Watch your freeper friends ears perk up when you say China holds US debt

[NNN0LHI]

The racist shits go completely bonkers. Don't forget to rub it in liberally. No pun intended.

Don

[OldLeftieLawyer]

1. My Chinese husband

says he's got a nice piece of the US, thank you very much.

Wait.

Is that a ............ ?

Does he mean ............... ?

Seriously, the Chinese government could close us down - literally - by calling in our loans. I am continually astounded how many people don't have a clue about this.

Bill Clinton did a nice explanation of it, in brief, on "This Week," when he said we can't keep borrowing money without knowing how we're gonna pay it back.

Oh, this is just getting good. . . . . .

[Dave Reynolds]

2. I had no idea that people did NOT

realize this.

I am not that well-informed, and I knew about that months ago.

And we keep on borrowing...where is the Katrina pledge coming from? Sure as shit not WalMart.

[Fenris]

3. They like us too much though.

We buy from the Chinese like there's no tomorrow. They like the income. ;)

[OldLeftieLawyer]

4. Yeah,

the Chinese make most of their business decisions based on how much they like other countries.

They are, without a doubt, the toughest people to negotiate with that I've had encountered. I mean, I've been in meetings where fistfights broke out over contracts or proposed litigation. They fight dirty in every possible way, and, you know, it's kind of nice to have it all up front right from the start.

And once you nail them, you immediately own them. That's something Westerners have never understood.

[NewJeffCT]

19. yes, my wife is a Chinese businesswoman

and, has a good friend that is also a Chinese businesswoman... i feel sorry for anybody that negotiates for the other side against them... unless the other side is Wal-Mart. (Negotiating against wal-mart is like negotiating with the Borg)

As an example, my wife's former company was a subsidiary of a larger corporation. They bought all their product in one line of business from their parent company. However, my wife was able to find a supplier that would sell the products in this one line of business directly to them. She also got these new suppliers to agree to not sell these products to the parent company and also to build a new factory to directly supply her company at a higher level. Because of this change, her company was able to buy out the parent company.

[OldLeftieLawyer]

22. Perfect

The concept of loyalty, in Chinese commerce, is a fleeting and liquid thing.

I've watched business partners do the exact same thing to each other. Quite often, I was never sure who my clients were, that's how tangled up it got.

But, I learned to move my expensive sunglasses off my desk when they starting punching each other out. Then we all went out to lunch.

[LittleClarkie]

5. Is it the trade deficit, or do we owe them loans outright

one of my freeper friends insists that we are the loaners, never the debtors.

[Robeson]

9. Ah, yes, but remember, they create their own reality.....

...its the freeper way.

[LittleClarkie]

12. Still though, I'd like an answer to the question as I'm not sure myself

which we are talking about.

[Robeson]

18. Send this article to your friend....

...maybe it will help...

Excerpt:

"Other nations actually purchase that debt, in the form of U.S. Treasury bonds and notes. Those bonds have increasingly been snapped up not just by private investors but by foreign banks. Japanese investors hold the most U.S. debt, but China has been buying more than any other country in recent months.

The biggest trade deficit is with China, too, at $162 billion. Japan is next, at $75 billion.

In a very real sense, the U.S. economy is dependent on the central banks of Japan, China and other nations to invest in U.S. Treasuries and keep American interest rates down. The low rates here keep American consumers buying imported goods."

Full article: http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1001050099

[LittleClarkie]

23. Thanks! And I'll keep a copy for myself

Thanks again.

[hvn_nbr_2]

10. OMG!

They own a large amount of the U.S. treasury debt. You know, the national debt. That thing that makes us the debtors, not the lenders. That thing the Repukes used to complain about before they quadrupled it under Raygun-BushI. (Just to be clear--I'm not making fun of you. I'm making fun of freeptards who don't realize that owing a debt makes you a debtor.)

[LittleClarkie]

17. Trade deficit?

I'm not an economist. I need clarification. Thanks.

