US Debt Losing its Appeal in China

[lanlady]

Source: International Herald Tribune

International Herald Tribune
U.S. debt is losing its appeal in China
By Keith Bradsher
Thursday, January 8, 2009

HONG KONG: China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home - a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy.

At first glance, the declining Chinese appetite for U.S. debt - apparent in a series of hints from Chinese policy makers over the past two weeks, with official statistics due for release in the next few days - comes at an inopportune time. On Tuesday, the U.S. president-elect, Barack Obama, said Americans should get used to the prospect of "trillion-dollar deficits for years to come" as he seeks to finance an $800 billion economic stimulus package.

Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasury securities. In the past five years, China has spent as much as one-seventh of its entire economic output on the purchase of foreign debt - largely U.S. Treasury bonds and American mortgage-backed securities.

But now, Beijing is seeking to pay for its own $600 billion economic stimulus - just as tax revenue falls sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and midsize enterprises, many of which are struggling with slower exports, and Chinese bankers say they are being instructed to lend more to local governments to allow them to build new roads and other projects as part of the stimulus program.

Read more: http://www.iht.com/articles/2009/01/07/business/yuan.ph...

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Oo boy. Now we're in deep trouble.

[and-justice-for-all]

1. I simple cure for all this madness....

wipe all the debt out, just erase it like it never existed, set it all back to zero.
"The system has failed" - Megadeth

[acmavm]

2. So, what next? We're owned by China. You'd think that this would

tell repubics something about their leaders and their policies but oh, no. It's all the dems fault, dems sold us off like chattel to China.

[madrchsod]

3. i guess they can buy their own crap and maybe we`ll be better off

i know.. what`s america to do without disposable crap from china.


that`s why i buy used american made stuff at the charity shops...you can still fix them when they break.

[Kolesar]

6. China spends their $cash in Europe, where they can buy-off opposition to their human rights abuses

It's all in Sherrod Brown's book: Myths of Free Trade, 2004.

[madrchsod]

10. while they fund the genocide in dafur......

[Suji to Seoul]

4. shit, meet fan. Get well aquainted. You'll ge together for a long time. Thanks, Chimpy!

[quidam56]

5. China regulates US

Appalachian Coal runs China's Empire, yet here in Wise County, VA, our schools are so old and outdated they can't even power up the latest technology our kids deserve to compete on a global scale. http://www.wisecountyissues.com The trade off for our mountains is we can go to walmart and buy cheap toxic crap.

[iamjoy]

7. Oh, Perfect

The timing couldn't be worse.

This is the fault of George W. Bush. He got us into so much debt with China, but blew the money in a unnecessary war. Now, when Obama takes office, they are going to turn off or reduce the supply. So, Obama will look like the incompetent one as all his ambitious plans to help the country will have to be scaled back.

If we Democrats and Liberals had any sense, we'd start talking now in public forums about how Bush has created such a crappy situation, that any problems over the next four years are not Obama's fault.

[L0oniX]

8. I'm suprised that China isn't printing our money yet.

[Javaman]

9. Meh, china sells us their garbage

we can't buy it, so they cut off the money supply.

it's really kind of counter productive from a capitalistic point of view.

but then again, no one said the gravy train will last forever.

china is in a bit of a panic, they are in deep trouble in their manufacturing sector and their employment rolls.

they are having massive layoffs as well and their production can no longer keep up with their hyper growth.

They have to cut back, no choice and now that their biggest benefactor is no longer buying their crap, they can't keep subsidizing their benefactor. round and round.

they can stop buying our debt all they want, but if they do that, there will be no capital for the US to keep the industry going, so we stop buying their stuff.

the situation is not much different that from saudi arabia. the biggest part of our trade deficit is our importing of oil. It accounts for roughly 65% of the deficit. however, if we stop buying it, saudi land tanks. the saudis have a tiger by the tail and they know it. now that oil prices are down the saudi's are freaking out because for the first time in many many decades they are going to have a budget shortfall.

so to recap, our economy is directly tied into buying china's plastic crap, however, we stopping it, china has to cut back and stop buying our debt and use that money for their own country. but if we stop buying chinas crap, the saudis freak out because the demand for oil goes down because, we shop less, which translates into: less driving, less plastic crap made from oil.

round and round...it never stops until someones train hits the brick wall.