China Threatens to Pull Pin on Global Economic Hand Grenade

China Threatens to Pull Pin on Global Economic Hand Grenade

Lintao Zhang/Getty Images

Is China’s threatened bond attack on Japan a warning for America?

A senior adviser to the Chinese government has called for an economic attack on Japan’s bond market to crash the yen and drive the country into submission, reported the Telegraph on September 18.

The threat comes as Japan and China vie over ownership of the Senkaku group of islands located between the two nations.

Jin Baisong, who holds a position at a branch of China’s Commerce Ministry, noted that China has become Japan’s most important creditor. China should use its $230 billion of Japanese bonds “in the most effective manner” and ignite a budgetary debt bomb in its eastern neighbor, he said.

He also indicated that China should starve Japan of rare earth elements. China supplies around 95 percent of the world’s rare earth metals, which are used in many hi-tech applications including military machinery. “It’s clear that China can deal a heavy blow to the Japanese economy without hurting itself too much,” he said.

Jin’s threats may be directed at Tokyo, but America should take note because they could just as easily be aimed at the Red, White and Blue—and maybe they are.

Let’s pretend that China did follow through with its threat and dumped its mass of Japanese bonds. What would happen? It would completely flood the market. The unbending laws of supply and demand would kick in, causing prices to hit the dirt and interest rates to blow sky high.

Japan’s response would dictate how far the economic shrapnel spreads. The Japanese government could react with its economic Gatling guns by opening up the printing presses and paying China back with newly created money. Although politically satisfying, this would have negative and immediate implications for the value of the yen. $230 billion worth of newly created yen would spike the money supply, causing its value to implode. China would get its money, but it wouldn’t be worth as much as it thought. It could also be hugely damaging to the yen’s reputation. If confidence in the yen breaks, Japan will feel like it has been carpet-bombed with inflation.

Alternatively, and more likely, Japan could play hot potato with the live grenade.

America owes Japan more than $1.1 trillion. If Japan sells a portion of its U.S. government bonds to pay China, then instead of Japan having a yen problem, America may have a dollar problem.

Washington can’t afford to ignore this growing dispute between China and Japan.

Under President Obama, America has publicized its Pacific Maritime strategy as the cornerstone of its defense policy. Under this reorientation of American power, America is working to string together the various smaller Pacific nations into an economic and military alignment against China. In this context, America has often referred to its ally Japan and its many islands as its “unsinkable aircraft carrier” in the region. Japan is America’s most important Asian ally.

If America does not strongly back Japan, it risks having its Pacific strategy revealed as an empty shell. If China can force Japan to back down, it will be a huge signal for other Southeast Asian nations to submit to China. Japan’s only other choice would be rearmament. To this point, Japan has opted for a small military in exchange for American support. If U.S. support is ever seen as unreliable, Japan will be forced to re-militarize. A rearmed Japan will be much more independent and less America-centric in its policies.

Yet America has to be very careful in its dealings with China too. America conducts 2½ times more trade with China than it does with Japan. The U.S. federal government has also borrowed a whopping $1.3 trillion from China (and Hong Kong). China also owns another half trillion or so in other U.S. dollar debt assets.

China has its fingers on the pin of a much bigger hand grenade.

And there is no doubt that China considers America’s debt as a weapon to be used too. Back in 2007, Xia Bin, a cabinet-rank minister, stated that China’s foreign reserves should be employed as a “bargaining chip” in trade talks with the U.S. That same year, as China and America hammered out a trade deal, He Fan, an official at the Chinese Academy of Social Sciences, went even further, warning that China could obliterate the greenback if it so desired. “China has accumulated a large sum of U.S. dollars. Such a big sum … contributes a great deal to maintaining the position of the dollar as a reserve currency,” he said. If China’s central bank is forced to dump its U.S. currency, it “might lead to a mass depreciation of the dollar,” he said. China’s state media describes China’s huge dollar holdings as a weapon. In the past, it has referred to America’s debt pile as China’s “nuclear option,” indicating Beijing could easily trigger a dollar meltdown of massive proportions if it needed to.

