BEIJING, Aug. 9, 2007
China Weighs Economic "Nuclear Option"
Officials Contemplate Dumping U.S. Cash Holdings
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U.S. Treasury Secretary Henry Paulson, left, shakes hands with Chinese President Hu Jintao in Beijing, Aug. 1, 2007. Paulson said last week he was assured that China is committed to currency flexibility and financial reforms, but Beijing offered no specific changes that could help assuage U.S. congressional ire over China's huge trade surplus. (AP Photo/Michael Reynolds POOL)
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Talking about currency rates is a lot like being forced by Mom to eat your vegetables: you know it's good for you, but you hate it.
So, apologies for offering a big course of Brussels sprouts here, but it is information worth knowing. The Chinese are holding and investing something like $1.3 trillion they made from selling goods to America.
Now, some Chinese officials have floated the idea that these U.S. dollars could be used against the United States. Here is how the London Telegraph's Ambrose Evans-Pritchard reported the story:
"Two officials at leading Communist Party bodies have given interviews in recent days warning — for the first time — that Beijing may use its $1.33 trillion of foreign reserves as a political weapon to counter pressure from the U.S. Congress.
"Described as China's 'nuclear option' in the state media, such action could trigger a dollar crash at a time when the U.S. currency is already breaking down through historic support levels."
The words that hit were "NUCLEAR OPTION". Rarely do you find that in a story on currency.
Here is the problem: The United States maxed-out its credit cards long ago, and it needs to borrow and borrow both to raise still more money, and to pay interest on that ever-growing debt. The Chinese, with all those dollars, are willing to lend by buying U.S. Treasury bonds. That keeps interest rates down and that gives Americans extra bucks to buy… more goods from China.
This is now a part of the presidential campaign. Here's what Sen. Joe Biden (D-Delaware) said at this week's AFL-CIO debate in Chicago about our debts to China:
"This administration, in order to fund a war that shouldn't be being fought and tax cuts that weren't needed for the wealthy — we're now in debt almost a trillion dollars — a trillion dollars to China. We better end that war, cut those taxes, reduce the deficit and make sure that they no longer own the mortgage on our home."
His comment drew this response from leading Democratic candidate Sen. Hillary Clinton: "I want to say 'Amen!' to Joe Biden, because he's 100 percent right."
The reality is that China is probably going to slow down its investment in U.S. bonds anyway. This is not so much because they don't like us, as it is because they are becoming savvy about where and how to spend their huge nest egg.
Low-interest U.S. bonds? According to an article in USA Today, some Chinese bankers say it would be better to start buying into businesses (U.S., European, Asian), where you get a better return and have long-term growth. Think the Japanese in the 1980s buying U.S. skyscrapers (Rockefeller Center) and golf courses (Pebble Beach).
Back to the nuclear option — oddly enough, many voices in the U.S., especially in the U.S. Senate, are pressing China to re-value its currency up against the dollar, making Chinese goods more expensive and U.S. goods cheaper for the Chinese to buy.
The Chinese are resisting. Their cheap currency helps them sell their goods. And that is where the nuclear (currency) option comes in… the U.S. is being warned to stop meddling in China's internal affairs.
But let us, for a moment, allow those Senators their due. Let us say that China revalues its currency. Then the Chinese could — if they wanted — buy U.S. goods by spending a lot less of their money, called the yuan. American proponents of this think it would level the trade playing field and spark an economic revival for U.S. companies.
Alas, and alack. Back to those vegetables, because it probably won't happen that way.
Arthur Kroeber, a managing director of the Dragonomics research firm in Hong Kong and Beijing, looked ahead to see what would likely happen if China's currency is revalued. His thoughts:
Sorry about making you eat all those spears of economic broccoli. But if we don't understand this, and are guided by politicians playing for sound bites, promising quick fixes, we could end up on a path that means we all share the pain... right in our pocketbook.
And the Chinese would be laughing all the way to the bank. Their bank.
By Barry Petersen © MMVII, CBS Interactive Inc. All Rights Reserved.
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See all 115 CommentsDam*n....just as I'm typing this we got hit by an earthquake...back soon....
http://earthquake.usgs.gov/eqcenter/recenteqsww/Quakes/ci14312160.php
Hope it was the quake and not a pre-shock...
