Posted on 01/07/2009 6:10:08 PM PST by Golddigger3
No story yet.
That they are.
We are not buying their goods at the moment. Their cash reserves aren't going to be sufficient to purchase the debt we're offering.
The morons in Washington need remedial math courses to see where this is all going. It will become a global disaster where the only protection a country has is to nationalize its debt -- starting with the U.S.
Most American investors think that China is tied to us because they need our markets, but a what point do they say:
“Who needs a customer that doesn’t pay his bills? How does that help our economy?”
Frankly, the US better balk at acquiring any more debt.
Briefly,it seems between the tainted food and lead paint problems as well as the world wide recession and their continuing energy problems,their economy has ground to a halt,he says they`re experiencing negative growth which has idled many workers,former rural people with nothing to go back to, who are a potential for civil unrest.
Uh, the reason being that CHINA doesn’t HAVE extra funds anymore to buy our debt. They are in this recession pickle also, and all this means is a few basis points increase in the interest rate the US of A will accept at our weekly treasury note auctions. BIG DEAL.
If he doesn't raise interest rates and no one else fills China's void the Fed’s either have to go with option A. or we default.
They are in worse shape then us.
We rely on them to sell us cheap junk, and buy our debt. They rely on us to buy the vast majority of their exports.
We can get other countries to make cheap junk and sell it to us, and there are ways to deal with China no longer being able or willing to buy our debt.
However, there are no other buyers out there that can come close to buying the amount of goods and services we do from China.
“Yeah great, except that the gubmint will be forced to boost interest rates to attract buyers.”
Or, the Obamanation and the Rats in Congress can “nationalize” everyone’s 401k’s, IRAs, etc. like was done recently in Argentina, and grab another $1T to keep on spending. It’s for your own good and that of the country don’t you know! ...and the government will “guarantee” a 3% return to you....except it’ll be just like Social Security.
good, let us get the disaster over as fast as possible
won’t happen.
Um, you neglected to mention Option C. Print dollars till hell won't have 'em -- and neither will the Chinese (but perhaps i repeat myself.)
Thanks for pointing that out
C.) The Zimbabwe option, print money until it’s not even worth as much as the paper it is printed on. But we will all be millionaires!
In an ideal situation, we shouldn’t have any debt.
I totally agree. But we are so far from ideal that the light from that ideal world will take thousands of years just to reach us.
“the gubmint will be forced to boost interest rates to attract buyers.”
Bring it on, the quicker the better!!
Some of the best income years I had were when interest rates were above 15%.
>> Frankly, the US better balk at acquiring any more debt.
You’re right, of course... but I have to laugh at the idea anyway. It’s so quaint. So “Greatest Generation”.
sigh
We face a deeper recession. They face millions more out of work and revolution.
Sounds good to me.
>> Bring [higher interest rates] on, the quicker the better!!
Yeah, good for us savers. Unless inflation increases even faster. :-(
The following definitely has something to do with it. If reserves are dropping, of their exports are plunging & factories closing, if they want to spend on their own economic stimulus in order to build internal consumer demand for the production from those factories, they would have little need to buy Treasuries at 0% return and risk being paid back with less valuable dollars.
China warns of risks from “abnormal” cross-border capital flow
http://news.xinhuanet.com/english/2009-01/06/content_10614803.htm
BEIJING, Jan.6 (Xinhua) — China faces a threat of “abnormal” cross-border capital flow because of global financial tumult, the country’s foreign exchange regulator said Tuesday.
Such capital movement, resulting from the world economic slowdown and financial crisis, will bring with it potential risks, said Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE).
China has cut interest rates and seen its economy slowing down since the global financial crisis hit the country’s exporters. That could reduce its attraction to foreign investors and lead to capital outflows.
More money flowing out of the border could increase the risk of liquidity strain in the country, which is especially dangerous amid the global financial crisis.
“Where the money will flow to is quite uncertain,” Hu was quoted as saying in a statement on the SAFE website.
China’s foreign exchange reserves had fallen for the first time since December 2003, Cai Qiusheng, a SAFE official, told a conference last month. He didn’t give specific data of when that happened or by how much.
He said the current reserves were below 1.9 trillion U.S. dollars, the level recorded at the end of September. It was the largest reserve in the world.
The SAFE will improve management on fund flows in and out of the border and more closely monitor the balance of payments, said Hu.
He urged for better risk control in managing foreign exchange reserves, which was “the last safeguard” against risks.
China’s central bank said Tuesday it will also strengthen scrutiny of cross-border capital flows and study ways to tackle “abnormal changes” in the balance of payments.
The People’s Bank of China said it will check the validity of trade payments and step up supervision on individuals carrying foreign currencies in and out of the country.
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