Where are the sanctions on China?

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Re: Where are the sanctions on China?

Post by Hermit » Fri May 04, 2018 9:22 am

Scot Dutchy wrote:
Fri May 04, 2018 8:56 am
How much US debt does China own? A small tug on the lead is enough to bring the US in line.
When you owe the bank $100,000 and can't repay, you've got a problem. When you owe the bank $100 million and can't repay, the bank has a problem.
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Re: Where are the sanctions on China?

Post by Scot Dutchy » Fri May 04, 2018 9:26 am

I agree up to a point but it still gives a sizeable leverage. I dont think the Bank of China will have a problem though.
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Re: Where are the sanctions on China?

Post by Hermit » Fri May 04, 2018 9:54 am

Scot Dutchy wrote:
Fri May 04, 2018 9:26 am
I agree up to a point but it still gives a sizeable leverage. I dont think the Bank of China will have a problem though.
It will. At the current exchange rate the BOC is capitalised at US $145 billion. Though it is only one of the four big Chinese banks the US debt to China is US $1.18 trillion. If all of that debt were called in and the US defaulted all Chinese banks would lose more money than they are worth.
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Re: Where are the sanctions on China?

Post by pErvinalia » Fri May 04, 2018 10:17 am

Hermit wrote:
Fri May 04, 2018 9:22 am
Scot Dutchy wrote:
Fri May 04, 2018 8:56 am
How much US debt does China own? A small tug on the lead is enough to bring the US in line.
When you owe the bank $100,000 and can't repay, you've got a problem. When you owe the bank $100 million and can't repay, the bank has a problem.
If the US defaults on its debt, interest rates will go through the roof, and that will be the end of the USD as the world dollar. The Yuan, I suppose, would take over. US and world economy tanks. Then they blow someone up with a nuke.
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Re: Where are the sanctions on China?

Post by Scot Dutchy » Fri May 04, 2018 11:24 am

Hermit wrote:
Fri May 04, 2018 9:54 am
Scot Dutchy wrote:
Fri May 04, 2018 9:26 am
I agree up to a point but it still gives a sizeable leverage. I dont think the Bank of China will have a problem though.
It will. At the current exchange rate the BOC is capitalised at US $145 billion. Though it is only one of the four big Chinese banks the US debt to China is US $1.18 trillion. If all of that debt were called in and the US defaulted all Chinese banks would lose more money than they are worth.
As pErv says it would be the end of the dollar and the end of banking and finance as we know it. :smug:
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Re: Where are the sanctions on China?

Post by pErvinalia » Fri May 04, 2018 11:25 am

And the end of Donald Trump! :{D
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Re: Where are the sanctions on China?

Post by Forty Two » Fri May 04, 2018 12:55 pm

Scot Dutchy wrote:
Fri May 04, 2018 8:56 am
How much US debt does China own? A small tug on the lead is enough to bring the US in line.
They own about $1 trillion.

They can't do too much to the US with that. Theoretically, they could call the debt all at once, but then the demand for the dollar would plummet, sending the global economy into a tailspin, and China's economy would collapse because its exporting sector relies on a strong dollar. Even if China tugs, by announcing a plan to reduce its debt holding, the dollar drops and that directly hurts Chinese exports.

The situation gets more dangerous, though, as the US manufacturing sector continues to shrink. What happens when the price of Chinese products rises due to a calling of Chinese debt is that Americans start buying other products rather than Chinese products. The fewer the American products, the fewer other options Americans have in that eventuality. That's one of the reasons why retention of domestic US industries is such an important issue to the US.
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Re: Where are the sanctions on China?

Post by pErvinalia » Fri May 04, 2018 2:28 pm

The rising Chinese middle class (and eventually in India as well) is the big threat. After that, China doesn't need the US much any more.
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Re: Where are the sanctions on China?

Post by Scot Dutchy » Fri May 04, 2018 2:40 pm

What do we need America for anyway? :ninja:
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Re: Where are the sanctions on China?

