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A Suddenly Nervous China Tells The US To "Earnestly Take Steps" To Avoid A Default
While the world's largest hedge fund, the Fed, may not care about the performance of its "bad bank" assets, and thus is largely ambivalent if the US Treasury defaults on the $2 trillion in US paper held by Ben Bernanke, others don't have the luxury of merely printing away any incurred MTM losses. Such as America's largest foreign creditor China, which at last check held at least $1.277 trillion in US Treasurys, which after realizing with a substantial delay that the US Congress is not precisely a "rational actor" and its bonds may be materially impaired in the case of a technical default, is starting to panic. In an oped in the largest media publication, China Daily, vice finance minister Zhu Guangyao, warned that the "clock is ticking" to avoid a US default that could hurt China's interests and the global economy. Somehow we doubt Boehner or Obama are particularly concerned about what happens to "Chinese interests." Of course, if China so wishes, it can pen an Op-Ed in the NYT and tell the US just what will happen if $1.3 trillion in US Treasurys were suddenly to be dumped in a liquidation fire sale.
China, the US's largest creditor, is "naturally concerned about developments in the US fiscal cliff", vice finance minister Zhu Guangyao said.
He asked that "the US earnestly take steps to resolve" the issue.
Mr Zhu said that China and the US are "inseparable". Beijing is a huge investor in US Treasury bonds.
"The executive branch of the US government has to take decisive and credible steps to avoid a default on its Treasury bonds," he said.
"It is important for the US economy as well as the global economy."
Zhu's parting words:
"We hope the United States fully understands the lessons of history," Mr Zhu said, referring to a similar deadlock in 2011 that led to a downgrade of the US "AAA" credit rating.
Well that, or perhaps some other history lessons, particularly those derived from Germany in the 1920s.
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Deniers have no eyeballs. Can't see the record ice losses proving global warming is real.
Maybe you think you don't need eyes where you're going but the rest of us do.
No argument warming has been real, as has been cooling before that, as has been warming before that, as has been cooling before that, for billions of years. Apparently you're a denier that climate has been changing for longer than 30 or so years.
The question remains, is mankind causing any of it and that has not been proven by any stretch to the point that the IPCC has had to admit that their assertions and climate modelling are on their face bogus.
You need to separate valid historic paleoclimatological data from the as of yet manipulated, deceptive fiasco that is the AGW propaganda agenda. People who call skeptics of AGW "deniers" are generally brainwashed into reflexive panic and anger that "deniers" see this recent short term trend for what it most likely is and not some bullshit end of the world scenario caused by you and me. It's actually laughable despite being so incidiously serious.
Ever wonder why receding ice on Greenland is uncovering remnants of Norse farming settlements from the so-called Medieval Warm Period that the IPCC conveniently ignored and culled from it's "data" for the longest time until they had to admit that too?
Ever consider the benefits of warming compared to cooling in the first place while stripping-out the hyperbole and lies like 20 meter sea level rise, etc?
It is hoped you don't actually think things like .04% of CO2 in our atmosphere is the cause of any atmospheric warming whatsoever because there's just no cure for that...
This medieval warming period has no credibility vs past historical records. None.
As for prior warming we could measure we do know the reasons it happened and those same reasons apply today.
Nothing has changed in the mechanics just how much of each gas is in the atmosphere. This time around nature has not changed the gases, we have, which are making the atmopshere trap more heat.
We can measure it very easily all around the world, both from industrial output and from volcanoes.
The warming is real & is measured using thermometers, infrared satellites, etc.
Did you even read and comprehend my first sentence, or anything I wrote, before embarking an your moronic, patronizing little lecture? Did you even read and comprehend the complete and utter nonsense you just put down in response?
"Medievel Warm Period has no credibility versus past historical records"? Do you even realize how idiotic that statement is?
