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Chinese Think Tank Implies America May Be Falsifying Its Accounting, Says US On Way To Default

Tyler Durden's picture


Joe Biden came to China, saw, and failed to conquer the locals' ridicule. Punctuating just how "effective" Biden's visit to China was in order to "reassure that the US is solvent" (no seriously, that;s the name of the article) is a just released article in the Securities Times by Wang Tialong, member of Chinese think tank Center for International Economic Exchanges in which he went on to blatantly say that "The U.S. may be on its way to default on its debt despite the U.S. government's ability to print more money, a Chinese think tank researcher said Monday." Now this is nothing new in the escalating war of words between the two countries, although increasingly China appears to be attacking the primary loophole that defenders of the unsustainable US debt use, namely the fall back to the USD as a reserve currency. Wang went on further to implicitly accuse the US of fabricating economic data: "There is also no way to punish the issuer country if it falsifies its accounting and there is no way to restructure the issuer either, Wang said." Well, when China accuses the US of "falsifying accounting" you know you have hit rock bottom.

From Dow Jones:

The U.S. may be on its way to default on its debt despite the U.S. government's ability to print more money, a Chinese think tank researcher said Monday.


There is no guarantee for sovereign debt, which increases the risks the lenders face, said Wang Tianlong, a researcher at the China Center for International Economic Exchanges, a think tank supervised by the country's economic planner, adding that the issuer could be more careless in using the loans.


In the short term, the U.S. doesn't have much ability to reduce its deficit, Wang said in an opinion piece published in Securities Times. He added that the U.S. lacks the political system to guarantee that it will not default on its debt.


There is also no way to punish the issuer country if it falsifies its accounting and there is no way to restructure the issuer either, Wang said.


Wang's comments come after the U.S. Vice President Joe Biden said Sunday the U.S. "never will default" on its government debt and reassured Beijing that Chinese investments in the U.S. are safe.

Slowly, surely, China is realizing that the endgame is nothing short of out of control debt inflation, which is precisely what having no way to "restructure the issuer" means. That plus sending the US to bankruptcy court may be somewhat problematic. It also means that Chinese holdings of US debt will be increasingly worthless, and its population increasingly stabby as the price of hogs resumes its record climb. The only alternative is for the CNY to float and for the Chinese, Russians and Germans to say enough to this broken economic model and launch a gold (and other hard asset) backed currency. The only question is when.

h/t London Dude Trader


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Sun, 08/21/2011 - 21:38 | 1584655 Gibu The Great
Gibu The Great's picture

Funny when the folks that strictly adhere to Chinese Regulatory Accounting Principles (CRAP) accuse us of the same.  Not saying they are wrong, but c'mon man!  Oh, totally bullish.  

Sun, 08/21/2011 - 21:41 | 1584666 wang (not verified)
wang's picture

re post from Bloomberg news


Wall Street Aristocracy Got $1.2T in Secret Loans Q

Sun, 08/21/2011 - 22:43 | 1584833 The Shootist
The Shootist's picture

That's a ridiculous sum, and to think those banks would have failed without it. Disgusting. They should have.

Sun, 08/21/2011 - 22:01 | 1584724 uranian
uranian's picture

the very notion that "mark to make believe" is a reasonable way to account for anything, rather than the actual market price (if there's any bid at all), indicates how entirely irrelevant any of these stats are anyway. rickards has a good interview at goldmoney's site; one of his observations was that if all the financial institutions of the world made a reasonable accounting of their combined books, the world would be insolvent, so all of these shell games are really moot anyway. it's just a matter of when everyone else notices that, too.

Mon, 08/22/2011 - 13:53 | 1586715 Koffieshop
Koffieshop's picture

So instead of the natural gradual decay, this will go down like Enron.
Fast, spectacular and with many casualties.

Mon, 08/22/2011 - 06:48 | 1585277 anyways
anyways's picture


The only good news in this mess is, the Chinese get back what they deserve: Nothing, but worthless paper. LOL


Mon, 08/22/2011 - 07:17 | 1585308 Sofa King
Sofa King's picture

Excuse me Mr. Kettle but it's Mr. Pot on the phone...he's just calling to remind you that you're Black.

Mon, 08/22/2011 - 10:36 | 1585794 tamboo
tamboo's picture

hey zh how bout some bigger or clickable avatars since y'all are upgrading things?

i cant even read gibu's and you definitely need too see my golden ass in all its glorious detail.

Sun, 08/21/2011 - 21:38 | 1584656 Captain Benny
Captain Benny's picture

When I read the news that Biden went to China to "reassure" them that the US was not going to leave China high and dry, my eyes rolled.  Who in their right mind would send such a serious fuck up like Biden to China?  Even Timmah knows how to create a more truthfull sounding lie than Biden!

Is Obama the guy that sent Biden?  Probably.  Just shows how out of touch Obama is with where the nation is.  Wow.

Sun, 08/21/2011 - 22:30 | 1584798 DeadFred
DeadFred's picture

You guys are still believing Obama is trying to improve America. What will it take to finally see him for what he is?

Sun, 08/21/2011 - 23:12 | 1584897 Thomas
Thomas's picture


Sun, 08/21/2011 - 23:58 | 1584990 IBelieveInMagic
IBelieveInMagic's picture

Unfortunately Obama misplaced his magic wand.

