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China doesn't have to dump US debt to harm us, all they have to do is stop selling us rare earth metals which play crucial roles in everything from smart phones to electric car motors, hard drives, wind turbines, military radar, smart bombs, laser guidance, and more..
I operated a small business for thirty years, received orders from many countries in Asia, and yet we never shipped a single order to the PRC, not one. This notion that a trade spat with China will hurt businesses here in the USA is laughable because they don't buy much outside of a few farm commodities or big-ticket things like airplanes.
And those big ticket items reach all over the place in our economy. That plane has thousands of parts, each of which relies on thousands of other items. Its that cascade effect, and disruption of flow that hurts. The farmers are having to make planting decisions right now. And those decisions affect many other companies as well. And will affect whats produced months from now.
And some places have razor thin profit margins. Such that these disruptions really hurt. And the same is true in China as well.
Someone mentioned China could simply get soybeans elsewhere. Its not that easy. South America is reaching the end of their available farmland. China needs a growing anount of soybeans to feed their hogs,chickens and farmed fish.
China could get some of its soybeans elsewhere. A 10% shift would be very impactful to Farmers in the US
I operated a small business for thirty years, received orders from many countries in Asia, and yet we never shipped a single order to the PRC, not one. This notion that a trade spat with China will hurt businesses here in the USA is laughable because they don't buy much outside of a few farm commodities or big-ticket things like airplanes.
Maybe you should read up a bit. Just because you didn’t ship anything there doesn’t mean they are a large importer or US goods/services
Very unlikely that happens. At least how you are painting it.
The biggest issue would be demand for Treasuries which we need to finance the goverment, would plummet. Prices would drop, rates would rise to compensate for the lack of demand. Borrowing costs would rise.
The Chinese are not going to play that Ace in the hole. They will hold it and do nothing with it because they don't have to do anything. If they want to stick something up our rear ends, they'll just cut down or stop buying treasuries, the market will feel the impact with either. Don't forget our own federal reserve is unwinding asset purchases as is. So any significant demand changes would be felt pretty quickly, especially on the short end.
Fact of the matter is, the United States will lose, bigly, in a trade war with China. The Chinese will simply match tariff for tariff in a calm, calculating way and ultimately we consumers are going to buy the goods anyway and pay for it. No significant jobs will be gained, in fact jobs will be lost because when prices start to rise it will throw the economy directly in the ****ter faster than Donald Trump can cut out a 1pm to hit the golf course.
If the jobs move out of China, it will be to another third or fourth world **** hole in asia that doesn't care if you use a class of people for slave labor and pollute / rape their environment. What people don't realize is, labor cost is a very small fraction of the overhead here. That isn't want is keeping jobs away. What keeps jobs away is clean air, water and the fact they can't just run a pipe out the back and dump a bunch of **** in the rivers and lakes here. Over there, put simply but more or less true, they can dig a hole and dump what they want, where they want with little oversight and rules where if they did that over here they'd get their balls sued off.
Much less the fact that everyone wants a piece of the rapidly growing Asian market and they are going to be far more important than us simply due to population size and demographics. Only makes sense to make stuff there and that shipping arteries would be so huge because that is where much of the world's population mostly lives.
Anyway China doesn't have to do anything. We are doing just fine at ****ing ourselves over while about 40% of the country pats themselves on the back thinking they are doing good.
As for 5% on Treasuries. Should they ever get that high in the near future, inflation will be so high that your statement would be laughable. We are far more likely to see a yield inversion than anything else but if rates did climb that high over the next few years odds are, given our economic situation, we'd be looking at Stagflation.
Stagflation is no joke. With the goverment spending like it is in relatively good times and consumers at record high debt wise the next recession isn't going to be pretty and is going to take a long time to work through.
Just remember something, it will be all self created and has nothing to do with losing manufacturing jobs, Bush, Clinton, Bush or Obama. It will be all on the current administration and it's missteps.
That's quite a list of assumptions you have there.
China doesn't have to dump US debt to harm us, all they have to do is stop selling us rare earth metals which play crucial roles in everything from smart phones to electric car motors, hard drives, wind turbines, military radar, smart bombs, laser guidance, and more..
We depend on them almost 100%
Quote:
Originally Posted by loves2read
So that is a commodity to invest in
There is a curious thing about rare earth metals: with the exception of the radioactive promethium, rare earth metals are not particularly rare.
For example, cerium (Ce) is more abundant in the earth's crust than copper.
While China is the main supplier, various countries around the globe are in production of various rare earth elements; China, of course, then flooded the market to make non-Chinese mining operations un-economic, forcing production holds and closures. Then, of course, China limited exports and everyone got pissed, and they opened up more exports.
China doesn't want to choke off exports of rare earth metals because they really don't want significant production expertise to develop elsewhere.
Last edited by SportyandMisty; 04-06-2018 at 06:47 PM..
China holds I believe 2 trillion dollars worth of US debt. Almost every media says it's a doomsday if China were to dump its holding in US debt.
Is anyone able to paint a picture of that scenario? Yes we all know price of US debt can plummet and yield can shoot up; I am talking 3,4, or even 10 steps beyond the obvious. What is that doomsday?
I for one, might convert most of my assets to US debt if 30 year Treasury yield goes to say 5-6%. Seems to me it would be a good opportunity to pick up some quality investment...
Amusing that you think anyone can accurately predict this, given that most folks can't even predict the past....
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