The reasons warming happened are the same reasons as today? What, global industrialization and use of petroleum, 7 billion people exhaling, a world of industrialized cattle farting, a billion automobiles, etc. in the 9th century? Or are you contradicting your own malarkey now?
Thanks for the laugh, my sympathies and good luck with that. It would seem as if you'd be quite capable of arguing absurdities with yourself so I'll just leave you to it...
The chemistry & physics haven't changed, only the rate at which we're putting those gases into the atmosphere.
Aw, c'mon, there's got to be the concept of Original Debt in there somewhere, like the CONcept of Original Sin.
You know, where someone ELSE sweats or bleeds (is sacrificed) for you? After they buy into the Special Substitution ('Surrogate') CONcept, they'll fucking "buy" ANYTHING.
Dumb sheeple!
China, Russia, Syria, Debt, Housing, Jobs, Shut down....None of it means a thing! Just watch the machines improve the indexes, that's the whole enchilada, lock, stock and barrel. Gold will be desimated and stocks will close green - Any questions??
But...but...but...the bank bought its clients a lunch and it makes headline news.
http://www.eubankers.net/article/14817/coutts-hosts-client-investment-lunch
20 people at lunch makes media headlines! What a joke! Who else hosted a Xmas lunch and had more than 20 guests? Raise your hands!
About time, Obama too invested in a lunch and gave a walking tour to the Chinese as well as a few Japanese investors? But I wonder, can he afford to host a lunch? Investors may want to know what Obama's Plan B is, being the CEO and all....
when the ten year bounces again, most likely it will overshoot 3.0 and head straight to 3.5. game over.
I hope there are Tilt lights and Buzzers!
horns whistles
naked dancing girls too..
Somehow i can't but think there's a martian in a UFO somewhere laughing feaverishly at the way Its human chess game is playing out.
Knowing our luck with the banksters to date, they will be Ferengi.
Mr. Zhu, An default by non-payment or a default by inflation is still a default. One way or the other the U.S is still going to default.
They are merely positioning themselves for "first in line" for any and all payouts and settlements.
And maybe buying a little bit more time to shop for real assets around the globe, to support their population and industry.
This is starting to feel like the real life version of "Weekend at Bernie's", complete with a corpse that does not stink, yet.
It hurts less when you ease it in slowly.
Has China learned the lessons of its own history?
http://beforeitsnews.com/new-world-order/2013/09/opium-wars-jesuits-and-...
So many Chinese citizens not getting paid... So many trillions of worthless American Dollars... So little time!
I don't think its correct that the Fed or any other major banking/lending entity can ignore the possibility that Treas paper may become an impaired asset.
There are so many repo, reverse repo, and more exotic collateralized transactions based on T-paper out there than you can imagine. Generally an impairment of the base collateral has the effect of a margin call in the equity market. Somebody in the transaction has to pony up more cash or more collateral.
In many cases the determination that collateral is impaired is a judgement call by one of the parties to the transaction and it can be ignored or acted on as chosen. In other cases impairment is determined "automatically" and requires one party to put up either more collateral, pay down the borrowing against the original collateral, or the deal blows up.
I simply can't imagine, if T-paper is declared impaired at some point how all of this could possibly be settled out in any orderly way.
Interest payments on T-paper is handled through a single purpose processing system at Treasury separate from all other disbursement. T-paper will be the first priority, higher than any other disbursement simply because the people who hold T-paper can do something bad if they are screwed.....refuse to buy paper at the rates the Treasury would prefer to sell it. Almost everybody else on the government payroll is sort of stuck. They don't really have any clout, even the largest defense contractors. What are they gonna do, start making consumer goods?
Government securities issued by the host government of the reserve currency...will collapse, taking the currency with it, right along with all trade denominated in it and all investments referencing or based upon it.
The world will move forward. The former Reserve host will experience significant loss of standard of living, along with political turmoil. These are all known impacts of a reserve currency shift.