Mon, 08/22/2011 - 07:51 | 1585353 Birddog
Birddog's picture

Obama can only "fundamentally change" America after the current system is overwhelmed

Mon, 08/22/2011 - 09:08 | 1585542 fiftybagger
fiftybagger's picture

10 The thief cometh not, but for to steal, and to kill, and to destroy:

John 10
King James Version

Mon, 08/22/2011 - 10:31 | 1585817 tamboo
tamboo's picture

Joe Biden: "I am a Zionist" | Wake Up From Your Slumber - Obama's Jewish "Irish" Grandfather


when's the last time the self chosen didn't defraud everything in sight?

Mon, 08/22/2011 - 00:11 | 1585010 DaBernank
DaBernank's picture

Confucius say, "Bank that loan one thousand dollar make problem for man, bank that loan one billion dollar make problem for bank."

Back when Confucius said that, a billion dollars was a lot of gold-backed currency. ;-)

Mon, 08/22/2011 - 00:11 | 1585013 Rick64
Rick64's picture

I doubt Biden went over there to reassure, but rather tell them hey this is the game and we own it. We have told you over and over to float your currency and if you don't there is a matter of possible default or we could continue to print money and cause inflation while devaluing your currency.

Mon, 08/22/2011 - 01:54 | 1585099 InvalidID
InvalidID's picture


 I think this about sums up the situation nicely. China isn't mad that we're inflating our debt, they're mad that we're devaluing the Yuan. LOL

Mon, 08/22/2011 - 04:03 | 1585179 Seer
Seer's picture

I don't think that anyone is going to be conned anymore.

Maybe Obama sent Biden in order to make him look bad, to make sure Biden wasn't strategizing to have Obama off'd? (meaning, if Biden did end up sitting on the thrown NO one would really recognize him as legit [not like it was hard to do from the start, but this pretty much seals it]).

But this is all meaningless and we know it.  It's always Kabuki theatre when things are irrevocably collapsing.

Mon, 08/22/2011 - 06:52 | 1585279 onthesquare
onthesquare's picture

An old Chinese proverb

"A lie told 10,000 times becomes the truth"


Sun, 08/21/2011 - 21:39 | 1584658 Grill Boss
Grill Boss's picture

Wang Long Dink Tank


Sun, 08/21/2011 - 22:45 | 1584840 Dumb Honkie
Dumb Honkie's picture

HONKIE TALK by a dumb HONKIE with a 2 inch dick.

Sun, 08/21/2011 - 21:39 | 1584659 Bobbyrib
Bobbyrib's picture

I'm so glad we handed China our economic prosperity on a silver platter. They are great "allies."/sarcasm.

Mon, 08/22/2011 - 04:08 | 1585186 Seer
Seer's picture

Economic prosperity is transitory, it's not a thing (not a permanent state).  All empires rise and fall,probing into why is usually meaningless (as EVERYONE refuses to note that it's growth that predestines it).

Mon, 08/22/2011 - 07:08 | 1585299 Bobbyrib
Bobbyrib's picture

Empires usually voluntarily hand over whole industries along with the technology to reproduce the same goods that they contracted other countries' companies to produce just to receive it cheaper? Good to know. 

Sun, 08/21/2011 - 21:43 | 1584673 molecool
molecool's picture

Fuck the Chinese - they knew what they were getting into - all part of their '50 year plan'. If it now backfires I am not going to shed any crocodile tears.

Sun, 08/21/2011 - 22:47 | 1584843 Dumb Honkie
Dumb Honkie's picture

Let's fuck you first, asshole.

Sun, 08/21/2011 - 23:14 | 1584903 treemagnet
treemagnet's picture

"Paddle faster.....I hear a banjo..."

Mon, 08/22/2011 - 00:12 | 1585015 Rick64
Rick64's picture


Mon, 08/22/2011 - 00:04 | 1584997 DaBernank
DaBernank's picture

Here's how: mint a 1ozt. silver coin with "1 Trillion United States Dollars" on it and let Joe Biden show it to them. See! Your money is safe, we made a very special coin just for you!

Mon, 08/22/2011 - 00:18 | 1585019 Rick64
Rick64's picture

We have every intention of reimbursing you.

Sun, 08/21/2011 - 21:46 | 1584683 Lazlo Toth
Lazlo Toth's picture

USA.... Fabricate??

Falsify numbers??

I am shocked....

China really should apologize for this...

Sun, 08/21/2011 - 22:29 | 1584794 MsCreant
MsCreant's picture

China, America, it's not "American Idol Housewife of New Jersey." No, bigger, better, Simon would be proud.

Surreality TV:

It's Kabuki theater.

Sun, 08/21/2011 - 23:39 | 1584956 carbonmutant
carbonmutant's picture

Megashark vs.

Sun, 08/21/2011 - 21:55 | 1584711 treemagnet
treemagnet's picture

Its just not true....Ben and Turbo took Act. I & II, they know how to use T-accounts, they both answered the gold standard "assets = equity plus liabilties" maxim correctly.....these are just lies, damn lies I tell you! 

Way to go Wang fuk dong, took ya 20 years to figure out the Fed lies......any other revelations you want to shine a little luminescent disinfectant on?  Fucking retard chinese inbred asshats getting their 15, whatever.

