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Thursday, August 09, 2007
11 comments:
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Rodger the Real King of France said...
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I'm not buying into this completely, but yeah- if you're looking for trouble. The Japanese have the same leverage, and so do oil producing nations, in a different way. But then, I'm a grade school drop-out.
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8/9/07, 3:44 PM
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Anonymous said...
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This remind me of Clevon Little's scene in Blazing Saddles where he puts the gun to his head and says "Make a move and the Na**er gets it." or something to that effect.
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8/9/07, 4:50 PM
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Anonymous said...
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First of all, this asswipe has got a monsterous hard on for President Bush. He must have said 4 times ''Bush's war" FUCK YOU ASSHOLE It's not President Bush's war, it is America's war and the only reason you're sucking air here is because of our brave troops protecting our butts by a forward defense.
Second, there is no doubt that the Chinese are in a good position vis-a-vie the debt they hold. But guess what? If they want to devalue their $1.3T in T-bills by selling off those bonds, fine. Yeah, there will be a correction, a lot of people with already cruddy mortgages in a money squeeze are gonna lose their homes, people that in saner times and tighter money wouldn't have gotten those mortgages in the first place.
But the simple fact is that if the Chinese do that, that is sell their dollars, they're DOLLARS. They are only and finally redeemable here. Would you, if you had a trillon pounds, seek to devalue the worth of those pounds? And if you did, that is devalue the worth of your pounds, you are the loser as well.
It's one more reason to, whenever there is a choice, to use resources in India. There's no doubt we've gotten ourselves into a pickle but OTOH we're China's biggest customer, hell, we're everybody's biggest customer. If they slow our economy down, they'll downright put a knife in theirs. And their booming economy is keeping their populace placted. Take the 3 or 400 million in their new middle class suddenly in a depression and there's gonna be some widespread unhappiness. To say the least.
I say it's a bluff and if not, than do it.
What am I missing?
MM -
8/9/07, 4:58 PM
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Anonymous said...
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Another option.
Default on any bond sold to China. Honor all the other ones ... but if it ever gets into China's hands, it gets defaulted on.
One Trillion dollars of Debt vanishes like smoke.
And there ain't much they can do about it.
The only downside is that Congress cannot issue anymore IOUs. -
8/9/07, 5:04 PM
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Anonymous said...
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Interesting arguments, all, and some have considerable merit. I (unlike MM) did not get distracted with the liberal spin of the article, since it is fact that the Chinese did have the balls to rattle their sword in the first place... whether this clown (the author of the article)is a Bush hater or not, is irrelevant. (check it out: its all over the news from major sources).
Did MM miss something? HELL YES!!! How about if the Chinese do not replace the bonds with more bonds as they roll?
Is it a bluff? Let's see: tainted dog food, toothpaste, shrimp... toys with lead based paint, tires falling apart, and shitty steel that has been built into our infrastructure over the years.... all from industry that we've moved offshore to CHINA, essentially condemning our middle class to ever-rising tax rates and fewer and fewer accessible jobs.
How the hell are we going to dig ourselves out of our next recession? Would you want to be holding a bunch of Treasury Debt when the inevitable happens?
Think through the entire scenario MM: WASS (We Are So Screwed)
Oh.. and by the way.... the markets reacted, in part, to this comment today as well.
Cuzzin Ricky -
8/9/07, 5:37 PM
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OregonGuy said...
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Let's assume that China wanted to liquidate its holding in US Dollars.
At what premium would you be made willing to give Euros, Yen or Francs in order to buy discounted Dollars? In order to coax new Euros, Yen or Francs into the market you would not only have to decide that the Dollar was no longer a good tool to store value, but you'd have to choose with which currency you would choose its replacement.
Don't check the economic news on trade imbalances for the French. If you do, you might not want to choose Euros to replace Dollar risk. (A measure of risk is what you think you might lose by holding on to dollars, especially in the face of smaller risks of loss by holding onto an alternative currency.)How would the Swiss Franc fair in a world of greater monetary uncertainty? Hmm. Maybe you wouldn't choose the Franc.
I got it!(You knew they were out there...the Goldbugs!) Gold! There are those out there who view fiat money as somehow less a dependable store of value than metal.
The problem is, as the demand for gold increases, US holdings in gold become more valuable. I don't know which country holds the most gold...but would you want to buy gold--and pay for its cost in transport and storage--or would you rather like a check. Which is really how we handle money today, at least in advanced countries.
Take numbers off my account. Add numbers to your account. Goldbugs don't see it. I guess most will be voting for that Ron Paul guy.
Dollars go down. Yuan go up. American made goods become less expensive in foreign markets. Demand for American goods, capital goods and labor go up.
Shoes made in China may become more expensive. But, would shoes made in Malaysia become more expensive?
People who foresee "economic meltdowns" with the issuance of whatever the latest report is are often guilty of the type of myopia refered to as seeing trees instead of forests.
Shocks can occur. Market adjust. Aritifical barriers to trade, duties, tariffs, content requirements are all barriers than can be overcome. But they do make it harder to do so efficiently. But remember, the people who want to make the world to reflect their values aren't playing with their own money. -
8/9/07, 5:50 PM
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Rodger the Real King of France said...
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FYI- Cuzzin Ricky is Exchequer of Transylvania and all its territories, and treasurer of the Monday night poker club.
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8/9/07, 5:50 PM
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Anonymous said...
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The entire economy of the world is tied together. No move China makes against the US economy will not affect them as well. In spite of having fewer and fewer accessible jobs, the unemployment rate today is still as low as it's been in recent memory.
The Chinese can do their worst, we were able to come back from the great depression largely due to war with Germany and Japan. China could throw us into depression and almost simultaneously pull us out when we start bombing them and our factories swing back into action and our manufacturing economy comes back. -
8/9/07, 5:58 PM
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Anonymous said...
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Maybe Cuzzin, this blame Bush for everything, from falling bridges to a bad hurricane season to trade imbalances, has worn too thin. Anyone that not only starts off their argument with it but peppers their rhetoric throughout with more of it has already lost their argument. So who, besides you, says I was distracted?
Distilled down, if the Chinese sell off their dollars(that amount is actually $900B+), the point I made before is still true. They will be hurt far more than we will. Second, where are they going to put their trade surplus? They know as well as we do, there is no safer place than dollars. The price of their goods rises, investment in China has less of a return, and the price of our goods decreases.
It's a bluff, as I said before. And as I said earlier, lets take these billions of Wal-Mart dollars and steer them towards India.
So Cuzzin's WASS is wrong because if we are so screwed than the Chinese are toast. And that Cuzzin is thought through, liberal CS writer or not.
MM -
8/9/07, 9:21 PM
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Anonymous said...
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Some are buying gold; I'm investing in copper, lead and brass.
Also, some steel & wood artwork assemblies -
8/10/07, 1:18 AM
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markshere2 said...
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.....
We do have a little issue here....
Do y'all remember a news tidbit whereby Iran said they would accept payment in YEN for their Oil?
Or am I dreaming again?
Mark -
8/13/07, 1:24 PM
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