I'm tired of these foreign countries and their cry-baby problems. So they made a bad investment. Do your due dilligence you dumbasses. Better luck next time. Happy hunting.
This isn't a creditor/debtor relationship.
It's a partners in crime relationship.
"Of course, if China so wishes, it can pen an Op-Ed in the NYT and tell the US just what will happen if $1.3 trillion in US Treasurys were suddenly to be dumped in a liquidation fire sale."
uh,yeah:
"its bonds (may) would be materially impaired in the case of a (technical default) dumping of their ust's in a liquidation fire sale."
all a smoke cloud from china, what with their real worry is a cheap dollar making the chinese exports too expensive.
my two cents,
:)
My understanding of the 14th amendment is that the executive cannot allow a default and must find a way to pay all debts on treasury - fastest way to do so is sell Gold reserves!
The last time China was nervous, MacArthur found himself retreating from the Yalu all the way to the ocean.
You Chinese folk didn't do what a Western banker recommended did you?
Fools if you did.
As far as gold and silver go, where were the Chinese when they were $250./ $5.00? That's right: Buying paper.
Since this morning, why I think that default may actually be coming:
1. There is not other weapon the US has to make this debt disappear! They created the Federal Reserve in 1913. Debt was the new money and gold was not, after 2,000 years or perhaps more. How can they make this debt just go away? Cannot convert to gold standard. Cannot create the new 'Amero'. Almost no other choices ahead.
2. Syria was a 'pressing of a button' away from attack and then suddently something happened and it is not news any more and the red line has been forgotten and daily pronouncements have died. Chemical weapon use, regardless of who used it, is no more a reason for attack! Whoa! Since when?
3. Afer 35 year long years, US is reaching rapproachment with Iran for no solid reason. Sanctions have been reduced for the first time and diplomatic talks via a local phone call happened in NY. What boggles the mind, is why now in Sept/Oct 2013?
4. China had until now kept quiet and so have the Japanese also. Outside of the Fed, these 2 nations hold the most but China has stopped publishing their gold holdings since 2010 or 2011 but we know that via HK, China has been importing billions in gold. Caribbeans hold USD 287bn which has risen from USD 108bn in Jan 2008. OPEC also holds USD 257bn rising from USD 140bn in Jan 2008. Brazil is next at USD 256bn followed by Taiwan at USD 185bn and then Switzerland at USD 178bn. Why are all these countries quiet? Brazil did throw a tantrum last month, so, was it because of the impending default?
5. The biggest losers of the default will be the rich investors, largest banks globally and some others. Poor people from Africa to China to Middle East to India etc have no cluse what a US Treasury even means. Some mutual funds will get impacted and interest rates will treble but then stabilise at double the rates. Just like In Poland assets were taken from pension funds or in Cyprus a full bank was raided to get cash, US default will remove lot of debt, maybe a few trillions, it may be a selective default instead of a complete default on all bonds, thus protecting the largest investors to some extent. Like a wayward individual, debt will need to be issued at very high rates and then stabilise but something has to give. Debt cannot be answer to more debt. Corporates have been shrinking globally and building cash war chests at an unprecedented record.
6. Price of gold has been kept low levels since last year, perhaps that much notice is given to all at the top most levels, to hold gold so that in the event of default, gold rises while bonds go down. It kind of makes sense if US was to default.
7. Republicans are not keen to talk and neither is Obama/Democrats. Why is there no national debate just like it is held every 4 years pre election time? They are avoiding each other like the love lorn. There is more to this than meets the eye. It is simply not possible to avid having this debate when every single MSM and global media is talking and looking. Why are they so quiet? Doesn't seem like a charade like 2011 when it was resolved. Why is a decent health care proposal aka Obamacare become a bone of contention and why now?
The million dollar question is: When will US default, not whether US will default? And, what will be the way of smoothening the impact?
