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By Michael Trinkle, ForexTraders Colonel Gaddafi was proclaiming the love of his nation for himself, inviting all Libyans to arm themselves to defend him, and he was seen on TV screens making fiery speeches to apparently small groups of supporters urging them to keep their spirits up and fight on. But it is not clear who he expects them to fight against, and with whom, as he himself admitted the evaporation of his police force and his army units seem as divided as his administration. Various units are choosing to join the opposition, while others support the regimes attemps at subjugation in cooperation with what is often defined as mercenaries from other African nations. After the fall of the eastern parts of Libya to opposition rule, some towns on the western border of the country adjacent to Tunisia were known to be controlled by rebels. Today, however, reports confirm that the regime has successfully regained control of many of these areas after sending army units, helicopters and planes in a strong show of force. Still, with Gaddafis own tribe now on the side of the opposition, it seems like the remaining days of the dictator are few. It is improbable that Muammar Gaddafi will flee to any other country, since the Saudis, who have so far welcomed the toppled Arab leaders, have always had tense relations with him, and of course his chance of finding a welcome in the Western World is slim. All this leaves the man the only option of fighting to death – his character would find such an end, going down all guns blazing, a suitably glorious – or ignominous – close to his life in any case. In another interesting event, Stephen Roach has written an article published on AlJazeera where he claims that the Chinese have made a dramatic commitment to reforming the nations economy. He quoted various speeches by Premier Wen and other powerful leaders of the Chinese state, saying that the recent moves against inflation and rate increases must be evaluated in the context of this transformation to a consumer-based growth model. We find it hard to agree with him that there is a true commitment to such a quick change among the nations leaders. First, the CCP probably would not want the Chinese people to prosper too fast, as this could quickly bring snowballing reform and democratization demands which the party is ill-equipped to accommodate. An affluent urban consumer society that does not live hand-to-mouth will have time to reflect on the policies of the party, leading to a wave of dissent with unpredictable consequences. Second, while the Chinese are good at committing on paper, deeds frequently fail to match the rhetoric. The CNY appreciation issue and the imbalanced nature of Chinese economic growth itself, which, we are told by Mr. Roach, is finally being addressed this time, are examples. But the failure to realize economic plans has a long history stretching all the way back to the days of Soviet Communism, and we shouldnt take such commitments too seriously anyway. Finally, in order to transform China to a consumption society, the CCP must do much more than just increase wages or provide credit. The consumer must be made to feel safe and confident about the future, with the typical benefits and advantages enjoyed in Western societies being introduced to China gradually. Not much is being done about this at the moment, and what is being done is probably aimed at alleviating short-term discontent rather than reforming the countrys huge labor market. China needs a mentality transform a complete shakeup before it can be a free society of consumers, and we dont see this happening under Communism due to the contradictions such a scenario leads to. Today, gold is getting close to new records, stocks are falling in response to oil price rises, and turmoil in Yemen, Libya, and Tunisia continue. Well continue to focus on the Middle East, oil, and China as the week progresses. More articles from ForexTraders….