THE RISING SEA DRAGON IN ASIA 2007 UPDATE
Also on FR for comment---> HERE.
Posted on 02/26/2007 12:17:57 PM PST by khnyny
IRVINE, CALIF. - Watch your flanks! That's a sound piece of advice US politicians have ignored as they remain mesmerized by the train wreck called Iraq. Meanwhile, a ruthlessly mercantilist China is running a flanking maneuver so effective that it now threatens America's economic, financial, and political independence.
America is addicted to a daily "fix" of Chinese capital that floods in to purchase US government bonds - and thereby fund the US budget and trade deficits.
China finances the US deficits as part of a broader mercantilist strategy to keep its currency undervalued. The way it does so is to set a "fixed peg" between the US dollar and the Chinese yuan. To maintain that peg in the face of a record trade imbalance between the US and China, China simply recycles its surplus US dollars back into the US bond market.
Today, as a result of its currency manipulation, China has become the largest monthly net buyer of US securities. More than two-thirds of its massive and highly undiversified $1 trillion in foreign currency reserves are estimated to be invested in US bonds. China will very shortly eclipse Japan as America's largest creditor. And its foreign currency reserves are projected to double within a few short years.
(Excerpt) Read more at news.yahoo.com ...
Well the utter ignorance expressed in this comment indicates this author has utterly NO clue at all what is happening anywhere outside his own trailer park and is simply not worth wasting time or bandwith on.
We're safe until after the 2008 Olympics...
Also on FR for comment---> HERE.
Thanks for the ping - great post.
"Some say that the Chinese would never take such an action because it would hurt them as much as Americans."
No, some say the Chinese would never take such an action because it would devastate their economy while only "hurting" Americans. Give me a break.
Interesting post & opinion piece.
I wonder if anyone cares if the Chinese Govt runs one of our biggest US ports on the west coast.
Well this guy is proof positive that with enough money and the right contacts they will give a PH.D to anyone. Not only is his Foreign Policy skill non existent his understanding of fiscal policy is about as limited as Paul Krugman's.
China holds enough US Debt to be totally at the mercy of the US Goverment. IF for any reason the US Govt were to not pay those notes (For example, the US and China went to war for some reason) their whole economy would go right in the crapper. Right now China holds the equivilent of half it's annual GDP in US debt. While it only represents about 1/14th of annual US GDP. WE can easily live with out THEM at need, THEY absolutely have to have access to our markets.
The there is the problem. Even if China wanted to dump it US Treasury issues, WHO would China sell to?
I have NEVER understood this need of the Dinocons consitently cling to their rabid Xenephobia over all basic Economic reality. When dealing in these sorts of numbers the BUYER, not the Seller, controls the Market.
Some of us are either over educated or not very intelligent to buy this scam. If we say no to a future big hoop they'll just call the loans. Meanwhile all of our ability to provide for ourselves is moved overseas. The only factory building our cruise missile gyros is located in duh China; I wonder how that happened.
I get so tired of everyone using the word addicted for meaning used to or expecting.
Addicted means you can't change without illness, not displeasure (at least in my book).
"If we say no to a future big hoop they'll just call the loans."
They're US treasuries. The Chinese CAN'T "call the loans".
You buy a Treasury bond, and the terms are printed on it. There's no call option.
The US Treasury pays 5 or 6% per year on the principal for 20 or 30 years, then it pays the principal back at maturity. You've bought an interest stream and a repayment of principal. That's all you've got. There's no "call option" whereby you can force the US Treasury to pay you early. And how would you execute that anyway, even if there was? You say "Pay!" and the US says "No!" and that's that. They can't repossess the United States. Even if they bought up all the property in the US they could only actually TAKE it if we respected our own laws enough to do it. If they're really our enemies, we just change the rules, steal all their property, and they're left with a big pile of IOUs we will not repay.
The one thing they COULD do would be to dump our bonds on the market, absolutely FLOOD the market with a trillion dollars is US treasuries. That would have a dire effect on the US government, because it would mean nobody except the Social Security Administration would buy the NEW bonds the government was issuing in order to pay off the debt.
But - NEWSFLASH! - the US government itself controls the printing presses. If China really did dump a trillion in bonds on the market, for pennies on the dollar, the US could inflate the currency and BUY THE BONDS BACK for pennies on the dollar, wiping out a trillion dollars in US national debt in the twinkling of an eye.
China buying lots and lots of our bonds is a good thing, overall. It keeps interest rates low. It floods money into the US, which is helpful to us. AND it binds China very deeply to the US economy. Yes, sure, they could cause a lot of short term havoc if they did something like dump the bonds. But that's assuming that the US would not deal strategically with such a strategic threat and play it's own dirty pool. The US government can always call its own bonds, and can always go onto the markets and buy them. If bonds are dirt cheap, pennies on the dollar, the US can repurchase its own debt for pennies on the dollar, and retire it. BAM! There goes that interest. Net result: the American economy takes a wild ride, and China has a trillion dollars less than before, but all the "stuff" they sold us is still over here.
The problem is not that China is buying our debt. The problem is that China is using slave labor to sell goods to us so cheap that our manufacturing industry is going out of business, and key components to complex weapons systems are all purchased from foreigners. That exposes the US to blackmail. The threat to "put" our bonds to us doesn't exist. They CAN'T. The threat to dump our bonds actually works to our medium term benefit, once we get over the initial panic. But not actually having the factories and the ability to make stuff - THAT is potentially deadly. It's not good for the US labor force either, and manufactures lots of new Midwestern Democrats every year. So, if Hillary wins, blame China.
Not by a long shot. They are also capable of reading any article that we can, including keeping track of what the concerns of those who post on FR seem to be. Anything we hear about, the White House heard about a month ago and saw coming a year ago.
In the same book, the author also decribed how China could fall apart from the inside triggered by an oil crisis, AIDS epidemics, ethnic uprising, and massive unemployment. It is not easy to balance economic growth and polical stability.
"Anything we hear about, the White House heard about a month ago and saw coming a year ago."
Well, unless we ourselves are the source of the news.
The more important question is: What decisions does the more-knowing-than-we White House TAKE with that information to head off problems at the pass.
Unfortunately, in the Iraq War, they had better information and still have managed to right royally screw the pooch. A lot of folks' trust in these fellows' decision-taking processes has had big dents put in it by the effects of the decisions they take.
To this day I do not understand why Bush did not seize his FDR moment and take America to war. Congress would not have refused. I was expecting it, hoping for it, praying for it...and he shied away from doing it. Did he even CONSIDER it?
This is the problem: these guys HAVE the information, more than anybody else, but what they DO with the information is often incompetent.
Did you read the article?
They are going to buy the rest of our industries soon.
With our own "Wall Mart Money".
My son asked me what foreign language to learn. I advised him to study and learn Mandarin.
That way he can communicate with our future overlords and masters.
Aided by treason and greed, and assisted by foolish leaders, the Chinese are poised to bring us to our knees and make us their slaves.
They will soon own the U.S. Treasury.
It's called "judgment" and it's coming soon to the USA.
I suggested, right here on FR, before the invasion of Iraq, that a Declaration of War should be obtained. I know of two others who also made that suggestion.
And we just say "Certificates X-Y of US Treasuries are now invalid"
And listen to them scream.
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