Tuesday, December 06, 2011

Treasures from the threads - Number 69 Lithium/Afghanistan

The following was the 190th Comment to a question posed on John Redwood's blog asking "Can you help write the end game?" Linked here:

Posted December 5, 2011 at 10:59 pm | Permalink
In the end the Euro will be saved in the short term but the current bailout package of 440 BILLION Euros will not do the trick.
What is required is 2 trillion Euros which leaves a shortfall of 1.56 trillion Euros.
So far the Germans have kept their hands firmly in their pockets and China ,Brazil and Russia have all refused to chip in .
America is effectively bankrupt and has traduced its currency so much and spent so much on black programmes and defence that it cannot really assist.
The Chinese ,could assist but take the view that the Euro crisis cannot be that serious because the Germans will not put money on the table.
Eventually Germany will have to if it really wants “ever closer union”.
Once they do the Chinese will grant some help via it,s sovereign wealth fund but only within the context of buying up Western banks and key assets.
This has already started with Sir Richard Branson,s recent purchase of Northern Rock via Virgin Money–His co-venturer was the Chinese Sovereign Wealth Fund and with the earlier help given to Greece by China which wanted an island in the Mediterranean sea for strategic reasons.
The discovery of $3 trillion USD in copper and $3 trillion USD in lithium at the Aynak mine in Afghanistan may hold the key to the conundrum.
China Metallurgical Corporation has secured the rights to mine against stiff competition by heavily bribing Afghan Government officials and promising to rebuild Afghanistan,s infrastructure.
350,000 Chinese mineworkers are hard at work at Aynak,guarded by American troops who had to first clear the area of Taliban fighters and more Chinese construction workers are building roads.
The lithium will power the first generation of new electric cars which will lessen our dependence on oil and our need to seize oil by force in dusty countries,whilst the copper will assist the Chinese economy during what for them is a slowdown.
One might envisage that one trillion might then be available to pump prime the US economy which would then be more receptive to Chinese goods.
Provided the Germans dig deep and austerity measures are applied to the PIIGS then the remaining trillion,secured by real assets and not paper could come to Europe from China .
In the long run however the Euro is doomed because Europe is by and large lazy ,unproductive and uncompetitive(except for Germany) and thinks it has the right to avoid paying its own way.



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