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Reply #43: China would hurt itself, yes, but they'd come out ahead of the US [View All]

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Selatius Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jul-23-06 05:01 AM
Response to Reply #30
43. China would hurt itself, yes, but they'd come out ahead of the US
Edited on Sun Jul-23-06 05:09 AM by Selatius
Since you simply can't take nations to court to collect on debts, all of this will be done in the currency exchange markets. Because nation's don't declare bankruptcy, what happens is the value of their currency plummets because faith, and thus what it can fetch in relation to other currencies, in that currency disappears or weakens considerably, which means that foreign countries and individuals would now notice that the price of goods and services in that country is now much cheaper in comparison to their indigenous currencies.

As a result, the victim country has its economy bought out and possibly dismembered as compensation to the creditors. In the 1980s, we saw a shadow of this when Japanese firms and individuals actually started buying up Manhattan real-estate and office spaces. When the Soviet Union collapsed, it's economy was essentially dismembered in fire-sale auctions that saw untold billions siphoned out of the Russian economy leaving behind a shell.

China's position is dependent upon US firms coming to China to build factories and set up offices to produce goods for an American market. The average Chinese is too poor to afford most goods in the US market, but this means that if China is forced into dumping US dollars, it will mean those American factories will shut down. It will hurt China tremendously, but there is a silver lining if China is forced into exercising it's Doom's Day plan.

The only consolation prize is the fact that those shutdown factories are dirt-cheap now as US firms are looking to liquidate "excess capacity," which is expensive to maintain. China will nationalize those factories and restart them, and they will produce goods for Chinese consumers now, not American consumers.

When is the best time to buy? You buy when there is blood running in the streets. China will take those factories from us when the time comes because we gave it to them by off-shoring manufacturing to their shores.
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