their ‘revolution’. Maybe that’s why folks like Ron Jr and Claire are talking of violence.
We know though that it won’t take violence to prove their ideology wrong again. Just patience.
The Chinese have mega problems. If they were free to vote - they would not elect a muslim to run their country 7 years after muslims attacked. Americans who watch Saudi-American TV are drooling idiots.
WikiLeaks is helping show what we have know: The Saudis are the money behind 9/11, the money behind killing our troops. With a little reading - the public will realize they have shareholdings, joint ventures and other deals with ALL 6 TV networks including Fox. The Saudis own DC, Londo and Brussels (EU).
The Chinese are not that dumb. The West is.
That country wasn't communist.
China does not wish to improve their lives.
It wants to kill them.
Improvement?
Communist countries are the lands that time forgets.
http://news.xinhuanet.com/english2010/china/2010-10/18/c_13562418.htm
BEIJING, Oct. 18 (Xinhua) — Although China’s success in feeding 22 percent of the world population using the world’s less than 10 percent arable land has been hailed as a miracle, concern is growing that the country’s shrinking arable land would jeopardize grain security.
The country’s summer grain output inched down 0.3 percent from one year earlier to 123.1 million tonnes in the first half of this year after a prolonged drought in southwestern China. It was the first decline in seven years for China’s summer grain output.
To ensure grain security, China set a “red line” to guarantee its arable land never shrinks to less than 1.8 billion mu (120 million hectares).’
Long-term success requires creativity and innovation. Innovation and creativity are the products of individuals. Free societies promote creativity. Homogeneous societies of hard working, but not truly free, people do not generally lead the world in creativity and innovation. Our advantage has always been that as a nation we supported the input and success of individuals. The ‘Borg’ ultimately cannot win over free thinking people. They may have short or medium-term victories, but the world moves forward ultimately on the basis of the input of individuals.
Our biggest task is to preserve our system of individual freedom. We live in a society in which, currently, a group of marginally talented people (primarily leftist politicians) are trying to push the rest of us into a homogeneous citizenry, under them. With their limited abilities it is the only way these people can make themselves ‘special’. We must not let them. We must preserve our individuality.
The Chinese don’t save and the Saudis don’t own anything. We are not dumb, and Wikileaks is a passing fad. The big dust-up over Wikileaks is stupid. It’s meaningless.
Every child born in the US without a Dad married to his Mom is a far bigger problem than anything in Wikileaks.
For China the acts of callousness that allow one girl-baby to be abandoned, or one mother forced to abort, or a parent to be sterilized, or a Falung Gong practitioner imprisoned are each, in each case of same, a bigger problem for that nation as a whole than all the trade imbalances.
And Saudi Arabia? Except for the practice that king is buried alongside commoners with no special markers on his grave, what good can I say of them? Do you think that our Lord G-d allows any amount of their money to have any negative effect on a people acting in a G-dly manner?
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