We didn't just show up in their lobby one day and ask to see the loan officer, did we?

Seriously. I don't understand the mechanics of how this happens. Who should I read to understand. Krugman?

[hvn_nbr_2]

25. Two separate issues, trade deficit and the U.S. debt

Hope I can make this clear.

The original post, that "China holds U.S. debt" probably refers to the fact that China owns a lot of U.S. treasury bills and notes. I say "probably" because it could conceivably mean something else but usually a statement similar to that is talking about the U.S. treasury's debt, otherwise known as the "national debt." I'll assume that in the rest of this discussion.

The "national debt" really means the U.S. government's debt. Okay, so we didn't actually show up in their lobby and ask for a loan. Actually, the way it works is that the U.S. treasury offers for sale bills and notes, which are really loans. When someone buys a $1000 T-bill (treasury bill) or note, they actually loan $1000 to the U.S. government for a specified period of time at a specified interest rate. This is how the U.S. government can spend more than it takes in; it borrows the money, and the mechanics of how it borrows are to issue bills and notes that it sells.

Anyone can buy these notes and bills. (The difference between a "bill" and a "note" is how long the agreed-on period of the loan is. So to make it easier, I'm only going to talk about one or the other from now on, and I'll mean bills and notes.) It turns out that over recent years, China has been doing a lot of the buying of U.S. treasury notes; i.e., China has been lending a lot of money to the U.S. government. So yes, indeed, the U.S. government is a big debtor to China.

Incidentally someone elsewhere on this thread said that China is going to order the U.S. to pay back $3 trillion of debt soon. That claim lacks credibility in my opinion for two reasons: 1. Since T-bills have a specified loan period (maturity), the owners of the bills can't force us to pay before then. 2. Since the current U.S. debt is something like $6-7 trillion (I've lost track) and China doesn't own almost half of it, the $3T claim is exaggerated at best. However, if China decided to bail out of their investment in U.S. government debt and sell all the notes they hold on the open market, it would really destabilize that market and as a result our economy. So even though the exact statement about demanding immediate payment of $3T isn't so, the implicit meaning that they hold a whammy over us is so.

Back to the debt vs. the trade deficit. So far I've been talking specifically about the U.S. federal (not state or local, just federal) government's debt. The trade deficit is something else entirely, but it has also been negative for us for a number of years. The trade deficit refers to the difference between how much we as a whole nation (including government, individuals, businesses, non-profits, everybody and every entity) buy from all similar such entities in other countries and how much we sell to other countries. (For any lurking economists etc., I know it's more complex than that, but I'm trying to keep this simple, and I no longer know all the complexities that I once knew.)

The trade deficit doesn't directly or necessarily relate to whether the buying and selling is done with cash or with credit (i.e., debt). But it's just a basic math necessity that if you're buying a lot more than you're selling for a long time, you're going to have to be using debt to do it after awhile. We've been doing that. So not only does the U.S. government owe a lot of debt to foreigners, including the Chinese, but the rest of the country too has been buying a lot on credit and owes a lot. However, the debt resulting from the trade deficit is much more amorphous and hard to track than the U.S. government debt because it involves money owed by individuals, companies, governments at all levels, and all other sorts of "economic entities" (I made up that term, so if it is a formal term with specific meaning to economists, I may not mean exactly the same thing as they do) and owed to all sorts of economic entities in other countries. Who owes how much to whom and where is not so easy to keep track of. And I don't know that anyone even tries, although somebody probably does. I never hear much about it, except for the basic fact that you can't keep borrowing forever and we've been doing it for quite awhile.

Hope I clarified more than confused (or bored), but I'm not really confident of that.

[LittleClarkie]

26. Thanks, I'm hopeless at this stuff

I'll print it out.

[bobbieinok]

13. about 6 years ago US became a debtor nation

[LittleClarkie]

16. Yes, but is it the trade deficit or did we take out a loan

I'm still not clear on which it is

[mattclearing]

30. We sell bonds for money. They are basically IOU's.

The federal deficit is basically the amount of money the US owes on these bonds we sell.

