China says lending to US will not go on forever

[we_are_toast]

Re: China says lending to US will not go on forever

We're ready to pay up. Come get your US dirt with wood and stucco structures. I've personally offered, (right here on iTulip), large portions of Utah if the Chinese are ready to settle this debt.

Hang on there! Utah has some of the most spectacular canyons and Mountains in the world. You haven't lived until you've been in one of those canyons and looked up to see Utah blue shining through.

Give em something that isn't worth anything, like Texas or Alabama or Mississippi...

[Mn_Mark]

Re: China says lending to US will not go on forever

Hang on there! Utah has some of the most spectacular canyons and Mountains in the world. You haven't lived until you've been in one of those canyons and looked up to see Utah blue shining through.

Give em something that isn't worth anything, like Texas or Alabama or Mississippi...

Better yet, give them something vastly overvalued, like San Francisco. They love "diversity" there, and already have a Chinatown, so there won't be any culture shock.

[LargoWinch]

Re: China says lending to US will not go on forever

Why can't China just spend its spare cash buying gold?

Two obvious reasons comes to mind:

a) That would mean war on the fiat system (especially the US). The US would respond by sending in Kevin Federline and Micheal Jackson.

b) Using even a small portion of their reserves to do this would spell disaster for the bulk of their USD holdings and gold would likely skyrocket making future purchases difficult. In turn, women being priced out of the market would not look as good.

[Wild Style]

Re: China says lending to US will not go on forever

Hang on there! Utah has some of the most spectacular canyons and Mountains in the world. You haven't lived until you've been in one of those canyons and looked up to see Utah blue shining through.

Give em something that isn't worth anything, like Texas or Alabama or Mississippi...

You forgot Florida ;)

[rchdenton]

Re: China says lending to US will not go on forever

I'll take Texas if no one else wants it.

[Sharky]

Re: China says lending to US will not go on forever

Why can't China just spend its spare cash buying gold?

Buying one thing means selling another. Buying gold with dollars means selling dollars. Selling dollars is viewed by some as having the potential to reduce the value of their portfolio, so therefore not desirable.

[The Outback Oracle]

Re: China says lending to US will not go on forever

To create a crisis I would have thought all they have to do is stop accumulating dollars. I guess this means they have to unload a few hundred billion a year onto some other unsuspecting poor b.....d. But...where the hell do you find one of those in the world now?

[santafe2]

Re: China says lending to US will not go on forever

Hang on there! Utah has some of the most spectacular canyons and Mountains in the world. You haven't lived until you've been in one of those canyons and looked up to see Utah blue shining through.

Give em something that isn't worth anything, like Texas or Alabama or Mississippi...

Yes, of course. I outlined the "Utah offer" in great detail in my original post. To recap, we're not offering the lower 1/3 of the state, we're going to call it Northern AZ.

[GRG55]

Re: China says lending to US will not go on forever

Hang on there! Utah has some of the most spectacular canyons and Mountains in the world. You haven't lived until you've been in one of those canyons and looked up to see Utah blue shining through.

Give em something that isn't worth anything, like Texas or Alabama or Mississippi...

I think jk posted some pics of some spectacular rock formations on the photoplog when he was hiking in Utah earlier this year.

I am surprised that someone [presumably hard core Democrat] hasn't suggested giving them Alaska. And throwing in the governor as a bonus...:rolleyes:

[we_are_toast]

Re: China says lending to US will not go on forever

I am surprised that someone [presumably hard core Democrat] hasn't suggested giving them Alaska. And throwing in the governor as a bonus...:rolleyes:

In the spirit of compromise; We'll keep the state, and give them the governor.

[Supercilious]

Re: China says lending to US will not go on forever

I guess that nobody grasps the importance of that Reuters article about the decrease in China's foreign reserves....

Let's put it in another way... What happens when China cannot afford anymore to both offer subsidies to the export sector AND sterilize trade surplus dollars, by increasing its level of dollar reserves (in order to keep the yuan down and exports "competitive") ?

Do you remember that strange piece of news, back in September, that PBoC was trying to go hat in hand to IMF for a measly $5-10 bil loan?

It didn't make any sense then. Why China with $2 trillion in foreign reserves would need a small loan from IMF? Why such a successful investor like Bernie Madoff, with $50 bil in assets in his funds and good , solid returns was looking for a measly $2bil loan from a few banks at the beginning of November?

But if we consider that the Chinese Ponzi scheme of export growth engine based on currency manipulation and FDI recycling into subsidies, had it's Madoff moment/beginning-of-the end in October (as implied by the decrease in reserves).... it makes a lot of sense that PBoC tried to get a small IMF loan in September.

Of course many would refuse to believe the Chinese economic miracle (which had produced double digits growth for the last twenty years) could be based on a Ponzi scheme.

Many refused to believe the Madoff funds which have achieved 12%+ returns for the last 10-15 years could end up as a Ponzi scheme...

When evolution of events in history don't make any sense, usually that means we are missing the important details and we don't understand what really happened then and there.

