China gets stimulated & tosses Treasuries off!

Quote from jficquette:

China is a house of cards. No rule of law, communist and no religious foundations to give structural support to society.

The only thing holding China together now is their economy. If it goes down tubes then China's government will morph yet once again.

John
More...


If I may......

The christian segment of the population is growing exponentially, and the average Chinese person, on the whole, are a very hard working and industrious people.

It is a shame that such a family oriented culture has been straddled with a communist monstrosity for a government.
 
Quote from Random.Capital:None of it will be "offset". It's like suggesting that taking away one of a teenagers many credit cards is going to transform them from a net-borrower into a net-saver.

Yes, Chinese exports will get hit, but not because of magically appearing savings across the pond.
More...
None of what you wrote makes any sense. The macroeconomic savings rate has NOTHING to do with "savings magically appearing" in bank accounts. Paying off debt = increasing savings in a macro sense.

Disposable Income = Savings + Consumption

Chinese exports will get hurt badly as the Western world goes to service debt instead of consuming.
 
Quote from makloda:

Paying off debt = increasing savings in a macro sense.
More...

Yes, of course. The problem is that the G8 is not going to start "paying off debt" if China starts dumping treasuries. They will either find new lenders, or they will default ("coordinated", or otherwise).

We are in agreement that Chinese exports will suffer dramatically.
 
Good article here on savings rate and historical US individual investor holdings in US treasuries. Who says there won't be natural buyers of the debt if China starts shedding treasuries?

US disposable income is $10 trillion. China holds $0.75 trillion in US debt. If China wants to dump 50% of their treasuries US consumers "only" have to direct 3.5% of their DI towards treasuries to offset that. Of course, this is all theoretical but feasible nonetheless:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahwrh7X7plg0
 
You must log in or register to reply here.
Back
Top