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Posted: 10/29/2009 9:45:32 PM EST
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?
Link Posted: 10/29/2009 10:35:31 PM EST

Originally Posted By Foxnews_FTW:
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?
I believe there was a time when they were actually hoping to profit by investing in a going concern....

Link Posted: 10/29/2009 10:38:07 PM EST
In Soviet China, debt buys YOU.
Link Posted: 10/30/2009 4:26:37 AM EST
They buy our debt and then leverage our week ass president to sign legislation favorable to them. Read that "blackmail".
Link Posted: 10/30/2009 5:19:27 AM EST

Originally Posted By TANGOCHASER:
They buy our debt and then leverage our week ass president to sign legislation favorable to them. Read that "blackmail".
Can they blackmail an appeaser, or do they just sit back and wait for him to blow 'them'?

Link Posted: 10/30/2009 5:24:03 AM EST
its a good investment. they buy treasury notes at interest, ie 3.5% 3.7% etc. historically this has been a very safe investment and we are China's number 1 consumer of their goods. Plus they need help with our technology in nearly every aspect of their society from farming to engineering.
If we stay healthy China reaps the largest benefit, so it's in their best interest.
Link Posted: 10/30/2009 5:27:45 AM EST
Because we do not make anything in this country that they want to buy a couple of trillion dollars of.

Therefor it is buy our debt or don't sell us anything that requires them to take our money.
Link Posted: 10/30/2009 5:28:22 AM EST
Because they can make interest on it.
Link Posted: 10/30/2009 5:30:54 AM EST
China sells boatloads of junk here in the US. We send
boatloads of US Dollars back to China. China needs to
do something with the money. They can spend it on
US goods or try to get some other nation to sell their
goods in dollars, like oil from the mideast. OR they can
lend it back to US and keep the money and earn interest.
Link Posted: 11/5/2009 4:51:39 PM EST
You too can buy our debt, it's called US Savings Bonds.
Link Posted: 11/5/2009 4:54:02 PM EST
Interest.
Link Posted: 11/5/2009 4:59:06 PM EST
SIMPLE....The debtor is SLAVE to the lender....GET IT.......
Link Posted: 11/5/2009 5:03:20 PM EST

Originally Posted By BBoyd:
its a good investment. they buy treasury notes at interest, ie 3.5% 3.7% etc. historically this has been a very safe investment and we are China's number 1 consumer of their goods. Plus they need help with our technology in nearly every aspect of their society from farming to engineering.
If we stay healthy China reaps the largest benefit, so it's in their best interest.

This. You scratch my back, I'll scratch yours.

Problem is, we're no longer scratching and the Chinese are starting to look elsewhere.
Link Posted: 11/5/2009 5:06:29 PM EST

Originally Posted By Foxnews_FTW:
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?

Their economy is export dependent....

If they do anything to harm the US economy, theirs goes down the drain with ours...
Link Posted: 11/5/2009 5:06:47 PM EST
US debt used to be a safe investment, especially for vast amounts of money. Investing money gets harder the more you have of it. 3% return on billions and billions of dollars is pretty good deal. Not so good if the real value of that ebt is devalued the way the Fed and Congress are doing now because they cannot face economic and political reality.
Link Posted: 11/5/2009 5:07:43 PM EST
Link Posted: 11/5/2009 5:07:44 PM EST

Originally Posted By zhick:
SIMPLE....The debtor is SLAVE to the lender....GET IT.......

Wrong...

'The Customer is always Right'...

It's not about what the US owes China...

It's about what would happen to China if the US stopped buying their products...
Link Posted: 11/5/2009 5:09:06 PM EST

Originally Posted By raven:
US debt used to be a safe investment, especially for vast amounts of money. Investing money gets harder the more you have of it. 3% return on billions and billions of dollars is pretty good deal. Not so good if the real value of that ebt is devalued the way the Fed and Congress are doing now because they cannot face economic and political reality.

At some point the Fed is going to have to raise interest rates. When they do it will be like a dam which is nearly overflowing with floodwater; they open the floodgates a little but the whole thing gives way.

I wouldn't be surprised to see 10% interest rates again within the next couple of years.

Link Posted: 11/5/2009 5:10:56 PM EST
China wants to keep selling us their products. They can't do that if they don't take our money.
Link Posted: 11/5/2009 5:14:15 PM EST

Originally Posted By Dave_A:

Originally Posted By Foxnews_FTW:
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?

Their economy is export dependent....

If they do anything to harm the US economy, theirs goes down the drain with ours...

Actually I dont think they rely on exporting to us as much as you think. I cant remember the actual percentage of their products we import compared to the rest of the world, but its not like they would collapse. It would hurt but they still wouldnt starve.
Link Posted: 11/5/2009 5:17:40 PM EST
Originally Posted By Dave_A:

Originally Posted By zhick:
SIMPLE....The debtor is SLAVE to the lender....GET IT.......

Wrong...

'The Customer is always Right'...

It's not about what the US owes China...

It's about what would happen to China if the US stopped buying their products...



