Author: matt605

USA plan for China [Copy link] 中文

Rank: 6Rank: 6

Post time 2005-10-27 08:24:56 |Display all floors


Actually, China must maintain some Treasuries as leverage against Neocons' aggressions.  But China has already reduced the new purchases of Treasuries, and that is one reason both Snow and Greenspan went to China.  This business about going to a basket of currencies was just a nice diplomatic way of saying, China will purchase less Treasuries in favor of other currencies.  Therefore, this is a two-headed problem.  The debts and deficits give China leverage since its holdings can create a cascade collapse as one only needs to see the July preview of what only a 2% revalue did.   Secondly, since US do need future financing because it is unlikely to run a balance budget, that is another reason Snow and Greenspan went to China to ask for help.  

These problems are self-created, since the US government overspends, or under tax depending on your point of view, and the typical consumers spend beyond their means, to sustain a lifestyle they cannot afford, but will not change or give up.   Those issues are the real issues.  Pointing fingers at others is just looking for scapegoats, instead of looking for real solutions!

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Post time 2005-10-29 00:58:29 |Display all floors

usa is a wealthy country?Yes!

The usa will always be wealthy becouse even if an idiot like bush messes things up ,the american people will elect someone who
will fix his term limets keep idiots from going too far.
Bill clinton turned a huge deficet into a huge surplus.

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Post time 2005-11-1 00:18:59 |Display all floors

What a silly retort

US will always be wealthy?   Always is a long time, and a silly retort to generalize such a statement, which you cannot prove.  No one can even guarantee that US can even get to its third century, so always wealthy is a empty statement at least, and a unsupported claim at best.  

You give the President too much credit or blame, depending on how you look at it, for the past and future of the US economy.  He has less influence on the US economy than the Chairman of the Federal Reserve, and the Central Bankers around the world.     

At the rate the US is accumulating debts and deficits, who is President is less important than how others in the world, specifically other Central bankers around the world, see the US, and its underlying economy.  It should not be lost on anyone that Greenspan will yet again be forced to increase interest rates soon.  Why you ask?  A poor creditworthy borrower like the US needs to pay higher and higher interest just to attract foreign financing.  Inflating away the debts is just blind wishful thinking since that assumes US doesn't need to borrow again.  Since we know that isn't true, the price for poor credit is higher interest rates.  

But there is an answer, and it will not come from the US politicians or the US President, since this problem is bigger than all of them combined.  The Central bankers around the world will decide how much more credit to grant US, and when to cut the credit line.  Therefore, the real financial power doesn't rest with the President, but with all the Central Bankers around the world who grant credit to US, to keep its economy afloat.

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