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The argument that China needs the U S just as bad as the U S needs China to fund our debt has been made several times ad nausem. I hate to toot my own horn, nearly all of my predictions fail but here is one that I hit.
Quote:
With these considerations in mind, China has adopted a very transparent response. Its new 12th Five-Year Plan says it all – a pro-consumption shift in China’s economic structure that addresses head-on China’s unsustainable imbalances. By focusing on job creation in services, massive urbanization, and the broadening of its social safety net, there will be a big boost to labor income and consumer purchasing power. As a result, the consumption share of the Chinese economy could increase by at least five percentage points of GDP by 2015.
A consumer-led rebalancing addresses many of the tensions noted above. It moves economic growth away from a dangerous over reliance on external demand, while shifting support to untapped internal demand. In addition, it takes the heat off an undervalued currency as a prop to export growth, giving China considerable leeway to step up the pace of currency reforms. But, by raising the consumption share of its GDP, China will also absorb much of its surplus saving. That could bring its current account into balance – or even into slight deficit – by 2015. That will sharply reduce the pace of foreign-exchange accumulation and cut into China’s open-ended demand for dollar-denominated assets.
It does not take a rocket scientist or a economist to figure that one out and that prediction was easier to hit then stealing candy from a baby with no arms. Common sense has always told us that China was in the drivers seat, and what is better holding/investing in treasuries from a over indebted country that most likely will be teetering on default in the future. Or spending that money in your own country with a billion people driving consumer spending.
It's a no brainer so therefore I do not deserve a cookie
Having a potential customer base of a billion consumers domestically sure helps...
I wonder what those who still cling to the belief that China needs the USA will do when it really comes to an end???
With globalism the U S is going to find out that besides being the policemen of the world we are not needed as much as we think. But on the bright side we have the "nuclear option" in Uncle Ben, can you say quantitative easing 3,4 5 ........
Having a potential customer base of a billion consumers domestically sure helps...
I wonder what those who still cling to the belief that China needs the USA will do when it really comes to an end???
China needed the USA to get itself going. Now that it's happening they can turn inward and build their own middle class consumer base.
Those that cling to the belief that China will always need us also cling to the belief that the Chinese are all poor, living in huts eating bowls of rice and working in sweatshops for $.10/hour.
There's plenty of college educated Chinese doing high tech R&D.
China made the list of the top 3 supercomputers in the world..they have #1 and #2 spot out of 3.
That's ok though..they will be the ones in shock when it finally dawns on them that the US will not return to its former glory of being the top dog.
They are cutting savings to balance trade we need to up savings to balance trade. We need enough savings to buy our own debts. With that we will have financial responsibility.
They are cutting savings to balance trade we need to up savings to balance trade. We need enough savings to buy our own debts. With that we will have financial responsibility.
I am not sure what you mean about savings to buy our own debt, are you talking about the gvt or the people?
I am not sure what you mean about savings to buy our own debt, are you talking about the gvt or the people?
Total debt, government, privet and corporate. The savings rate needs to be high enough to cover all of theses. This will tend to balance trade. We need to do the inverse of what China is doing for economic health.
We own China.
It's the same old adage.
If you owe the bank a thousand bucks, they got you. If you owe the bank ten million bucks, you got them.
China holds two trillion in US treasuries, the proverbial compass of the international economy.
It's in our currency, and if it trashes, they're hyper screwed.
There's no other real place for their money to go.
They're entire long term monetary policy is currently tied to US treasuries.
Unless or until we voluntarily default or hit a long depression, China will be our bestest buddy.
What's funny is our capitalist like to lecture them on things like human rights, liberty, anti-piracy and currency manipulation. Meanwhile, they're better capitalists than we are-- and only slightly more totalitarian.
China needed the USA to get itself going. Now that it's happening they can turn inward and build their own middle class consumer base.
Those that cling to the belief that China will always need us also cling to the belief that the Chinese are all poor, living in huts eating bowls of rice and working in sweatshops for $.10/hour.
There's plenty of college educated Chinese doing high tech R&D. China made the list of the top 3 supercomputers in the world..they have #1 and #2 spot out of 3.
That's ok though..they will be the ones in shock when it finally dawns on them that the US will not return to its former glory of being the top dog.
well where does the power needed to run them come from because last time I checked they tried to buy up a large percent of canadian oil natural gas reserves and potash corporations with insane amounts of money over their current market value and we killed the deals
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