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Asia Times' David Goldman Discusses The Imminent Chinese Asset Dump
The Chinese dumping story is really catching on. After even Alphaville reprinted it, it seems that everyone in the blogospehere is aware of the imminent, and far greater than a Greece contagion, danger of Chinese dispositions. Here is David Goldman who originally broke the story for Asia Times' Inner Workings blog, discussing not only Chinese dumping and the implication for cost of capital (ca. 11 minutes into the clip), but shares color on the topic du jour, Greece, along with Rick Santelli and Larry Kudlow.
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Riley: "This is the worst financial crisis we have all lived through"
Listen pal first I would like to to know the extent of your "suffering" while this crisis has occurred.More than likely you still have been able to make those BMW payments. You would think he was lining up at the docks the past few months with the rest of the potential day jobbers. When people are selling Samsungs LCDs on Ebay for 220.00 you will know what a modern depression resembles.
What if the US were to just simply "default" on that paper? Seems to me the US is holding all the cards, and the chinese, all the paper...
Sure, if we had a balanced budget, because our borrowing costs (as Obama would say) would necessarily skyrocket
Default on Treasury debt is unconstitutional. The words "full faith and credit" of the US in the constitution mean the Treasury cannot default. Of course there are words and then there is reality but don't imagine that those words mean nothing.
Selective default, like on the Peoples Banks holdings or Social Security, would be popular, each in its own way, but still default will in an important sense demak the end of America's constituional democracy.
Very valid point, but you'd have to agree that the constitution has not exactly been that pillar and guiding light of the political elites for many years.
It will be interesting to see where reality leads us...
"Unconstitutional"? ROFL! You mean that "G-d damn piece of paper" -- Ex-POTUS Bush
You mean that thing that says wars must be declared and voted upon?
You mean that thing that makes the Patriot Act illegal yet they still follow it?
Shall i go on? There are literally hundreds (probably thousands) more to list. Personally, part of the problem is that the USA is not following the Constitution and has went from being a Republic as per the Founding Fathers to a democracy (to name one of the many problems within the USA).
So next time before you site something as unconstitutional, you may want to realize the USA has destroyed it both by letter and by intent many years ago.
PS: Per the Constitution the USA government could easily release their own currency and thus eliminating the Federal Reserve. As such, there would be ZERO interest that needed to be paid on debt, thus saving the country billions of dollars (soon to be trillions in interest payments).
MarketTruth: I doubt this will matter, but war against Iraq was approved by Congress. See H.J.RES.114, approved in the Senate 77-23 and in the House 296-133. You can resort to weaselisms and say it just "authorizes President Bush to attack Iraq", but the bottom line is there would have been no war without this Congressional approval. Therefore, in effect, it was a declaration of war. Just sayin'.
Still incorrect, bc HJRES 114/Senate 77-23 or Resolution 1443 states that Congress will authorize the executive to act, with UN Security Counsel approval, which never happened, and it was based on international law which only allowed pre-emptive attacks on soverign nations, if the nation was in fear of an IMMENINENT attack. There were no WMD, and the "Colin Powell Address to the UN Security Counse" was based on forged evidence in "Niger", obtained from the Mossad, and a plagurized master's student's paper from twenty years previous......the UN Security counsel did not buy it. Colin Powell was exposed to be a lying shill. His ego couldn't take the exposure, so he resigned.
No, both wars of aggression are unConstitutional, in violation of Article 1, section 8, which explicitly grants only to Congress the right to declare war, and only after full and fair debate. None of that happened. There were no WMD, therefore neither Afghanistan nor Iraq had the capability to attack this nation.
Therefore, it was also a war crime, and a crime against humanity, under International law and the 4th Geneva Conventions.
"Let them eat yellow cake"----Marie Bush
Off with her head.
Quite simply, you are lying. I will only point out the two most obvious lies: 1) The UN did approve the invasion (google it yourself), and 2) The Bush administration never claimed that Iraq had WMD (just try and find where they did...good luck with that!). I actually don't care, but I must say the brainwashing was thorough!
I agree with your premise, however the quote has been disavowed by the original source.
http://www.capitolhillblue.com/artman/publish/article_7779.shtml
The article that previously appeared under this URL has been removed from our database because a followup investigation revealed the sources quoted in the article did not, as they claimed, attend a White House meeting between President George W. Bush where we reported he called the Constitution a "god damned pieced of paper."
