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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: Centurion2000
So the silversmith engraver that takes your $500.00 revolver, carves on it and charges you 300.00 for services which then makes the gun worth 1000.00 doesn't add wealth ??

Engraving raw material (the revolver) transforms the material to a different state that has higher value in the market.
It is an example of a value-added activity that creates wealth.
(note: it doesn't "add wealth", it "creates wealth" by adding value.)
It is not a service.

81 posted on 07/30/2002 6:17:09 PM PDT by Willie Green
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To: AIG
Like Marx, you believe in the "labor theory of value," which does not believe anything is of value unless it involves producing some tangible product with physical human labor.

Wrong. Services have value, they simply do not add value.
Services engage in wealth transference, which at times may be of significant quantity.
They do not, however, create wealth.

82 posted on 07/30/2002 6:23:48 PM PDT by Willie Green
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To: Toddsterpatriot
I guess there aren't very many service jobs that don't add value.

You guessed wrong.
There aren't any that do.

83 posted on 07/30/2002 6:28:09 PM PDT by Willie Green
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To: Thane_Banquo
Why is it not good? They have no power to influence buy owning federal bonds.

Actually, dumping large amounts of US government debt has been suggested by some Chinese military strategists as one "asymetrical warfare" tactic to use in the coming Sino-American War. Doing so could drive up US interest rates dramatically. Leveraged financial speculators (i.e. most major banks) who sell Treasuries short and invest the proceeds in higher yielding securities would be crushed, toppling our whole financial system.

84 posted on 07/30/2002 6:29:53 PM PDT by Arleigh
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To: staytrue
Services are just as important as manufacturing.

Then why did Mexico want the maquilas and China wants them now? Why don't they just do services?

85 posted on 07/30/2002 6:31:15 PM PDT by FITZ
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To: Arleigh
Doing so could drive up US interest rates dramatically. Leveraged financial speculators (i.e. most major banks) who sell Treasuries short and invest the proceeds in higher yielding securities would be crushed, toppling our whole financial system.

If the Chinese dump their treasuries the lower prices would give the banks and speculators an easy opportunity to cover their short positions and make a large profit.

86 posted on 07/30/2002 6:32:56 PM PDT by Toddsterpatriot
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To: Willie Green
The manufacturing industry creates the service industry.
87 posted on 07/30/2002 6:37:00 PM PDT by FITZ
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To: Toddsterpatriot
Willie this is your best post ever. I'm curious, how does wealth get dissipated?

Big ticket items, homes, cars, durable goods, machinery, etc. etc. eventually fall into disrepair or otherwise deteriorate to the point they no longer have market value.
Consumer goods have appreciably lower economic life spans.
Perishable goods (food) and disposable items dissipate wealth most rapidly.

Of course, I'm explaining this in terms of personal items that constitute most people's personal wealth. But the same principle holds true for large items owned by businesses and/or government: Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.

88 posted on 07/30/2002 6:53:37 PM PDT by Willie Green
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To: FITZ
The manufacturing industry creates the service industry.

It's nice to come across somebody who understands. ;^)
It gets boring trying to educate the usual bunch of naysayers.

89 posted on 07/30/2002 7:02:47 PM PDT by Willie Green
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To: Willie Green
Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.

Wealth is not dissipated and you are talking about depreciation and durable (5+ year) goods. Any sound investor that buys property had better take the time, energy and money to maintain the structures that they purchase.

BTW .... name an example of a road, or a bridge that has actually lost value.

Real estate is one of the few things that almost always appreciates in value.

90 posted on 07/30/2002 7:15:47 PM PDT by Centurion2000
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To: Centurion2000
BTW .... name an example of a road, or a bridge that has actually lost value.


Tacoma Narrows Bridge

91 posted on 07/30/2002 7:31:24 PM PDT by Willie Green
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To: Willie Green
Services do not add value, they do not create wealth.

What is value? What is wealth? The answer is simple. You are wealthy when you have something that others want. By distributing and disseminating knoweldge you can create value. Manufactured are just as subject to the laws of supply and demand as intellectual property, and have no more intrinsic value, though their value may be less volatile.

