Posted on 10/08/2013 8:52:18 AM PDT by honestabe010
Just about everyone worries that Beijing, perturbed by the ongoing squabble in Washington, will sour on Treasuries. This concern is embedded in the provocative title of Eamonn Fingleton’s recent Forbes posting: “If Republicans Want to Shut Down Washington, They’ll Have to Ask China’s Permission First.”
The Republicans in fact did not seek Beijing’s approval, and neither did Democrats. Are both sides making a mistake by not taking into account China’s “feelings,” as the Communist Party demands everyone do?
It’s clear Chinese officials are watching closely. “The United States, the world’s sole superpower, has engaged in irresponsible spending for years,” observed Xinhua News Agency in an editorial on Wednesday. “With no political unity to redress its policy mistake, a dysfunctional Washington is now overspending the confidence in its leadership.”
(Excerpt) Read more at forbes.com ...
Bernanke will buy it.
I thought they already did, and that’s why the Fed started just printing money (buying the debt themselves).
Better call Saul!
Chang must have head in sand. China doesn’t buy our debt anymore. They’re worried about the debt they’ve already bought.
This would cause a drop in China’s exports of about 20% almost over night.
The Chinese economy would implode.
Then they will find a horse head in their bed. . . .
> I thought they already did, and that’s why the Fed started just printing money (buying the debt themselves).
Yup. This is like three years already when all net debt is being monetized by The Bernank.
It is sad that we are reduced to this question.
We sell debt at auction to the lowest bidder. If they aren’t willing to buy at a rate low enough, then the Federal Reserve will step in and buy it.
Thus there will always be a market for our debt, until our currency is so debased as to be meaningless.
I was hoping the shutdown would stop the cheap imports coming in from China at least temporarily. And make domestic producers think twice about relying on Chinese goods instead of American goods. But apparently customs was designated as essential personnel.
We sell debt at auction to the lowest bidder. If they aren’t willing to buy at a rate low enough, then the Federal Reserve will step in and buy it.
Thus there will always be a market for our debt, until our currency is so debased as to be meaningless.
I was hoping the shutdown would stop the cheap imports coming in from China at least temporarily. And make domestic producers think twice about relying on Chinese goods instead of American goods. But apparently customs was designated as essential personnel.
Our economy would collapse, they’d be unable to ship any more crap to Walmart, a billion ChiComs would be laid off, and all ranking Party members would be swinging from lampposts within two weeks.
It’s Mutual Assured Destruction, 21st. Century style.
That’s why all the huffing and puffing about the “debt ceiling” is so phony. We already blew right by the real debt ceiling when no one buys your debt anymore, and that happened several years ago.
We’re already in free fall and they just haven’t acknowledged it.
The Chinese stopped buying our debet and have been unloading it.
The oly buyer now is the Fed.
Who buys theirs? Us. That just keeps the cycle going like they want.
I’m not up to speed on this topic, but didn’t a recent bond sale go poorly, and China is no longer buying our debt? Like I said, I’m not up to speed, it’s Mrs. Liberty’s department.
China already stopped buying US debt. Right now, the Fed is dumping $85 billion per month into the US Treasury. Over the last 12 months, that amount actually exceeds the revenue shortfall for current spending levels. We did not have to borrow a single dime over the past year, which is why interest rates remain so low.
The Chinese have to buy it. They run a surplus with us, the surplus being US dollars. Therefore those dollars have to come back to the US in some form since they are worthless in China. The Chinese can take those dollars to buy US real estate, products, services, companies or debt.
Scary.
They would need another place to put it.
What if?? They’ve been selling more US treasuries than they’ve been buying since 2011. Japan is or soon will be the largest holder of US debt, yet the sky hasn’t come tumbling down yet. Once China un-pegged it’s currency there was no reason for them to keep on the path they’d been on, and Chinese leaders have criticized US spending patterns for a long time. Like most theories about the US economy, the idea that the U.S. is reliant on China to buy its debt and that hell will break loose when it stops is greatly exaggerated.
You’re correct.
Poor Bush had to worry about peddling to the Chinese, Baraq just has Ben and Jack handle it.
Much more accomodating.
We got their crappy products and they got our crappy dollars. Who won?
The reserve currency is PetroDollars. The Chinese still have to buy US Dollars in order to buy OIL.
Old news now I believe. Iran is already selling oil for yuan and rubles. Other OP nations will follow.
Interesting they used rocks... when, of course, they probably should have used cards.
You can dismiss it as old news,
but 90 days after it happens
we will have Hyper-inflation.
That is what I thought, China bailed on us a while back and let the Fed pick up the debt buying.
At some point we will default, the question is how we handle it, a partial default, total government default, total default across the board for public/private debt?
They are also using US dollars to buy gold.
Immense amounts of gold.
thanks for the links and post.
Right, and they are blocked from most significant U.S. investments. Just some smallish corporate takeovers and a lot of residential housing in California. China would never be allowed to take over a Boeing, for instance, even though they could easily afford it.
So with their dollars they can buy land in Africa or bonds.
China looks very unstable internally now anyway.
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