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Gloating China Says "Has Every Right To Demand US Address Its Debt Problem", Asks For New Global Reserve Currency

Tyler Durden's picture





 

China has released a scathing op-ed in Xinhua, the official Chinese news agency, in which the authors waste no time to humiliate a "debt-ridden Uncle Sam" following the S&P downgrade, in the most violent surge in the recent war of words between the ascendent and descendent superpowers. Some choice selections: "Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth", "China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets." It doesnt stop there, "[the US] should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits." China takes the opportunity to give the US a little lecture on a broken way of life: "All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss." And lastly, China once again gets back to its pissing contest about whose reserve currency is bigger: "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country." Just wild fun. Read the whole thing below.

From Xinhua:

After historic downgrade, U.S. must address its chronic debt problems

The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor's (S&P) for the first time on Friday.

Though the U.S. Treasury promptly challenged the unprecedented downgrade, many outside the United States believe the credit rating cut is an overdue bill that America has to pay for its own debt addition and the short-sighted political wrangling in Washington.

Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth.

China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets.

To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.

S&P has already indicated that more credit downgrades may still follow. Thus, if no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way.

Moreover, the spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all.

The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.

It should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits.

A little self-discipline would not be too uncomfortable for the United States, the world's largest economy and issuer of international reserve currency, to bear.

Though chances for a full-blown U.S. default are still slim now, the S&P downgrade serves as another warning shot about the long-term sustainability of the U.S. government finances.

International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.

For centuries, it was the exuberant energy and innovation that has sustained America's role in the world and maintained investors' confidence in dollar assets. But now, mounting debts and ridiculous political wrestling in Washington have damaged America's image abroad.

All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss.

 


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Sat, 08/06/2011 - 11:23 | Link to Comment Mongo
Mongo's picture

icanhaszloty?

Sat, 08/06/2011 - 12:06 | Link to Comment FEDbuster
FEDbuster's picture

Dollars. Spend 'em, if you got 'em.

Convert them to something real (food, gold, land, etc...)  The era of paper IOUs is over.

http://www.youtube.com/watch?v=7GSXbgfKFWg

Sat, 08/06/2011 - 12:16 | Link to Comment Atomizer
Atomizer's picture

Certain parties view the US economy as, "Drive it like you stole it." 

Sat, 08/06/2011 - 12:22 | Link to Comment FEDbuster
FEDbuster's picture

That's because they are stealing it.

Sat, 08/06/2011 - 17:29 | Link to Comment 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

The rotten scums are looting us b4 we go to austerity.  Wall St knew in 2003 we were goin down.  They are gettin while the gettin is good.  They issue large bonuses to each other.  They know the gravy train will soon end.

When we take over DC we will deputize about 400,000 unemployed veterans to hunt em down.  Each scum will have a prize, I mean bonus, I mean bounty of at least $100 NEWdollars.  Them vets deserve a bonus for each one they "locate."

Sat, 08/06/2011 - 18:30 | Link to Comment sterling effort
sterling effort's picture

Can we have their pictures on a deck of cards like in Iraq?

I'll start; Blythe can be the Queen of Hearts and Benny can be the Joker.

First person to allocate the King of Spades to Barry gets to go to the naughty corner for a long long time.

Sat, 08/06/2011 - 12:18 | Link to Comment Ahmeexnal
Ahmeexnal's picture

WAR

Sat, 08/06/2011 - 13:17 | Link to Comment Bananamerican
Bananamerican's picture

Fuck China

Sat, 08/06/2011 - 13:59 | Link to Comment Bananamerican
Bananamerican's picture

and fuck sinophiles....

Sat, 08/06/2011 - 14:19 | Link to Comment Bananamerican
Bananamerican's picture

and allow me to elaborate because THIS comment got 10 thumbs up down thread...

"Fuck China. Fuck trade agreements. Raise tarriffs now. I will be happy to pay a little more for MADE IN AMERICA, in fact I already do so when I can. But good luck trying to find anything made by Americans except financial fraud"

Sat, 08/06/2011 - 14:51 | Link to Comment reader2010
reader2010's picture

Marc Faber once said that only beer and prostitues are made in USA now. You've got to do your part, dude.

Sat, 08/06/2011 - 15:34 | Link to Comment Bananamerican
Bananamerican's picture

I'm a welder bitch...

how bout you?

China is the Plantation state for the decadent western world

Sun, 08/07/2011 - 01:16 | Link to Comment Ramboy
Ramboy's picture

Jewish and jewified  American girls now suck cock for 10 dorrar.  

Sat, 08/06/2011 - 16:54 | Link to Comment monoloco
monoloco's picture

Yeah, Fuck China, we financed their move into the first world by letting them have our manufacturing base then buying up all the cheap shit they could produce. Let them take the hit just like the rest of us.

Sat, 08/06/2011 - 18:54 | Link to Comment Pegasus Muse
Pegasus Muse's picture

China calling the USA over-spenders is the pot calling the kettle black.  Bert Dohmen talks about China's own domestic currency over-printing and over- producing of materials just to keep its population from rioting.  He says China will implode.  Interview starts at about the 18:40 mark.   

http://www.financialsense.com/financial-sense-newshour/big-picture/2011/08/06/01/bert-dohmen/the-next-perfect-financial-storm

Sat, 08/06/2011 - 14:39 | Link to Comment Shredd the FED
Shredd the FED's picture

Fuck israel

Sat, 08/06/2011 - 17:58 | Link to Comment sun tzu
sun tzu's picture

Fuck Namibia

Sat, 08/06/2011 - 18:16 | Link to Comment Bananamerican
Bananamerican's picture

Fuck thongs on dudes

Sat, 08/06/2011 - 21:04 | Link to Comment StychoKiller
StychoKiller's picture

So, you're copacetic with the bowtie and cuffs then?

Sat, 08/06/2011 - 18:23 | Link to Comment Ramboy
Ramboy's picture

Let me tell you about the state of the American people.  they're like the dirty skank women in nyc who watch housewives of ny and say what a bunch of pathetic moneygrubbing sluts they are.  millions of american hillbillies watch the hills have eyes and albino farm and comment how retarded they are.  ONE WORD:  DENIAL.

Sat, 08/06/2011 - 20:47 | Link to Comment 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

-17...wonder what Asian citizens are klikin the red arrow?

Sun, 08/07/2011 - 02:35 | Link to Comment HAL 9000
HAL 9000's picture

I can see you're really upset about this...I honestly think you ought to sit down calmly, take a stress pill and think things over.

