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China Becomes US Second Biggest Bondholder
The People's Daily (CCP News) ^ | 7/29/02

Posted on 07/29/2002 7:41:35 PM PDT by Enemy Of The State

China Becomes US Second Biggest Bondholder

China has risen from its 4th place to become the second biggest bondholder claiming US$82 billion worth securities in the US. Japan still with US$317.3 billion securities on hand stays atop.

The UK comes third with a sum of US$49.4 billion. Hong Kong takes the 6th place and China's Taiwan Province 9th alongside the others as known from US official data lately released.



TOPICS: Breaking News; Business/Economy; Foreign Affairs; Front Page News; Government; News/Current Events
KEYWORDS: chinastuff
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To: staytrue
Exposed film in a can is even more useless than unexposed film in a can unless their is artistic merit in the exposure. Artistic merit is a service and not a tangible good.

When artistic merit is captured on exposed film, it becomes direct labor involved in the manufacture of that film. It is not a "service" but a value-added activity.

Although this is the mechanism by which wealth is created, there is no guarantee that simply engaging in such activities will generate a profit when subjected to competition in a market economy.

101 posted on 07/31/2002 9:08:47 AM PDT by Willie Green
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To: FITZ
These countries want to buy stuff from the US like machine tools, engineering consulting services, insurance services, dollar backing service for their own currencies, software, computer hardware, planes, computers, etc. To do that, they must export to the US. China and Mexico both have overall trade deficits and they both import capital.
102 posted on 07/31/2002 9:10:40 AM PDT by staytrue
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To: staytrue
If I mow the grass in my yard, the value of my property goes up as opposed to letting the grass grow to whatever height it desires. Tell me why mowing grass is either not a service or does not create wealth.

As you note, your property value increases (marginally) when your grass is kept trimmed. It is a value-added activity that creates wealth. However, it is an extremely marginal and short-lived form of wealth. Grass grows back quickly, and the value of your property declines in marginal proportion. The economic impact is so marginal that grass trimming can essentially be viewed as a "service", the distinction is virtually irrelevant. A greater value-added impact on your property value would be obtained by extensive professional landscaping.

103 posted on 07/31/2002 9:18:20 AM PDT by Willie Green
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To: Toddsterpatriot
Both are good but you can't have a good service industry if you don't also have manufacturing.
104 posted on 07/31/2002 9:42:23 AM PDT by FITZ
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To: FITZ
you can't have a good service industry if you don't also have manufacturing.

I don't think I can agree with you. How large is Hong Kong and how much manufacturing do they do? Their standard of living was higher than the U.K. (at least before the commie takeover) I believe most of their economy was trade and services.

Please tell me if I'm missing anything.

105 posted on 07/31/2002 3:33:03 PM PDT by Toddsterpatriot
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To: Willie Green
That deficit returns to haunt us as China purchases our government debt obligations. In the long haul, America will have squandered its wealth and will be obliged to pay taxes simply to pay interest on the debt owed to China, and in turn, receive less government services for the tax dollars we pay.

This situtation is NOT in America's best interests.

OK, what do the Chinese do with our money? It doesn't do them any good if they just collect the interest and sit on it.

Money is only good for what you can buy with it.

If they do buy things with it, it creates jobs here, doesn't it?

106 posted on 07/31/2002 4:30:54 PM PDT by Toddsterpatriot
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To: Toddsterpatriot
OK, what do the Chinese do with our money? It doesn't do them any good if they just collect the interest and sit on it.

My guess is they'll turn around and reinvest it in even more T-bills.
That way they'll collect even more interest from our taxes.

At some point, it's possible that we could default on our debt.
In that situation, it's conceivable that they'd demand seizure of some of our assets.
We purchased Alaska from Russia long ago.
Considering the oil and geographical proximity of Alaska, perhaps that's what they'd want in payment of our debt.
We might even be forced to toss in Hawaii.

107 posted on 07/31/2002 4:57:13 PM PDT by Willie Green
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To: Thane_Banquo
Anything the Chinese government can do with its mere $81 billion in US Treasury Bonds pales in comparison to what the Federal Reserve can do to lower interest rates back to their normal level. It wouldn't work. Plain and simple.

In case you haven't noticed, the Fed no longer has much control over interest rates, money supply, economy or anything else. 9 Fed Funds cuts in one year, and long-term rates barely moved. The financial markets have evolved to the point where the Fed has very little influence. If the Chinese are dumping Treasuries, what's the Fed going to do? Buy them all? With what?

108 posted on 07/31/2002 5:29:59 PM PDT by Arleigh
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To: Willie Green
My guess is they'll turn around and reinvest it in even more T-bills. That way they'll collect even more interest from our taxes.

At some point, it's possible that we could default on our debt. In that situation, it's conceivable that they'd demand seizure of some of our assets. We purchased Alaska from Russia long ago. Considering the oil and geographical proximity of Alaska, perhaps that's what they'd want in payment of our debt. We might even be forced to toss in Hawaii.