The trade deficit is completely different, and doesn't really have anything to do with it.

The trade deficit is the difference between the worth of what we export to another country and what they export to us.

China has a trade surplus with us, because we buy more stuff from them than they buy from us.

We have a trade deficit with China, because they buy less of our stuff than we buy from them.

Got it?

[Rainscents]

6. Thom Hartmann was talking about Debt we owe to China This morning

And he said (was told by insider), China is going to order USA to pay their money back (3 Trillion dollars) within next few weeks. One thing for sure, we will go into automatic deep depression! This the way Thom Hartmann put it!

[NewJeffCT]

20. I don't think they can do that

They can hurt is terribly by just not buying. They buy t-bills and the like that have fixed maturities, if I'm not mistaken.

However, they will also kill their own economy as the GEs, Wal-Marts, etc of the world will no longer have the money to invest in China.

[nonconformist]

7. My yellow dog dem grandfather told me back in the mid-80's

That what we really had to watch out for was China. That when the shit really hits the fan in America, it will be China that is holding all the cards and owning our ass.

I've never forgotten that.

[OldLeftieLawyer]

21. Ever since Nixon opened it up,

my economist buddy (who worked in Nixon's White House) said that China was going to end up owning the world, and not break a sweat while doing it.

Go back even further, and read Winston Churchill's speeches in which he warns of the danger to the world posed by the Wahabi.

Talk about prescient.

[Maat]

8. I love saying that to them!

"If you don't like communists, how come you voted for a guy selling us to them?" Shuts them up every time.

[pretzel4gore]

11. the rightwingnuts say the clinton sold china

some hi tech stuff, yet lookit what's happened while geeb (brother of floriduh gov john ellis bush, or 'jeb') squatted in the wh.....obviously, the chinese have all the 'plunge protection team' secrets, not to mention all the really gritty 911 stuff (plus the stolen 2k election details)...the freepers genuinely believe in racial superiority, and that gives everybody an advantage over them (tiger woods, for example, is part asian!)
michael jackson, the famous white guy from 'neverland' must give them supremists nightmares!
:) ;)

[bobbieinok]

29. when the RW was yelling this, Malloy was telling abt the $$ HBarbour

got from China when he was head of the RNC....now of course he's governor of MS

[KT2000]

14. Yes - pretty amazing

they really do not think past the "tax cut" to see how it is paid for.

Really, unless hate radio has given them the talking point that "Japan, China, Korea" own us now - they will remain oblivious.

[lateo]

15. Even my Democratic friends don't believe it when I tell them.

It shows you how well informed the media keeps us.

[yella_dawg]

24. There are two fascinating aspects to this that almost no one talks about

One, much of the debt that China is buying is Fannie Mae bonds. They have been the ones who really financed the re-fi craze of recent years. So, if you've bought or refinanced lately, your note is probably owned by a Chinese bank.

Second, and even more disturbing, they are buying up basic raw materials at a ferocious rate. Lumber, bulk cement, metals of all sorts, you name it. A girl I went to high school with literally made a fortune buying up scrap metal around the North Texas area and shipping it to California where it was loaded directly on ships for China. Her buyers were Chinese nationals, and she was the only "middleman" between China and local scrap yards. Some experts contend that the rate of purchase is several times any possible rate of consumption China could expect in the near future. Pessimists offer the possibility that they are stocking up on raw materials in preparation for jerking the rug out from under the US, and thus the world, economy.

[NMDemDist2]

27. we beat Germany cuz we cut off their oil and we beat Japan cuz we cut

off their steel in WWII

china is stockpiling scrap metal and buying up all the oil they can find. if you plan to have a war of expansion you need lots of oil and steel.

just saying....:scared:

[hvn_nbr_2]

28. Hmmm....

I have a vague recollection from school in the 1960s of statements similar to: "We won World War II with tanks and guns made out of old German razor blades." I wonder how much truth there was in it.