Posted on 08/08/2011 1:49:25 PM PDT by papasmurf
China’s own system is jammed with rotten debt held in off-balance sheet state enterprises. Its countryside is littered with eerie, empty ghost towns. And Moody’s Investors Service says last month that China’s local debt was understated by hundreds of billions of dollars.
Read more: http://www.foxbusiness.com/markets/2011/08/07/chinas-debt-problem-worse-than-portugal-1014895568/#ixzz1UTHEy1aW
(Excerpt) Read more at foxbusiness.com ...
We deserved the downgrade, to be sure, but NOT the tongue lashing coming the ChiComs.
bump.
GAAP..”Generally accepted accounting principals”..can’t be translated into Mandarin (g)..the books are all COOKED..stir fried..
Even the Chicoms are threatened by this boobs incompetence. They don’t want the US economy in a depression because that will kill their exports and make economic modernization more difficult.
Chinese debt is at 200% of GDP.
Ours is at 100% of GDP
They are lecturing us about excessive debt.
Just sayin’
We are dealing with economic hypocrits here, the ChiComs.
Oh, and by the way, their economy depends about 75% on selling goods to the US.
US buys good from China because China lends us the recycled dollars to keep us buying Chinese goods.
Our economy is in the dumps because of the 75% we buy from.
The less we but from China the better our economy gets.
The less China sells to US the worse their economy gets.
Who has the bigger problem here?
Investments indeed.
Forget the tongue lashing.
China has whole cities, whole cities, that no one lives in.
The whole world is screwed. It’s all been a illusion, all along.
I swear I don’t understand how all the nations owe more many then they have and everyone owns everyone else’s debt. Who the heck is the one holding the real money?
I understand someone is banking on the growth of economies so that they will “make money” when they cash on the loan, but someone has to be either holding some massive reserves or going to take it in the shorts eventually and someone else will come out on top. It’s like one big ponzi scheme everyone is playing and you want to be the guy that got in on it first.
I’m confused. The way I read this is that the Chinese bought our debt with money that isn’t really worth what was thought. So where does that leave everybody?
Ours is at 100% of GDP.
Ancient Chinese proverb: All debts are eventually repaid, if not be the borrower, then by the lender. The hoof beats you hear are those of the Four Horsemen of the economic apocalypse.
LOL!
CIA World Factbook
Country Comparison: Current Account Balance
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html
I was wondering wth...but I get it. The CIA is way wrong on China’s debt.
They print money to hold down the value which makes it’s exports dirt cheap. And that is the “cash flow” they use to buy our debt with.
Hah ! ... and we, in turn, print money and buy their cheap imports.
Works out well for all involved.
Fire Up Those Presses !
Give credit to W, he knew the ChiComs were artificially inflating the value of their currency, he just didn’t elaborate on how they were doing it. He made a lot of noise insisting that they allow the Yuan to float, but was pooh-poohed by the World’s leftists.
Bush Aides Struggling With Yuan
By EDMUND L. ANDREWS
Published: May 10, 2006
WASHINGTON, May 8 — After nearly three years of pushing China to let its currency float more freely, with only modest results, the Bush administration still appears reluctant to accuse China of manipulating its exchange rate.
excerpt from NYT...http://www.nytimes.com/2006/05/10/business/worldbusiness/10china.html
Here’s another...
Bush, US Senate jerk up pressure on yuan
(Agencies)
Updated: 2005-04-20 10:28
US President George W. Bush claimed on Tuesday that Chinese Government was considering taking an interim step toward easing yuan currency peg with the US dollar, according to a Reuter report.
An interim move could help ease Sino-US trade tensions, but Bush said the United States would keep the pressure on China to “eventually” let markets set the value of the yuan.
excerpt from...China Daily http://www.chinadaily.com.cn/english/doc/2005-04/20/content_435862.htm
This is NOT new, it’s just now getting some traction.
At some point in the future, economists will win Nobel Prizes by figuring out the answer to that question.
“CIA World Factbook
Country Comparison: Current Account Balance
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html";
Those are 2010 estimates from 0bama’s peeples. They don’t know their butts from a hole in the ground.
The downgrading of our debt was not a sudden cataclysm, but the result of a pattern of behavior over an extended periond of time.
Up to WW II any creditable currency was pegged to a gold/silver standard, which would have included the money of Washington’s time as President. During the Revolution the Continental Congress tried printing paper currency not backed by real assets to pay for the war, and hence the term “not worth a Continental”. Then during the Civil War, both the Union and Confederacy issued paper currency unsupported by real assets. Depending on Union fortunes, the paper traded as low as 40% in relation to gold coins. By 1864 Confederate currency had a gold value of five cents on the dollar. The U.S. didn’t try anything like that again until FDR confiscated gold coins during the Depression, but silver coins were still minted and still freely circulated.
While WWII destroyed most economies of the world, the United States prospered. The only way to restart international economic activity was for the U.S. to take the lead, which it did with the Bretton Woods Agreement. Every currency had a fixed value in relation to the dollar, and the U.S. kept everything functioning by buying and selling gold at $35 an ounce. Therefore, once again there was a U.S. gold standard and the dollar became the world’s reserve currency. However, Americans could not take their Federal Reserve Notes to a Fed bank and trade them for gold.
The U.S. unilaterally abrogated the agreement in August 1971, allowed the dollar to float in relation to the trading whims involving all paper currencies. Until about 1968 people could still trade their Federal Reserve notes for Silver Certificates and trade those for packets of silver from a Federal Reserve Bank. When the government renounced that option, silver coins quickly disappeared from circulation. At this time the working careers of a single generation comprise the totality of comprehension for how the international community was to function economically without currencies emerging from things people can touch and see.