America faces some tough choices. Watch to see how its massive debt leads to a weakness that will alienate its allies. America is about to lose a lot more influence within the Asia Pacific. Whether China drives Japan into submission, or causes Japan to seek military independence from Washington, America risks being effectively driven back to the beaches of Darwin and Pearl Harbor.

China has got its fingers on a global economic hand grenade, and things may be about to get ugly.

Germany Closes Embassies in the Middle East

Germany Closes Embassies in the Middle East


Germany temporarily closes its doors in Arab countries due to increasing radical Islamic violence.

On September 20, German Foreign Minister Guido Westerwelle announced that German embassies in many Middle Eastern countries would be closed on Friday, September 21. Officials were instructed to avoid the embassies, and Berlin has increased security at many of its diplomatic missions.

Germany is taking precautions in response to Muslims who are growing increasingly violent toward the West. The violence, including the murder of a United States ambassador and three other Americans in Libya, was allegedly sparked by an anti-Islamic video posted on YouTube titled The Innocence of Muslims. That claim is dubious, however, in light of the details surrounding the recent attack on the U.S. Embassy in Libya.

Islamic anger has mainly targeted America, but on September 14, angry Sudanese protesters stormed the German mission, broke windows, and set fire to the building. Germany has condemned the violence, but has not responded with force. The Khartoum embassy’s website says it is “closed until further notice.”

On Friday, 19 people were killed and more than 160 were injured according to reports coming out of Islamabad, Pakistan. The New York Times called it the “worst single day of violence” since the American ambassador was murdered on September 11.

Westerwelle declined to comment on precisely what Germany’s precautions are. “We have done everything within our means [to prevent further violent protests],” he said. “I can’t go into detail, because I don’t want to publicize the measures we’ve taken so far.”

Germany may be moving cautiously, but don’t assume that it will back down against Muslims in the same way the United States has. Daniel 11:40 prophesies that the “king of the south” will “push” against the “king of the north.” Matching biblical prophecy to current events, the king of the south can be identified as an Iranian alliance, and the king of the north as a German alliance. Although the headlines appear to point to a clash between the United States and Iran, it’s the tension between Iran and Germany that you need to watch for most. For more on this developing story, read our free booklet The King of the South, and “What Is Ahead for Europe.”

Herbert W. Armstrong’s Message to Indonesian President Suharto

Herbert W. Armstrong’s Message to Indonesian President Suharto


Meeting United Nations president and Indonesian Foreign Minister Adam Malik, along with President Suharto

Why would the president of one of world’s most populous nations repeatedly pursue meeting an unofficial ambassador for world peace? Why would such a nation partner a joint humanitarian foundation exploration of land inhabited by aboriginal peoples?

To understand, we must wind the clock of history back to 1954. During this time, the World Tomorrow radio broadcast, with Herbert W. Armstrong as presenter, beamed out over Asia via Radio Ceylon, receiving responses from listeners eager to hear current events explained in light of Bible prophecy.

By late 1968, a worldwide advertising campaign was in full swing, featured in publications such as Life, TV Guide and Reader’s Digest, along with newspapers from all corners of the globe. Over a quarter million subscribers were added to the mass-circulation Plain Truth magazine, and tens of thousands of these came from Indonesia.

By September 1970 this exposure, along with key relations with world leaders from Europe, the Middle East and Asia, led to a meeting organized between Mr. Armstrong and President Suharto in Djakarta.

Formerly General Suharto, the president had only been in power two short years by the time of his first invitation to the unofficial ambassador for world peace. After an attempted coup in 1965 was thwarted by Suharto-led troops, blame was leveled at the Indonesian Communist Party. Suharto was appointed acting president two years later and then appointed to the full powers of the country’s highest office the following year.

The first rescheduling of their meeting came in September 1970 due to scheduling conflicts, with the president in Europe and the unofficial ambassador in Singapore. Next was when Mr. Armstrong had a pre-scheduled meeting with the Philippine president. He recounted this to co-workers Oct. 28, 1970, “I had an important meeting with President Marcos. And while in Manila, President Suharto tried personally to reach me by telephone to arrange a meeting the next day. Prior commitments did not allow time to fly back down to Djakarta. Result, I am now scheduled to meet General Suharto the middle of December.”