Sun, 08/21/2011 - 21:57 | 1584712 digalert
digalert's picture



Can we get a Jeethner/Biden China comedy tour?

Add the Bernank and we'll have a 3 Stooges lineup.

Talk about some knee slappin Chinese fun.


Sun, 08/21/2011 - 21:57 | 1584717 stock trout
stock trout's picture

Falsification would require a high degree of sophistication and cunning. It's more likely simple errors from not knowing basic accounting principles.

Sun, 08/21/2011 - 21:58 | 1584719 bugs_
bugs_'s picture

Stop projecting - thanks in advance

Sun, 08/21/2011 - 22:00 | 1584723 Calmyourself
Calmyourself's picture

You know what is not falsified my Chinese friends..  The numbers on the t-bills you hold.  They will be wiiped off our books soon.  Good luck with food production and the mob after that..

Sun, 08/21/2011 - 22:00 | 1584725 IMA5U
IMA5U's picture

the pot should not call the kettle black


china is the biggest ponzi scheme on the planet

Mon, 08/22/2011 - 04:13 | 1585190 Seer
Seer's picture

So, you're saying that they're dealing with bigger numbers than the US?

Oh, and unlike the US, China is actually manufacturing stuff (yeah, it might be junk, but at least it's REAL junk, not virtual makebelieve junk like the US produces).

P.S. Yeah, bright one, it's ALL a ponzi- perpetual growth on a finite planet- like anyone needs to know anything more than this to figure it out!

Mon, 08/22/2011 - 05:14 | 1585224 InvalidID
InvalidID's picture


 This is kinda why the Chinese are on the losing end of this trade. They are making real junk, and trading it for imaginary junk.

Sun, 08/21/2011 - 22:01 | 1584726 Newsboy
Newsboy's picture

I think Biden went to China to reassure China that the US was not going to undercut them with the new-new-deal to save Western banking, which is soon-to-be-announced as an emergency measure. Their cooperation is needed, and a high level visit shows appropriate respect.

Sun, 08/21/2011 - 22:02 | 1584730 dalkrin
dalkrin's picture

Sending our boy Biden to reassure the Chinese;  may as well send our boy Pee Wee Herman to the biker bar to show them we mean business.

Sun, 08/21/2011 - 22:21 | 1584786 IQ 145
IQ 145's picture

Exactly; he should have offered to play chess with them; then they really would have been impressed. the chinese have a higher normalized IQ score than white Europeans; and as for Africans; you really don't want to know. It's an example of "Reality"; as in "Reality, you couldn't handle reality".

Sun, 08/21/2011 - 23:07 | 1584891 AmCockerSpaniel
AmCockerSpaniel's picture

I don't "think" any one group has an IQ higher than the Jews. Oh; I am not jewish, just calling them as I see them.

Sun, 08/21/2011 - 23:32 | 1584939 ping
ping's picture

The Poles, bitchez. Or anyone around the Baltic. Rampant IQs.

Mon, 08/22/2011 - 00:10 | 1584994 Dumb Honkie
Dumb Honkie's picture

 Ashkenazi Jews are smart but Sephardic Jews are pretty dumb. On the whole the iq of Jews is about 100, about the same as that of white gentiles.

Mon, 08/22/2011 - 07:48 | 1585346 DaveyJones
DaveyJones's picture

Dolphins plus they use less oil

Mon, 08/22/2011 - 03:40 | 1585146 Snidley Whipsnae
Snidley Whipsnae's picture

If you have read 'The Bell Curve' and believe it, the Chinese do have a higher average IQ than the Jews... Indeed, higher than any group on the planet...

Of course, 'The Bell Curve' was/is extremely controversial... Definition: it ruffled a lot of hair in an age of political correctness.

Sun, 08/21/2011 - 22:02 | 1584731 toady
toady's picture


They 'think' so..... HA!

Sun, 08/21/2011 - 22:06 | 1584737 Sizzurp
Sizzurp's picture

I guess this is some type of reverse psych-op where they try to shame us into not defaulting by constantly accusing us of defaulting. LOL  Hey China I got your interest payment right here, come and try to take it.

Sun, 08/21/2011 - 22:20 | 1584778 Missiondweller
Missiondweller's picture

Isn'y it interesting how the US must always tip toe around China so they don't "lose face" yet they have no problem spewing this crap.

Sun, 08/21/2011 - 22:39 | 1584819 DeadFred
DeadFred's picture

If we wanted to save face for ourselves, living within our means would have been a good start. Yes they spew a lot of crap and get their knickers twisted in a bundle over any tiny slight, so why do we put them in the power seat?

Mon, 08/22/2011 - 04:20 | 1585192 Seer
Seer's picture

It's amazing how those fucking up can get so defensive...  Reminds me of people's driving habits wherein someone fucks up you point it out to them and they get all irate like it was YOU who were at fault.  US superiority shit!

Takes two to tango...  Didn't Adam Smith state that countries of dissimilar economic footing shouldn't trade?

It was always a strategy of eliminating the communist govt by overrunning it with the plague that is The American Dream.  As soon as the Chinese bought the transportation meme (literally the road to hell) they were fucked.

Sun, 08/21/2011 - 22:11 | 1584753 vast-dom
vast-dom's picture

My toilet bowl think tank could have prognosticated that. Put another way, how many Chinamen does it take to flush my soothsayer turds?