The problem at the present moment is that the dollar is backed by the full faith and credit of the government. When much of the world looses faith in the U.S. as a reliable engine driving the world economy because of its incredible behavior, then the dollar’s status as a reserve currency is jeopardized. The memory of the United States as “The Arsenal of Democracy” fades to be replaced by the realization of the United States as “A Gulag of Dependency”.
At the margin, the country expects the rest of the world to buy our long term bonds issued in ever increasing amounts to finance current government expenditures dedicated over 60% to social welfare programs and interest. The world also perceives the awful specter of media, politician, and academician feeble dithering before the looming catastrophe of $61.6 trillion of unfunded social welfare obligations. Without any real assets backing the dollar, people are decidedly troubled by this country’s behavior and can decide the dollar is “not worth a Continental”. Such contemplation is already widespread, because through Quantitative Easing (QE) programs the Federal Reserve already had to buy $100’s of billions of bonds the world would not purchase.
However typical of all central bankers, Ben Bernanke believes he can overcome these international fears by applying his intellect to macro-economic models providing dubious information to achieve precisely timed money supply changes, which allow timely adjustments for identification and reaction to increases in money velocity. Supposedly he would sell bonds and reduce the money supply with a precision that prevents inflation from taking hold or a recession from occurring. He would proceed in such a manner as to concurrently allay any fears of a Congress and an Administration in an election year. This result has probably not been achieved since the seven years of plenty and famine in Egypt when Joseph obeyed the word of God from his dreams.
To carry the Jewish/Christian analogy further compare the character of God to the enormity of the hubris committed by the Federal Reserve and the Treasury Department as they style themselves after the Creature. The new money is not printed, but spoken into existence in exactly the same manner as God created the heavens and the earth in Genesis.
However unlike God’s creation, money has no substance at any time. In spite of that people do exchange items of real value such as labor, cars, and food for words spoken over a phone by a twenty something Fed bond trader. This person calls a company such as Goldman Sachs that has an inventory of securities brokered for the Treasury Department, and pays let’s say $1 billion for securities. Until the trader speaks “$1billion”, the money to pay for the notes or bonds does not exist. Anyone else purchasing the bonds does so with dollars already in circulation.
One analogy to explain the looming inflation might be to consider a flood control dam. The water that builds up behind it during the winter and spring could be considered QE1, QE2, QE3, etc. The face of the dam would be the current moribund economic activity indicating a very low velocity of money as exampled by such questions as “Why do I want to borrow if no one wants to buy? or “Why do I want to buy when I don’t have a job?” Now stagflation happens when the reservoir gets so full with QE’s that some water just has to go over the top, even though economic activity remains anemic.
But when the economy picks up money begins to actively circulate. Now the increased velocity of money exponentially multiplies the QE’s, and the increased pressure shatters the face of the dam. Just as a wall of water scours out the stream bed and washes all before it, inflation now rages through the economy and destroys people’s financial asset values and their purchasing power.
Now all this seems fairly insane, until you realize that every member of the G-20 behaves in much the same way, and do understand their precarious situation. The national debt now exceeds GDP joining that of Iceland and Ireland. By 2037 the CBO reports national debt will become 200% of GDP to reach that of Japan. Since all currencies have about this same connection to reality, finding one or several of sufficient magnitude and viability to replace the dollar as a worldwide medium of exchange and store of value becomes perplexing. An individual country might think they have a solution, but they know they must also survive during the resulting chaos as all countries seek similar solutions. They see the daunting specter of disaffected holders sending trillions of dollar denominated bonds to the marketplace when there are no buyers unless prices are severely discounted. They are also frightened by the image of a devastated U.S. economy, because feeding the insatiable desires of U.S. consumers has been a mainstay of their prosperity. I imagine something like the final scene in “The Good The Bad and The Ugly”. The members of the G-20 are standing in a circle with open graves behind them. They are all contemplating how they are going to successfully outdraw the other nineteen members and survive the resulting mayhem, which Lee Van Cleef’s character did not.
The Good, The Bad and the Ugly: http://www.youtube.com/watch?v=sXldafIl5DQ
Tax Rate to Balance Budget: http://www.taxfoundation.org/research/show/25985.html
Fy2010 Spending by Category/Department: http://en.wikipedia.org/wiki/File:Fy2010_spending_by_category.jpg
FY2010 Spending by Function: http://en.wikipedia.org/wiki/United_States_federal_budget
Policy Basics: Where Do Our Federal Tax Dollars Go? http://www.cbpp.org/cms/index.cfm?fa=view&id=1258
U.S. Funding for Future Promises Lags by Trillions http://www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm
What if the Treasury Defaults: http://online.wsj.com/article/SB10001424052748703864204576317612323790964.html?mod=WSJ_Opinion_LEADTop
CBO outlook on long-term debt worsens: http://thehill.com/blogs/on-the-money/budget/167781-cbo-outlook-on-long-term-debt-worsens
U.S. Debt Clock: http://usdebtclock.org/
Understanding the Budget Control Act: http://keithhennessey.com/2011/08/01/bca-understanding/
14 posted on August 7, 2011 12:42:04 PM PDT by Retain Mike
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Here’s my estimate. My USA is being turned into a third world hellhole by traitorous scum, who sympathize with a foreign communist nation and aid it in building up its nuclear forces to attack us. They sponsor lying propaganda in attempts to fool us into being complacent, while their socialist, government-employed family members push all levels of our government to default with their thieving ways.
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