If the Chinese stop buying our bonds, we are in deep do.
The US will have to print more money, which will devalue the dollar, and before u know it a dollar won’t buy squat.
Should have made the cuts.
Where is this money going to come from...the Fed? The same Fed who is talking QE3?
We are going down hard folks.
If the Chinese stop buying our bonds, we are in deep do.
wrongo
If the Chinese stop buying our bonds, they are in deep do.
If the yuan goes up,
they will get what I call ‘Japan disease’.
with deflation stagnation, and unemployment.
as it is,
the only thing keeping china going now,
is construction of useless ghost cities.
The Chinese can’t stop buying our bonds unless they decide to stop selling things to us. It’s an empty threat from a country that doesn’t have its own bond market.
Over the past year and a half the Chinese have reduced their holdings of US treasuries by nearly 60%.
They still hold more than anyone else, but they have seen trouble coming and reduced their exposure.
The second big problem with a rating downgrade is that the interest rate will have to be raised in order to sell new issue bonds. It won't take too much to get to a point where we can't pay the interest AND meet the rest of the Federal obligations, let alone retire the principal on any bonds. Then we're done.
It would have been nice if we had made the cuts. We had to fight tooth and nail just to get what we got. It’s worth noting that Asia has problems of its own.