Just let the RMB BE~
;-)
Posted by viper9527 at 04:21 AM : Aug 09, 2007
Not early...late....1:34 am and headed to bed....unless we get another quake...night for now....
ANNNNT! LIE ALERT! DANGER, WILL ROBINSON!!
This won't mean squat for the American workers, because the "American" companies outsourced their labor to "developing" countries long ago, so no new jobs will result, only increased profits for the CEOs of the companies to embezzle.
To all of the aforementioned "American proponents of this," either you are actually stupid enough to believe such naivety, Or you are deliberately trying to con someone into helping you get richer, at everyone else's expense.
either way, we're not fooled.
"
I think the solution to these is to set up a better social security syetem in China,and lower the rocket-sky-high price of the housing, and maybe we could have extra money to buy some American goods
America, on the other hand, is beginning to reap what we have been sewing for decades. America's U.S. congressional, and presidential politicians continuously spend more than they are willing to tax because voters are more than OK with that policy.
There's no such thing as a free lunch as everyone knows or ought to know. Is it too late for America to return to the fundamental basics of a currency backed by some tangible thing other than vague promises? If so America's prospects may become very difficult.
America can learn something from the Chinese. Work hard, spend less than we make, and save our money.
Cheers!
This obviously won't be the first nation to rise and then fall on the greed and arrogance of its power elite but let me flip you the bird and be either Chicken Little or the canary in the coal mine when I tell you that unless we wake up and take control of our own future, and stop letting reality be formed in sound bytes, our best days are behind us. Ni hao brother, can you spare a dime?
America can learn something from the Chinese. Work hard, spend less than we make, and save our money.
Cheers!
Posted by Imshaken at 08:06 AM : Aug 09, 2007
You are a pathetic Nazi that's for sure. American's are by far the most productive Workers on this planet but how can they compete with $2.00/day wages at best and FORCED labor at the norm? It's because of you hating America types that we're in this mess and we sure as H-E-LL aren't going to get out of it by rushing to the bottom. We need to trash these corporations that exploit Communism and third world countries. We need to tell them when they move their operations to china they leave this nation behind them... MARKETS included. Sieg Heil Bush!!
The very fact that it's possible for someone to lose any part of their pension is reason enough for the corporate CEO & CFO to be htrown into a cell for a long time. The corporation has violated its fiduciary responsibilty and just as the Republicans want to bleed individuals filing for bankruptcy for the benefit of corporations, they should be bled to protect their workers before settling into bankruptcy. Paying back pensions and making good on health benefits should be the #1 priority in any restructuring or settlement.
The bankruptcy laws need to be made to work for individuals as much as for corporat creditors.
The goal of the Republican party is to eliminate the federal government. The Republican party wants to return to the "good old days" when robber barons all lived in luxury and peasants knew their places.
And, were available to do a hard's day work for a slice of bread.
The impending bankrutpcy of the US government is not accidental, that is the primary goal of the Republican party.
Not too many companies can make a living by threatening their primary customers. In the case of China, if they bankrupt our economy(which Bush has made a possibility for them) they will come crashing down to earth themselves and will quickly see the mother of all People Power movements. Tien An Men Square was nothing compared to the nuclear option they would experience. We are still far more self sufficient than they are and would be more apt to survive than them.
So China, don't threaten to destroy us if we don't agree to keep letting you rob us. We'll still buy the *** that the People's Liberation Army forces your political prisoners to produce but you need to follow through on your promise to devalue your currency by 2 years ago.
World Trade Organization, are you listening?
Robber barons despise the idea of having to pay their slaves a "minimum wage" or providing any basic services at all.
Their idea of the "good old days" can be found in the pages of books like "David Copperfield."
Which is also, interestingly enough, the same vision shared by the Catholic church.
Five of the nine US Supreme Court justices, including the Chief Justice, are Catholics. So, we can expect them to rule in favor of robber barons and against the slaves in every single case.
Which they seem to be doing.
But, no one can say he wasn't warned. Americans were and are too preoccupied with "American Idol," "Jerry Springer" or right wing hate radio to pay attention to what's going on around them.
