The US of A owes a great deal money to China. Now US told the bond holders of GM to go take a long walk off a short pear.
We can tell China the same. Think of it like owing Tony Soprano; wha'ya gonn'a do about it?





The US of A owes a great deal money to China. Now US told the bond holders of GM to go take a long walk off a short pear.
We can tell China the same. Think of it like owing Tony Soprano; wha'ya gonn'a do about it?





All I will say is that the end result would probably be less severe if Tony Soprano did in fact hold the debt !!! At the very least, Tony Soprano's boys breaking the kneecaps of 100 million Americans would send an indelible message regarding the risks of borrowing and spending amounts of money that are so large ( compared to the borrower's 'real' income potential ) that they can never be paid back at full 'value' !Think of it like owing Tony Soprano; wha'ya gonn'a do about it?
Unfortunately, this is one of those financial topics that does not have direct and immediate relevance for dancers ... or for average working people either for that matter.





As China (and other lenders) want to hold less and less additional US debt, the interest rate will rise inevitably for those who will take on more US debt (likely including China). Somewhere it will just stop though. This is a critical time for the US and many other countries that we have dragged down with us.
What does this specific situation mean for us? Higher interest rates coming and eventually higher taxes too. What strategies do we need to take individually is the real question.
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.










Doesn't it make you feel warm and fuzzy that Americans are helping COMMUNIST CHINA with their agenda? Yep, anytime someone buys a product made in China you are doing just that.
Like I've said before, all those who allowed jobs to go to China should be tried for treason. That's actually what it is and we are all paying the price. Meanwhile, those who worked in factories (and other industries) can no longer afford many things, but of course the head honchos at the companies can.





^^^ trying to swing back on the economic side, the opening up of the US economy to wholesale 'globalization' has obviously been a two edged sword. Arguably, it allowed a US standard of living to be maintained / achieved over the course of the past 15 years that would never have been possible / affordable in the more 'insular' North American economy of earlier times. And arguably, the very low US dollar prices made possible by globalization have been of greatest benefit to the US 'poor' and working class - in the short term at least.
Regardless of opinions on globalization's merits or curses, for a fact the 'genie' has been let out of the bottle. Even if overwhelming US support could be mobilized to reduce globalization ( which is a whole 'nuther discussion because so many factions have vested interests ), as you have pointed out the USA no longer has the wherewithal to function as an 'insular' economy again. Indeed, even for industries that still have the outward appearance of being American ( i.e. GM ), a significant portion of actual product content has already been globalized ( i.e. subassemblies imported from Asia, Mexican labor content etc.).
But the above is somewhat beside the point, with Earl's main issue being that most Americans were not content with paying very low US dollar based prices for globalized goodies - but also took on ever increasing levels of debt in order to consume even more very low US dollar priced goodies than their own ( declining net ) incomes could support. Ultimately, this debt was financed by the Chinese, the Japanese, some Europeans, and of course Middle Eastern Oil Shieks.
Whether or not public admissions are forthcoming, all of these 'creditors' are becoming increasingly concerned that America's debts to them will not be repaid at full 'value' because America increasingly lacks the productive capacity to do so. The speculative scenario is that these 'creditors' will indeed be paid the US dollars that America owes them, but that the real 'value' of those repaid dollars will be greatly reduced compared to the original dollars these 'creditors' lent to America in the first place. Thus in real 'value' terms, American dollar depreciation will wind up 'screwing' these creditors out of 1/2 the 'value' of their original loans.
The likely fallout of course is that
A) a depreciated American dollar will result in price increases across the board for virtually everything Americans must buy ( not I said must buy not want to buy )
B) reluctant foreign lenders will dry up the availability of future business and personal loans, with those future loans that are still available carrying much higher interest rates.
C) reluctant foreign lenders will eventually dry up the availability of future 'loans' to US gov't entities ... resulting in future tax increases as the US gov't entities are forced to replace their borrowed money funding source with additional tax revenue funding source.
D) the combination of these factors is likely to act as an ongoing 'drag' on the US economy for many years to come
In reality, no the US can't ! If America were to attempt an outright repudiation of debt to China, China and other foreign creditors could and very probably would attempt to 'cut their losses' by selling off their US dollar denominated trade surplus assets en masse ( while at the same time shifting to a different 'reserve currency' for global trade settlements). If this were to take place, the US dollar could be devalued by 50% in a matter of weeks ... leading to US dollar denominated energy prices / commodity prices / food prices etc. doubling in a matter of weeks. The resulting consequences to American businesses, and more importantly American families, would be horrendous ! America has never experienced anything like this, but a few other countries have ... and the results were indeed horrendous !Now US told the bond holders of GM to go take a long walk off a short pear.
We can tell China the same
If there is any direct relevance of this thread for dancers, it is probably this ...
- holding US dollar denominated savings and investments now involves the same sort of financial ( currency ) risk regardless of whether those assets are held by hard working American dancers or the Chinese central bank.
- it IS possible for a hard working American dancer to mitigate this risk by diversifying savings and investments to include assets that are not denominated in US dollars, in exactly the same way that the Chinese central bank is doing. While the 'small scale' of individual savings and investments may complicate the issue, there are still some opportunities available ...
- purchase of precious metals
- purchase of a US bank CD that is denominated in a foreign currency
- purchase stocks and/or bonds of foreign companies and/or governments
~
Last edited by Melonie; 11-19-2009 at 11:14 PM.










