Posted on 03/13/2009 4:40:25 AM PDT by Brilliant
China's premier expressed concern Friday about its massive holdings of Treasuries and other U.S. debt, appealing to Washington to safeguard their value, and said Beijing is ready to expand its stimulus if the economy worsens.
Premier Wen Jiabao noted that Beijing is the biggest foreign creditor to the United States and called on Washington to see that its response to the global slowdown does not damage the value of Chinese holdings.
"We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."
Wen's comments foreshadowed possible appeals to President Barack Obama, who will meet with Chinese President Hu Jintao at a London summit of leaders of the G-20 group of major economies on April 2 to discuss the global financial crisis.
Analysts estimate that nearly half of China's $2 trillion in currency reserves are in U.S. Treasuries and notes issued by other government-affiliated agencies.
Washington is counting on China to continue buying Treasuries to fund its $787 billion stimulus package. Last month, visiting Secretary of State Hillary Rodham Clinton sought to reassure Beijing that government debt would remain a reliable investment.
"They are worried about forever-rising deficits, which may devalue Treasuries by pushing interest rates higher," said JP Morgan economist Frank Gong. "Inside China there has been a lot of debate about whether they should continue to buy Treasuries."...
(Excerpt) Read more at biz.yahoo.com ...
Sovereignty and freedom—such overrated concepts. /s
Actually, what are the Chinese and Arabs going to do—come and take worthless dollars out of our hands?
When you owe a little money, the bank owns you.
When you owe a lot of money, you own the bank.
Reminds me of an old Chinese proverb:
“A communist holding US Treasuries, a capitalist doth make.”
That's my worry.
If they’re capable of learning anything that is.
That's another worry because they aren't.
Not sure.
Anyways, by and large, say the stock market as a whole, the people that work there, or all the people all over the world that execute their trades there..by and large have zero confidence in what politicians SAY. Only what they do.
That’s why the large swings.
Further, this population, doesn’t seem to have much ‘faith’ in the ‘system’. They know that all over the world, everything rides on paper money, backed up by lying governments.
I think as a class, a group, in general, traders are the smartest people, fair in business, good with finance, and more wide and well read than most.
So, if you have a select, and unappointed elite, that has to earn their money every day, and they don’t ‘trust’ the ‘system’, what’s that tell you about the future?
Long ago, when the average person was unread, lived in rural isolation, or urban poverty, people followed the Church.
Now its this magical thing called ‘governments’.
I hoping people are starting to see what Reagan said about government not being the solution, but the problem.
Actually, total destruction of the currency and replacement with another would be an excellent way of producing a socialist paradise.
All previous money is worthless and every citizen gets an equal amount of new currency to start over. Or maybe even a few get extra currency to make up for past discrimination and/or lack of education due to previous oppression.
“They are worried about forever-rising deficits, which may devalue Treasuries by pushing interest rates higher,” said JP Morgan economist Frank Gong. “Inside China there has been a lot of debate about whether they should continue to buy Treasuries.”...
It is obvious that this is Washingtons plan. They must be watching Schiff videos on youtube.
But here is a good question to ponder. What can China do with so many dollars? Even if they invest in US economy again, and it doesn't crash again, they still end up with more dollars. They can buy food, and metals, and oil but they can invest in the production of those now while cheap. And China's has a big retirement problem due to one child rule, yet Americans will never move to China to take care of Chinese elderly to get those dollars. Ironically US government prints money and hires Caribbeans to take care of our elderly (some are new immigrants) on medicare and Medicaid.
How about telling them that if we default then they can keep Obama?
I believe Peter Schiff called this “decoupling” and predicted it years ago.
They would get to where they are going a little faster by investing in Zimbabwe bonds.
We need a Constitutional amendment forbidding deficit spending.
Or the Treasury could simply increase the rate of interest it pays to attract more investment. No need to default and no need for make believe money.
I challenge you to look at any electronics, clothing, whatever and see where it was made. Similar to the early Japanese products that were inferior and now are high quality the Chinese are along that same path. They got a foot in the door and that door is now wide open.
The American economy has financed the Chinese and now the Chinese economy is financing the American economy.
The problem we have is not with the past debt owed the Chinese but the ever increasing need for new financing in order to stave off a either a terrible economic collapse or ruinous inflation. We are simply over the barrel with the our creditors and they know it. I am seriously concerned about how our nation must kowtow to our creditors no matter how outrageous their demands.
Watch interest rates skyrocket in the coming years.
Please, no more amendments!
The Treasury is the American taxpayer. You’re saying let’s raise taxes.
Sorry Wen, you place your bet, you take your chance. We did the same and yeah, we're a "little worried" too... after all, it's our country.
Any substantial increases in interest rates will send the economy into the tank in a huge way. It is indeed a free market solution but certainly not a political solution. And it is the politicians that will control the interest rates.
Interest rates will inevitably go up when more countries such as China question our ability to pay off the debt.
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