In Washington, the State Department said . ``
Bush is under growing American pressure to crack down on militants at the Afghan border because of fears that al-Qaida is regrouping there.
The Bush administration has also not ruled out unilateral military action inside america but like Obama, has stressed the need to work with the americans.
An aide to the president, who requested anonymity because of the sensitivity of the issue, bush was due to meet with Cabinet members , the attorney-general and leaders from the ruling party on Thursday to discuss whether an emergency should be declared.
He did not expect a declaration of an emergency in the early hours of Thursday.
A senior government official, who requested anonymity because of the sensitivity of the issue, said bush had held several meetings Wednesday with, legal experts and top figures of the ruling party and the leaking of possible emergency plans indicated that it was a serious option.
Under our constitution, the head of state - the president - may declare a state of emergency if it is deemed that the country's security is ``threatened by war or external aggression, or by internal disturbance beyond'' the government's authority to control.
If a state of emergency is to be extended beyond two months, it must be approved by a joint sitting of, the constitution says.
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Posted by MCVet at 08:15 AM : Aug 09, 2007
Amen brother, you are 100% correct on this one.
President bush
During a state of emergency, the government can restrict the freedom to move, rally, engage in political activities or form groups and impose other limits such as restricting congress right to make laws or even dissolving congress
``These are only unconfirmed reports although the possibility of imposition of emergency cannot be ruled out and has recently been talked about and discussed, keeping in mind some external and internal threats and the law and order situation,bush told The Associated Press.
``I cannot say that it will be tonight, tomorrow or later. We hope that it does not happen. But we are going through difficult circumstances so the possibility of an emergency cannot be ruled out,'' he added.
so all you so called americans that keeps saying dont worrie, you better start now. alot of us have been saying this would happen before they electtion....so bend over and take it right up the a/s/s/. thanks congress, welcome to the u.s. of china..................................
President bush
During a state of emergency, the government can restrict the freedom to move, rally, engage in political activities or form groups and impose other limits such as restricting congress right to make laws or even dissolving congress
``These are only unconfirmed reports although the possibility of imposition of emergency cannot be ruled out and has recently been talked about and discussed, keeping in mind some external and internal threats and the law and order situation,bush told The Associated Press.
``I cannot say that it will be tonight, tomorrow or later. We hope that it does not happen. But we are going through difficult circumstances so the possibility of an emergency cannot be ruled out,'' he added.
so all you so called americans that keeps saying dont worrie, you better start now. alot of us have been saying this would happen before they electtion....so bend over and take it right up the a/s/s/. thanks congress, welcome to the u.s. of china..................................
President bush
During a state of emergency, the government can restrict the freedom to move, rally, engage in political activities or form groups and impose other limits such as restricting congress right to make laws or even dissolving congress
``These are only unconfirmed reports although the possibility of imposition of emergency cannot be ruled out and has recently been talked about and discussed, keeping in mind some external and internal threats and the law and order situation,bush told The Associated Press.
``I cannot say that it will be tonight, tomorrow or later. We hope that it does not happen. But we are going through difficult circumstances so the possibility of an emergency cannot be ruled out,'' he added.
so all you so called americans that keeps saying dont worrie, you better start now. alot of us have been saying this would happen before they electtion....so bend over and take it right up the a/s/s/. thanks congress, welcome to the u.s. of china..................................
What's your basis for blaming the Catholic Church for Bush bankrupting the country and promoting social Darwinism? Let me clarify that I'm not asking for any article links to justify your slur, I'd like you to explain the logic. The fact that the conservative S.C. majority is comprised of Catholics doesn't prove your point, it only proves that you like to generalize and slander people.
"This administration, in order to fund a war that shouldn't be being fought and tax cuts that weren't needed for the wealthy %u2014 we're now in debt almost a trillion dollars %u2014 a trillion dollars to China. We better end that war, cut those taxes, reduce the deficit and make sure that they no longer own the mortgage on our home."
WATCH... LEARN... THEN ACT!
Posted by USAyesterday
exactly ( Thanks for the tax cuts Bush)
Now all you neocons out there, aren't the Communists supposed to be your sworn enemy along with terrorists, real and/or imaginary? What are you crazy right-wingers doing supporting a White House and Congress that are financially aiding and supporting an enemy?