Sun, 08/21/2011 - 22:49 | 1584849 Dumb Honkie
Dumb Honkie's picture

Another DUMB HONKIE talking shit.

Sun, 08/21/2011 - 23:33 | 1584942 ping
ping's picture

Oh Fuck You, broken record. Go pick peanuts out of your shit and leave ZH to the grown ups.

Sun, 08/21/2011 - 23:44 | 1584964 Dumb Honkie
Dumb Honkie's picture

Hey sissy HONKIE mother fucker, why don't you put your little dick in your fat ugly mama's cunt, after that suck 10 black dicks.  What a douche bag.

Mon, 08/22/2011 - 10:26 | 1585804 JohnnyCrash
JohnnyCrash's picture

Where did I put that Bozo filter...

Mon, 08/22/2011 - 12:05 | 1586219 Dumb Honkie
Dumb Honkie's picture

Inside  your mama's smelly cunt.

Mon, 08/22/2011 - 11:16 | 1585985 Dyler Turden II Esq
Dyler Turden II Esq's picture

You're a gentleman and a scholar.

Sun, 08/21/2011 - 22:19 | 1584774 JustPrintMoreDuh
JustPrintMoreDuh's picture

If I the debtor owe you the creditor $100,00k and cant pay, then its my problem.  

If I owe you 2+ Trillion and cant pay, then its YOUR problem.

He who raffs rast ... 


Sun, 08/21/2011 - 22:20 | 1584776 Silver Brass Lead
Silver Brass Lead's picture

The Chinese should be insulted and down right pissed off that we sent such a jack hole to "reassure" them that we won't rip them off. If anything that should make them feel even more unsettled.


Sun, 08/21/2011 - 22:23 | 1584788 IQ 145
IQ 145's picture

You must have failed to notice, that we don't have anything but "jackholes" available. They make up the Federal Government.

Mon, 08/22/2011 - 01:11 | 1585071 lunaticfringe
lunaticfringe's picture

+1 trillion

Sun, 08/21/2011 - 22:24 | 1584790 Sizzurp
Sizzurp's picture

Yep, we should send Donald Trump next time.

Sun, 08/21/2011 - 22:41 | 1584826 DeadFred
DeadFred's picture

That only a slight improvement. We should try harder than that.

Mon, 08/22/2011 - 00:17 | 1585020 DaBernank
DaBernank's picture

Dust off pee-wee Herman and have him ride his bicycle out onstage to reassure the Chinese.

Mon, 08/22/2011 - 07:57 | 1585356 DaveyJones
DaveyJones's picture


Mon, 08/22/2011 - 07:05 | 1585294 onthesquare
onthesquare's picture

they should have sent Nixon; would have gotten a better image of the situation

Sun, 08/21/2011 - 22:39 | 1584823 toady
toady's picture

Dude! The term is jackwagon!

Mon, 08/22/2011 - 04:30 | 1585198 Seer
Seer's picture

No better way to communicate reality than through comedy...  Thanks for the link!

Sun, 08/21/2011 - 22:33 | 1584793 goldfish1
goldfish1's picture
Chinese Think Tank Implies America May Be Falsifying Its Accounting




May be?

These people are polite.


Sun, 08/21/2011 - 22:30 | 1584797 carbonmutant
carbonmutant's picture

Well there is a reason they sent Biden. Can't afford to have the locals laughing at our community organizer...

Sun, 08/21/2011 - 22:30 | 1584799 chirobliss
chirobliss's picture

Why this infantile obsession with the Chinese and the Russians running the new recerve currency?  Does anyone who writes this BS ever think about the consequences of having the world's most prolific fabricators of government statistics and the world's biggest exporter of orgiastically violent organised crime run the world's economy?

Now I know, you are all going to tell me about the Bernank, and I agree with you, but if you are telling me you'd rather live under their criminals than our criminals...  now that really is a WTF!

Sun, 08/21/2011 - 22:49 | 1584848 DeadFred
DeadFred's picture

Respectfully, it's not about what we want but what we fear will be crammed down our throats. They currently have the opportunity for a major power play but the window will close when their own economy goes too far south.

Will they make a deal with the other BRICs to become number one? "The only question is when." How about this week before Jackson Hole? They've been giving plenty of fair warning.

Sun, 08/21/2011 - 23:51 | 1584977 asparagui
asparagui's picture

>Does anyone who writes this BS ever think about the consequences of having the world's most prolific fabricators of government statistics and the world's biggest exporter of orgiastically violent organised crime run the world's economy?

Wait, I'm confused, are you talking about us or them?

Mon, 08/22/2011 - 07:04 | 1585293 Bob
Bob's picture

Sounds like you're confused about the profound difference between criminal mob enforcers and the baddest military "nation building" machine the world has ever seen.   

It's all in the uniforms . . . and which end of the gun you're on. 

Mon, 08/22/2011 - 08:04 | 1585368 DaveyJones
DaveyJones's picture

The uniforms and the accent, maybe the hair, and the guitars

Mon, 08/22/2011 - 11:19 | 1586003 Dyler Turden II Esq
Dyler Turden II Esq's picture


Sun, 08/21/2011 - 22:30 | 1584800 gwar5
gwar5's picture

Falsifying the accounting is absolutely true. But who's counting?