[Andreuccio]

Re: China says lending to US will not go on forever

I guess that nobody grasps the importance of that Reuters article about the decrease in China's foreign reserves....

Let's put it in another way... What happens when China cannot afford anymore to both offer subsidies to the export sector AND sterilize trade surplus dollars, by increasing its level of dollar reserves (in order to keep the yuan down and exports "competitive") ?

Do you remember that strange piece of news, back in September, that PBoC was trying to go hat in hand to IMF for a measly $5-10 bil loan?

It didn't make any sense then. Why China with $2 trillion in foreign reserves would need a small loan from IMF? Why such a successful investor like Bernie Madoff, with $50 bil in assets in his funds and good , solid returns was looking for a measly $2bil loan from a few banks at the beginning of November?

But if we consider that the Chinese Ponzi scheme of export growth engine based on currency manipulation and FDI recycling into subsidies, had it's Madoff moment/beginning-of-the end in October (as implied by the decrease in reserves).... it makes a lot of sense that PBoC tried to get a small IMF loan in September.

Of course many would refuse to believe the Chinese economic miracle (which had produced double digits growth for the last twenty years) could be based on a Ponzi scheme.

Many refused to believe the Madoff funds which have achieved 12%+ returns for the last 10-15 years could end up as a Ponzi scheme...

When evolution of events in history don't make any sense, usually that means we are missing the important details and we don't understand what really happened then and there.

I sold all of my investments in China about a year ago when I read that maids in Shanghai were quitting their jobs because they could make more money playing the market. If that doesn't say Ponzi, I don't know what does.

[c1ue]

Re: China says lending to US will not go on forever

It didn't make any sense then. Why China with $2 trillion in foreign reserves would need a small loan from IMF? Why such a successful investor like Bernie Madoff, with $50 bil in assets in his funds and good , solid returns was looking for a measly $2bil loan from a few banks at the beginning of November?

China may be a Ponzi scheme, but if so then where was the cash coming from? Also what about the assets - which are well documented agency and Treasury bonds? Are these in fact fictitious?

Your statements are inflammatory, but the single anomaly you pointed out can be explained by a number of other things.

In particular, the PBoC is not a monolithic holder of all assets in China.

I had posted an article quite a long time ago noting an instance where the PBoC would be forced to go to the China Treasury ministry as it was near the stage of violating its own reserve requirements.

As the China Treasury ministry was not forthcoming - as its constituency are the parts of China not directly involved with exports thus diametrically opposed to the ongoing PBoC currency subsidies via sterilization.

I don't actually know if this is why, but it is an example of infighting vs. fraud.

[Slimprofits]

Re: China says lending to US will not go on forever

$#* -

I do find it odd that the Chinese asked the IMF for a $5b - $10b loan in September. Do you have a private source for this information? I can't find any news accounts of it and didn't hear about it in September. On the other hand, I did read in October about Gordon Brown suggesting that the Chinese add many billions to the IMF reserve fund.

[Supercilious]

Re: China says lending to US will not go on forever

$#* -

I do find it odd that the Chinese asked the IMF for a $5b - $10b loan in September. Do you have a private source for this information? I can't find any news accounts of it and didn't hear about it in September. On the other hand, I did read in October about Gordon Brown suggesting that the Chinese add many billions to the IMF reserve fund.

Well the sources are both private and public. It was middle of August when an acquaintance of mine (who seems to be extremely well connected here and there in China) asked me in a very confidential manner how I would interpret the fact that under much secrecy PBoC is looking for a $5-10 bil IMF loan.
At that time, if you remember, everybody was talking about the Chinese not being able to control the "hot money" inflows, so I told him that IMHO his information was most probably just a BS rumor, but if it were true it would mean the Chinese are far more deep in trouble than we believe.

Later, at the beginning of September I've seen an AP or Reuters news bulletin confirming the talks from an IMF official, but I believe they were talking only about $5 billion or so. I can't find that bulletin anymore probably because it is buried under a lot of unrelated garbage and a quick Google search gave me just some watered down musings in NYT:
http://www.nytimes.com/2008/09/05/bu...=2&oref=slogin

If you can spend some time digging in news bulletins around the 5th September it would be great if you can post the original link here.

By the way. Today a great guest entry in Naked Capitalism. I won't quote it because it is worth reading it entirely.
http://www.nakedcapitalism.com/2008/...minent_23.html

I found very interesting two user comments. One by Jesse :

Jesse said...

The 'China Miracle' is remniscent of the "Japan Miracle' if you are old enough to remember that one.

China will do all right if they can make the transition from an export - foreign capital investment policy model to a fully functioning developed economy with domestic demand and decent wages.

One cannot starve themselves into prosperity. The problem in Japan is that the keiretsu and MITI are too powerful.

When the cities start burning it will be too late for Beijing to react perhaps.

and another one by an anonymous user:

China is a nation with hundreds of millions in poverty, extensive pollution, growing corruption, increasing drug abuse (opium anyone?) among its youth, numerous ethnic groups becoming restive, and an upcoming disparity in females vs. males. Other than that, everything's fine.