American Intervention in Libya

[striperman36]

china owns 1.2 trillion in US bonds.

http://www.treasury.gov/resource-cen...uments/mfh.txt

[Nebe]

Originally Posted by striperman36

china owns 1.2 trillion in US bonds.

http://www.treasury.gov/resource-cen...uments/mfh.txt

Right. That is one way that we fund our national debt. What happens when they want to cash them in?
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[striperman36]

it's a little scary that's like 20 pct of the chinese gdp and it's on like 1 - 2 pct of the US GDP.

And reduce their #2 trading partner to a junk bond dealer?

[fishpoopoo]

Originally Posted by Nebe

Right. That is one way that we fund our national debt. What happens when they want to cash them in?
Posted from my iPhone/Mobile device

Treasury bond prices will drop sharply (on the selling pressure), driving bond yields (the percentage discount to maturity) sharply up.

As these notes are denominated in U.S. dollars, the massive flood of U.S. government bond selling will weaken the dollar (even though yields/interest rates are going up).

We will have a double whammy of high interest rates (which will choke off borrowing and therefore slow the economy down) and massive inflation on whatever we have to import, like oil.

So, imagine getting a mortgage at 30%, or a credit card at 50% APR.

Then, paying $20 a gallon for gas, and God knows what for food and healthcare.

It will be a disaster of epic proportions, and we have our government and ourselves to blame for this.

Unless we swap California for our outstanding debts. LOL.

You might be interested to know that China is already trying to sell or trade its U.S. bond holdings for tangible assets (like oilfields and shipping companies).

[Bronko]

The only way to make these problems go away is to host another giant tribute to Mowtown at the Whitehouse and then shoot out the back door to play another round of golf.

[RIJIMMY]

Originally Posted by fishpoopoo

Treasury bond prices will drop sharply (on the selling pressure), driving bond yields (the percentage discount to maturity) sharply up.

As these notes are denominated in U.S. dollars, the massive flood of U.S. government bond selling will weaken the dollar (even though yields/interest rates are going up).

We will have a double whammy of high interest rates (which will choke off borrowing and therefore slow the economy down) and massive inflation on whatever we have to import, like oil.

So, imagine getting a mortgage at 30%, or a credit card at 50% APR.

Then, paying $20 a gallon for gas, and God knows what for food and healthcare.

It will be a disaster of epic proportions, and we have our government and ourselves to blame for this.

Unless we swap California for our outstanding debts. LOL.

You might be interested to know that China is already trying to sell or trade its U.S. bond holdings for tangible assets (like oilfields and shipping companies).

but....that would screw china as well since we're one of their biggest customers. They wouldnt gain from it.

[Nebe]

Originally Posted by RIJIMMY

but....that would screw china as well since we're one of their biggest customers. They wouldnt gain from it.

Not for long. As other nations westernize like India, and china, we will become less important.
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[RIJIMMY]

Originally Posted by Nebe

Not for long. As other nations westernize like India, and china, we will become less important.
Posted from my iPhone/Mobile device

Those countries have higher standards, dont underestimate our dependancy on plastic garbage.

[fishpoopoo]

Originally Posted by RIJIMMY

but....that would screw china as well since we're one of their biggest customers. They wouldnt gain from it.

Yes, but that doesn't address the main issue that their $1 trillion + in treasury holdings, denominated in U.S. dollars, is losing value, and there is no way we are ever going to pay them back.

Over the long run, there are those who believe that China's emerging middle class (about 300 MM right now) will being to consume more stuff. They are going to be the world's biggest customers.