Although we believe President Bush has a history of flagrant disregard for the protections and liberties outlined in the Constitution, we cannot confirm that he made the statement and retract the article.
Our apologies to our readers. Our policies regarding the use of unnamed sources were changed in 2006 and the article would not have appeared on this web site under those new policies.
© Copyright 2006 by Capitol Hill Blue
Well said........the constitution is revered much like a DEAD GRANDPARENT...spoken of with found memory but of no consequence.
Those words mean nothing. Politicians lie and sold us out to the lobbyists and campaign contributors.
Rapier, you are wrong. The constitution actually says "Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state." Art IV, Sec. 1. All this means is that State A has to enforce the judgments of State B. It has no bearing on the debt of the United States.
The constitution demands that money be backed by gold or silver. Thats ignored too... I think the constitution has been dead for a long time. It feels like game over for the great experiment.
Uh, hate to tell you be the US has defaulted before.
Valid point. The Chinese have nothing but paper and we have all the goods. So how do they collect if we choose to default?
Electromagnetic pulse.
Amer-icans no want to pay? Say "ni hao" to EMP! All yo soopa-mahkets are now empty. And all your womens are belong to us.
And Submarines........
The black rooms are hardened for just such occasions, the numerically stored accounts held by electrons are TBTF.
US won't default till the end.
China holds all the Fixed Assets (BRAND new state of the art factories and a few hundred thousand engineers graduating each year)
US boxed up all heavy equip and sent it off shore. We
have Nail Salons and pizza palaces for fixed assets.
Didnt the US do the same thing to Sterling during Suez - history ryhmes
isnt this what the US did to the whole world before they caught on?
then they sold us out to china...and now china is doing it to us?
wow...i finally understand rocket science...
The Price of gold certainly isn't interested in China dumping or the Eurozone. crazy.
It doesn't seem like anything is interested.
Stop looking at the price of Paper Gold and look at the TWO BANKS who are going short AGAINST ALL BUYERS. The COMEX gold market is nothing but a PAPER DERIVATIVE SHAM!
no because the price of gold is a function of the dollar.
the fear has been built into gold..thats why its up so high..
it will no fluctuate based simply on dollar fluctuations...the dollar is going to appreciate...so expect gold to go down...maybe not as much because of the fear out there...but its still going to go down...
"no because the price of gold is a function of the dollar."
...
"it will no fluctuate based simply on dollar fluctuations"
Seems there's a contradiction here somewhere.
The 10 Au chart unquestionably shows the price of Au is tied to currency valuation. With the US (and others) inflating like mad, the *long-term trend* in Au price has only one place to go.
Why do they all talk about a Greek bailout as though it were signed and sealed? As I see it, until they have convinced Eurostat that the data is now correct, the budget reforms are done and the Greeks have stopped striking and or rioting, nothing will be given. Also, a loan guarantee is not a bailout in my book...
Not a bailout? Cool. Would you mind co-signing a few loans for me?
As much as I don't like "mustard seed" Kudlow he's right, there has to be some discipline in the system and somewhere you have to draw the line. That's always been the problem with bailouts and subsidies, once you head down that path there's no stopping. To avoid the dilemma of when to stop you just never go there, regardless of how disasterous the consequences. You have to step back and let the chips fall, let the winners win and the losers lose, otherwise you end up supporting mediocrity and socialism.
All the talk about how in reality it saved the American people is a load of bull. There's nothing to suggest that we're any better off today than we were a year ago and the actions of the administration have only masked the real problem that will eventually be uncontainable.
These little "explosions" will only become more and more prevalent as the system comes closer and closer to self-destructing.
"The Russians Are Responsible"
Remember, in his book, that Hank Paulson blamed Russia for the financial crisis, claiming that the country was trying to convince China to also sell Fannie and Freddie MBS.
This is a red herring and the Chinese are being set up to take the blame for Primary 3. Wise up, folks.
Yep this is definitely the blame game. Whoever comes out of this richest is DEFINITELY to blame.
Stares intently at every central bank CEO in the US and ALL of goldman sachs down to but not including the janitor and building cleaners.
@going down
the russian are responsible because hank paulson said it?