There does not seem to be any law or executive order that can simply make all this debt go away with a magic wave, so my question to all my friends here is, what could be an alternative solution to this USD 17 trillion debt problem aside from an outright / selective default? Let us discuss various possible alternatives to add some juice at ZH.
Obamacare = a decent health care proposal? I presume you are either in Dubai or the CONgress of the United Statists of Merka?
Lol. I am in Dubai. Aside from the costs involved, and some corruption for cronies (why is no one surprised here) if many people can be given relatively subsidised health care, it may be 'decent'. Because not everyone can be made happy. NHS in UK and most European states are similar, even Canada with Health Plans in various provinces. It is mandatory for all to be enrolled in such. Dubai has started mandatory health care as well to reudce costs. India gives free food. What are the other major disadvantages of Obamacare?
If you compare America with her Constitution, Bill of Rights, Declaration of Independence and the body of law that has allowed a small young country to bring more prosperity, health and opportunity to more people worldwide than all other governmental systems put together throughout history, if you compare us to Dubai, India, the NHS in UK "and most European states" then I will not bother to answer your overly simplistic question as I'm quite certain you are unable to comprehend the answer.
Two words for you to mull over in your Oil-drenched Paradise where politically connected Princes live like Kings and maids and guest workers are treated worse than animals are treated in America: "given" and "mandatory". Just to get you started, before gov can "give, it must first "take". Mull away Mr/Ms DubaiBanker
PS Just for kicks, you ever see Dubai's Constitution? Mind sharing?
Yep, it is not like having one of the richest continents to exploit with only a few scattered amerindians putting up a fight had anything to do with American exceptionalism...
Are you really that naive?
The duplicitous eternal blobbing-up nature of US 'american' citizenism is the nib of the mattering thing!
When did you become a parangong of AnAnonymysticalism?
AnyAnymouse is a twit as we both know...
And yes, the Constitution was (and still is) a wonderful document... but that doesn't change the fact the US benefited from exploiting a virgin continent with no real competition from outside powers... The US didn't go the route of Empire until 1896....
@Flak Facts are stubborn things. Come out of the basement into the light and study some history.
Every continent has resources and riches. What is different in America is the nature of the freedoms our founding fathers enshrined in the very constitution our current president and his leftist followers consider anachronistic.
Why do you feel a need to talk down the very best experiment in human governance while living in and taking advantage of its benefits? Why not go aggravate your soulmates in the Kremlin or the Red Roof Inn in China?
Naive is too good a word for you, I believe you are simply another useful idiot. Obama loves the feel of your kiss on his ass. Go to it, lefty boy.
Nice rebuttal, some empty words and a gratuitous ad hom...
Do you think that if the Permian Basin and Spindletop were located in Central Europe that things might have been a wee bit different?
Nothing gratuitous about it, I merely responded in kind to your unsolicited characterization of my position as naive.
The fact that you consider those words empty is evidence of your distaste for the country I hold dear.
As far as different outcomes "if" things weren't the way they were or are, well isn't that cherry picking bullshit? You play the hand you got. You live the life you can. I consider the greatest asset in this country to be the freedom to live your life and pursue your happiness without fear of heavy-handed gov't telling you how much you can keep. We have allowed those rights enshrined in our founding documents by the founders to be eroded, just as they warned, but it does not diminish the fact that NO OTHER country before us in the history of the world had ever achieved the level of prosperity that we did. Just bulding the greatest transportation network ever known and feeding everyone were great things, long before Spindletop was discovered in 1901.
If you must compare central europe and us you must acknowledge the liabilities of their many nationalities and the flow of trade across multiple borders, their feudal governance at that time and since, and the simple lack of a single language across borders. Those things all, to this day, are impediments to trade.
I'll let you savor your jingoistic claptrap undisturbed in your echo-chamber...
I think that you did not even grasp my point...
All I can say that it is a good thing that a few of the founding fathers had more in mind than just figuring out how rich they could make themselves in the next 10 years....
flakmeister is using the facts.