This adminicastration has projected 5% rosey growth scenarios for years and years, along with higher and higher tax revenues.

Or Perhaps, the Chinese just found Joe Biden's priceless video loop saying: "The more we spend, the richer we are!  No... really!" 




Mon, 08/22/2011 - 00:23 | 1585028 StychoKiller
StychoKiller's picture

Hmm, ranks right up there with Pelosi's assertion that spending FRNs on unemployment is good for the Economy!

Mon, 08/22/2011 - 04:34 | 1585199 Seer
Seer's picture

Actually, if unemployment stopped you could rest assured that the economy would be blown to bits.  It's a bribe to pay off those who have been ripped off from turning.

But clearly, spending on the banks has been infinitely smarter...

Sun, 08/21/2011 - 22:31 | 1584801 IQ 145
IQ 145's picture

Of course it's on the way to default; where the fuck did you think it was on the way to; "a bright shiny new day"; are we supposed to believe that Tinker Belle can really fly? Tinker Belle has a steel wire on her, (his), costume that makes "stage flying" possible. Reality is a bitch. "all ur paperz is ourz and we arn't give u no cheezeburger" So, sit down and shut up.

Sun, 08/21/2011 - 22:33 | 1584802 Rattling Bones
Rattling Bones's picture

They just figured that out? Is their think tank still using a abacus?

Mon, 08/22/2011 - 04:39 | 1585200 Seer
Seer's picture

And do you not understand how diplomacy works?

The think tank is a proxy for what the Chinese goverment is wanting communicated.  It's a way of being put on record their grevances before action is taken.  It'll be much harder for the US to paint the Chinese as evil (which has always been my hypothesis as to how this will ultimately play out- the US will paint the Chinese as evil and then default, and the dumb masses in the US will buy it).

Sun, 08/21/2011 - 22:33 | 1584805 Dumb Honkie
Dumb Honkie's picture

A lot of Dumb Hoinkies here.

Mon, 08/22/2011 - 07:15 | 1585304 RealFinney
RealFinney's picture

10 print "dumb Honkie"

20 goto 10


Sun, 08/21/2011 - 22:34 | 1584810 bigdumbnugly
bigdumbnugly's picture

joe biden was the right man to send to china for reassurance. 

he's never falsified anything, right?

Sun, 08/21/2011 - 22:35 | 1584812 Dumb Honkie
Dumb Honkie's picture

Fuck all stupid HONKIES.

Sun, 08/21/2011 - 23:38 | 1584950 ping
ping's picture

Keep it down. Your mother's difficult enough to bring off without you distracting me

Sorry, it's the echo.  

Sun, 08/21/2011 - 23:51 | 1584978 Dumb Honkie
Dumb Honkie's picture

Hey COCK SUCKER, I bet your fat ugly mama fucked a lot of black guys. Why don't you go home spread your shity cheeks for big black dicks. You dumb ass HONKIE SHITBAG.

Mon, 08/22/2011 - 18:04 | 1587857 GeoffreyT
GeoffreyT's picture

lol - nigger, please... take that fake-ass shit back to Tel Aviv or to your tribal fucktard clansmen in the settlements - nobody here is stupid enough to fall for such a flagrant display of fake asshattery.


Although perhaps (putting on my tinfoil hat)....

TD are you trying to get zH to show up in Google for 'honkie'?


PS inb4 some bitch whines about the use of the word 'nigger': I can say nigger because I'm part eggplant and therefore I can't possibly ever be racist ever not ever never. Why? Shut the fuck up, that's why.

Tue, 08/23/2011 - 16:29 | 1592039 InvalidID
InvalidID's picture


PS inb4 some bitch whines about the use of the word 'nigger': I can say nigger because I'm part eggplant and therefore I can't possibly ever be racist ever not ever never. Why? Shut the fuck up, that's why.


 Um, HA!

Mon, 08/22/2011 - 01:22 | 1585078 jomama
jomama's picture


Sun, 08/21/2011 - 22:36 | 1584815 At120
At120's picture

That's kinda like the pot calling the kettle black, right?


Sun, 08/21/2011 - 23:36 | 1584943 Problem Is
Problem Is's picture

Kinda like Jamie calling Lloyd a thief...

Kinda like Obama Bin Lyin' calling Boner a dumb ass...

Mon, 08/22/2011 - 02:03 | 1585103 MsCreant
MsCreant's picture

At least they KNOW.

Mon, 08/22/2011 - 01:21 | 1585077 jomama
jomama's picture

until listens to (allows) dissenting voices, then they'll get some cred. 

Sun, 08/21/2011 - 22:41 | 1584817 Big Ben
Big Ben's picture

I continue to believe that the main way that the US will deal with its excessive debt is through inflation. But the US has a great deal of short term debt that it needs to turn over fairly frequently. If inflation were to spike to say 20%, interest rates on that short term debt would quickly rise to above 20%, making it difficult for the US to get a reduction of the short debt in real terms. For example, if prices go up by 20% and the interest rate is 20%, then after one year the value of the debt (measured in purchasing power) would remain unchanged. (This neglects taxes, which is why I think that interest rates would actually become quite a bit higher than the inflation rate. But you get the idea...)

