Clinton Seeks to Reassure China Amid U.S. Debt Stalemate

[DeepModem Mom]

Source: Washington Post

Secretary of State Hillary Rodham Clinton tried to reassure China — the largest holder of U.S. Treasury securities — and other Asian countries Monday about the roiling debt debate in Washington even as she urged them to adopt fair competition principles at the core of the American economy.

“Many have questions about how the United States is going to resolve our debt ceiling challenge,” Clinton said in a speech in Hong Kong, the financial hub of Asia. “Let me assure you we understand the stakes. We know how important this is for us and how important it is for you.”...

Clinton’s words highlighted the complex, intertwined and sometimes antagonistic relationship between the U.S. and China. While China eagerly and aggressively competes with the U.S. in almost every field, it is also the largest foreign holder of U.S. dollar debt.

As a result, the current stalemate in Washington has not only threatened to push the U.S. government into default and downgrade its AAA rating, but it has put an enormous pool of Chinese investment at risk....



Read more: http://www.washingtonpost.com/world/clinton-seeks-to-reassure-asia-amid-us-debt-stalemate/2011/07/25/gIQAujW6XI_story.html?hpid=z12

[IronicNews]

1. Um, trust issues anyone?

[blank space]

2. China will dump the lot straight onto the global market

and simultaneously un-peg the yuan, the US dollar will drop to around 20% of its current value - while simultaneously causing massive inflation, not simply through devaluation but also vastly increased demand from Chinese consumers with perhaps doubled purchasing power.

Oil in US dollars will go through the $130-$150/ barrel over night.


Pretty much sending the united states into unstoppable depression well and truly beyond anything seen in Argentina.


Increased purchasing power from inflated yuan would quickly and easily take over the consumption requirements of the Chinese export market, more than likely increasing it. The net effect would be $800 billion dollar loss on the value of their US bonds, a $5-600 billion increase in domestic consumption, including a huge increase in real estate speculation and construction.

I can not see any other real option for the Chinese, it is simply a no win situation to continue subsidizing the US consumer when they have reached the transition point to subsidize their own consumers.

[Nihil]

4. Well, that would make life interesting ... (n/t)

:toast:

[cap]

6. except that China will still have a lot of US dollars

and no where to put them. We will still pay for our imported crap in dollars.

[Heywood J]

3. "the largest holder of U.S. Treasury securities"

I thought that was Social Security...

[udbcrzy2]

5. What is China complaining about they got the oil deal WTF? n/t

[Devil_Fish]

7. So what is clinton saying? US is just playing a game? puting on a show?NT