You are the one misportraying history.
Your "founding fathers" are illegal aliens & stole resources to make America. There never should have been a "white America" which was just a colonial empire turned into another white empire not under the original king/family of that era.
It is really easier to look at the end result, figure that is what they were trying to accomplish and then figure out how they are going about doing it. This gives an indication of how they will operate in the future.
Youse is astin a lot of questions Pal, just watch your TV those folke will tell yo8 what to think and what to do so you can be Safe!
If a U.S. default leads to the demise of China....I am all for it!
WHY? China isn't your enemy, they aren't attacking you. If you're angry over outsourcing blame CEO's in your own country for arranging it & blame your own goverment for rigging labor markets to force it.
China suddenly realises it is a bag holder after all.
I guess I don't see the problem. Wouldn't the Fed just buy all of the debt that China is holding?
Uber-Inflation (1923)
Not to mention all those uber-inflated Amazon, Facebook, Google, and Tesla stock positions riding on some of this now-riskier collateral.
They lent money to an odious borrower, and thus deserve to lose every last dime.
When you owe the bank $1 Million dollars, the bank owns you.
When you owe China $1.4 Trillion dollars, YOU own China.
Clearly through the 30's, 40's and then 50's that worked out swell for Germany.
Oh wait....
...This is all a Prelude to WW3...just waiting for the "Archduke Ferdinand" Moment when someone throws a shoe at Obama.
I remember being at a bus stop in Boston back in 2008 when it looked like he was going to win the presidency and the MSM was preparing for this, especially the newspapers.
A black woman next to me was reading hers and commented to herself: "Oh, they gonna elect a brotha? Man, they gonna shoot dat nigga"
Confucius say man who goes to bed with hard problem, wake up with solution in hand.
Let the Chinese dump, Daddy Bernanke could buy them for 10 cents on the dollar. Daddy wants to buy all the outstanding treasuries.
The USA Fed only knows one strategy......PRINT MOAR!!!!!!
It may be time for Uncle Sam to give the Chinese a Haircut.
I have a question: If China, or anyone for that matter, gives us our own USD in exchange for Treasuries that guarantee a coupon rate return ongoing and principal return in USD at a future date, are they, in essence, absorbing all of the inflation we create?
They give us, say, circa 2011 USD and we pay them back with an increasingly less-valuable USD, which may even give you a negative return on your investment, considering the low interest rates.
Why would anybody do that?
It's 8:42am PDT and I already need a drink.
No.
What fraction of Chinese oil imports are paid by the coupon?
Anyone care to elaborate?
I think this might be the best answer to this article and the set of comment(s) on this particular thread that have followed.
To your second question on "why anybody would do it"? Beats the fuck out of me!
China trades stuff to Walmart. Walmart trades Dollars to China. Every day.
If China would spend these Dollars inside China, then China would have even more inflation inside China.
So China parks some of the Dollars in Ts outside China instead.
Ok, that makes sense. So, they're not looking at UST's as a good investment, just a hedge against USD inflation in their own country.
Thanks.
To MeatHammer's point.
This suggests a pernicious rate of return for the Chinese CB and as we keep witnessing time and again doesn't make any rational business sense which more importantly is unsustainable.
It truly has been bizarre to watch.
In light of Guangyao's announcement here "reading between the lines" I guess the next thing we need to be looking for is another series of earthquake(s) inside or near the coast of Iran and Pakistan or our Navy showing up omnipresent with another battle group around Gwadar and the South China Sea "partners". The question is how long can the U.S. keep doing this when they rely on the Chinese CB to help pay the bills.
If I had to bet on these two horses I think China still wins.
But will they have enough buyers of their crap in Russia and Europe to sustain themselves if the American economy and, more specifically, the USD blow up?
Stable economic systems (read: free markets) aren't this perplexing. The never-ending confusion further illustrates what a house of cards this truly is.