So it is very possible that the US might unilaterally extend the duration of the debt. For example, if you happen to own a 1 year treasury yielding 1% (purchased when inflation was expected to be low), the government might refuse to pay you back in dollars at the end of the year. Instead, it might force you to accept a 5 year treasury yielding 1% ( even though the current inflation rate has become 20%). So even people holding short term treasuries may not be as safe as they think.

Even with all the clear evidence that US debt is unsustainable, interest rates are currently at long term lows. I simply cannot understand what the people who are buying this debt are thinking. I wouldn't touch UST's with a ten foot pole.

Mon, 08/22/2011 - 02:05 | 1585107 MsCreant
MsCreant's picture

Maybe no one, but Ben and his Primary Dealers, is buying...

Mon, 08/22/2011 - 09:28 | 1585592 fiftybagger
fiftybagger's picture

+ 15 trillion

Mon, 08/22/2011 - 03:49 | 1585160 Snidley Whipsnae
Snidley Whipsnae's picture

Extending the duration of a bond is default. Anyone care to speculate what the new US credit rating would be?

Sun, 08/21/2011 - 22:41 | 1584828 My Days Are Get...
My Days Are Getting Fewer's picture

I agree with all prior posts.


Biden was sent to China to lie.


China's banking system is a lie, just like the systems in the US, Europe and Japan are.

Who here remembers "Mad Magazine".


Spy vs Spy - a Cold War cartoon.


Today, Lier vs Lier and a world bank charade.


It is all going down. Protect yourself with gold and silver.


Over and Out

Sun, 08/21/2011 - 22:41 | 1584829 user2011
user2011's picture

US default ?  By now,  I think most if not all people know that US will not default.    US will always be able to pay off debt own to other countries in US dollars, because we print as much as we want.   If Chinese are bitching about this,  tell them to go fuck themselves.

However, to guarantee the US treasury notes and bonds value will be next to impossible.     If that is what Chinese are concerning, then tell them to fuck off.

Mon, 08/22/2011 - 04:43 | 1585202 Seer
Seer's picture

Always?  That's a LONG time!  I don't think ANY empire has lasted this long.  But, good to know.  Maybe it'll also cause the sun to shine longer?

Sun, 08/21/2011 - 22:42 | 1584830 user2011
user2011's picture


Sun, 08/21/2011 - 22:48 | 1584844 buzzsaw99
buzzsaw99's picture

It took them this long to figure out how hosed they are? heh heh

Mon, 08/22/2011 - 04:47 | 1585203 Seer
Seer's picture

No, it took them this long to come out with a dimplomatic statement.  Something of this magnitude shouldn't be tossed out there lightly: when the US has nukes pointed at China (and it has a larger PR budget [read "propaganda budget'] than China's military budget, well, China is just wanting to let the international world know that the US is on the verge of defaulting and that it might try to hide it by drumming up some military action).

Mon, 08/22/2011 - 05:25 | 1585228 InvalidID
InvalidID's picture


 Military action? You really think it's going to come to that? I honestly don't see the US attacking China anytime soon. Too many other projects going on and all.

Sun, 08/21/2011 - 22:51 | 1584858 zorba THE GREEK
zorba THE GREEK's picture

F*#k the Chinese. I got Chinese take-out for dinner last night and those ignorant SOB's forgot to give me the 

fortune cookies.

Sun, 08/21/2011 - 23:04 | 1584888 Dumb Honkie
Dumb Honkie's picture

Your fortune sucks, you DUMB HONKIE  MOTHER FUCKER. LMAO!!!

Mon, 08/22/2011 - 00:09 | 1585008 zorba THE GREEK
zorba THE GREEK's picture

Hey dumb honkie: Du le lo mo. Hum chuck. I only posted that to see how many chinese are posting on ZH.

I love all people of all nations, but I am not crazy about some of their political leaders.

God bless you. Hate is a burden we all need to shed. Love makes us stronger.

Mon, 08/22/2011 - 00:24 | 1585018 Dumb Honkie
Dumb Honkie's picture

I have no problem with having an intellegent discussion about anything. But I want to give all the racist assholes a taste of their own medicine.

Mon, 08/22/2011 - 04:29 | 1585197 Alpha Monkey
Alpha Monkey's picture

I'm afraid their wealth and ignorance will keep them blind to the intended effects of your actions. 

Mon, 08/22/2011 - 00:31 | 1585038 Rick64
Rick64's picture

Du le lo mo

 Doesn't that mean go fuck your mother.

Mon, 08/22/2011 - 00:54 | 1585054 Dumb Honkie
Dumb Honkie's picture

@Rick64 Did you read the Zorba The Greek's post? I didn't see you making objections to his post. So according to your biased-logic it's ok for Zorba to insult Chinese, on the other hand it's wrong for me to insult him. Hey mother fucker,take your hypocricy shove it up your stinking shity asshole.

Mon, 08/22/2011 - 01:08 | 1585065 Rick64
Rick64's picture

This isn't in response to you, its just a question of what that means (du le lo mo). Insult all you want to, I really don't care. How in the hell did you interpret that as an objection to anything? I think you have a comprehension problem or a chip on your shoulder.

Mon, 08/22/2011 - 01:26 | 1585081 Dumb Honkie
Dumb Honkie's picture

You are the one  who has a comprehension problem. Why don't you read ZORBA'S first comment which was very insulting to Chinese. What a dumb shit you are!!