China got to where it is today by state controlled predatory pricing.
All internal sales in China are taxed and some of that money goes to fund exports. It is a state decision on what exports get supported, and there is a clear strategy to it. China starts out subsidizing 'downstream' products. When the subsidized products have driven Western Manufacturers out of business, they increase the prices on the downstream product and use that to subsidize the next product in the supply chain - and so on.
I used to work in the tungsten industry (which China now has a 70 - 80% share of).
The first things they subsidized were the raw materials: Ammonium Paratungstate (APT) and Yellow Oxide (WO3) When a lot of the Western mining companies had given up mining and converting ore into these intermediates, the Chinese started subsidizing tungsten powder - and drove a lot of Western producers of tungsten and tungsten carbide powder out of the market. Then they started to produce subsidized solid products: TIG welding electrodes, WC cutting tips, etc, until they got that share of the market.
Western governments accepted that for two reasons:
(a) Divide and Rule - there was always someone who got competitive advantage out of the cheaper, subsidized Chinese products - so there was never a real concerted effort to stop the predatory pricing.
(b) Western Governments found the cheaper products coming out of China held down inflation - and ignored the downside that it was slowly but surely wrecking their manufacturing base.
So we are in great debt to China because a (Communist) state controlled industry was allowed to use carefully planned predatory pricing techniques over a 25 year period to slowly destroy great swathes of Western industry.
(Western Governments are incapable of thinking things out over 25 months so - despite being told by a lot of industries that this was happening - they sat back and let it happen. The timescale of their vision was far less than the Chinese).
Phil.





I would think that China would not just dump their American currency but would space it out. Even to try to maintain a better exchange, their intent would be known. Thus they would not get a good rate.
Problem with foreign currencies or securities is that you don't know which are tied how closely to the dollar. Further you cannot predict what ill fortune may befall that currency too. Diversification would help.
If one could purchase a commodity that retains intrinsic value perhaps because of its strategic importance. Gold is certainly traditional, but it has little importance as a strategic commodity.
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.





^ Interesting post, Phil.
One thing I've noticed is that China is able to optimize their financial decisions because tof the nature of its central government. The US is rarely able to do that because of the diversity of interests influencing our bedraggled government.
Last edited by threlayer; 11-22-2009 at 02:38 PM.
I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.
Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.
NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.





I suppose this really comes down to a policy decision ... i.e. whether it's 'worth it' to the Chinese gov't to lose $1-2 trillion dollars in order to accomplish a strategic objective - such as displacing the US and Euroland for global economic dominance ! Putting this in perspective, the US gov't is in the process of deciding to spend $1-2 trillion on 'national health care' in order to achieve a different strategic objective. And as you already pointed out, the Chinese gov't has far fewer 'entanglements' with vested interests who would bear the brunt of such a loss than the US gov't does !I would think that China would not just dump their American currency but would space it out. Even to try to maintain a better exchange, their intent would be known. Thus they would not get a good rate
Well in China's case, this relationship is well known. The yuan is kept pegged at 6.8 to the US dollar by Chinese central bank purchases of US treasury debt and US currency. Obviously, it would be necessary for China to abandon this peg if the decision were made to sell off their US dollar holdings.Problem with foreign currencies or securities is that you don't know which are tied how closely to the dollar





an interesting analysis from a professional investor's BBS ...
"(snip)The Chinese admit they are scroomed, due to their "Deal with the Devil"
That "Devil" being us, of course.
In a Bloomberg article, found here:
...our debt-enablers admit outright that the U.S. is devaluating its way out of its massive, unprecedented debt.
However, in the course of the missive, the Bloomberg reporter makes this wildly inaccurate statement:
"The nation (China)...is the U.S.’s biggest creditor, holding $798.9 billion of Treasuries as of September.
Sadly, Candice didn't do much fact-checking before she pounded out this story on her keyboard. For, the biggest, single, creditor to Uncle Sugar is "Intragovernmental Holdings", which is a cutesy Orwellian name given to:
1. Social Security
2. Military
3. Postal Worker
4. and other federal pensions and "trust funds"
...from which Uncle has borrowed funds to pay for day-to-day operating expenses.
Currently, the amount of IOUs that Uncle has piled up to the "Intragovernmental Holdings" bagholders is:
FOUR-POINT-THREE TRILLION FIATSCOS
...totally blowing away our Chinese debt masters.
Here is the link to the Treasury's own site, detailing the debt:
(*** Conclusion): While the poor Chinese are gonna take a big hit from the debasement of the U.S. *dollar*, the "Intragovernmental Holdings" creditors are gonna take an even bigger one.
Oh, and by the way, the "Intragovernmental Holdings" suckers don't even have "marketable" IOUs from Uncle Sugar, but rather, NON-marketable ones, so the managers of these "trust funds" can't even sell their bonds on the open market.
Of course, if a private corporation were to take funds from its employee retirement accounts and spend it for day-to-day operations, its officers would be arrested, prosecuted, and thrown in prison by...you guessed it...the federal government!!!
LOL, we're scroomed.
But at least we have a billion or so Chinese as company. "(snip)
For laughs...
I like Chinese food. Mmmmm. Fried rice and sushi.





Could this be the beginning of the end? What will they want next $800,000,000.00
Born in the USA.
Settling our Chinese panda debt
I am shocked that economists and businesspeople aren’t paying much attention to the news that best symbolizes America’s precarious economic situation. I’m talking, of course, about the impending departure of Tai Shan, the adolescent panda born and succored at the National Zoo, who, under a long-standing loan deal with the Chinese government, must be sent to China early next year.
Bookmarks