Explain why the Chinese Cental Bank is raising interest rates - now - and talking down the value of the dollar, then.
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China Diversifying 1 Trillion USD Worth of Currency Reserves
- Thread starter ByLoSellHi
- Start date
Explain why the Chinese Cental Bank is raising interest rates - now - and talking down the value of the dollar, then.
I just read a couple articles in The Economist... Sunday reading...
Anyways, one article said the white elephant in the room that everyone is ignoring, while they talk about all the other problems and headwinds, is America's current account deficit.
Americans consumed 847 billion dollars more of goods and services than they produced in 2006.
China's current account surplus with the United States? So far in 2007, 40 billion per month.
Anyways, one article said the white elephant in the room that everyone is ignoring, while they talk about all the other problems and headwinds, is America's current account deficit.
Americans consumed 847 billion dollars more of goods and services than they produced in 2006.
China's current account surplus with the United States? So far in 2007, 40 billion per month.
What if we hit a nasty recession and can't buy the goods from abroad? Who will buy the goods? Will China go into a nasty recession with its unemployment rate going through the ceiling
and all those single guys unemployed without any women. Civil war, revolution, war ...... So they lend us the money like that japs did in order to buy their products but when does it end China might as well be california, we are all connected and if we default china and japan lose their money and customers,so it won't be allowed on all fronts. It's the only thing that makes sense or they whole would have falling apart already. The fix is in, and to keep the game going we'll continue inflate, like last week 55billion bail out , keep the market afloat biz as usual, maybe the chinese gave us the money or yen carry trade. I say nationalism dies and gives way to global type of nafta ism and the us becomes a banana Republic at sometime. BRIC takes over.
It would have been interesting to see if we stayed the course and
and continued the assault on the deficit. Instead we well Iraq ...
and all those single guys unemployed without any women. Civil war, revolution, war ...... So they lend us the money like that japs did in order to buy their products but when does it end China might as well be california, we are all connected and if we default china and japan lose their money and customers,so it won't be allowed on all fronts. It's the only thing that makes sense or they whole would have falling apart already. The fix is in, and to keep the game going we'll continue inflate, like last week 55billion bail out , keep the market afloat biz as usual, maybe the chinese gave us the money or yen carry trade. I say nationalism dies and gives way to global type of nafta ism and the us becomes a banana Republic at sometime. BRIC takes over.
It would have been interesting to see if we stayed the course and
and continued the assault on the deficit. Instead we well Iraq ...
Quote from stocon:
What if we hit a nasty recession and can't buy the goods from abroad? Who will buy the goods? Will China go into a nasty recession with its unemployment rate going through the ceiling
and all those single guys unemployed without any women. Civil war, revolution, war ...... So they lend us the money like that japs did in order to buy their products but when does it end China might as well be california, we are all connected and if we default china and japan lose their money and customers,so it won't be allowed on all fronts. It's the only thing that makes sense or they whole would have falling apart already. The fix is in, and to keep the game going we'll continue inflate, like last week 55billion bail out , keep the market afloat biz as usual, maybe the chinese gave us the money or yen carry trade. I say nationalism dies and gives way to global type of nafta ism and the us becomes a banana Republic at sometime. BRIC takes over.
It would have been interesting to see if we stayed the course and
and continued the assault on the deficit. Instead we well Iraq ...
You know everytime someone states something as ridiculous as you, I get really pissed off. But, then I realize that this people just don't know what they are talking about. United States transforming into a banana republic is highly unlikely. Even during the depression years, US was doing better than the counterparts at Europe. Just because China is gaining some economic strenght over United States is not the end of the world. People believed same thing in 80's and 90's when Japan was on the tear, and what happened next? Japan went into recession and deflation. While, United States continued to gain GDP at 3%+. I donot mean to start a war but, the fact that you are pulling up are illogical. Just because China is doing slightly better than US in this decade does not mean it will happen to the point when US will be dependant on someone else.