It wasn’t until the middle of the following year that the two saw their schedules clear, only to be thwarted again. “At Djakarta, my planned visit with President Suharto had to be postponed because the king of Thailand (Siam) was there on an official state visit. This required President Suharto’s entire time. He had scheduled a meeting with King Leopold (who was on a private, non-state visit, with us), for the following Monday, and wanted to see me then. But I had meetings scheduled in Manila and Tokyo, and was unable to remain over that long. But a special dinner was held on Tuesday night in Djakarta, attended by six or eight of the chief officials under President Suharto, and their wives” (co-worker letter, May 28, 1971).

At the time, Mr. Armstrong’s eldest daughter accompanied him, aiding in the organization of such occasions, as he reminded his supporters: “She takes her mother’s place as my hostess.” His wife, Loma, had died suddenly in 1967, thrusting his oldest daughter into greater duties. Had Mrs. Armstrong have lived, her role would have been alongside her husband, traveling to world capitals, meetings world leaders with him and acting as his ambassadorial “hostess” at the hundreds of such banquets and testimonial dinners he would attend over the remainder of his life.

It was not until the summer of 1972 that President Suharto and Mr. Armstrong finally met. This time, the president of the General Assembly of the United Nations, Adam Malik, who was also Indonesian foreign minister, passed along the request to Mr. Armstrong to travel to Djakarta. Mr. Armstrong and Mr. Malik were already friends and had visited previously at the foreign minister’s home in Indonesia.

At 8:45 a.m., August 3, Mr. Armstrong arrived for his meeting with the leader of the world’s fourth-most populous country. The occasion came at a time of global tensions amid fears of Communist encroachments. Suharto had gained much Western support for his resistance to this power and its advancement into his resource-rich, poverty-stricken nation spread over 3,000 islands of the South Pacific.

At the presidential offices, Mr. Armstrong was greeted by press photographers, staff members and the chief protocol officer. He then signed the official guest book, was ushered into a waiting reception room, then into the president’s office. After a warm handshake, Mr. Armstrong, as was his tradition, presented President Suharto with a gift of Steuben crystal.

His “personal” for the November edition of the Plain Truth was termed an “exclusive interview” to its then 2.5 million subscribers, with the Indonesian president’s picture featured as the cover. Mr. Armstrong wrote from Sri Lanka the day following his stopover in Indonesia, “We really had a most interesting and profitable meeting with General Suharto.” Mr. Armstrong’s recollections came amid the backdrop of the Vietnam War and the U.S. administration’s efforts to withdraw troops from the conflict.

“He had been desirous of seeing me all along, and this was made doubly evident by the warmth of the reception at this meeting yesterday morning,” he wrote readers. “If you could be with me in meetings with heads of governments in different parts of the world, you would have an altogether new conception of the insurmountable problems facing this whole very sick world today. These heads of governments tell me of problems beyond their human power to solve.”

The two discussed President Nixon’s visits to China and Russia, the changing landscape of the United Nations with admission of Communist nations, and the domestic security threat to Indonesia, which the president told Mr. Armstrong he feared more than any threat from abroad. The two discussed Indonesia’s policy of national resilience and the challenges of the country’s poverty, economic development and education expansion.

“I thanked him for giving official approval for our forthcoming scientific expedition into the Irian, that is, the western portion of New Guinea and for the cooperation given by the Indonesian government to King Leopold of Belgium, when he was there planning the expedition,” Mr. Armstrong wrote. “I’ve mentioned previously the joint participation of Ambassador College with the Belgian Foundation, headed by King Leopold, for the exploration of land inhabited by Aboriginal peoples, the study of these peoples, and other activities in the field of anthropology.”

Mr. Armstrong then concluded his report of this “exclusive interview” by reminding readers of God’s inexorable law of give, outflowing love and concern for others—of cause and effect and the resultant 6,000 years since the Garden of Eden of man’s inhumanity to man, amid a world held captive.

By 1973, the Plain Truth was on Indonesian newsstands and the shelves of 84 of its libraries.

The following year, he continued to work to reach Indonesians with God’s gospel message, organizing public appearance campaigns, additional testimonial dinners and promoting his humanitarian endeavors in the Andaman Islands in the Sea of Bengal in consort with its government and King Leopold’s Belgium Foundation.