SOUNDS LIKE TREASON TO ME!!!
Posted by realpatriot1 at 09:17 AM : Aug 09, 2007
Haiti:
Religions:
Roman Catholic 80%, Protestant 16% (Baptist 10%, Pentecostal 4%, Adventist 1%, other 1%), none 1%, other 3%
Mexico:
Religions:
Roman Catholic 76.5%, Protestant 6.3% (Pentecostal 1.4%, Jehovah's Witnesses 1.1%, other 3.8%), other 0.3%, unspecified 13.8%, none 3.1% (2000 census)
Cuba:
Religions:
nominally 85% Roman Catholic prior to CASTRO assuming power; Protestants, Jehovah's Witnesses, Jews, and Santeria are also represented
Source: CIA World Factbook
https://www.cia.gov/library/publications/the-world-factbook/geos/cu.html (Haiti, Mexico, Cuba)
Should I go on?
The list is quite long and does not represent "generalizing" nor "slander."
Wherever the Catholic church has been allowed to become dominant, poverty, misery and suffering soon follow.
As it will in the US if the pope is allowed to maintain control over our government. He's got his, and the more people are thrown into poverty, illiteracy and ignorance, the more brand new converts for his mumbo-jumbo.
It's expensive to maintain that palatial estate called "Vatican City" (and other palaces maintained by the Catholic nation) and it requires enormous streams of money from ignorant, illiterate peasants.
During a state of emergency, the government can restrict the freedom to move, rally, engage in political activities or form groups and impose other limits such as restricting congress right to make laws or even dissolving congress"
Posted by forthepeopl1 at 09:15 AM : Aug 09, 2007
is this recent news? i mean is this quote recent?
Posted by realpatriot1 at 09:17 AM : Aug 09, 2007
George Bush, December 12, 2002, speech regarding his "Faith Based Initiative" (aka welfare to the Catholic church and other flim-flam institutions):
"I am going to sign an executive order directing all federal agencies to follow the principle of equal treatment in rewarding social service grants."
Source: http://www.whitehouse.gov/news/releases/2002/12/20021212-3.html
George Bush nominated Roberts and Alito, both Catholics, giving the pope a 5 of 9 majority in the US Supreme Court.
WWW.ZEITGEISTMOVIE.COM
One simply has to look at the manner in which Monsanto have behaved toward American and Canadian farmers as a indication of their behaviour to the rest of the world. This example is the tip of the iceberg, Big Pharma is right up there too.
During the last century many countries have looked upon America for innovation, guidance and fair play, what they now see are a bunch of crooks subverting their governments and robbing their people. Is there any wonder that these so-called terrorist leaders can amass such ill feeling toward us, our corporate criminals are feeding the animosity.
The little guy worldwide assumes that all America benefits from this corruption and harm caused by the elite in America. The time as now come to let them know that we are hurting too and that we are more than prepared to do something about our well being as well as theirs.
Since it is not business deduction, why would corporations give a political candidate tens of millions of dollars?
That's a pretty pathetic basis to your slander of Catholics. Generally, when people practice guilt by association as a means of reasoning they can at least demonstrate an association.
Have Catholic organizations benefitted any more than other faith-based organizations from the program? I haven't heard that before, even though the program has been politicised and grants have gone disproportionately to organizations who generally share the Bush faith philosophy.
Do you think the Pope consulted Bush on the Alito & Roberts nominations? I don't, I think it was Pope Karl's doing.
Posted by realpatriot1 at 10:10 AM : Aug 09, 2007
In my original comment, I stated that the goals of the Republican party and Catholic church were the same, i.e, bankrupt the federal government.
I did not claim that the pope and George Bush were conspiring.
You also pul a bunch of statistics out of the CIA World Handbook regarding Catholics in poor countries and present it as though it proves that poverty followed Catholicism to these countries. Where's your basis in fact for that?
Churches tend to go where poverty already exists and try to alleviate it. The poor tend to look to faith for deliverance.
Face it, you hate the Catholic Church and that's driving you to make slanderous comments with no basis in fact.
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