True. But this is where the pain I believe gets worse for "us" not "them".
China's dependence on the American economy for purchasing their goods and services will continue to decline because the U.S. workforce no longer is in place anymore for building the goods and services in it's own workforce that the rest of the world wants outside of weapons which has plenty of competition. We're not talking about WalMart junk anymore either. It has gotten to the point where they no longer need to come to the U.S. for an education because they have the infrastructure in place like India as well to build it on there own successfully in their own Country courtesy of the U.S. giving it away piecemeal over the last 3 decades in exchange for cheap labor.
Keep in mind that a good deal of our higher education in the fields of science and technology depend on scientisits and engineers from those Countries and when enough of them leave the drain on our workforce for developing the next generation of talent only gets worse. If you don't have a blue collar workforce that makes things anymore outside of defense that people want you' ain't shit!!! End of story.
This is why the BRIC is not something that is an idle threat anymore or is one or two decades away from eclipsing the U.S. We not only are beginning to show signs of not being able to develop and think outside the box towards the next generation of new technologies especially in the semi conductor and computer fields but also developing high end composite materials engineering as well as health and pharmaceuticals. No wonder we have essentially put our eggs in one basket to use our remaining gifts for spying on the rest of the World through industrial espionage. If that isn't your death knell than I don't know what is?
To put the "whipped cream and cherry" on this sundae they have proven they are a Nation of savers and have a government that encourages their people to invest in that "yellow thing" that the U.S. Government continues to give away in earnest because they will go down with the house of cards they have created 41 years ago.
I believe that the only thing we have left is a bought and paid for military that is as corrupt and incompetent as the rest of the civilian workforce that spends like there is no tomorrow and will forfeit the future to watch one more episode of "Breaking Bad" or Superbowl. What did Bill Kristol say here a couple of years ago -"If you have the nuclear option and the weapons are paid for Why not use them"? or words to that effect.
It took a long time for us to get to this place, but Guess What? We're Here!
Good talk
Depends. #1 how much is re-hypothecated in London #2 what is the rate of return of the maturities in question #3 are any being resold at a higher price (lower yield) before maturity to get more dollars and/or later maturities?
Dear Zhu Guangyao: go f**k yourself, and eat dirt.
It is interesting to hear from China what they really think about the Circus here, the guy is at the Top of largest Chinese Copper companies - they speak only what China allows to:
Gu Liangmin, head of copper at Minmetals.McEwen Mining & TNR Gold: Las Bambas Copper Bidding From China Heats Up
The quote above can be the one of the year and you can spot the trend now. It is getting more interesting by the day: Mining.com reports that now third Chinese company has entered the bidding "Art of War" for "Glencore Xstrata's (LON:GLEN) much-coveted Las Bambas copper mine." Situation is getting more and more industry attention now and Lumina Copper closed yesterday at 4 month's high of CAD5.72. We are waiting when the market and analysts will pick up this story and translate Los Azules Copper project value for McEwen Mining and TNR Gold.
Update: Lumina Copper has printed CAD6.55 today - we hope to hear some good news from the company soon. http://sufiy.blogspot.co.uk/2013/10/mcewen-mining-tnr-gold-las-bambas.html#
China dump T-bonds? No probrem, Fed buy.
I think I don't understand this. If China sells their T-Bonds to the Fed, what do they get in return? Federal Reserve Notes? T-Bills?
Isn't $1.3T about 25,000 tons of gold? Isn't that about 50 years of gold production? About 260 million acreas of land? About 400,000 square miles? 19 of our smallest states? Or the state of Alaska? Seward's folly?
Perhaps the real reason is that the United States is simply sending China a message, that is if you keep buying Gold to undermine our product then we will teach you a very bad lesson and not pay you...I think this threat is working will see
The USA should NOT default now. Better to wait and default in a few weeks. Or in 2016. Or 2017.