Then in 1975, with the establishment of the Ambassador International Cultural Foundation, he launched the Human Potential magazine, designed for the limited readership of royalty and the highest echelons of worldwide government such as President Suharto and Foreign Minister Malik. The publication was later renamed Quest.

On March 15, 1981, Mr. Armstrong reminded the world from the pages of the Wall Street Journal of Indonesia’s size and scope of population and needs for physical humanitarianism and spiritual education.

Five years before his death, he oversaw visiting and baptizing tours into Indonesia from the Church’s Australian regional office. Representatives traveled to Java, Sumatra, Kalimantan and Permantang Siantar. Readership of the Plain Truth remained steady, but by late 1983, there were only a handful of members from its Muslim population of hundreds of millions.

Thankfully, today at the Trumpet, successor to the Plain Truth, editor in chief Gerald Flurry in like manner receives responses from our readers, listeners and viewers of the Key of David in Indonesia. And in the spiritually benevolent footsteps of Mr. Armstrong, the Church’s regional office in Australia serves and supports those in Indonesia and throughout Asia with understanding of God’s Word and law of love.

Morsi Demands Fundamental Changes From U.S.

JERUSALEM—In a recent interview with the New York Times, Egyptian President Mohammed Morsi said the United States “needed to fundamentally change its approach to the Arab world, showing greater respect for its values and helping build a Palestinian state, if it hoped to overcome decades of pent-up anger.”

According to the Times, Morsi “said it was up to Washington to repair relations with the Arab world and to revitalize the alliance with Egypt, long a cornerstone of regional stability.”

Now Washington, remember, is currently supplying billions of dollars in funding to Egypt—despite the nation’s increased hostility toward the West, a decidedly undemocratic takeover by the Muslim Brotherhood, and a complete disregard for its peace treaty with Israel. And Washington, of course, is largely responsible for clearing the way so that Morsi could be president!

It’s interesting when you compare what Morsi said about the U.S. needing to fundamentally change its approach to the Arab world, with what Barack Obama said just before he was elected back in 2008. Just days before the election, then Senator Obama said at one of his campaign rallies: “After decades of broken politics in Washington, and eight years of failed policies from George W. Bush … we are five days away from fundamentally transforming the United States of America.”

Many would say, now almost four years on from that, that he’s certainly had some success in transforming the United States. He’s certainly helped to radically transform the Middle East. In the Cairo speech from 2009, President Obama called for “a new beginning between the United States and Muslims around the world, one based on mutual interest and mutual respect ….”

This outreach, as Charles Krauthammer noted in his column last week, implied that the relationship had been based on disrespect in previous administrations.

“Curious,” Krauthammer wrote, “as over the previous 20 years, America had six times committed its military forces on behalf of oppressed Muslims, three times for reasons of pure humanitarianism (Somalia, Bosnia, Kosovo), where no U.S. interests were at stake.”

And yet, look at where we are in the Middle East today after so many fundamental changes in recent years. It staggers the mind when you consider just how far the U.S. has fallen here in the Middle East today, in terms of power and influence.

“The Islamic world is convulsed with an explosion of anti-Americanism,” Krauthammer said. “From Tunisia to Lebanon, American schools, businesses and diplomatic facilities set ablaze. A U.S. ambassador and three others murdered in Benghazi. The black flag of Salafism, of which al Qaeda is a prominent element, raised over our embassies in Tunisia, Egypt, Yemen and Sudan.

“The administration, staggered and confused, blames it all on a 14-minute trailer for a film no one has seen and may not even exist.”

To admit otherwise or to pin the blame elsewhere, would be to admit the abysmal failure of Obama’s fundamentally new approach, his new foreign policy for this region.

Krauthammer said, “Religious provocations are endless. … Resentment about the five-century decline of the Islamic world is a constant. What’s new—the crucial variable—is the unmistakable sound of a superpower in retreat.” That’s the new element that’s added here. That’s what’s bringing about these fundamental transformations that we see here in the Middle East and also back in America too.