Post by Joe » Fri May 04, 2018 2:48 pm

Scot Dutchy wrote:
Fri May 04, 2018 2:40 pm
What do we need America for anyway? :ninja:
Our exports, of course. :prof:

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Re: Where are the sanctions on China?

Post by Scot Dutchy » Fri May 04, 2018 2:57 pm

Well there is that I suppose.
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Re: Where are the sanctions on China?

Post by pErvinalia » Fri May 04, 2018 2:57 pm

Joe wrote:
Fri May 04, 2018 2:48 pm
Scot Dutchy wrote:
Fri May 04, 2018 2:40 pm
What do we need America for anyway? :ninja:
Our exports, of course. :prof:

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:lol:
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Re: Where are the sanctions on China?

Post by Forty Two » Fri May 04, 2018 3:56 pm

Dutch exports? I didn't realize the effete effeminite market had so much buying power....
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Re: Where are the sanctions on China?

Post by Forty Two » Fri May 04, 2018 4:07 pm

Joe wrote:
Fri May 04, 2018 2:48 pm
Scot Dutchy wrote:
Fri May 04, 2018 2:40 pm
What do we need America for anyway? :ninja:
Our exports, of course. :prof:

Image
Until we run out of money.

This is the issue we have, as manufacturing and industry continue to decline at a fast pace, we are left with people in service industries. We were able to purchase a generation or two of time with the tech industry boom of the nineties and the naughties, but it won't last forever. A big part of how the US keeps economic dominance these days is by means of our military complex -- however, that's a very dangerous way to maintain economic dominance, and it is what has been getting the US into wars since the 1950s.

The US is lucky that we have oil, coal, and other resources in relative abundance, and our agriculture sector is huge. But,we can't rely on imports for heavy industry in the long term. That's where Trump is right. Whatever one thinks of tariffs and other measures of his to fix the problem, Trump is right about the problem.

We are in a different scenario than 25 years ago. We had a much bigger industrial base then, even though it was already in decline for the previous 25 years. We had the opportunity to use the emerging markets to get us cheap goods, and that's how Walmart was created - items that cost $10 coming in from China that would have been $50 if made in the US. So, stagnant wages were not such a huge deal when everything was getting cheaper.

Now, however, things ain't so cheap anymore. Inflation is hitting hard, regardless of the fed's number. Automobiles, electronics, and consumer goods in general are going through the roof, as is health insurance and such. Washers and dryers are now like $750 to $1000 (or more) bucks a piece, and they're made like shit in Chinese and other Asian factories - they last 5 to 7 years -- my parents had one back in the day that lasted 25 years and still worked when they got rid of it. Refrigerators - hard to find one under $1000 bucks now, and it's a piece of shit -- more normaly price is $1200 to $2000. For a refrigerator.
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Re: Where are the sanctions on China?

Post by Joe » Fri May 04, 2018 4:45 pm

The feds have an incentive to keep the CPI low. Here's a pretty good write-up on it.
Why does the government want low inflation numbers?

The CPI is tied to the incomes of about 80 million Americans, specifically: Social Security beneficiaries, food stamp recipients, military and federal Civil Service retirees and survivors, and children on school lunch programs. The higher the CPI, the more money the government needs to spend on these income payments to keep pace with the cost of living. However, this same government is about $17 trillion in debt. If the CPI is low, the less money the government needs to spend on cost of living adjustments, something seniors are astutely aware of.

The government has a few resources at its disposal to manipulate the CPI. First, the Bureau of Labor Statistics operates under a veil of secrecy. The raw data used to calculate the CPI is not available to the public. When I asked why, I was told “so companies can’t compare prices.” This makes very little sense because companies can easily compare prices with data openly available on the internet. It also makes it impossible to audit their findings. Additionally, over the past 30 years, the government has changed the way it calculates inflation more than 20 times. These ‘methodological improvements’ to the CPI are said to give a more accurate measure of consumer prices. However, these changes could also be a convenient way to include or exclude certain products that give favorably low results, but there’s no way to know, given the lack of transparency.
Here's a provocative view of the impact.
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