Chinese Premier Says He is Worried About Safety of US Bonds

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Lemonyellowschwin's picture
Lemonyellowschwin
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Chinese Premier Says He is Worried About Safety of US Bonds

Coming from the Premier of China, shouldn't this be really big news?

http://bloomberg.com/apps/news?pid=20601087&sid=a.z1.V13_8G0&refer=home

 

pinecarr's picture
pinecarr
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Re: Chinese Premier Says He is Worried About Safety of US ...

Good article, Lemonyellowschwin!  As someone with too many dollar-based assets in her retirement fund, having our biggest creditor get nervous about the safety of holding US Treasuries seems like pretty important info to me!

caroline_culbert's picture
caroline_culbert
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Re: Chinese Premier Says He is Worried About Safety of US ...

"Chinese Premier Says He is Worried About Safety of US Bonds "

Hmmm... I wonder why?Tongue out

 

caroline_culbert's picture
caroline_culbert
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Re: Chinese Premier Says He is Worried About Safety of US ...

"China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said."

And that's all they're going to get-- assurance (not backed by much)!

 

britinbe's picture
britinbe
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Re: Chinese Premier Says He is Worried About Safety of US ...

The Chinese are caught between a rock and a hard place.  Continue to buy and they will surely face the errosion of their asset or something similar to the current situation in the future.  Pull the plug and watch the whole thing come down as fast as the value of their assets.

They need the US as much as the US needs China!

caroline_culbert's picture
caroline_culbert
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Re: Chinese Premier Says He is Worried About Safety of US ...
britinbe wrote:

The Chinese are caught between a rock and a hard place.  Continue to buy and they will surely face the errosion of their asset or something similar to the current situation in the future.  Pull the plug and watch the whole thing come down as fast as the value of their assets.

They need the US as much as the US needs China!

Are we pretty much 50/50 or does China have a significant upper-hand even when contracting?

britinbe's picture
britinbe
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Re: Chinese Premier Says He is Worried About Safety of US ...
caroline_culbert wrote:

Are we pretty much 50/50 or does China have a significant upper-hand even when contracting?

I'm sure that is one that would keep the "greatest
economical minds" occupied for a while
Wink.  I guess if one were to consider that
China doesn't have the internal market for much of the goods it produces and the
US doesn't have the manufacturing base of the items it consumes, that would make
it somewhere around 50:50 give or take. 
 
What options does the US have?  I can only see
devaluation or default!!  Inflation from all this extra money that is being
pumped into the economy, or increasing interest rate and tax rates to try and
contain inflation and in order to keep servicing the debts, I would assume that
in the current climate the tax revenue burden will become more and more limited
to a reducing number of people making the problem worse. 
 
This is not a great scenario for China, the US or
the rest of the world.

 

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