Mon, 08/22/2011 - 02:05 | 1585105 Rick64
Rick64's picture

I comprehend that you haven't made any intelligent comments, and your only comments are verbally abusive ones. You seem very intent on being a distraction and obstruction to any intelligent conversation so I would assume you are wanting attention as well as venting some of your frustration which has nothing to do with any comments but rather your personal life.

Mon, 08/22/2011 - 02:20 | 1585119 Dumb Honkie
Dumb Honkie's picture

Hey mother fucker,am I the only one who is making verbally abusuve comments here? I don't find you objecting  to a lot of abusive racist remarks against Chinese which don't contribute anything intellegent to the blog post discussion. As far as I'm concerned,you haven't contributed anything intellegent here either. You remind me of a long-winded sissy HONKIE shitbag.

Mon, 08/22/2011 - 03:52 | 1585165 Snidley Whipsnae
Snidley Whipsnae's picture

The only mystery here is why you haven't been permanently banned from posting on ZH...

Mon, 08/22/2011 - 04:17 | 1585189 Dumb Honkie
Dumb Honkie's picture

Then they have to ban all the other racist cock-suckers along with me. So ZH has 2 choices; either banning all the assholes making racist comments or not censoring  comments at all. Either way is fine with me.

Mon, 08/22/2011 - 06:59 | 1585288 anyways
anyways's picture

I don't love all people, especially not the bernank and the chinese 'communists'.

Sun, 08/21/2011 - 22:53 | 1584864 notadouche
notadouche's picture

You owe the bank 10k the bank owns you, you owe the bank trillions, you own the bank.

Sun, 08/21/2011 - 22:53 | 1584865 bankruptcylawyer
bankruptcylawyer's picture

there has never been an international currency not controlled by one country. gold might be money but it is not a nation backed currency. 


you can use gold coins because the currency contains the money. but GOLD BACKED currency requires someone , or some group, to own and secure the gold. 

you think china russia and other countries are going to magically agree upon who gets to own the gold in order to create a new currency while the u.s. stands by and allows them to do what they want , while the u.s. still owns the largest portion of the worlds gold. ?


yea, usually when countries come together to discuss issues of gold ownership, the discussion is usually described historically as war. 

Mon, 08/22/2011 - 03:56 | 1585170 Snidley Whipsnae
Snidley Whipsnae's picture

"while the u.s. still owns the largest portion of the worlds gold. ?"

The US claims it owns ~ 8,100 tons

The EU claims it owns ~10,000 tons

Indian private population is estimated to own ~ 15,000 tons not counting what the Indian Gov owns...

Why don't you put your brain in gear before engaging your mouth?

Sun, 08/21/2011 - 22:53 | 1584866 Mongrel
Mongrel's picture

Says one tyrannical regime to another . . .

Sun, 08/21/2011 - 23:00 | 1584883 I am Jobe
I am Jobe's picture

The great bullshit and the banks are now holding the country hostage.

Sun, 08/21/2011 - 23:11 | 1584894 chump666
chump666's picture

What?  And China?  My goodness, their commie style fudgy manipulating data feeds are comical.  Their housing implosion is probably already happening won't know till the Shanghai indexes completely obliterate.  Then you short the BRICS and send the AUD into hell, say 0.60 cents

Mon, 08/22/2011 - 04:59 | 1585211 Seer
Seer's picture

So, we blame the victim?  It's NOT China who owes the US.

Sun, 08/21/2011 - 23:14 | 1584904 vainamoinen
vainamoinen's picture

yeah, yeah, yeah - and I'm not eatin' anymore "french" fries either cause I don't like them frenchies - - -

The Burger King crowd is really on a roll tonight - ever thought about actually analysing phenomenon like such as that addressed in this post instead of telling us what you like?

You're supposed to do the "I like" thing at the drive up window at Burger King.

Have a better day tomorrow - - -

Sun, 08/21/2011 - 23:30 | 1584933 Problem Is
Problem Is's picture

Yeah Chinese economic expert bitchez... Keep running trade surpluses and taking $$$Billions a month of the Bernank Buck toilet paper you are so fond of criticizing...

I hate to quote a bad movie but...

Who is the more foolish? The Bernank... or the Bernank that follows him...

Sun, 08/21/2011 - 23:35 | 1584945 bill1102inf
bill1102inf's picture

The Banks can, should, and would default.  The US, not going to happen. This is pure recockulousness.

Sun, 08/21/2011 - 23:51 | 1584979 ItsDanger
ItsDanger's picture

This commentary by China means little on its own.  However, it may foretell potential future action re:US debt & the lack of a comprehensive plan.

Sun, 08/21/2011 - 23:52 | 1584981 Mister Minsk
Mister Minsk's picture

It reeks like a Three-Card Monte.

Mon, 08/22/2011 - 00:30 | 1585035 Mediocritas
Mediocritas's picture

It's pointless to think about a US default in binary terms (black and white). This is an analogue situation: infinite shades of gray.

The US has already defaulted, but it's a grey (soft) default, not a sudden snap / binary default like Greece. The US has defaulted by the Fed's manipulation of TSY markets to suppress yields in conjunction with expanded relative money supply (ultimately inflationary). Anyone with a large savings account is losing purchasing power, and a large savings account is essentially what Chinese holding of US sovereign debt represents.