WOW...great research there Einstein.
hank paulson will go down in history as one of the biggest crooks our country has ever seen...bigger than madoff...bigger than stanford...
im talking along the lines of bush, greenspan, bernanke and geithner.
we should wise up?
id tell you to take your head out of your ass...but its probably better if it stays up there.
clinton and rubin also come to mind. obama has done nothing but carry the torch forward.
I'd tell you to reread that post. Based upon your reply, I'd say, it may take you a few extra readings to get what he is saying.
Kudlow is a complete wanker. Doesn't like deficit spending or bailouts, loves to see union wages compressed, but also wants his tax cuts. My dog's got a better handle on economics.
I believe it was Kudlow who ranted in 06 - 07 "deficits don't matter" when concern was raised back then. The guy is a (and i love this term thank you ZH for it) Assclown.
Better than you for sure.
You mean our aircraft carriers and jingoistic chest-thumping can't intimidate China into buying our junk paper?
Paging Armchair General Leo, you are wanted in the war room.
Good stuff.
Let the chinese dump. It has to happen someday. Atleast we'll know that we've been feeding and nurturing an economy that is venomous. The chinese steal, hack, spy, blackmail and blatently loot our intellectual property while we sit back and provide more fodder for their growth. The chinese have never been our friends.
So if the Chinese dump what will they do with the money? Buy treasuries of course. They certainly are not going to buy the Euro or their own currency and cut-off the export hand that feeds you. They will buy treasuries, the Fed will extend QE and mortgage rates will stay relatively low.
The key to this is mortgage rates. If mortgage rates rise the real estate market tanks and we will all be holding hands and whistling in the dark. Tank the real estate market and bank assets look even worse, unemployment rises and all hell breaks loose.
This whole thing is chinese water torture and with bail out followed by bail out it could last for several more years. I don't think businesses can get any traction and the private sector grow with this much uncertainty in taxes, monetary policy, regulation and the health care crisis. If they really want to help unemployment take the uncertainty out of these issues and we have a chance - a start anyway.
"Tank the real estate market and bank assets look even worse, unemployment rises and all hell breaks loose." So what?
"So if the Chinese dump what will they do with the money? Buy treasuries of course. They certainly are not going to buy the Euro or their own currency and cut-off the export hand that feeds you. They will buy treasuries, the Fed will extend QE and mortgage rates will stay relatively low."
Exactly correct. If the Chinese meant to dish out a punishment to the U.S. government they have it precisely backwards. This is like a huge reward to the U.S. government. Holder of debt that is not government backed are going to take it in the shorts. The Treasury is going to get a huge boost.
Worse yet, there is no way that the feds can get out of the mortgage market now--without government backing there will be insufficient demand. This puts the entire U.S. credit market on a path to government backing, which ultimately means nationalization.
I wonder whether the Chinese intended this outcome?
"...cut-off the export hand that feeds you..."
bwaaaahhhahahaa. Earth to McFly. Just in case you didn't get the memo yet, China doesn't need the USA anymore to buy their goods.
Can't stand Kudlow, he is a fool.
I still remember him just before the present crisis
started, spouting happytalk. He was one of those
"deficits don't matter" idiots
This reminds me of the scene in "The Hangover" where the American lads are in the Mojavi desert trying to negotiate with the Chinese gangster. Oh, we'll get our "Doug" back. But Chinr will make sure we get the wrong one. Chinr Gangster, "Not my problem."
The chinese may not be our friends but we can either tax, borrow or print to sustain the overspending. None of the above are great choices, all bring misery in the end.
Tax, borrow, print - We are doing that now anyway. Are we in denial that we have not been pursuing such ruinous policies for many decades now ?
Kudlow has turned quite negative recently. Maybe they are running out of Kool-Aid...
Nah, they just switched to the sugar free stuff, looks the same but doesn't quite carry the same hopium high as the real stuff does.
HINT: In the case of a nuclear war starts, take your car and rush to a remote rural area, as far as possible from any city with over 1 million inhabitants. Your chances of not being hit by a nuclear bomb will rise. My car already has a full tank.
Good Plan. Let us know how you make out.
E melhor com uma motocicleta. Mais rapido, melhor capacidade de escapar quando as ruas ficam lotadas. E pode esconde-la tambem quando o gas se acaba.
