Concerns grow over China's sale of US bonds (Evans-Pritchard)

[due_indigence]

In a recent Evans-Pritchard article that explores China's recent dumping of $43 billion in US bonds, Neil Mellor, a currency expert at the Bank of New York Melllon says this:

"We still think China will have to continue buying US Treasuries by the bucket load. Where else can they invest in a liquid market?"

I find this sort of 'logic' mind-boggling and completely circular. The only pool capable of absorbing Chinese export profits and providing 'liquidity' is so large now that it exceeds even the theoretical prospect of safeguarding/returning said profits. Therefore continued purchase of bond puchases are assured. Huh?

Since social order requires jobs and growth, the power-that-be have resorted to promoting the appearance of growth. So long as China and America are willing to 'pretend together' in a weird version of the prisoners' dilemma, things will stagger along. But for how long? Social order is lashed to growth. The existing regimes/elites cannot survive a transition to some sort of sustainability model. The Ponzi has been revealed. However the elites have deeemed that the Ponzi will continue.

http://www.telegraph.co.uk/finance/c...=finance2402am

[GRG55]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

In a recent Evans-Pritchard article that explores China's recent dumping of $43 billion in US bonds, Neil Mellor, a currency expert at the Bank of New York Melllon says this:

"We still think China will have to continue buying US Treasuries by the bucket load. Where else can they invest in a liquid market?"

I find this sort of 'logic' mind-boggling and completely circular. The only pool capable of absorbing Chinese export profits and providing 'liquidity' is so large now that it exceeds even the theoretical prospect of safeguarding/returning said profits. Therefore continued purchase of bond puchases are assured. Huh?

Since social order requires jobs and growth, the power-that-be have resorted to promoting the appearance of growth. So long as China and America are willing to 'pretend together' in a weird version of the prisoners' dilemma, things will stagger along. But for how long? Social order is lashed to growth. The existing regimes/elites cannot survive a transition to some sort of sustainability model. The Ponzi has been revealed. However the elites have deeemed that the Ponzi will continue.

http://www.telegraph.co.uk/finance/c...=finance2402am

China's recent overtly public responses to the USA continue to reflect a country that is anything but confident outside its own borders. It comes back to the dragon and panda analogy discussed in this thread. And the recognition of their precarious situation in this "prisoner's dilemma" would seem a part of that motivation.

[Starving Steve]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

1.) There has to be growth in the world economy. Practicing policies for so-called, "sustainable development" is a sign of serious mental illness, not to mention, elitism and selfishness. In urban areas, for example, anti-development restrictions have led to outrageously over-priced land prices and outrageous housing costs. Such anti-growth policies are unfair to our children.

2.) The United States, now being the world's largest debtor-nation, has no business trying to poke a stick in the eye of China, America's biggest creditor. China doesn't need America to consume its products indefinitely, but America needs China to buy U.S. Treasury debt. America now has to be humble and have respect for other nations, particularly China, because the days of the U.S. being the world's only super-power are over.

[GRG55]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

1.) ...China doesn't need America to consume its products indefinitely, but America needs China to buy U.S. Treasury debt. (This is just common sense.)

China can't do the latter unless the USA does the former...despite your common sense, China needs the USA too.

[due_indigence]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

I find there is a tendency to moralize i.e. denigrate the US because it is the debtor as opposed to the creditor nation. We are talking about economic forces, not normatives such as good and evil or industriousness and laziness. Suffice to say both nations require one another.

The notion that China can supplant the US consumer for 1) domestic consumption or 2) alternate trading partners was pretty well debunked in a very good article posted up here recently, though I cannot recall the source (E.A. Review?). The point was that this sort of shift will be 20-30 years in the making, i.e. multiple business cycles away and a lot of shuttered Chinese factories in the interim.

So we have a toxic symbiosis that sort of deforms the entire global economy. The good guy/bad guy debate is frivolous.

In 1978, China elected a Japanese export-model and passed on cultivating domestic consumption, probably because the CCP felt its power would be more jeopardized in a nation with rising prosperity. The trouble is, they gave birth to 2 billion factory workers. But how many shoes can the average American wear simultaneously? The world's productive capacity vastly exceeds the developed world's capacity to consume the output. We're back to a marxist overproduction dilemma.

[Jim Nickerson]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

http://baselinescenario.com/2010/02/...ina/#more-6577

There is a link to Simon Johnson where he discusses what China can/may do.

[blazespinnaker]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

"We still think China will have to continue buying US Treasuries by the bucket load. Where else can they invest in a liquid market?"

[FONT=Book Antiqua][SIZE=3]I find this sort of 'logic' mind-boggling and completely circular.

China needs to buy american assets in order to manipulate it's currency.

What other liquid instruments could China be buying? Plus all those trillions of treasuries give them a certain amount of leverage.

They could buy american Real Estate, but then the US government could put policies in place to make that unpleasant.

Purchasing debt is powerful. If the the US government defaults or does something about that debt then their ability to borrow in the global markets decline significantly. It's the safest debt that China can buy.

We're all in this together, my friends. never forget that.

[Starving Steve]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

What does China get out of this bargain?

Does China need American consumers when it can have consumers in other countries worldwide? Why would American consumers be privileged and special?

This kind of mentality comes from being the world's only super-power, something that America was in the past, but is no longer. Now, the U.S. is just another dying empire, a corrupt and arrogant and stagnant regime, and a rather annoying relic of the past.

What does China get out of this bargain with America? --- apparently just a poke in the eye and a heap of worthless bonds that pay next to nothing in real interest.:rolleyes:

[jacobdcoates]

Re: Concerns grow over China's sale of US bonds (Evans-Pritchard)

China gets to exist, That is what it gets out of the deal. They picked an economic path by lashing their economy to ours and now they have to live with the consequences just as we will. How long do you think the CCP would stay in power with 500 million unemployed people running around?