Oh no, they'd demand Alaska. Perhaps we'd tell them to pound sand. They can buy all the T-Bills they want. We can print the money to pay them back. Paper is cheap.

109 posted on 07/31/2002 8:22:30 PM PDT by Toddsterpatriot
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To: Arleigh
In case you haven't noticed, the Fed no longer has much control over interest rates, money supply, economy or anything else. 9 Fed Funds cuts in one year, and long-term rates barely moved. The financial markets have evolved to the point where the Fed has very little influence. If the Chinese are dumping Treasuries, what's the Fed going to do? Buy them all? With what?

You've accidentally stumbled into the truth and don't even realize it. You don't know how the Fed creates money, do you? They "buy" treasuries from banks and "give" them a deposit slip that says "You have a balance at the Federal reserve of X billion dollars" The Fed could buy back the Chinese Treasuries without breaking a sweat.

110 posted on 07/31/2002 8:27:46 PM PDT by Toddsterpatriot
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To: Toddsterpatriot
Oh no, they'd demand Alaska. Perhaps we'd tell them to pound sand.

Nah, the bankers wouldn't stand for that. They get a commission on the transaction no matter which way it goes. But they may persuade China to accept Kalifornia instead: there's a lot more mortgages to foreclose on and eviction notices to serve. Bankers like that!

They can buy all the T-Bills they want. We can print the money to pay them back. Paper is cheap.

True, devaluation is another option... if you don't mind pushing a wheelbarrow full of money to the corner store just to buy a loaf of bread.

111 posted on 07/31/2002 8:34:13 PM PDT by Willie Green
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To: Willie Green
True, devaluation is another option... if you don't mind pushing a wheelbarrow full of money to the corner store just to buy a loaf of bread.

It's only devaluation if they spend the money. If they keep it under their mattress, it doesn't cause inflation. If they do spend it, it creates jobs. I'm still not worried.

112 posted on 07/31/2002 8:57:33 PM PDT by Toddsterpatriot
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To: Willie Green
Nah, the bankers wouldn't stand for that. They get a commission on the transaction no matter which way it goes. But they may persuade China to accept Kalifornia instead: there's a lot more mortgages to foreclose on and eviction notices to serve. Bankers like that!

China has their own banking problems. Bad loans to state owned companies that will never make a profit and never pay back the loans.

Kind of like U.S. steel companies.

113 posted on 07/31/2002 8:59:41 PM PDT by Toddsterpatriot
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To: Toddsterpatriot
I'm still not worried.

My cat isn't worried about it either, though I've tried to explain it to her in relatively simple terms.
That's OK, she's entitled to a more carefree life, she doesn't owe anybody a penny.

114 posted on 07/31/2002 9:16:34 PM PDT by Willie Green
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To: Willie Green
My cat isn't worried about it either

I hope the Chinese don't demand your cat as repayment on our Treasuries.

115 posted on 07/31/2002 9:18:50 PM PDT by Toddsterpatriot
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To: Willie Green
The value of service businesses is not in physically tangible products, but they create value and wealth nonetheless in the form of real money and increasing profits. The ultimate service business, the financial services industry, has created many a millionaire. A "product" does not necessarily have to be physically tangible in order to generate real wealth. When you buy any number of non-tangible products such as an insurance policy, your money is contributing to the insurance company's bottom line and helping it generate real wealth for its shareholders, make no mistake about it.
116 posted on 07/31/2002 10:02:24 PM PDT by AIG
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To: Willie Green
Despite several decades of US manufacturing being exported to places like Taiwan, S. Korea, etc., the US standard of living today is higher than ever and America's per-capita GDP is higher than ever. 36 years ago, which is about when US manufacturing started to go to places like Taiwan and S. Korea, America's per-capita GDP stood at just $3,400 but today is 10 times that. If anything, being able to buy low-cost goods from low-cost Asia improved America's standard of living by allowing Americans to save money by buying such-lost goods -- money that Americans could put to other uses. Low-cost Asia has allowed Americans to get more bang for their buck. Low-cost Asia is like a huge "tax cut" for Americans over the past several decades. In addition, for any American to complain about his standard of living today is quite ridiculous when America has the highest standard of living in the world.

When you speak of "wealth generation," I assume you're speaking of actual profit generation because wealth comes directly from profit. The entire service sector doesn't merely transfer wealth, but the profit motive drives service sector businesses to engage in their respective businesses. And when service sector businesses try to generate profit, they inevitably generate wealth. If there were no profit to be made and wealth to be generated in the service sector, service sector businesses would have no reason to engage in those businesses at all. But since they do generate profit and real wealth, that's why they engage in the service sector businesses in the first place.

117 posted on 07/31/2002 10:14:31 PM PDT by AIG
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To: AIG
If there were no profit to be made and wealth to be generated in the service sector, service sector businesses would have no reason to engage in those businesses at all.

Your logic is impeccable.

118 posted on 08/01/2002 5:06:12 PM PDT by Toddsterpatriot
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