It's the numbers and arithmetic. the savings rates , the debt on all levels..... they've never been like this before and something gotta give, somebody owes somebody something? The middle class barely exists on a double income and is still chasing its tail and dwindling, boomers'entitlement will not be there and some actionable upheaval will present itself as this horseshit over priced health system continues to break the bank.... on and on and on we are on bamboo sticks,,,no standards and when GS hits the fan well the piper may have arrived
no War you are right about public gdp growth but I feel we may be stuck holding the ticking bomb
no War you are right about public gdp growth but I feel we may be stuck holding the ticking bomb
Someone else agrees with Phil & Stocom (and me):
8March 07 comments by David Walker, comptroller general, Government Accountability Office:
âOur country is now the worldâs largest debtor nation and our mounting debt is undermining* our ability to deal with a range of current and emerging challenges in the 21st century. If we stay on our present path, the United States faces a prolonged period of debt and decline.â
"Financial burdens caused by entitlements rose from about $20 trillion to $50 trillion over the past six years, equaling a $440,000 obligation for each American household," Walker said. âIn 2005, personal savings rates dipped to negative numbers for the first time since the Depression. The federal trade deficit hit a record $763 billion in 2006. The meaning is clear: A crunch is coming,â Walker said.
From: http://www.fcw.com/article97955-03-16-07-Web
Much more there also, especially how the economics slide threatens US military power.
--------------------------------------
*I give a very current example of this, widely commented upon in local Brazilian newspapers:
In the last few years Chavez has given other south and central American counties 6 billion dollars in aid, and will be the main financer of the "Bank of the South" now being created to displace the IMF, which the US basically controls. (Brazil paid off all debts to the IMF last year and will be a minor financer of BoS.)
When GWB was here about 10 days ago, mainly trying to counter Chavezâs growing influence, his main aid offered was: (1)free English lessons for some students in the US & (2)the loan of a hospital ship to teach doctors. - Less teaching than Cuba has done in Africa alone! Cuba has aided Chavez with doctors and equipment to establish free medical centers for all of the population Venezuela , most of who have never before in their lives been seen by a doctor. The newspapers were polite, but the fact that US is overextended and cannot do more was clearly indicated.
8March 07 comments by David Walker, comptroller general, Government Accountability Office:
âOur country is now the worldâs largest debtor nation and our mounting debt is undermining* our ability to deal with a range of current and emerging challenges in the 21st century. If we stay on our present path, the United States faces a prolonged period of debt and decline.â
"Financial burdens caused by entitlements rose from about $20 trillion to $50 trillion over the past six years, equaling a $440,000 obligation for each American household," Walker said. âIn 2005, personal savings rates dipped to negative numbers for the first time since the Depression. The federal trade deficit hit a record $763 billion in 2006. The meaning is clear: A crunch is coming,â Walker said.
From: http://www.fcw.com/article97955-03-16-07-Web
Much more there also, especially how the economics slide threatens US military power.
--------------------------------------
*I give a very current example of this, widely commented upon in local Brazilian newspapers:
In the last few years Chavez has given other south and central American counties 6 billion dollars in aid, and will be the main financer of the "Bank of the South" now being created to displace the IMF, which the US basically controls. (Brazil paid off all debts to the IMF last year and will be a minor financer of BoS.)
When GWB was here about 10 days ago, mainly trying to counter Chavezâs growing influence, his main aid offered was: (1)free English lessons for some students in the US & (2)the loan of a hospital ship to teach doctors. - Less teaching than Cuba has done in Africa alone! Cuba has aided Chavez with doctors and equipment to establish free medical centers for all of the population Venezuela , most of who have never before in their lives been seen by a doctor. The newspapers were polite, but the fact that US is overextended and cannot do more was clearly indicated.
Quote from billdick:
Someone else agrees with Phil & Stocom (and me):
8March 07 comments by David Walker, comptroller general, Government Accountability Office:
âOur country is now the worldâs largest debtor nation and our mounting debt is undermining* our ability to deal with a range of current and emerging challenges in the 21st century. If we stay on our present path, the United States faces a prolonged period of debt and decline.â
"Financial burdens caused by entitlements rose from about $20 trillion to $50 trillion over the past six years, equaling a $440,000 obligation for each American household," Walker said. âIn 2005, personal savings rates dipped to negative numbers for the first time since the Depression. The federal trade deficit hit a record $763 billion in 2006. The meaning is clear: A crunch is coming,â Walker said.
From: http://www.fcw.com/article97955-03-16-07-Web
Much more there also, especially how the economics slide threatens US military power.