Interesting that unions have to suffer pay cuts maybe up to 13%, but no discussion about writing off a percentage of the loan amount due. It's always the poor who are tied to the back of the truck and dragged down the street and the banks aren't required to give up anything. Then when wage earners are beaten to near death, their complaints are characterized as anarchistic terrorism.
I'd welcome a nuke dropped on my head. Just go ahead and get it over with sooner rather than having to live through the shithole that is the spiraling down of our society thanks to the cunt bags in DC and the corporate interests that use them like puppets.
Seriously, I'm 30, I've been married a couple years, my wife turns 28 soon, and I'm dreading having the "this economy is too fucked to think about having a kid in the next 3 years" convo.
It's gotten that bad for me that I have a relatively well paying job but cringe at the thought of "just getting by" after I start sinking money into a kid.
I've been thinking about it a bit and I know a lot of people like to day dream of a Mad Max type scenario. But the further we go along, the more I'm starting to lean toward Dark Ages 2.0
Riley:We'll hit 14,000 in the next 18 months
haahah
WE WILL YOU ASSCLOWN...
it all has to the do with the direction of the dollar...
deflate the dollar to inflate the markets...WHAT ARE YOU MISSING?
it doesnt mean you will be wealthier...infact the dollar delfation will most likely equaly the market inflation...for a net nothing
wake up...and stop acting like you have a clue what you are talking about.
That's the scariest thing I've read today.
Yeah, they'll buy treasuries instead, that'll teach us a lesson we'll never forget. LMAO!!!
While price is the arbiteur, this is nothing new. As has been shown in the last 2 releases of tic data, overseas purchases of agency and corp paper have been falling off since the end of '09. Recent talk of arms sales and Dali Lama visits only fanning the flames of whats been going on for the past few months. problem is it probably starts to attract more attention than vice versa
the Chinese calling the dollar peg, an exchange rate policy, is the height of disingenuousness. The three branches of China's government, the politburo, the military, and the poor and ignorant masses, which brandishes influence through the implied threat of revolt, maintains that countries checks and balances. The disruption caused by a politburo decree to verticalize China's economy would probably result in social unrest, and cause the complete closing down of China, but so far incrementalist policies are either absent, or showing no real effect. Applying austerity measures during a recession is political suicide, at least in this country. Should China really go its own way, they might try that, and increasing wages sounds like the first shot fired across the bow. (That is what Obama should have done in the US, and they should have RAISED interest rates several years ago to reflect RISK, but in a democracy the bankers own the peoples house) Has China finally created the workers paradise? We've already see the Workers Hell. Who knows?
11 trillion $ is J.Stiglitz's estimate for the total of government's support to the U.S financial system, and these morons are talking about Europe's round heels....Food for thought instead of Kool-Aid:
"The most worrisome part is that we are nearing the end of our fiscal and monetary ability to bail out the system. In 2008-09 we were lucky that major countries had the fiscal space available to engage in stimulus and that monetary policy could use quantitative easing effectively. In the future, there are no guarantees that the size of the available policy response will match the magnitude of the shock to the credit system.We are steadily becoming more vulnerable to economic disaster on an epic scale." Simon Johnson 02.09
What about the effect on the dollar if China does sell MBS?
....buy something other than Treasuries: MBS rates up, housing prices down, growth and employment down, equities down (carry trade unwinds), dollar up.
...or, if funds from MBS are just re-invested in Treasuries, can the Fed just by more and system is stable (relative to present)...
The bailout of Greece will be tiny compared to the bailout of California.
Santelli a voice of logic.
so let me get this straight - china will dispose of risk assets and buy treasuries and AGENCY (perhaps riskier than risk assets) debt. hmm, but the fed just bought all the agency debt from china...me smells a bernake hatched fart. china to pick up where the fed has left off on mbs purchase. then in 6 months the fed goes QE 2.0 and buys back all the agency crap from china. anyone want to place odds on this?
'Santelli a voice of logic.'
Unfortunately he is not on enough. There should be Santelli TV on 24/7.
Or
Palin/Santelli 2014
A lot of chest thumping going on here. Pretty courageous for people in a rapidly decaying society.
To spend $1 trillion dollars @ $1 million per day you would have had to start spending at the end of the Roman Empire. How big does sovereign debt have to be too big? Are we talking "The debt is too big to fail?"
Whenever I listen to Larry Kudlow, I get the desire to scrape myself off with a stick afterwards.
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