China to Europe: ‘Your worn out welfare society and outdated labor laws induce sloth, indolence and penalize hard work.’

By mw | Related entries in Bad Decisions, Bailouts, Banks, China, europe

Today was a bad day in the continuing drama of the soap opera we call Europe.

Focus shifted from an insolvent Greece to a potentially insolvent Italy. The back breaker is that the cost of borrowing for Italy spiked above 7% for their 10 year bond, which most economists say is unsustainable.

Greek insolvency was a manageable problem because the Greek economy is a pimple on the ass of the European economy. Italy, OTOH, is the eighth largest economy in the world. Not only is Italy too big to fail, it it may be to big to bail. Bailing Italy out of a debt crisis would have to come from one of three sources.

  1. The International Monetary Fund (IMF) which is highly reliant on funding by the US. What do you think the domestic political appetite is for US taxpayers bailing out Italy and the Eurozone via the IMF?
  2. The European Central Bank (ECB), which is legally constrained from doing so, doesn’t have the money anyway, and says they won’t do it.
  3. The European Financial Stability Facility (EFSF) which was the centerpiece of the Eurozone Debt “solution” touted by Merkel and Sarkozy way back two week ago. Problem being – they were expecting the Big Panda to fund those bonds. Yeah, that is not happening either. Here is why…

Al Jazeera’s Teymon Nabili recently interviewed Jin Liqun, Chairman of China’s Sovereign Wealth Fund. The remarkable interview has garnered deserved attention in the blogosphere and MSM. It is well worth the 30 minute investment of time, but for those who want to skip right to the good parts, I’ll offer a few highlights.

First, Jin Liqun explains with crystal clarity the prerequisite conditions for China’s potential role as a “white knight” riding to the financial rescue of the Eurozone. To whit – if it is not good for China, and it is not a good investment, China is not going to participate in the European Financial Stability Facility (EFSF):

“You cannot come to me, asking me ‘Hey! Why don’t you pump money in this kind of… projects, or investing the banks that are in trouble… we are in trouble, and our two countries are friendly, so why don’t you come in?’, this is actually in stark contrast to the requirement imposed on our sovereign wealth fund”, “the recipient countries should treat sovereign wealth funds fairly… as any other financial investors…”

This is a perfectly reasonable investment posture, but apparently a surprise to the European leadership.

Even more interesting, is the explicit, no BS, no mincing of words, no diplomatic artifice with which Jin Liqun lectures Europe on exactly the problem with the Eurozone labor laws and welfare state.

This excerpt around 12:10 in the YouTube video (I’d embed it here, but my Donk permissions don’t let me embed video):

NABILI: “There are many in Europe who consider their own situation as being right on the brink. Even after this apparent agreement between the leaders of Europe on how to save Greece and stabilize their economies, there are still some who say this is matter of merely postponing the crisis … if there isn’t some form of much stronger commitment, for instance from the Chinese, we really are at the point of disaster. There is going to have to come a point here where a decision has to be made and soon. I know you are not speaking on behalf of the Chinese government, but is China going to step in and play that role? “

LIQUN:
“We in China, we in the CIC, are actively looking for investment opportunities that are good for both sides… We are upbeat about Europe, but firstly Europe must be upbeat about itself. There is whole range of reform measures which have to be done without delay. Having 17 governments and parliaments does not give Eurozone members any excuse for not taking any action. And this is the message… If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hard working. The incentive system, is totally out of whack. Why should, for instance, within [the] Eurozone some member’s people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair.”

NABILI:
“You are speaking in many ways like one of the extreme capitalists of the United States. Are you suggesting that a hard line capitalist approach is where Europe should be going?”

LIQUN:
“The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard.”

It was about this point in the interview that my head exploded.

Two questions come to mind:

  1. Why does it take one of the elite members of the leadership of a “Communist” country to articulate the problems in Europe with this kind of lucid precision? Why is this clarity completely lacking in either American or European leadership?
  2. Why do I have to go to Al Jazeera to see an interview with intellectual depth and real answers to questions about the nature of China’s perception of and possible participation in solving the European sovereign debt crisis?