--------------------------------------
*I give a very current example of this, widely commented upon in local Brazilian newspapers:
In the last few years Chavez has given other south and central American counties 6 billion dollars in aid, and will be the main financer of the "Bank of the South" now being created to displace the IMF, which the US basically controls. (Brazil paid off all debts to the IMF last year and will be a minor financer of BoS.)
When GWB was here about 10 days ago, mainly trying to counter Chavezâs growing influence, his main aid offered was: (1)free English lessons for some students in the US & (2)the loan of a hospital ship to teach doctors. - Less teaching than Cuba has done in Africa alone! Cuba has aided Chavez with doctors and equipment to establish free medical centers for all of the population Venezuela , most of who have never before in their lives been seen by a doctor. The newspapers were polite, but the fact that US is overextended and cannot do more was clearly indicated.
What's sad is that everyone knows Walker is 100% correct, can't be defeated in a debate, so he is being shunned by anyone who doesn't want truth to see light.
The guy is as intelligent and credible as one can get, and he isn't forecasting something that is crazy: He is forecasting something that can be calculated with mathematical precision, as long as one has the accurate raw data to do so, which he does.
Anyone who thinks we can "grow" ourselves out of this impending crisis when we will soon have 1 worker supporting 3 retirees better wake up to the new hard choice: Much higher taxes, or much less government entitlements (or maybe both).
I am not an expert. I do have a undergraduate business degree. I do read the Economist, Wall Street Journal and Financial Times among other publications. However, I am not speaking from a perspective of expertise. But, if China cuts back on buying our long bonds, isn't their going to be hell to pay with the economy?
The market follow's the Fed's every move. But, does the Fed really have that much control over the long end of the flat yield curve?
Isn't the 600 pound gorilla in the room, we owe China about a trillion dollars or something like that? If China wanted to diversify their currency holdings - it would send the long bond rates up? I understand, it is to their advantage to buy dollars. for a number of reasons (keeping the dollar strong so the US continues buying their exports, the liquidity of the dollar, the reliability of our banking system etc.) If we upset China with protectionism, then maybe they'll play a little hardball themselves? Or if they start playing hardball with Taiwan, and we step in, are they going to continue to buy our dollars at the same rate? Or what about the billion or so farmers that are becoming upset, because some of them are getting pushed off their "collective" land, due to expansion? What if those farmers become a political force? Not everyone's in on the gravy train in China.
Fact is, nothing is forever. They depend on their growth by buying dollars. But, we depend on them to fund our government, or at least the account deficit (for the government add the other countries buying). So, if they and other countries were to cut back on buying dollars what then? Maybe this is a problem 1, 5, 10, 50 .. years down the line. We are a debtor nation and we aren't going to be able to stop borrowing long any time soon, we have no choice. Our only recourse is to raise the long rates, if demand for the dollar diminishes, how else are we going to fund the deficit both the current account deficit and for that matter the national debt?
The market follow's the Fed's every move. But, does the Fed really have that much control over the long end of the flat yield curve?
Isn't the 600 pound gorilla in the room, we owe China about a trillion dollars or something like that? If China wanted to diversify their currency holdings - it would send the long bond rates up? I understand, it is to their advantage to buy dollars. for a number of reasons (keeping the dollar strong so the US continues buying their exports, the liquidity of the dollar, the reliability of our banking system etc.) If we upset China with protectionism, then maybe they'll play a little hardball themselves? Or if they start playing hardball with Taiwan, and we step in, are they going to continue to buy our dollars at the same rate? Or what about the billion or so farmers that are becoming upset, because some of them are getting pushed off their "collective" land, due to expansion? What if those farmers become a political force? Not everyone's in on the gravy train in China.
Fact is, nothing is forever. They depend on their growth by buying dollars. But, we depend on them to fund our government, or at least the account deficit (for the government add the other countries buying). So, if they and other countries were to cut back on buying dollars what then? Maybe this is a problem 1, 5, 10, 50 .. years down the line. We are a debtor nation and we aren't going to be able to stop borrowing long any time soon, we have no choice. Our only recourse is to raise the long rates, if demand for the dollar diminishes, how else are we going to fund the deficit both the current account deficit and for that matter the national debt?