Sat, 08/06/2011 - 12:29 | Link to Comment Two Towers AU AG
Two Towers AU AG's picture

The era gets over and we really will feel the pinch in interest rates when China ends up with a mandate that they dont trust western credit rating agencies  and any investment product has to be rated by Dagong ( or whatever their agency is called) to get any chinese investments into it.... that is the time we will see regular visits from members of the treasury and the fed to China trying to convince Dagong that US is still a AAA, AA+, AA- AA BB+..... over period of time.. with every incremental downgrade increasing the interest rate burden...

And history teaches us.. that sovereign creditors in international bonds are in for a different game.... remember the British Pound was the worlds reserve currency till the mid 1950's... that was till the day the USA stood up and said we are willing to lose ALL our investment made in the British Pound if that finishes your global regime and ends your control over the world as the reserve currency.. the action of the USA after that is history... The Pound, well it is only worth a Pound now..and the sun then set over the British empire

The point here is we should be worried how soon before China tells us they are willing to bear 1.5 trillion of losses in the treasury if that permanantly kills the USD as the reserve currency..

Sat, 08/06/2011 - 13:41 | Link to Comment Tortfeasor
Tortfeasor's picture

This hits home for me.  I've been ruminating on how people don't understand that ratings agencies affect more than just US funds.  World-wide there are funds with investment restrictions that are being boxed out from spending cash on our treasuries.  Demand destruction is demand destruction, even if it starts as just a little bit at a time.

"How'd you go bankrupt."  "Two ways, gradually and then suddenly."  - Hemingway

Sat, 08/06/2011 - 17:42 | Link to Comment 11b40
11b40's picture

Zat right?  Well, then who buys their shit?  If the USA & Europe go into the crapper, the Chinese will be the toilet paper....and if we start putting on tarriffs, they are dead meat.

Sat, 08/06/2011 - 20:26 | Link to Comment aramsogo
aramsogo's picture

Doesn't work like that.  Are you actually asking who will buy their shit if they won't take our worthless paper and defaultable Treasuries????   They can sink the shit in the Pacific or bury it in the Gobi Desert.  The net economic impact is exactly the same if you are seriously asking this question.

Sun, 08/07/2011 - 13:23 | Link to Comment 11b40
11b40's picture

No.  You are simply wrong.  It works exactly like that.

A major decline in exports means major hardship for a poor country with virtually no safety nets for a huge, marginal population.  China is vast.  Too many Americans go to Hong Kong, and now some of the major cities on the mainland, and think China is some giant, self-sustaining economic engine.

Meanwhile, their leadership knows the difference, and they are scared to death of popular uprisings from inflation on the one hand, and economic slowdowns on the other.  Either way, it has to do with putting food on the table in a billion homes, and keeping those homes heated in the winter.  We have 1/4 the number of people, and our economy is 5 times larger.

And, by the way, if suddenly our paper is worthless, their vast dollar reserves mean double trouble for them.  They MUST import most of the raw materials they consume....and have to pay for them with something.  If you are Australia, for instance, and you see great social unrest looming in China, just how eager are you to accept payment in their currency?

We have plenty to worry about, and we are just about f**ked up to the max, but among the major developed nations, we are still the best of a bad lot.  An argument could be made for Germany, but the have a very heavy stone around their neck called the EU.  Canada is in good shape now, but still a relatively small economy with substantial dependence on the US.........have a good weekend ;-))

Independent Contractor

Sat, 08/06/2011 - 14:44 | Link to Comment DormRoom
DormRoom's picture

We're going to the Bancor, bitches.

 

http://en.wikipedia.org/wiki/Bancor

Sat, 08/06/2011 - 17:59 | Link to Comment IQ 145
IQ 145's picture

Dollars; "smoke them if you got 'em"

Sat, 08/06/2011 - 19:50 | Link to Comment Yen Cross
Yen Cross's picture

   Can you write something of " value" if you are going to stomp on the threads of your Supposed Underlings" YOU TOOL!

Sat, 08/06/2011 - 21:03 | Link to Comment Nikao7
Nikao7's picture

Who exactly crowned you moderator?

Sat, 08/06/2011 - 11:27 | Link to Comment DeadFred
DeadFred's picture

Water empires like Western civilization can only be brought down by external forces. The game is on.

Sat, 08/06/2011 - 12:19 | Link to Comment JLee2027
JLee2027's picture

What game? What empire?

Sat, 08/06/2011 - 12:44 | Link to Comment KeyserSoze
KeyserSoze's picture

Are you shitting me? "Water empires"? Do you mean the west is fluid? Erm no. The West is relatively the new boys in town in the global world. You want "fluid" look to China, India, Iran, even African tribal people have survived it all for thousands of years.

The West doesn't need an external force to destroy it, it will destroy itself, through its own excesses. All the while, the poorer and more astute rest of the world chugs on by.

P.S. The west doesn't have any resources left, no oil and gas. It is the west that will need to invade and steal from others to stay on top. And if it does so, it will find those "brown savages" will end up destroying them. As was prophesised.

Sat, 08/06/2011 - 13:18 | Link to Comment MarkS
MarkS's picture

He probably means seafaring nations like the US.  Yes, China, India and Africa have survived for thousands of years - and are virtually in the same cultural state they were thousands of years ago...all of there advancement has come in the last few decades after being 'opened' by the West.  I'm not arguing that the West did 'good' only that the pace of advancement in the 'third world' is why we called it the third world.

P.S. - you're not just wrong on resources, you're stupidly wrong.  China has virtually no resources beyond rare earth metals.  India, can you name me their abundant raw materials?  Africa has resources and that is why the Chinese are trying to access them, but Africa is still a basket case that could not develop those resources themselves.

The Western Hemisphere is one of the few areas of the world that could actually be resource self sustaining with some of the largest natural gas and oil reserves known.  True, some of those resources are difficult to get a but there is also plenty of timber, arable farmland and other mining reources.

So, Will the West destroy itself througfh its own excess, maybe?  Then again maybe we just got a wakeup call we can't avoid.

Sat, 08/06/2011 - 17:51 | Link to Comment 11b40
11b40's picture

Thanks for restoring a little sanity to the conversation, Mark.

China is totally dependent on the US and Europe to keep theri evermore rstless population in check.  Now that they have had a taste of freedom and properity, woe be unto the political class if that growth and expansion stop.  Given a few more years, they just might build a middle class that can sustain their growth internally, but, as you point out, they must import so many raw materials that they can't become comfortably independent in the foreseeable future.

Sun, 08/07/2011 - 07:13 | Link to Comment Pay Day Today
Pay Day Today's picture

"and are virtually in the same cultural state they were thousands of years ago...all of there advancement has come in the last few decades after being 'opened' by the West."

What a sad and inherently colonialist attitude. China, India and Iran had advanced technical and cultural civilisations while Europe was still living in an age of glorified barbarian tribes. That might also be the case in the future too, the way things are going.