92 posted on 07/30/2002 8:29:54 PM PDT by andy_card
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To: andy_card
What is value? What is wealth? The answer is simple.

Yes, the answers are simple.

VALUE: Quite simply, this is the amount of consumer satisfaction directly or indirectly obtained from a good. service, or resource. The more a good satisfies a person's want or need, then the more valuable it is to that person. Furthermore, different people are likely to place different values on a good. Resources are valuable to the degree that they are used to produce stuff that consumers want. The bottom line is that value, like beauty, is truly in the eye of the beholder.

WEALTH: The net ownership of material possessions and productive resources. In other words, the difference between physical and financial assets that you own and the liabilities that you owe. Wealth includes all of the tangible consumer stuff that you possess, like cars, houses, clothes, jewelry, etc.; any financial assets, like stocks, bonds, bank accounts, that you lay claim to; and your ownership of resources, including labor, capital, and natural resources. Of course, you must deduct any debts you owe.

By distributing and disseminating knoweldge you can create value.

Well I agree that "information" can be distributed and disseminated, but not knowledge. In any event, while information may alter value perception in the marketplace, it does not "add value" to the product. It does not create wealth.

93 posted on 07/30/2002 8:48:52 PM PDT by Willie Green
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To: Arleigh
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.
94 posted on 07/30/2002 8:50:40 PM PDT by Thane_Banquo
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To: Enemy Of The State
If they attack Taiwan, or misbehave in Tibet or elsewhere, we just cancel those bonds or default on them.
95 posted on 07/30/2002 8:52:14 PM PDT by crystalk
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To: FITZ
The manufacturing industry creates the service industry.

Sure, that doesn't mean that manufacturing is good and services are bad.

96 posted on 07/31/2002 8:27:43 AM PDT by Toddsterpatriot
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To: Willie Green
Wealth is created only by engaging in value-added activities. By the same token, Service sector activities do not create wealth, they merely transfer, redistribute and eventually dissipate wealth as consumption. Thus, as value-added activities move offshore and the U.S. labor force shifts to the Service Sector, wealth is dissipated, not created. And the U.S. standard of living declines as a result.

Big ticket items, homes, cars, durable goods, machinery, etc. etc. eventually fall into disrepair or otherwise deteriorate to the point they no longer have market value. Consumer goods have appreciably lower economic life spans. Perishable goods (food) and disposable items dissipate wealth most rapidly.

Of course, I'm explaining this in terms of personal items that constitute most people's personal wealth. But the same principle holds true for large items owned by businesses and/or government: Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.

So, regardless of whether we're talkin about services or manufactured goods, eventually all wealth is dissipated? Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.

97 posted on 07/31/2002 8:35:06 AM PDT by Toddsterpatriot
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To: Willie Green
There is quite a bit of labor involved with the manufacture of this exposed film. It is value-added and creates wealth.

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. I can expose film in a can by taking unexposed film and opening the can. Hollywood is mostly a service industry.

98 posted on 07/31/2002 8:54:47 AM PDT by staytrue
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To: Toddsterpatriot
So, regardless of whether we're talkin about services or manufactured goods, eventually all wealth is dissipated?

Yes, which is why it is important for an economy to continuously engage in wealth-creating, value-added activities. If these activities exceed the dissipation rate, overall wealth increases. If they do not, overall wealth declines.

Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.

We are in a phase where the illusion of wealth is being propped up through the use of debt. That is the topic of this article. The Trade Deficit is an indicator of how we acquire short-economic-lived consumer goods to maintain this illusion. 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.

99 posted on 07/31/2002 8:57:06 AM PDT by Willie Green
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To: Willie Green
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. I guess you could argue that I am manufacturing groomed land from ungroomed land but it you take that argument, everything is manufacturing. Teachers manufacture educated students from uneducated students. Babysitters manufacture cared for kids from uncared for kids. Burger flippers manufacture cooked burgers from raw meat. Movie ticket takers, manufacture paying movie goers from unpaid movie goers. But eventually, you will wind your self into an argument where all services are manufacturers and that services are equal to goods.
100 posted on 07/31/2002 9:00:38 AM PDT by staytrue
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