For more on the failure of America’s Muslim outreach, be sure to watch “The Failure of America’s Muslim Outreach.”

UK to Opt Out of 100 EU Laws

UK to Opt Out of 100 EU Laws


Britain will opt out of over 100 European Union laws on policing and crime, the Sunday Times reported September 23, claiming that Prime Minister David Cameron is preparing to announce the opt outs shortly.

The announcement would see Britain reverse key steps toward European integration, while Europe’s leaders loudly call for “a federation” and “more Europe.”

The most high-profile law facing the axe is the European Arrest Warrant (eaw), which requires a member state to hand over someone suspected of a crime in another. Once an eaw has been issued, there is very little Britain can do to avoid handing the suspect over, even if the suspect is a British citizen, and even if he is accused of an offense that isn’t a crime in Britain.

This law is unpopular with both the left and right, especially after it was used to compel Britain to attempt to hand over WikiLeaks founder Julian Assange to Sweden. Some have been held without charge in terrible conditions in foreign jails for months. In one of the most outrageous cases, Portugal issued an eaw for a man charged with first degree murder, despite the fact that he was acquitted on similar charges years earlier, and that the man he supposedly murdered was still alive. In this case, the warrant wasn’t fulfilled.

Under the Lisbon Treaty, Britain can opt out of all of the 130 of the laws on crime and justice. Afterward, it can negotiate with the EU to opt in to certain laws. The Times claimed that a “senior government source” confirmed that the government planned on opting in to “dozens” of the laws. It reports that these laws are probably the ones on human trafficking and smuggling—where international cooperation is more useful.

“This is a fork in the road for the British justice system, and a vital opportunity to retain UK democratic control over criminal justice policy,” said Conservative Member of Parliament Dominic Raab.

It’s also a fork in the road for Britain and Europe. If this goes through, it would be an actual, concrete step away from European integration, not just the disgruntled chattered that is a constant part of British politics. Meanwhile, core European nations are looking for ways to bind themselves closer together with more laws. As the Trumpet has forecast for years, Europe is heading toward a federation, and Britain is heading out.

Border Skirmish Raises Questions Over Camp David Accord

Border Skirmish Raises Questions Over Camp David Accord


Egypt announces plans to revise peace treaty with Israel.

An Israeli soldier was killed and another wounded last Friday when terrorists launched a surprise attack on a group of Israel Defense Forces (idf) soldiers aiding refugees on the Israeli-Egyptian border. A 20-year-old idf corporal was killed as he approached the border fence to provide water for a group of African migrants. Taking advantage of the distraction, nearby militants opened fire. Three militants were killed in the fight that ensued.

The Sinai Peninsula has become a hotbed of contention over the last few months as Egypt has stepped up its military presence to combat the increased activity of rebel insurgents. This increase of Egyptian troops in the region has raised many concerns regarding Egypt’s commitment to the Camp David Accord that has ensured peace between Israel and Egypt over the past three decades. The accord limits the number of troops the two nations are allowed to have in the de-militarized zone of the Sinai Peninsula. However, Egypt has used the current chaotic situation to justify deploying additional troops to the region.

Last week’s incident was the second fatal terrorist attack along the border in recent weeks, and has prompted Israeli criticism of Egypt’s ability to handle the situation. Some are calling for Israeli military action in the peninsula to eradicate the increasing terrorist threat.

In response, Egyptian Member of Parliament Mohammed Abd al-Haleem told Al Arabiya, “It is impossible under any circumstances that Israel would conduct strikes against Egyptians in Sinai.” This week a member of Egypt’s Higher Military Council stated that Egypt would “cut off the arm of any foreign or domestic aggressor.”

Stating that the current treaty prevents Egypt from gaining complete control over the terrorists, an Egyptian presidential adviser announced yesterday he would be submitting a proposal for amending the 1979 peace treaty within the next few days. This prompted Israeli Foreign Minister Avigdor Lieberman to reply that “there is no chance that Israel will agree to any kind of change” to the accord.

With tension building throughout the Middle East, watch for the rift between Israel and Egypt to widen as Egypt continues drawing closer to Iran. To understand what is about to happen in the Sinai, read “Egypt: Morsi Sheds His Moderate Cloak.”