The China Privilege

Good morning!

I’m getting through all the excellent suggestions from the mailbag.  This one, in particular, jumped out at me today.

Rude reader Geoff, from Gig Harbor, WA, asked me to share my views on China.  

Geoff was wondering where all the outrage was concerning China’s actions.

I’m reminded of William Bennett’s book, The Death of Outrage, which attempted to awaken the country’s conscience concerning the Clinton Administration.

I devoured that book when it came out.  Having voted for Bob Dole in ‘96, that should be no surprise.

Well, there are many reasons we give China a pass.  I’ll list my big ones.

Feel free to write with others!

The Unknown Virus of Unspecified Origin

In many of his videos, the Critical Drinker has called Covid this pejorative term, and I never cease to laugh.

The Covid origin story is still, painfully, being covered up.

Just ask Jon Stewart.

But before you do, watch this hilarious video.

If you’re wondering how Stephen Colbert has a job, it’s easy: he’s a company man.  And it’s an embarrassment.

But the interview itself isn’t what’s so cringeworthy.  Nor is Colbert trying to cover up for his masters.

It’s the blowback Stewart got for that interview that cracks me up.

This thread on Twitter sums it all up.  Scientism is real.

Now let’s do a thought experiment.

Let’s say we have irrefutable proof the Wuhan lab was responsible for the newly concocted virus, its gain-of-function, and the outbreak.

What are we going to do with our second-largest trading partner?

Declare war?

Doubtful.  There’s nothing militarily we can do without setting half the planet on fire.

That’s the real reason for the cover-up.

So China gets a pass.

Uighurs or Tibetans Have No Impact on Our Daily Lives

When was the first time you learned how to pronounce “Uighur correctly?”

I was in my late-30s, I think.  (It’s WEE-grr, in case you were wondering.)

This may be incredibly unpopular, but I just don’t care.

Well, I care in the normal “I wish them well” sense.

You may never have seen someone write that in print.  So I apologize if that shocks you.

But when you’re born in a country that went to war with the greatest empire ever known over a 2% tax, it’s tough to feel bad for those who won’t fight back on their own.

As for Tibet, I respect those famous people who bring attention to the plight of the Tibetan people.  That’s all they can do.

But what they can’t do is explain that China wants Tibet to control Asia’s water flow.  Or that they’re only occupying Xinjiang (or East Turkmenistan, as the Uighurs call it) to protect their Western flank.

And that takes the issue from one of opportunistic conquering to one of mandatory security.

But what about Taiwan, you ask?

Hell yeah, we care about them!

No Taiwan… no iPhones.


So, China gets another pass.

The South China Sea is Too Far Away

Robert Kaplan, in his excellent book, Monsoon: The Indian Ocean and the Future of American Power, wrote:

Americans, in particular, are barely aware of the Indian Ocean, concentrated as they are, on their own geography, on the Atlantic and the Pacific.

Of course, the South China Sea is next to the Indian Ocean via Singapore, so the same logic applies.

Americans rightly care about Canadians and Mexicans first.  They’re our closest neighbors and deserve our utmost attention.

When American Presidents meet with other leaders before those two, it always raises hackles.  

Not because of offended vanity, but because there’s an order to things and should be respected.

Most other international observers are angered when US Presidents don’t deign to understand their countries first.

The fact is if you’re not a Canadian or Mexican, you simply don’t matter as much to Americans.  

Sorry, not sorry.  That’s realpolitik.

And yet, this is another reason why China gets a pass.

Though 22% of total world trade and 60% of global maritime trade passes through this critical body of water, it’s not front-of-mind… until it has to be.

Keep Dancing!

“When the music stops, in terms of liquidity, things will be complicated.  But as long as the music is playing, you’ve got to get up and dance.”

Alas, this attitude has not changed in the 13 years since Wall Street blew up.

And it won’t, for all the reasons I’ve outlined in this very newsletter over and over again.

But the real reason is that if the world’s fund managers call time on this rally, it really will be over.  And if it’s over, the just desserts won’t be sweet.

And so we must keep up the pretense that all’s well.  With this, China gets to keep providing cheap exports to Americans eager to supply customers through their e-commerce stores.

China, too, prints money.  Not as much as the Fed, ECB, or Bank of Japan.  But it does.


We’re All Fiat Now

The simple fact is that it’s now acceptable for central banks to print money and buy other countries’ equities with them.

Let’s take the Swiss National Bank, for example.  I wrote the other day that it was a hedge fund dressed up a central bank.

Some of my banker friends had a good laugh over that.

Why did I write it?

Nearly a quarter of Swiss foreign reserves are held in equities.

That means the SNB prints francs out of thin air and then purchases stock.

How is this right?   I think it’s downright immoral.

These are the SNB’s top holdings:


These are all the holdings over $2 billion.

I love Switzerland.  The Swiss have no ill intentions.

They’ve done nothing illegal.  Far from it, you can allege they’ve admitted that US stock is better than their own currency!

And the franc is a currency that used to be backed by gold.

Yet, there’s nothing right about this situation.

Now just think of how many Chinese state-owned enterprises (SOEs) own US stock and don’t have the best of intentions.

And what about their sovereign wealth funds?

We simply don’t know.

From a report titled, China’s Sovereign Wealth Fund, from the Congressional Research Office:

On May 20, 2007, China Jianyin Investment Company, a wholly-owned subsidiary of the Central Huijin Investment Company (CHIC), signed an agreement to purchase a less than 10% stake in Blackstone Group in non-voting shares worth $3 billion. The decision to purchase less than 10% of Blackstone’s shares, and to purchase non-voting shares, was apparently not an arbitrary one. According to Blackstone’s CEO and Chairman Stephen A. Schwarzman, “The deal is ‘purely commercial’ and do [sic] not need the U.S. government approval as the stake is less than 10 percent.”

It’s a situation that never should have been allowed to arise.

Wonder why Elon Musk has no respect for the SEC?

This should be reason number 1!

Imagine if China dumped all its holdings?  Yikes!

So we’re prisoners in a jail whose gate we left open for others to invade.

Wrap Up

I’m sure there are other reasons, such as China having far too many friends and far too few critics in Washington and the media.

But the reasons above are big enough.

I hope that answered your question well enough.

Until tomorrow.

All the best,


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