By the way, China has one of the largest coal reserves in the world.

 

Sun, 08/07/2011 - 13:35 | Link to Comment 11b40
11b40's picture

Their coal is largely dirty, poor quality stuff....very little coking coal needed for industrial production, and last I checked, you can't eat it.

Yes, there were great Middle Eastern and India cltures, just as there were great Chinese cultures long, long ago.   Too bad for them, they coud not adapt and adjust as history passed them by.  That was then, this is now. 

You call it "a sad and inherently colonialist attitude", but you can't deny the validity of his statement.

Sat, 08/06/2011 - 13:21 | Link to Comment ipunchsquirrels
ipunchsquirrels's picture

I junked you...without a junk button......idiot......

Sat, 08/06/2011 - 13:22 | Link to Comment ipunchsquirrels
ipunchsquirrels's picture

and not you Marks......the dude above you, keyser.......

Sat, 08/06/2011 - 13:24 | Link to Comment G. Marx
Sat, 08/06/2011 - 13:43 | Link to Comment Bananamerican
Bananamerican's picture

At what point shall we expect the approach of danger? By what means shall we fortify against it?-- Shall we expect some transatlantic military giant, to step the Ocean, and crush us at a blow? Never!--All the armies of Europe, Asia and Africa combined, with all the treasure of the earth... in their military chest; with a Buonaparte for a commander, could not by force, take a drink from the Ohio, or make a track on the Blue Ridge, in a trial of a thousand years.

At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

-Lincoln

Sat, 08/06/2011 - 14:44 | Link to Comment Mallenet
Mallenet's picture

He did buy votes, but I like him - what a man among sheep.  I had never seen the quote before - ta very much.

Sat, 08/06/2011 - 17:54 | Link to Comment 11b40
11b40's picture

I can only wonder who the Bozos are that junk Lincoln?

Must not be from around here ;-0

Sat, 08/06/2011 - 18:20 | Link to Comment Bananamerican
Bananamerican's picture

Sino-holes or PRC lurkers....or globalist "entrepreneurs"

Sat, 08/06/2011 - 11:27 | Link to Comment snowball777
snowball777's picture

The global hooker wants to complain about her john's after-shave?

Unpeg and say that shit again, bitchez!

Sat, 08/06/2011 - 11:34 | Link to Comment doggings
doggings's picture

those days are over now, arent you paying attention?

Sat, 08/06/2011 - 11:38 | Link to Comment snowball777
snowball777's picture

A collapsing US economy is bad for both host and parasite alike; is China paying attention?

http://www.zerohedge.com/news/confidential-wal-mart-memo-discloses-subst...

Sat, 08/06/2011 - 11:53 | Link to Comment Minimum Clearance
Minimum Clearance's picture

China is worried that the US will pay its Treasuries off in highly devalued dollars.  If that happens (and it will), then the US will have paid what the crap from China is actually worth.

Grow up, China, and depeg your own currency.

And welcome to the NWO.

Sat, 08/06/2011 - 11:58 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

Bingo. Hence the quote, "International supervision over the issue of U.S. dollars should be introduced..."

Snowball's chance in hell of that ever happening, because then we couldn't issue the fake dollars to pay China. Which we will.


Sat, 08/06/2011 - 12:30 | Link to Comment FEDbuster
Sun, 08/07/2011 - 11:39 | Link to Comment bonderøven-farm ass
bonderøven-farm ass's picture

or Tungsten.....

 

Sat, 08/06/2011 - 12:12 | Link to Comment cocoablini
cocoablini's picture

So, China owns all this debt. If they start taking a victory lap, why don't we just default on all the cusips China owns and tell them they can go fuck off.
Sometimes the debt owed is more powerful than the debt owned. China is mad as hell but has to manueuver carefully due to their own mistake of buying too much US toxic nonsense thinking that was a way to buy us.
Wrong

Sat, 08/06/2011 - 12:44 | Link to Comment Founders Keeper
Founders Keeper's picture

[China is mad as hell but has to manueuver carefully due to their own mistake of buying too much US toxic nonsense thinking that was a way to buy us.]---cocoablini

Hi cocoablini.

Note, half of China's hoard of US dollars comes from our trade deficit.  So, debt repudiation would only affect half the problem.

Regarding China's "mistake" in holding so many USDs.  That was a decision by China based primarily in the interest of national security, not economics.  That is, the US's national security.  China holds a sickle and hammer over the head of the US economy and foreign policy.  Dump all those USDs on the market, and bye bye USD.

Allowing China to hold a potentially devastating amount of USDs is a national security threat to the US.  Allowing this to happen is criminal.  But, here we are.

China has four-of-a-kind, and we are bluffing with two pair.  Can you feel it?  You can actually feel it, the bluffing.

 

Sat, 08/06/2011 - 13:07 | Link to Comment arby63
arby63's picture

China holds what we give them. Step back for a moment into the reality of a world 200 years ago (because that's the direction we are headed.......globally). We all bluffed. Every nation bluffed and lived beyond its means. China was the slut that sold itself--we didn't come knocking......they came to us with their pants down at their ankles looking for the outlet. I call BS on the relevance of their comments.

If this whole sucker goes down then China ends up with the short end of the stick and that's about it. What are they going to do? Start a war with the U.S.? Think again.

We are a seriously derelict nation but there are a LOT of folks in the United States that never signed up for this bullshit. Once the game ends then reality has a funny way of rearing its ugly head.

China isn't ready for a fight with an angry U.S. in my opinion. And ANGRY is what we're building here right now.

Sat, 08/06/2011 - 14:29 | Link to Comment Founders Keeper
Founders Keeper's picture

[China holds what we give them.]---arb63

Hi arb63.  Thanks for your Reply.

I don't think the facts play this out.  China is the number one Creditor nation.  USA is the number one Debtor nation.  Who's calling the shots?  Who is "giving" what to whom?

He who pays the piper calls the tune.

(Yes, China will suffer too in relative terms, but that's beside the point.)

 

Sat, 08/06/2011 - 15:49 | Link to Comment PaperBugsBurn
PaperBugsBurn's picture

What an ignorant clown this guy is...

 

China was raped by the europeans, primarily by the british..

 

do you know what the opium wars were for???  David Sassoon aka HSBC.. the Rothschilds of the east (which they later intermarried with the Rothscum

 

moron

Sat, 08/06/2011 - 13:31 | Link to Comment Schmoo
Schmoo's picture

I don't think we are bluffing with a weak hand. Not sure there is a poker analogy, but what we have is more like Mutally Assured Destruction. Without us buying the stuff they manufacture, what will happen to their economy / employment levels?

Sat, 08/06/2011 - 14:35 | Link to Comment Mallenet
Mallenet's picture

Now that is a really stupid statement: China and India alone are 10 times the size of the USA in terms of consumers, add former USSR and Europe, with Africa, Middle East and South America: and the USA is what - oh yes, a pimple on the arse of world trade!  The only pimple that is shinking, fast, and can't pay its bills.  The annual growth in 'middle-class' in Asia amounts to a number greater than all American workers of any type combined - and that without the other BRICS members!

Many of you call to 'buy American': do it - actually, just TRY IT!  The world, specifically China, will feel it like a mosy bite: itches for a day, then all forgotten and best left alone.  After a year do you recall the mosy that bit you the night of August 5th?  Hell, you don't even recall the bite, let alone the drop of blood it cost!

The fact is the USA WAS (past tense) a massive consumer: not any more.  The fact is no one wants a consumer WHO DOES NOT PAY (opps - sorry, American 'capitalists' don't yet understand why this is not good business).  The fact is the USA, as a viable market, is shrinking fast and has a very clear 'best before' date (2012 - or even Christmas 2011), that is extremely close in global trade terms.  The fact is that like any bully in a kiddies playground, when America does not get what it wants it behaves like Rambo - while forgetting that Rambo is a movie, not history (like the real Vietnam and its outcome).  The fact is that while America 'fiddles' the world is not sitting idly by: moves are afoot, significant games are in play, policies are developing into directives and trading deals are being done 'sans dollar'! Ratings agencies are finally reflecting global opinion (well, two are plus one is 'testing' the water).

America is looking very very sad these days (point of interest: the Serbo/Croat translation for USA = SAD!), not just because the world has hated all things America since GW (though it was a major contribution): BO getting a Nobel was a paid-up fix (like GW elections), the rest of USA politics is paid for by corrupt business interests (BO included), the USA has lost the right to be governance officer of the reserve currency (and the world has been dealing with this for at least two years to my knowledge: the global fix is in boys and girls), the USA repeatedly reaches for the bottle while the world attempts a 12 step program, the USA is headless: and that is the biggy!

Where are the rallying calls of old? Where are the 'one nation' people?  In fact, where the hell has America gone - because it ain't in the USA anymore (or so it seems)?

Despite the above, I happen to like America: I still watch 'Happy Days' whenever I can.  I think America has forgotten to like itself because 30 years of BS politics, dumbing down and 'sound-bite' attention span is  delivering the results they always would.  Politicians always promise change: only involved people can make it happen - get active, don't bang the Chinese, light a fire under the fat arses of America: charity and activity, start at home!  Start being a parent, start pressing schools for more (not less) real results, start demanding a voice: just start getting 'in to it' and stop moaning about it!  You have rights, us in the world are not so lucky!

Sat, 08/06/2011 - 18:03 | Link to Comment 11b40
11b40's picture

"and the USA is what - oh yes, a pimple on the arse of world trade!"

The American economy is 14 times larger than China.

Like it or not, America is the primary engine of the world's economy, and when combined with the Eurozone, it is China and India and all the rest of the 3rd world who are pimples.

I freely admit that we are facing huge problems and have truly screwed up, but let's stick to reality here, please.

Hey, but thanks for still liking us.

Sun, 08/07/2011 - 07:27 | Link to Comment Pay Day Today
Pay Day Today's picture

Your stats are well out of date. US GDP is only 11x higher than China.

That is still a huge gap. But the big issue is that China is growing fast while the US is stagnating hard. Growth draws investment, talent, opportunity.

Chinese gross GDP will exceed the US sometime between 2020 and 2030. So enjoy first place while it lasts.

Yes I know, US will still be streets ahead in terms of per capita GDP, and the average Chinese citizen is going to remain poorer than the average American for a long time to come.

Sun, 08/07/2011 - 16:14 | Link to Comment Dyler Turden II Esq
Dyler Turden II Esq's picture

"The American economy is 14 times larger than China."

False. And not even close.
China GDP:
$6 trillion (nominal)
$10 trillion (PPP)

... hence U.S. economy is perhaps twice (or less)
larger than China's.

Sun, 08/07/2011 - 11:30 | Link to Comment FEDbuster
FEDbuster's picture

Mallenet, I agree with most of what you are saying, but there is still a small "corporate class" of Americans whom benefit greatly from worldwide growth.  The problem is the rest of America's workforce is getting left to fend for themselves or rely on government to take care of them.  The housing bubble was the last great American employer. (it was also the last great source of credit for Americans, the HELOC).  What is left to employ the average under skilled, under educated American worker?  We can't all flip burgers or mow each others lawns.  We need jobs to produce things to sell to the rest of the world.  Trade surpluses are the ONLY path to prosperity, and no one seems to be promoting this (except maybe Peter Schiff, whom they won't even put on TV anymore).  This fantastic Charlie Rose interview with Sir. James Goldsmith forecast our current situation twenty years ago, take the time to watch it all (the Clinton shill, Laura Tyson, now advises Obama):

http://www.youtube.com/watch?v=4PQrz8F0dBI

Sun, 08/07/2011 - 11:16 | Link to Comment gillimus
gillimus's picture

The poker analogy is, China may have 4 of a kind, but the US has Geithner of a kind.  China wants to swing their dick around and call a new reserve currency?  The Bernank has a thousand bulk carriers filled with FRNs to pay off the debt.  Coming soon to a port near you!

Sat, 08/06/2011 - 16:58 | Link to Comment monoloco
monoloco's picture

Zactly, if they don't like it let them come and reposses all their cheap crap.

Sat, 08/06/2011 - 13:02 | Link to Comment arby63
arby63's picture

No, they are not over. China is one FU*CKED up country. The crap we are "forced" to buy from them is the same crap they made 35 years ago. They are right about our bullshit finances but they are part of the problem--and not the solution. And DEFINITELY not the future. China isn't even worth the conversation.

Sat, 08/06/2011 - 13:45 | Link to Comment Mallenet
Mallenet's picture

I agree - you should definately leave this conversation - it is for grown-ups!

Sat, 08/06/2011 - 14:01 | Link to Comment Bananamerican
Bananamerican's picture

to-ta-ree agree with RB63

Sat, 08/06/2011 - 15:54 | Link to Comment PaperBugsBurn
PaperBugsBurn's picture

 

 

and there it is... the KKK empire!!

 

youre going down biatch!

Sat, 08/06/2011 - 18:06 | Link to Comment j0nx
j0nx's picture

I nominate Snowball for the comment of the day. Bravisimo!

Sat, 08/06/2011 - 11:29 | Link to Comment Mae Kadoodie
Mae Kadoodie's picture

Ahh Soo...new leserve cullency Blitchez!

Sat, 08/06/2011 - 12:50 | Link to Comment toady
toady's picture

Japs do the 'L' thing...

Not sure what the chinks do...

Sat, 08/06/2011 - 13:45 | Link to Comment Tejano
Tejano's picture

Not sure either. But whatever it is, it might have something to do with the vibrant prospects of the US industrial base.

Sat, 08/06/2011 - 11:29 | Link to Comment cswjr
cswjr's picture

Pot. Kettle. Black.

If they want a reserve currency, they can depeg and have a go at it.  Furthermore, nobody is forcing them to support our debt addiction, let alone at current rates.

So... screw 'em.

Sat, 08/06/2011 - 11:46 | Link to Comment Spitzer
Spitzer's picture

Is this some kind of joke ?

China cannot be this clueless. There is a reason they are the worlds biggest importer of gold and the worlds biggest producer of gold at the same time. Gold is on the verge of becoming the worlds wealth reserve asset and the Euro currency will serve the purpose of meduim of exchange.

Sat, 08/06/2011 - 12:14 | Link to Comment cocoablini
cocoablini's picture

The euro? C'mon have you read the latest? France, spain,Italy, Greece?

Sat, 08/06/2011 - 13:32 | Link to Comment Spitzer
Spitzer's picture

You mean the Euro zone ? The zone is a net creditor with no trade deficit. They have problems but nothing compared to the dollars problems. We are stuck with the Euro, it is the only option.

Sat, 08/06/2011 - 13:43 | Link to Comment Mallenet
Mallenet's picture

And, if history serves (and genetics mean anything), large portions of Eastern Europeans have Chinese genes: thanks Khan, pure Genius of foresight!

Sat, 08/06/2011 - 13:41 | Link to Comment Mallenet
Mallenet's picture

He has a point - and do not make the classic American mistake of confusing geography (the countries of Europe) with Economics (the currency of SOME European countries - or states, if your prefer).  When the Euro was created there was much in the media of the new 'alternate' reserve currency.  The failure of the European sovereign states may not lead to the failure of the Euro, which already plays a healthy part in international trade as well as being a 'grey' market currency throughout continental Europe (i.e. including all ex USSR and Yugoslav states).

No Sir dont do it: for it would be foolish man indeed to mix geographic locations with global political economics!

Sat, 08/06/2011 - 12:20 | Link to Comment RiverRoad
RiverRoad's picture

Are you SURE it will be the Euro currency?  Do you really think that in the end they will let the round-eyes rule?

Sat, 08/06/2011 - 11:30 | Link to Comment Stoploss
Stoploss's picture

Oh yes there will be some unpegging happening. TOTI.

Sat, 08/06/2011 - 11:32 | Link to Comment baby_BLYTHE
baby_BLYTHE's picture

First Putin, then S & P, now this.

Going to be interesting to see what the PM complex does from here.

In this environment I don't want to be invested in anything that I can't feel when hitting my foot.

Sat, 08/06/2011 - 11:40 | Link to Comment gmrpeabody
gmrpeabody's picture

AAA

My feelings exactly!

Sat, 08/06/2011 - 12:21 | Link to Comment Ahmeexnal
Ahmeexnal's picture

baby_BLYTHE: Nice shoes.

Sat, 08/06/2011 - 15:53 | Link to Comment Hearst
Hearst's picture

Time to start GGG & SSS ratings for indicating which assets are backed by Gold and Silver and to what degree.

Sat, 08/06/2011 - 11:31 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

Maybe China should worry more about getting it's own house in order with it's 1200 to 1 leverage and housing bubbles

and bad loans, and stop pointing finger at U.S. If they don't like it, they can just sell their lead painted toys to 

someone else.

Sat, 08/06/2011 - 11:48 | Link to Comment Spitzer
Spitzer's picture

They are the worlds largest producer and importer of gold.They are also the Euro zones largest trading partner who happens to control the largest gold hoard in the world, who also happens to be a net creditor with no trade deficit.

 

This is just a bad joke. Demanding a new reserve currency...haha.

Sat, 08/06/2011 - 12:04 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

Jim Rickards has said many times that the US has 8,000 tons of its own gold, and 6,000 tons of everyone else's gold which we will never give back. 

Thus, we have, by a very large margin, the largest hoard of gold in the whole world.

Is this not so?

Watch the video - http://vimeo.com/18160394

Sat, 08/06/2011 - 12:05 | Link to Comment LoneStarHog
LoneStarHog's picture

Until there is a VALID and CERTIFIABLE audit of all U.S. Gold Reserves, Jim Rickards has his cranium up his rectum, to be polite.

Sat, 08/06/2011 - 12:39 | Link to Comment Temporalist
Temporalist's picture

Don't be an idiot.  Rickards is just using the U.S. figures and doesn't necessarily believe them.

Sat, 08/06/2011 - 13:13 | Link to Comment arby63
arby63's picture

The world is a rough place. The way I see it, we are getting into lockstep globally to go toe-to-toe with any one interested in dancing. This fiat currency bullshit will be the last thing on our minds as we march onto the oil fields worldwide to ensure the only thing that really matters.

How is it that everyone is so deluded to not understand that we are going to have war upon war soon. It has been the same since prehistoric times actually. It's not about to change now. It will probably end bad but that's just the way it is. No winners and all losers.

I can imagine how this is all going to play out. Chaos everywhere. Anger everywhere. By the way, FU*CK China.........

Sat, 08/06/2011 - 12:15 | Link to Comment Quintus
Quintus's picture

Have you seen any of this 8,000 ton stockpile of gold?  No?  Well, neither has anyone else since, I believe, 1957.  

It seems to be a very, very secret kind of gold that you can only be told about but never see.  Even if you are a United States Congressman and ask many times.

As for a full independent audit, well, you can imagine how far proposals to do that have gotten.

I cannot imagine that this one asset alone is immune from the fraud, lies and deception that events over the past 3 years have shown constitute business as usual at the Treserve.  I would not, therefore, bet very much money that it's all there, right and proper as it should be.

Sat, 08/06/2011 - 12:18 | Link to Comment Spitzer
Spitzer's picture

No that is not so.

The US treasury allegedy has 8000 tons of gold, the Fed has none. The ECB (a central bank that has no ties to any nation state) is in control of 10,000+ tons of gold.

The BIS is owned by its customers, the CBs. They set it up and subscribed to it (bought in) so it could provide clearing services for inter bank gold sales. The BIS's own gold is still owned by the CBs because they own a proportional share of the BIS.

Out of practical necessity, privacy and security, most BIS gold activities are with unallocated gold. The main difference between the BIS and private bullion banks being that BIS sight accounts are fully reserved. Being "reserves" is the very definition of CB gold.

I hope this may clear some things up incase you thought that the US treasury (congress) was going to "take" some other countries gold.

Sat, 08/06/2011 - 12:28 | Link to Comment RiverRoad
RiverRoad's picture

The operative word is "allegedy".......

Sat, 08/06/2011 - 11:50 | Link to Comment holdbuysell
holdbuysell's picture

Most (all?) major economic powers are in dire straights, and yes, China's no different.

At this point this is a war of words as the titans jockey for leverage in a world that is quickly changing away from the status quo.

Ultimately, those words will result in action, by choice or other.

Reminds me of the end of the movie, Reservoir Dogs, the Mexican standoff; they were all screwed; it was just a matter of who started it.

http://www.youtube.com/watch?v=FQ3ujsh_xC4

Sat, 08/06/2011 - 12:31 | Link to Comment RiverRoad
RiverRoad's picture

And more importantly, who ends it and gets to write the history books.

Sat, 08/06/2011 - 12:09 | Link to Comment DaBernank
DaBernank's picture

They can also just sell their fucking treasuries now if they don't like the deval. Go ahead, make Timmah's day!

Sat, 08/06/2011 - 11:32 | Link to Comment Fanakapan
Fanakapan's picture

More signs of Rotation, wonder if the Puppy will Touch Down next week ?

Sat, 08/06/2011 - 11:32 | Link to Comment I am Jobe
I am Jobe's picture

Global Currency Bitchezzz. No fucking leadership int he USA. Bunch of idiots giving each other blow jobs period.

 

China attacks US debt 'addiction' after America loses AAA credit rating

http://www.telegraph.co.uk/finance/financialcrisis/8685968/China-attacks-US-debt-addiction-after-America-loses-AAA-credit-rating.html

Sat, 08/06/2011 - 11:34 | Link to Comment bigdumbnugly
bigdumbnugly's picture

confucious say:

man who live in glass house should change clothes in basement.

Sat, 08/06/2011 - 11:34 | Link to Comment Subprime JD
Subprime JD's picture

Protest at Fullerton police department today in response to the brutal murder of Kelly Thomas. 6 fascist pigs beat the man to death in front of spectators and witnesses. Fuck the police. Be there!

Sat, 08/06/2011 - 11:40 | Link to Comment Lem Motlow
Lem Motlow's picture

And the next time you're carjacked at gunpoint, call the ACLU.

Sat, 08/06/2011 - 11:46 | Link to Comment Sean7k
Sean7k's picture

You're not just a moron, but a fascist moron. Congratulations.

Sat, 08/06/2011 - 12:05 | Link to Comment marcusfenix
marcusfenix's picture

the time is coming, very soon, when you are going to regret making that statement...when you are going to wish that you had been at that protest, or one like it and stood up for yourself and your fellow man...while you had the chance...

Sat, 08/06/2011 - 13:25 | Link to Comment Doyle Hargraves
Doyle Hargraves's picture

Next time someone attempts to carjack me, I will smoke their bitch ass...we carry here, legally. Waiting for the cops is an exercise in futility, they only show up if you say you have a gun and will take care of business yourself. Besides that, the SCOTUS said the cops are not obligated to protect citizens, however, citizens are obligated to pay their salaries and kick ass retirement and benefits.

Sun, 08/07/2011 - 07:37 | Link to Comment Pay Day Today
Pay Day Today's picture

"I will smoke their bitch ass...we carry here, legally."

So the car jackers can carry legally too huh?

Sun, 08/07/2011 - 12:43 | Link to Comment bonderøven-farm ass
bonderøven-farm ass's picture

Seems that criminals carry whether it's legal or not, right?  What exactly is your point?

 

Sun, 08/07/2011 - 14:31 | Link to Comment Doyle Hargraves
Doyle Hargraves's picture

Most carjackers are already felons, so probably not. But what people like you payday seem not to realize is that when some asshole does not know if you are packing or not they are less likely to try some stupid shit. LA county is on the other side of the county I live in, they cannot legally carry under any circumstances and crime is through the fucking roof there with things like carjackings. Here, we handle shit ourselves, violent crime is exponentially lower thanks to the fact we can carry. You may want to study the town of Kennesaw, GA where it is the law that head of household carries, and may even want to look at their violent crime stats, just trying to head you off before you make another one of your stupid lib arguments. Oh and as far as felons being able to carry, they carry whether its legal or not...so why bother with a law to exclude them? I don't believe for one minute that the second amendment should exclude any class of people and before you start a dumb lib argument on that front it is called liberty, Bitchez!!!

http://www.youtube.com/watch?v=2sBmUszhP_Q

Sat, 08/06/2011 - 16:03 | Link to Comment James
James's picture

When every second counts police are only minutes away.

Sat, 08/06/2011 - 11:39 | Link to Comment RobotTrader
RobotTrader's picture

 

 

Hilarious.

Those mealy-mouthed apparatchiks have been buyiing Uncle Gorilla paper for decades.

And the buying became so ferocious the last two weeks, that 99% of their purchases are currently in a winning position.

And now they have the nerve to dictate and lecture to the U.S.?  When we could easily just impose a temporary moratorium on interest payments on all China-held Treasuries as a "warning shot"?

Those guys obviously do not understand that we are the "Donald Trump" and they are the nervous bankers sitting across the table back in 1990.

They are the ones with everything to lose.  They are stuck with the paper.  We can easily turn that 99% winning trade into a big, fat zero in an instant.

We are the ones enjoying iPads, iPhones, Abercrombie jeans, Coach handbags, Lululemon outfits.  We have tangible assets bought and financed by China.

They have nothing but scrip.

Sat, 08/06/2011 - 11:57 | Link to Comment Spastica Rex
Spastica Rex's picture

You might be enjoying Coach bags; I don't carry a purse.

Hey - why don't you put up the other picture of yourself for a while? You know, the one with the mullet and the molestache?

Sat, 08/06/2011 - 11:59 | Link to Comment Spitzer
Spitzer's picture

Hahaha, you are actually falling for this shit ?

 

You actually think China is in the tough position ? They could easily write off all of the US debt tommorow. The USD would fall but 50% over night and the RMB would rise by the same. They will still have a real productive econonmy to fall back on. With the rise in the RMB, the Chinese will have extra discretionary income to consume their own production similar to what the US did after WW2. Their gold will be revalued up by a few 1000% too.  They will still have a customer in the Euro zone, (their largest trading partner) because the EU is a net creditor with no trade deficit and more gold then the US.

The US would go compltetly bankrupt the next day. The armies will be called home and there would be caos in the streets.

Sat, 08/06/2011 - 12:18 | Link to Comment dracos_ghost
dracos_ghost's picture

If the USD fell 50% so would the yuan(ie US foodstamp). It's pegged remember.

How about US demands China depeg as per WTO agreements? China would collapse overnight, riots in the streets and their export economy(90+% of their economy now) would evaporate. And no, they couldn't write of the debt tomorrow, since they have to put up treasuries as collateral for payment of accounts, since once agains, they don't have a currency it's a discounted dollar.

China is only a player now because the US vehemently backed their entry into the WTO. Look at the charts of government spending versus revenues. Crossover right at 1998 when the WTO crap was born and the US helped bail out the Asian currency mess. Offshoring US industrial production pulled them out of the dark ages.

China is a dog who' biting it's master.

You're right, there will be chaos in the streets -- of Beijing.

Sat, 08/06/2011 - 12:36 | Link to Comment RiverRoad
RiverRoad's picture

China will de-peg the second it doesn't work for them anymore.

Sat, 08/06/2011 - 13:10 | Link to Comment dracos_ghost
dracos_ghost's picture

And there lies the problem. It's a global system of settlements. Not just the little prima donnas over in the "Middle Kingdom". And they made obligations to the WTO to already be pegged so technically, if all these New World Order types want a global rule of law, China should be forced to depeg.

They played the Popeye and Wimpy school of economics with "I'll gladly pay you Tuesday for world domination today" and then banged everyone after 2008 and started everything in a death spiral.

Now everyone looks to them for leadership?! Yeah, they'll allow gold and silver to remain unconfiscated when they depeg.

Sat, 08/06/2011 - 14:11 | Link to Comment Bananamerican
Bananamerican's picture

"The US would go compltetly (sic) bankrupt the next day. The armies will be called home and there would be caos (sic) in the streets."

at least we don't have to ask if you spit or swallow sino jizz "Spitzer"...

China is a melamine eggroll...attractive on the outside...shitty on the inside.

Yea Spitzer, EUROpe will pick up the amerikan consumer slack, uh huh.....



Sat, 08/06/2011 - 16:26 | Link to Comment Spitzer
Spitzer's picture

One thing is for sure, the amerikans are flat fucking broke, so they are not going to take up the slack.

Sat, 08/06/2011 - 12:42 | Link to Comment t0mmyBerg
t0mmyBerg's picture

Yes exactly.  When they say "[the US] should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits." it is pretty funny.  We have allowed them, first through granting "Most Favored Nation" status and then accession to GATT/WTO in what 2001? to develop that surplus.  Normally some equilibrium would be restored by adjustment in exchange rates, but their dollar peg prevents this.  This is one of those things that if it can't go on forever, won't.  Well we are now approaching forever apparently and the piper will likely be paid, and in the not too distant future, most likely in blood unfortunately.

That is not to say our politics is not broken - it is.  But that is what democracy is.  And until someone can think of something better - and a managed authoritarian economy where decisions of men in individual cases counts for more than law isn't it - that is the way it will be.  Despite our problems we will still be the last man standing.

Sat, 08/06/2011 - 13:17 | Link to Comment TGR
TGR's picture

Errm...the only fallacy in your post, is...the opening premise. The yuan is not pegged to the dollar. Never has, never will be.

The yuan is managed against a basket of currencies and is whatever the CBOC says it is on the day. There is no peg.

Sat, 08/06/2011 - 13:48 | Link to Comment Spitzer
Spitzer's picture

There is many fallacies to his post.

he doesn't understand basic economics.

Sat, 08/06/2011 - 13:43 | Link to Comment Spitzer
Spitzer's picture

You are clueless

The Yuan is what is holding up the dollar. Look at what happens any time they revalue the Yuan. IT GOES UP, NOT DOWN.

China's biggest trading partner is the EU, not the US. What the hell makes you think that China needs the US for a market ?

The rise of the RMP(a basic econ concept that you don't understand) will foster more domestic consumption and the rest of the slack can be taken on by the Eurozone, which like I said, is still their biggest trading partner.

 

 

Sun, 08/07/2011 - 16:43 | Link to Comment Dyler Turden II Esq
Dyler Turden II Esq's picture

addendum:

http://news.xinhuanet.com/english/2008-01/31/content_7530491.htm
Domestic consumption drives GDP for 1st time  
www.chinaview.cn  2008-01-31
BEIJING, Jan. 31 -- China's domestic consumption has replaced investment to become the biggest driver of economic growth for the first time in seven years......

 

Sat, 08/06/2011 - 12:20 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

I do not understand what Spitzer is saying, but I am ignorant.

If China writes off our debt, does that not solve our debt problem? Please enlighten me.

Moreover, the US Treasury possesses 8,000 tons of gold. This is, by far, more than any other country possesses. The Eurozone possesses, when summed, 10,000 tons. But there is little chance they will actually use it as a lump sum of gold. Moreover, the Eurozone's error is that 6,000 tons of their gold is in the basement of the NY Fed, so they'll never see it again. The FED will just give them a receipt.

China possesses a trivial amout of gold. Maybe 1500 tons.

Sat, 08/06/2011 - 12:37 | Link to Comment RiverRoad
RiverRoad's picture

And who has audited all this?

Sat, 08/06/2011 - 12:54 | Link to Comment Havana White
Havana White's picture

A "writeoff," as used in the above example, would be to account for the debt as unpaid, following the U.S.'s inability or unwillingness to honor it.  Not to be confused with forgiving a debt.

Sat, 08/06/2011 - 13:20 | Link to Comment ATM
ATM's picture

In fact wouldn't China simply begin the process of turning those non-paying treasuries into anything of value that they could? Say buying Utah or something?

all their Treasuries will eventually flood back to the US and that will begin the real hyper-inflation, only the Chinese will be out ahead of the total calamity. 

Sat, 08/06/2011 - 13:49 | Link to Comment fishface
fishface's picture

NO NO, not buying confiscating

and then they gonna set up some sweatshops there...

 

Paytime bitchez

 

Sat, 08/06/2011 - 13:56 | Link to Comment Spitzer
Spitzer's picture

If China writes off the debt, there is $0 dollars to pay for the military, there is $0 dollars to pay for the US government, there is $0 to pay for medicare and social security. So yes, the debt will be eliminated but so will the US dollar and the standard of living in the US. The US would hit rock bottom which it badly needs and they can rebuild from there.

The Euro zone, on the top line of its balance sheet, marks it as a lump sum right now. They have since the inception of the Euro. No country can join the Euro unless they have gold and they add it to the lump.

The BIS clears gold for the CB's, there is no way the bank of NY could take posetion of CB gold.

 

 

Sat, 08/06/2011 - 12:20 | Link to Comment DaBernank
DaBernank's picture

dbl

Sat, 08/06/2011 - 12:19 | Link to Comment DaBernank
DaBernank's picture

You think Europe will have the Money to buy Chinese goods that will be 125% more expensive 'overnight'? The Chinese have plenty of over-leveraged paper assets, plenty of real estate that nobody needs, they have to import massive amounts of food to feed their population (which was not the case 20 years ago). They are stuck with too many US Treasuries and they know it, that's why their pissed at the weak $ policy. If they ditch 100% of their treasuries it will give the US a chance to write off 100% of its debt. Tabula Rasa, bitchez.

Sat, 08/06/2011 - 14:06 | Link to Comment Spitzer
Spitzer's picture

The Eurozone does not use the dollar. The Euro will not fall by nearly the same amount as the USD. We have evidence of that now. Consider all of Europes problems and look at how the Euro is behaving. Its still way ahead of parity with the dollar.

 

Yeah, the US could write off 100% of its debt and the standard of living in the US will be written off too. The US govt and the military would also be written off. It would be serios pain for the US but that is what they need. let the system crash, hit rock bottom and rebuilt from there.

Sat, 08/06/2011 - 15:55 | Link to Comment DaBernank
DaBernank's picture

Euro is below parity with the US dollar. Greek debt monetization is already equal to US 4 Trillion (per capita bailout). Wake up, crunch some numbers.

Sat, 08/06/2011 - 16:29 | Link to Comment Spitzer
Spitzer's picture

Below parity ? You don't have numbers to crunch, you have eyes that need to be opened.

Sat, 08/06/2011 - 17:05 | Link to Comment monoloco
monoloco's picture

Maybe then Chinese maquiladoras will bring back manufacturing to the U.S..

Sat, 08/06/2011 - 13:16 | Link to Comment arby63
arby63's picture

REALITY = China ain't shit without Western markets. End of story. They will migrate back to their farms.......Oh, and so will we.

Sat, 08/06/2011 - 14:07 | Link to Comment Spitzer
Spitzer's picture

What gives you that idea ?

The US had the highest value currency in the 50's while it also was the world largest exporter.

Sat, 08/06/2011 - 17:25 | Link to Comment johngaltier
johngaltier's picture

The largest economy in the world does not go quietly into the night... That is, without an unacceptable amount of collateral damage.

The world is stuck with the US' problems whether or not they want to deal with them.

Sat, 08/06/2011 - 12:01 | Link to Comment kaiten
kaiten's picture

Denial?

Sat, 08/06/2011 - 12:09 | Link to Comment joak
joak's picture

"They are the ones with everything to lose."

Are you serious or it's the week-end joke ?

Sat, 08/06/2011 - 12:16 | Link to Comment whaleoil
whaleoil's picture

Aargh, does anyone really think the US could default its obligations to China, and not have China nationalize every iota of US corporate investment on their domestic soil?  Probably pretty close to a wash as far as they are concerned...

Sat, 08/06/2011 - 12:28 | Link to Comment Havana White
Havana White's picture

Robo: "We can turn [Treasuries] into a big, fat zero in an instant."

Honestly, man in the tangible Lululemon tights, can English be assembled into anything dumber?

Sat, 08/06/2011 - 12:47 | Link to Comment aramsogo
aramsogo's picture

Suspend interest payments => they'll nationalize GM China. Go ahead.  Every month, China will nationalize a US asset until the US pays up.  Nuke them, they'll nuke back.

Sat, 08/06/2011 - 13:06 | Link to Comment toady
toady's picture

Huh...

I was thinking nationalize everything overnight, but I like your month-by-month, or maybe a week-by-week approuch better.

It has an anaconda-squeeze feel...

Thanks!

Sat, 08/06/2011 - 13:20 | Link to Comment arby63
arby63's picture

If their Nukes work like every other piece of shit they make ten I will take that bet. Think we're all going to live forever? Think this shit is going to play out in a congenial manner? Bullshit. We're in a mess. China is in a mess. Europe is in a mess. After 20+ years of watching and working with the armies of the world, I will say this: Regardless of technology, people will always defend what is theirs to the death.

That's what we will see. Debt be damned. The average joe in Nebraska could give a shit about China and it's poor circumstance. Whatever.

This isn't even a question of economics. What we're moving into is a question of who has the biggest balls. Frankly, we're moving slowly toward a discussion of yet another global war.

 

Sun, 08/07/2011 - 07:45 | Link to Comment Pay Day Today
Pay Day Today's picture

Didn't you hear? China has had modern US nuke designs for years now.

Sat, 08/06/2011 - 13:53 | Link to Comment SamuelMaverick
SamuelMaverick's picture

Wow Robo, I dont know why anybody junked you. Your point of view is spot on. Usually I totally disagree with your viewpoints, but not this time.  That Donald Trump analogy is perfect.

Sat, 08/06/2011 - 14:15 | Link to Comment Spitzer
Spitzer's picture

wow you know nothing about basic economics.

Sat, 08/06/2011 - 14:22 | Link to Comment Mine Is Bigger
Mine Is Bigger's picture

Well, it seems China may have found a good way to get rid of the worth-less green paper.

According to a stock analyst in Tokyo, China has been buying the Japanese yen, bonds and shares like crazy.

They have been using multiple vehicles to buy the shares.  So, it may not be so obvious yet.  But Chiense entities are now major shareholders in many Japanese companies if their aggregate holdings are used, according to the guy.

Also with the yen rising so much (nearly 130 yen just a few years ago to 77-78 yen to the dollar), many Japanese companies are being forced to move factories outside Japan.  And many of them are now building new factories in China.

This seem to explain the puzzling surge of the yen in recent months despite the crazy soverign debt level and the nuclear disaster.

Sat, 08/06/2011 - 16:01 | Link to Comment msamour
msamour's picture

You better be willing to use your nuclear weapons if you think you want to do that. And remember there are 1.3 billion of those guys. Better hope you get them all too, and don't forget the ones already in your country spying for them. Otherwise, you may not be singing the same tune.

Armchair arrogance is nice, but i bet you would not be saying any of this stuff to a chinaman when he has you by the scruff.

Sat, 08/06/2011 - 11:36 | Link to Comment Bob Sacamano
Bob Sacamano's picture

"domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits."

Lenders (China) absolutely have the right to question borrowers (US) and make demands.

But the suggestion in the quote above that the US has taken the global economy hostage is over the top and shows China has learned well from the 50% of Americans who view themselves as victim.  I am certain no one forced China to lend the US money. Without force it is hard to be a "hostage."  If China would stop making inexpensive products that Americans deem good value, they would not have the problem of knowing what to do with all that money (by funding US deficits).

But I do not blame China for piling on here -- it must be rather humorous to them. 

No worries, BHO will handle this with great intellect and well reasoned long term planning -- not a chance!

 

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