which at this point I'm sure they will, the U.S. won't have any ability at all to fund the bailout programs, job stimulus, etc. This is a race against the crash of the dollar. The 6 trillion dollar question is this - will banking, and the underlying asset values with which banking relies on to guarantee loans - prop itself up to 2006 levels before the international investment community throws up it's hands and stops buying treasuries? The obvious answer is no - and that, ladies and gentlemen, is the crux of the problem.
The current banking system, based around the U.S. dollar as a reserve currency is irrepairably broken.
Chinese Cautious on Treasury Notes
By REUTERS
Published: January 31, 2009
LONDON (Reuters) — China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.
“Whether we will buy more U.S. Treasury bonds, and if so by how much — we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said.
His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt.
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China will keep buying them for the exact reason they state to protect their investment. there is no other place for them to safely invest. This is all a big game because of Geithners comments.
The Chinese need the US and the US dollar. China would be no where without us buying their products.
The dollar is going to strengthen throughout this process. We are going to be the first out of the recession.
Revelation 18. The U.S. will ultimately crash in the future, quite possibly near future...everyone thought Bush was bad about the bailouts and stimulus..Obama is doing a lot worse..give it time..welcome to change?? Business as usual if you ask me, tax and spend..typical liberal democrat.
"Obama is doing a lot worse"
hahahaha
Elections have consequences, Bible Boy.
ps: I find the notion that somehow Bush was a fiscal conservative laughable too. But you probably already had one of your steamy revelations about that!
Enjoy the recovery!
Jared, China has a rapidly growing middle class. With a billion rice farmers about to turn the keys to their very first automobiles, consumption can stay within their borders. If the USD crashes, that would effectively be a dramatic increase in the yuan, and that would completely stop exports. China would then repurpose itself to manufacturing and consumption within their own borders. They don't need us. We're only 300 million Americans, and we're broke. They've got a billion people about to become industrialized. It would be uncomfortable for China, but - sustainable. Can't say the same for the U.S. borrow and import model.
if the US gdp was cut in half it would still be twice a big as china's, simple as that
the world markets are crashing because of the problems in the us.
I think the world economy is actually going through a process Greenspan calls, "Creative Destruction" where markets go extinct, replaced by emerging markets. While the USGDP is multiples of China - this is now, the future growth looks Chinese - they still have a positive GDP where the U.S. is shrinking at an accelerating rate. Plus, it is industrializing. Those customers will replace US buyers of consumable goods.
The owners of the Central Banks orchestrated this financial crisis on purpose and are doing everything they can to make it worse, under the guise of trying to help. Their goal is a world central bank and a New World Order controlled by those who OWN the financial system. Just search Google using their “NEWS” button and see how many mainstream articles, are currently calling for a “Global Currency”, “Global Banking System”, “New World Order” or “North American Union.”. Go ahead, just plug in these phrases and watch how many hits come back from the most respected publications in the world.
I believe the Oligarchs will eventually propose the Federal Reserve report to the IMF, instead of Congress. They'll come up with all kinds of reasons why this will correct the financial crisis. Congress will give away their pseudo control over the FED the same way they did foreign trade and tariffs to the World Trade Organization (WTO) under the GATT Treaty.
When people are completely broke from hyperinflation and have no jobs or nothing of value in their wallets, paychecks, bank accounts and their pensions can’t buy enough to purchase daily necessities, they will accept any “lifeline” you throw to them. The Bank$ters know this and they don’t care about the hardships and ruined lives it causes. They would shoot their own mother and bet on which direction the bitch would fall.
Quit trying to believe the people in power are working in the interest of the common person. When you do, the actions of world leaders and the central banking systems make a lot more sense.
If you want to fix this problem then repeal the Income Tax and impose a National Sales Tax that is higher on products made outside the USA. If a product is built and made here, then the TAX will be lower. Talk about stimulate the economy! No Income Tax and a huge incentive to buy or build in America.
Of course that will never happen. All the government is going to do is
impose a huge deficit spending package that will have to be repaid by taxes and it will erode the value of our savings due to inflation. There is nothing new coming out of Washington. No CHANGE whatsoever just a slick salesman who sounds good.
Gary-
Greenspan is right, it is creative destruction and they will build a New World Financial Order on the rubble of the United States.
Hytek
The Federal Reserve generates money and if you have one dollar in your pocket and there are a million dollars in circulation, your net worth is 1 over 1,000,000. And if the FED prints a Billion dollars more, your net worth is instantly reduced to 1 over 1,001,000,000. If I remember my fractions from elementary school, the larger the denominator, the smaller each part. Hence, the Federal Reserve can systematically rob you of your wealth, life savings and purchasing power at the touch of a button. No unelected and unaccountable group should have that much power. Perhaps you can see why the Constitution mandated the use of coins minted in Gold or Silver. Gold and Silver prevent these kinds of shenanigans. Gold is like a chaperone on a date. It makes you behave yourself. The Bank$ters don’t want a chaperone, cause they want to get you into the back seat on a deserted road and rape you.
The FED’s monetary policy over the last few years of loaning money to anyone with a pulse, created a huge financial bubble that is still in the process of popping. People took on debt and invested in stuff they should not have and now the party is over and they have to pay off these debts. It’s like getting drunk and finding you’ve gambled away your life’s savings. Now the FED, in combination with the US Government, are talking about spending / printing trillions more in a stimulus package, in order to “Help” us. It’s like giving us a drink of the “Hair of the Dog.” It will do nothing but devalue our currency more, reward bad behavior and rob people of their savings, who didn’t act foolishly.
The Government has already rewarded the irresponsible behavior of commercial banks and mortgage companies with bailouts of nearly one trillion, which amounts to a huge currency devaluation. Now Washington DC is going on a spending spree for crap that will not change a thing and devalue the currency even more. If you were a foreign nation would you buy more of our debt? After reading the stimulus package, I sure wouldn’t. Eventually, those who hold our debt in bonds will start dumping them and will not buy more or roll them over. When they do, LOOK OUT! The only way for the FED and the US Government to payoff these treasury bonds is to print Federal Reserve Notes by the Tens of Trillions, and that is exactly what they will do and hand them to the foreign bond holders. If the foreigners don’t trust our paper bonds, will they trust our paper dollar? Absolutely not! They’ll trade them for anything of value as quickly as they can and the dollar’s value will go to ZIP, perhaps in just a few days, weeks or months. Now perhaps you see why the G20 Nations are calling for a New Brenton Woods Agreement that made the dollar the world’s reserve currency after WWII.
The US GDP still had growth last year, while small and less than ideal we still ended the year with positive GDP. I read a report today saying the Obama stimulus should add close to 4 points to GDP for 09'.
So while GDP growth was down in 08 it was not negative.
Sure China will have more buyers, but the US buyers are not going to disappear. The other problem China is going to start to run into is as the Chinese workers are going to smarten up and start to demand more money. This has already started to happen. As soon as hourly wages increase too much in China, manufacturing is going to move to another country such as India. Once that happens China's income potential is going to drop.
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