While what you are saying is somewhat correct about "the customer is always right" Have you ever heard of buyers remorse..It is the customer that was "right", "and the salesman "let" him be "right".. and he bought something that was not correct to fulfill his need..... This customer gives new meaning to "a woman (customer) scorned" Do you get what I am saying???? Regardless...the debtor is always SLAVE to the lender...always. Don't think so quit your job and quit paying your mortgage and see if the bank dosen't yank your chain.
Link Posted: 11/5/2009 5:24:22 PM EST
China gets paid coming and going....

ship us a bunch of cheap shit, and we buy it....on credit.

sum tin wong....
Link Posted: 11/5/2009 5:25:01 PM EST
This,,,,The Chinese have a very tightly controlled society and for them unemployment is almost as detrimental as a nuclear explosion, That society has NO concept of the people in charge EVER being wrong. When I was there last time We saw a picture of the Chairman that had been fire bombed for the SECOND time by the same guy. The first time got him five years. The second time was on the day he got out of prison. The point is that you are either 'with the program" or you are in prison.Open dissent is taken by the average citizen as a failure of the leadership. Literally. Hence the Chinese will do WHATEVER it takes to perpetuate their system (buying treasuries) to keep the masses employed (making crap for us using our money).
Link Posted: 11/5/2009 5:39:56 PM EST
Originally Posted By Mackinaw:
China gets paid coming and going....

ship us a bunch of cheap shit, and we buy it....on credit.

sum tin wong....


...............................
Link Posted: 11/5/2009 5:40:16 PM EST
Well you see when they get paid in American money for the goods you buy at the store, what are they going to do with it? Invest in the stock market (like they did with blackrock and lost money,) They want to make more money like any other smart entity or use it for something smart. However if they kept the money in the dollar instead of trading it back for the chinese yuan, it keeps the U.S. dollar strong. So they keep it in the dollar because their currency is actually pegged to ours (so even if our dollar sinks, their shit will still be cheaper and our manufacturers still suffer!) However if they bought debt, (and they are the biggest buyer) they can get some say in politics, and if we rely on them so much for government money, they can and will eventually screw us!!! If they sold all the treasuries tom. The price of treasuries would SINK. Meaning the government wouldnt be able to sell anymore till all the supply is absorbed.

The only option is to wait or raise interest rates (which would drastically hurt the economy because of borrowing costs to business and individuals.) Because are you going to buy a treasury for face value or half off (but have the same value at maturity as the other?) That would force the federal reserve to buy the debt which would drive down the value of the dollar. If China pulls all their money out of the U.S. dollar at the same time, the dollar would drop even more! You would see hyperinflation and our economy in chaos.

Now whats sad is that our enemies are our biggest debt holders....now imagine that!!!!
Link Posted: 11/5/2009 5:42:00 PM EST

Originally Posted By Dave_A:

Originally Posted By Foxnews_FTW:
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?

Their economy is export dependent....

If they do anything to harm the US economy, theirs goes down the drain with ours...

Yup. They need us to buy their cheap SH**.

Link Posted: 11/5/2009 5:48:39 PM EST
Possession is 9/10ths of the law
.
Link Posted: 11/5/2009 5:51:41 PM EST
Originally Posted By Foxnews_FTW:
Unless I'm mistaken- china used to buy our debt to keep their currency value low, so their goods would be cheaper. In the end, it made for "You buy our debt, we buy your cheap shit, and lots of it." Am I wrong?


You are basically correct. The China central bank maintains its currency peg (favorable to China's exports) by buying U.S. dollars using printed yuan. It then takes those U.S. dollars and buys Treasury securities so that it earns interest.

See here.
Link Posted: 11/5/2009 6:14:43 PM EST
Originally Posted By Lightning_P38:
The Chinese have as much to lose as we do if our economy fails. Without somebody to buy your goods you can't continue to grow, without a customer the producer also fails.


This is the argument I have a hard time with. Do they really have as much to lose? They make stuff that they send to us. We make very little, and mostly pass money back and forth between ourselves providing services to each other. To keep the game going, we offer unlimited IOUs and the Chinese gladly take them. Dollars get loaned back to our government, which the government uses to fund myriad entitlement programs to sustain the lifestyles of increasing numbers of American citizens (who being at the low end of the economic totem pole, buy more Chinese crap at Walmart).

Now anyone with half a brain from China looks at this situation must conclude that the game cannot continue forever. Four Chinese workers effectively work a total of 24 hours a day to sustain one American that works 8 hours a day. Sure, the math is a little rough since we have better infrastructure here (highways, etc.). But still, those 4 Chinese guys would get a better ROI if they traded their time for 16 hours of Indian work, or 20 hours of Japanese work, or 30 hours of Mexican work (ok, that last one is a bit of a stretch but you get the point).

They won't stop buying our debt cold-turkey, because it would be too disruptive. But if I was China, I'd be scaling back on the IOU purchases, and stepping up on purchases of tangibles. Like idunno, commodities and other raw materials needed if you had to go to war. Cause when a country that makes very little has it's credit card declined, things will get hairy. The productive people of said country will not be inclined to immolate themselves to sustain the lifestyles of non-productive people on entitlement programs.

Oh look, China is scooping up commodities.
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