I have no answers to those questions.

But when Jin Liqun finishes lecturing the Europeans, I’d like him to offer a few courses in capitalism and economic reality to our leadership in Washington D.C.

X-posted from “Divided We Stand United We Fall”


This entry was posted on Wednesday, November 9th, 2011 and is filed under Bad Decisions, Bailouts, Banks, China, europe. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

7 Responses to “China to Europe: ‘Your worn out welfare society and outdated labor laws induce sloth, indolence and penalize hard work.’”

  1. cranky critter Says:

    I am certain this clarity exists in the minds of both American and European leadership. They just can’t say it.

    China can say it, this guy can say it, because it’s not his ass in the vise.

    Maybe Italy needs to default. Someone needs to default. Don’t we need some defaults so that more folks re-open their eyes to
    • consuming no more than they’re producing
    • debt is risk

    Easy credit created these problems. It’s going to be the defaults that finally start bringing interest rates up.

  2. cranky critter Says:

    ^&^*&^%^&$%^#$$%@#%

  3. Tully Says:

    Liqun can say it because he need never face the voters. Even when they have their asses in the vise, the Chinese party wheels aren’t subject to electorate pressure, except for that of the Central Committee. They’re not a democracy and they OWN the military, so the “bread and circuses” problem is not something they need to finance, much less finance past reality limits with Hope and handwavium.

    Besides, this is standard Marxist dogma. Marx was not a total idiot, despite believing in the labor theory of value. He knew that there would be no surplus value to “share” unless it was first created. Thus the state (China) has no problem enforcing its diktats in the name of the Glorious Revolution. Liqun has no problem calling out welfare freeloaders as social parasites, because in Marxist doctrine, they are.

  4. Jim S Says:

    Of course China knows how to motivate their people.

    http://www.chinadaily.com.cn/china/2011-03/01/content_12092367.htm

  5. Tully Says:

    That’s just their standard grade of neglect, Jim. For motivation they call out the functionaries and military to visit you. Do it our way … or else. And they don’t mean they’ll cut your welfare check. If they decide you’re a “social parasite” and you don’t shape up in response to a first warning, they won’t undernourish you, they just won’t feed you at all. Or they’ll simply kill you outright as an object lesson. As far as they’re concerned, “social parasites” serve no useful purpose other than as object lessons.

    Lovely people, communists. Anything for the Glorious Revolution.

  6. All linky, no thinky « Blunt Object Says:

    [...] a) Grinch-like German Chancellor Andrea Merkel, complaining about her country being on the hook for a Greek bailout? b) Hard-hearted conservative bloviator Rush Limbaugh, blaming the welfare state for Occupy Wall Street? c) Robotic Canadian Prime Minister Stephen Harper, looking for excuses for the country’s inability to grow its way out of debt?  Or d) Jin Liqun, chairman of the People’s Republic of China’s Sovereign Wealth Fund, explainin… [...]

  7. Chen Says:

    Tully, then what is your attitude to the European financial crisis? What is the cause?

Leave a Reply


NOTE TO COMMENTERS:


You must ALWAYS fill in the two word CAPTCHA below to submit a comment. And if this is your first time commenting on Donklephant, it will be held in a moderation queue for approval. Please don't resubmit the same comment a couple times. We'll get around to moderating it soon enough.


Also, sometimes even if you've commented before, it may still get placed in a moderation queue and/or sent to the spam folder. If it's just in moderation queue, it'll be published, but it may be deleted if it lands in the spam folder. My apologies if this happens but there are some keywords that push it into the spam folder.


One last note, we will not tolerate comments that disparage people based on age, sex, handicap, race, color, sexual orientation, national origin or ancestry. We reserve the right to delete these comments and ban the people who make them from ever commenting here again.


Thanks for understanding and have a pleasurable commenting experience.


Related Posts: