Is now the time we learn the downside of owing china money?

Forums: China, Taiwan, United States, Economy, Economics
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Quote:

By John Pomfret
Washington Post Staff Writer
Sunday, January 31, 2010

China's indignant reaction to the announcement of U.S. plans to sell weapons to Taiwan appears to be in keeping with a new triumphalist attitude from Beijing that is worrying governments and analysts across the globe.

From the Copenhagen climate change conference to Internet freedom to China's border with India, China observers have noticed a tough tone emanating from its government, its representatives and influential analysts from its state-funded think tanks.

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/30/AR2010013002443.html?hpid=topnews

the idiot western governments have yet to get it that China will not let Tibet survive no matter how much it costs China to kill it, and that the Island called Taiwan by some will be brought back into the fold no matter what the costs to China to get it done.

Not inderstanding before now...is Obama about to find out that China is willing to sink the dollar as retubution for failing to do what we have been told by our banker?

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@hawkeye10,

hawkeye10 wrote:

...is Obama about to find out that China is willing to sink the dollar as retubution for failing to do what we have been told by our banker?

No, because they aren't.

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@Robert Gentel,

aren't what? They have well over $ 2 trillion in the vault, they have the ability to devalue the dollar well past the point where OPEC will get off of the dollar, then the dollar is over as the main global currency.

1 Reply

@hawkeye10,

hawkeye10 wrote:

aren't what?

I quoted it for you. You asked if Obama is about to find out that they are willing to sink the dollar and I answered no, because they aren't (willing to sink the dollar).

The sky is not falling, this is a ritual that will pass just like all the other times America sold Taiwan weapons.

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@Robert Gentel,

Quote:

this is a ritual that will pass just like all the other times America sold Taiwan weapons

You might be right, but they do have much more leverage on us than ever before. The standard analysis is that China can not afford to sacrifice the $2 trillion in a power play over Taiwan, but I am not sold on that evaluation.

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@hawkeye10,

hawkeye10 wrote:

You might be right, but they do have much more leverage on us than ever before.

And we, in turn, on them. It's called financial contagion and it's why countries will increasingly be wary of rocking each other's boats. Hurting the dollar hurts them.

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@Robert Gentel,

Quote:

And we, in turn, on them. It's called financial contagion and it's why countries will increasingly be wary of rocking each other's boats.

Bullshit, Obama did it twice this week, first when he said that he wanted to put a new tax on the remaining Wall Street Banks, and now with defying China on Taiwan armament sales.

You will also notice that the word from Davos is that the rest of the world is now seriously worried about American Political paralysis.....

It has been a bad week for those trying to prevent contagion.

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@hawkeye10,

I gave you a link to a search hoping you'd edify yourself about it, but no you don't understand economic contagion. What Obama did this week is simply not rocking their economic boat.

Pissing people off isn't financial contagion hawkeye. China won't sink the dollar because it will hurt them tremendously to do so. This is a result of economic contagion where their economy suffers when ours does.

Doing the Taiwan ritual simply isn't even the same class of thing.

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@Robert Gentel,

Quote:

I gave you a link to a search hoping you'd edify yourself about it, but no you don't understand economic contagion. What Obama did this week is simply not rocking their economic boat.

YOur constant underestimating me is getting annoying....

Throwing uncertainty into the global economy is an act of harming all of the worlds economies, which Obama did this week, first by creating the uncertainty over the future ability of the wall street banks to operate in a large enough scale to play the roll on the global stage that they have till now. Secondly by provoking a China that has proved that it is willing to burn the rest of the world if it does not get what it wants. China cares only about China, they are not a responsible world citizen, which is what predictably happens when you let countries take powerful global roles before they are ready. Our theory was that if we let China into the club, that China would grow into their role and become a responsible citizen....it has not happened.

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@hawkeye10,

Read a rather interesting article that said the reason China's economy is better than ours is because they didn't open their doors like we did with NAFTA (ooh I hate that) to let in cheaper markets and let out jobs.

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@auroreII,

there is also the take that china's economy is a house of cards. Another that it is so good because China is predatory, on the grounds that they refuse to float their currency, but also for their refusal to follow established norms of behavior generally.

In the West there seems to be this faith that central planning cant work, thus China will eventually fall apart, thus we don't need to worry to much about how they are behaving. This is dumb. The Soviet economy not working does not mean that Central planning cant work. Given how weak Western Capitalism has been shown to be these last few years this assumption that the "china way" as the Chinese call it cant work because it rejects major portions of Capitalist theory is backed by nothing but wishful thinking.

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@hawkeye10,

The reality is China can't sacrifice the $300 billion/year in exports to the US in a power play.

The recession has shuttered many factories in China and put a lot of Chinese workers out on the street. The recession is only a small part of what would happen to the Chinese economy if they tanked the dollar. Does China really want to risk a billion people upset and out of work because of the actions of the Chinese government?

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@parados,

Quote:

Does China really want to risk a billion people upset and out of work because of the actions of the Chinese government?

Chinese leaders absolutely MUST keep the population employed. However, I am not sure that this means that China can not sacrifice exports to America. The plan was always to at some point pivot from being an export driven economy to being one that was largely self sufficient. It might be time to start. Plus, America is a failing country, we and our economy are increasingly not relevant. China looking long term would be looking to expand its trade with regional economies such as India anyways.

At some point losing America as a trading partner is going to be no big deal, so maybe they cut America off a little early to make a point that China is not to be toyed with? If they can keep the Chinese people on the job suppling other countrys besides America, or supplying China, they might.

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Quote:

Jan. 30 (Bloomberg) -- Google Inc.’s opposition to censorship in China was the one topic left off the table in Davos -- at China’s request.

“China didn’t want to discuss Google,” Josef Ackermann, chief executive officer of Deutsche Bank AG and a co-chairman of this year’s World Economic Forum, said in an interview. China’s Vice Premier Li Keqiang made that clear, he said

http://www.businessweek.com/news/2010-01-31/china-bosses-davos-as-nobody-discusses-what-happened-to-google.html

I am shocked! Shocked I tell you, Both that china does not want to follow the rules of open exchange of ideas, and that the rest of the worlds leaders gave china what they wanted. Some things lever change.

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@Robert Gentel,

Quote:

And we, in turn, on them. It's called financial contagion and it's why countries will increasingly be wary of rocking each other's boats

Your theory is on thin ice

Quote:

Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.

Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his new memoir, “On The Brink.”

The Russians made a “top-level approach” to the Chinese “that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies,” Paulson said, referring to the acronym for government sponsored entities. The Chinese declined, he said.

“The report was deeply troubling " heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets,” Paulson wrote. “I waited till I was back home and in a secure environment to inform the president.”

Russia never approached China about dumping U.S. bonds, government spokesman Dmitry Peskov said Friday. “This is not the case.”

The Russian government sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to Central Bank data. Fannie and Freddie were seized by regulators on Sept. 6, 2008.

http://www.themoscowtimes.com/business/article/russia-asked-china-to-dump-us-bonds-book-claims/398684.html

On the one hand it is hopeful that the Chinese said no back then, on the other it is not that the Russians have already done what some some worry that the Chinese will do.

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Quote:

http://www.taipeitimes.com/News/biz/archives/2010/02/01/2003464861

In other words China will end its predatory monetary policy when it is damn good and ready, that Sarkozy and Soros demanding change at Davos will not alter the Chinese plan. Calling the monetary policy a stimulus plan is a blatant finger in the eye towards the West.

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Is now the time we learn the downside of owing china money?

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