Sure - everyone in the wolrd realizes that default is inevitable - but everyone seems to hold out hope that we can skate by for another few years before that happens.
Would it really be so bad just to go ahead and default now? Its like going for a dental check-up and learning you've got 2 cavities that require some drilling and some pain. Better to just get it over with.
exactly - a planned, phased default is much better than default under duress
This debt is the guarantee that China would play fair, not fuck over their sponsor and over generous host the United States of America. The world order requires this 'security deposit' to voluntarily discourage war and maintain equitable balance. Having received their benefits up front China may now be testing the water to welch on this agreement, with the encouragement of the usual corner cutting villains who think they can benefit at the expense of everyone else by killing the goose that lays golden eggs.
I can comfortably support myself and achieve my personal goals without contributing a drop of sweat to the legions of cretans who demand my charity. So far my charity has only gotten me sacrificed, ripped off and maligned by those who demand my support, up to the point where these predators have usurped my government and legal system with the intent to enslave me. Your need is not a claim on my ability. You can not force a mind: my substantial contribution is off the table because the nwo being birthed is an hierarchical slave state. Without my gift, and the abilities of the others, this will fail on its own faults. I can wait. NON SERVIUM
Ha! There's the reality. China doesn't have us by the balls, we have them by the balls. "Hey, remember all of that paper we gave you in exchange for manufactured goods? Suckers!"
"If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem." - J. Paul Getty
Nothing will happen if China dumps. Fed buys it all. China can buy Bumfuck Iowa woith their newly printed cash.
Dear America, get ready to return to work manufacturing toasters. I've seen the 7 dollar Chinese toasters. I'm sure you can make a better product for less when your dollar is cheap enough.
Some Americans think Foreign Debt does not matter. If the US defaults - simply bad luck for the debtor.
Not so fast.
If the US defaults outright (not only technically) on Government Debt and the Bank of China can not expect refunding, US investors would probably face the bill.
All US companies might be forced to sell their assets and their patents to the Bank of China in exchange for US-Treasury paper.
So the bad cards would end in US investors hands. Foreign Assets in China are much higher than the foreign reserves of the BOC!
There is no freee lunch - not even for the US.
Marklind
A house of cards... we're witnessing the collapse... I'll take the few dollars I have and see if they'll trade for yuan... everybody knew it was coming... Japan gets Hawaii... China, a good chunk of Alaska...
Lots of comments here about what would happen if China panics and dumps Treasuries. I think a far more likely scenario is that Japan panics and dumps Treasuries. The House of Cards rarely starts crumbling at the spot where everyone's attention is focused. This is like one of those giant domino mazes - once one domino tumbles it is almost impossible to avoid the collapse of the entire maze.
When 2 fight a 3rd wins.
No matter what, keep the polices that allow a $50B+ per month trade Chinese trade imbalance in place
US, next time you want to bomb someone, be sure to ask China for permission first, and if you want to bomb China, they might lend you money to drop some on them as well *evil grin*
Suddenly China, our best trading partner, will be portrayed as a villian with military intentions. Some obscure general in the red army will suggest war with the USA. In that way the American people will be brought to see that screwing those who have lent us money can be OK. It is sad when governments renege on their debts....but they do so 100% of the time.
Dear China
Invoice
Support for the 16 million illegal immigrants received during the BHO occupation @ $400,000 ea: 6,400,000,000,000.00
Please remit payment
If China dumps its US bonds, Ben will buy them at reduced value. So China will swap $1.3T in bonds for perhaps $1T or less in Bernankebucks, whose value will be on its way to zero. Not sure that's a good move for China.
China is caught with that age old problem. When you owe the bank $1000 it's your problem but when you owe it millions its the bank's problem. When you owe it trillions it is even more the lender's problem.
Or maybe he referred to les évenéments of 1968 – the Paris student riots and sit-ins. And not the French revolution.
Speaking of history lessons...