We're Doomed!
Posted on 11/11/2004 4:21:54 AM PST by goldsaint
Who will buy our debt if China goes down?
Currently China is one of, if not the largest, buyer of U.S. debt. It is also the largest recipient of our trade dollar deficit. The World wide financial markets are getting subtle signals form the Chinese that they are tired of taking devaluating U.S. dollars and buying devaluating U.S. bonds, notes, and bills. In early 2005 they will try to move to a “basket of other currencies” and eliminate 500 Billion dollars in U.S. denominated paper from their holdings. My first question is who do they think is going to want to buy all this U.S. paper? My second question, is it possible that the Chinese may be experiencing the beginnings of their own economic collapse? As is usually the case you can’t trust the commie controlled media in the U.S. which always shows China as the up coming world economic power. What you see on the U.S. news is beautiful new huge cities, all very clean with millions of folks going to work and beginning to live the good life. This is not what I hear from friends in China. Below are a few pieces of information I received from a friend this week. This gentleman is mid 30’s and has two college degrees, one in business and one in archeology. He paints a much different picture of life in a major city in China.
“Yes, certain economic progress has been made but there are much more serious problems here than anyone can imagine, can you imagine that real estate prices in shanghai has exceeded that of Chicago? That is really a fact, most people here earn about US$2000 per year. Maybe you are not willing to believe this, a new apartment with three small bedrooms (for the poor in U.S. I guess) in jam-packed downtown Shanghai costs at least Yuan 1,100,000 (US$135,000), that is why most people have to live in the old apartments of more than 20 years. The whole real estate market is pushed higher by money loaned from banks (most are state owned), I think this is a big bomb which will destroy the whole financial system in the near future, this is serious inflation, there is no way out. Besides real estate, automobiles are also much more expensive than anyone like you can imagine, about double the prices in U.S. moreover, the market in land is out of control, and most governments from the provinces to the counties try to deprive the land from peasants and sell it to private companies at cheap prices because they are of the common interest, many peasants are losing their lands without enough compensation. In China, all medias are controlled by CCP (the only party) and they never expose any faults in this country. The prices of agriculture produce and most industry product here are more expensive than in U.S, but labor-based products are cheaper. most metals like gold are of the same prices as yours due to the opening market.
Welcome to FR?
George Soros........ he's got nothing else to do.
Perfect.
Got ozone?
The sky will fall and we are DOOMED!
Gee. Bet you speculate in gold, don't you?
We're Doomed!
Why we will. IT will be a good thing.
I should post the 'not this ____ again' graphic.
Your first out of the box statement is wrong and misleading. US debt is HIGHLY diverse. China, while it may purchase "a lot", is just one face in the crowd of hundreds of countries.
As far as being the 'largest' purchaser (in outright terms) is sheer garbage and a downright lie.
True, it is one of the largest foreign government purchasers, but even if you add up all of the foreign governments in the world who hold US debt, they would STILL only hold a certain portion of our debt.
China holds somewhere in the neighborhood of 2% of all of our outstanding debt. That by far is not any sort of commanding leverage over our economy.
Who knows, and who cares. If China dumped everything, they would have to offer huge deep discounts in secondary markets. They would have to sell (at a deep discount) (and probably a loss for them) if they really want to get rid of their treasuries.
If the yeilds are enough, I can promise there is LOTS of money on the sidelines looking for a place to go.
Shut down the Government for Two years and the Debt would be paid from the savings.
Welcome to FR?
Thanks Trippin
Gee. Bet you speculate in gold, don't you?
peyton Randolph
NO !
As far as being the 'largest' purchaser (in outright terms) is sheer garbage and a downright lie.
maui_Hawaii
Taking time to read carefully is a good thing you will please notice Sir my statement said CURRENTLY !
To me, this sounds like China is about to start floating their currency against the dollar. Chinese are dumping their dollar before it become even less valuable versus the yuan.
are your friends serious? even kids can earn more than $2000 per year in Shanghai.
If there are gaps in China, they are between the countryside and metropolis cities, where living standards are not the same.
p.s. it is stupid to show the price of DOWNTOWN Shanghai as a proof that no one can afford a house. Do you think every american is capable to become a landlord of Manhattan?
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