Many argue that QE is not inflationary as it's just an asset swap. On paper that's true, but I stress that I said "relative money supply". If the Fed swaps a bunch of shit onto its books at par then marks to fantasy, it does not change the fact that the assets have no real value. Were they to be marked to market, the Fed would have to realize an enormous loss and have a negative book. Obviously that can't happen so the Fed would simply ignore the write down which effectively means printing. The point is, those swaps cannot be sterilized meaning that they simply must end up having an inflationary effect.

These asset swaps represent what I refer to as "temporally offset money printing" due to the fact that they can never be swapped back at par (unless another spectacular bubble blows up to enable it: not going to happen). The size of the "gray" US default is therefore directly reflected by the size of the Fed's balance sheet.

Mon, 08/22/2011 - 02:15 | 1585115 MsCreant
MsCreant's picture

The FED has to be the bag holder of last resort. Do you think they will be the "bad bank" that gets cut loose in a restructuring? The grey default is here, I hear that. But still, won't there be waterfall event or a straw that will break the camel's back, or a level of mark to fantasy that no one will stand for anymore? A CDS event would be one.

Mon, 08/22/2011 - 04:06 | 1585185 Snidley Whipsnae
Snidley Whipsnae's picture

Ben will continue to print until the dollar is worthless...

Then Ben, the entire US Gov, and all MSM will claim that 'no one saw this coming'...

We will then find out if there is a plan B... which I doubt very much...

Mon, 08/22/2011 - 04:09 | 1585188 oldman
oldman's picture


Do you really believe that the Fed will be the loser of last resort? I'm not too bright at these things, but I cannot imagine that this will be the case. After all, when the deal is done and we wait outside the banks and then the FDIC for a few years, I do not believe the 'Fed' will care whether we repay ourselves or not---long gone and pleased as punch with the deal they will have done---and, they will have all the gold, if they do not already.

In other words, I have no idea, but only answered because I have a question for you:

With no 'skin' in the game. What can be expected except what we have?

Does anyone have any ideas---what do we do with all the debt? Please, no bible lessons or gold standard talk---tptb are not going to ever accept those two gems.

I'm boring myself with my constant criticism of 'them'---please help an oldman

yeah, i posted this a couple of hours ago but i was too late----shoulda stayed in the redwoods at Big Sur more than the two weeks i was there---always too late---no timepiece since 1978     thanks   om

Mon, 08/22/2011 - 04:55 | 1585209 falak pema
falak pema's picture

well if you remember the date 1978 you're doing OK. Since then the world has been in Thatcher-Reaganomics spiral.

So you missed nothing. Consider yourself lucky like Rip Van Winkle!


Mon, 08/22/2011 - 07:23 | 1585318 Bob
Bob's picture

I wondered where you'd gone off to, oldman!  Welcome back to the wilds of "civilization" . . .

Mon, 08/22/2011 - 05:01 | 1585216 Seer
Seer's picture

Thanks for injecting a sense of rationality into this conversation!

Mon, 08/22/2011 - 00:35 | 1585044 reader2010
reader2010's picture

"A U.S. mobilization in Asia is well underway, in faith with a spring 2001 Pentagon study called "Asia 2025," which identified China as a "persistent competitor of the United States," bent on "foreign military adventurism." Three years later, the U.S. government went public with a plan that called for a new chain of bases in Central Asia and the Middle East, in part to box in the People’s Republic. Similarly, the nuclear energy cooperation deal signed by the U.S. and India in 2008 was an obvious containment maneuver aimed at Beijing. In late March, press reports detailed a major buildup of American forces in Asia, including increased naval deployments and expansive cooperation with partner countries. Meanwhile, the Pentagon is forging ahead with a multi-year effort to transform Guam into its primary hub in the Pacific, an initiative so vast that John Pike of the Washington, D.C.-based has speculated that Washington wants to "run the planet from Guam and Diego Garcia by 2015."

Mon, 08/22/2011 - 04:08 | 1585187 Snidley Whipsnae
Snidley Whipsnae's picture

"Washington wants to "run the planet from Guam and Diego Garcia by 2015."

...and people in hell would like some ice water...

Washington is preparing for a world war that will never come. Washington is in a world war now, economic warfare, and is totally unprepared.

Mon, 08/22/2011 - 05:31 | 1585234 InvalidID
InvalidID's picture


 I'd say Washington is winning the economic war today. They seemed to get off to a slow start though I'll give you that.

 But lets really look at the score. America has been living beyong her means yes? She's been buying globally sourced goods, on debt she creates, in a currency she controls. And here we see the world STILL buying more of it.

 America has traded worthless paper for 40 years worth of resources, I'd say that's a win.

Mon, 08/22/2011 - 07:49 | 1585345 falak pema
falak pema's picture

Desperate win of poker player always upping the ante, reaping the pot as others shy away, then throwing it all back with interest added to win more, as he is hocked to his boots and for many generations; reputed gunslinger, 'fastest in the world', with his colt ready to smoke if anybody dares his ongoing bluff by calling it...he has nowhere to turn except to up the next ante!

Mon, 08/22/2011 - 05:05 | 1585219 Seer
Seer's picture

Resource shortages mean war.

Options are always:

1) Conservation;

2) Sharing;

3) Theft/war.

Being the great nation of peace that it is, the US will pick option #3.

Nope, we're NOT smarter than yeast...

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