Thom Hartmann: China threatens to sell our national debt & crash our economy

[yurbud]

he mentioned a Telegraph article on this.

I'll add it when I find it.

[ThomWV]

1. Sell it to who? Saudi Arabia?

[seemslikeadream]

6. Iran?

[swag]

2. Someone posted the article last night

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2945181

It's interesting to think about, but I doubt that China wants to trash the wallet of its biggest customer. Not just yet.

[KoKo]

4. not just yet.......

[yurbud]

28. they'll wait until we attack Iran

[Deja Q]

5. *DING* *DING* *DING* We have a winner!!

There are many positive-themed turnarounds as negative ones. As much fun as it can be to think about doom and gloom tinfoil theories, the end is not nigh.

Besides, too many incidents of one's market hiccuping affecting the other shows that neither side is going to want to crash anything.

[rockymountaindem]

23. Hypnotoad, I gotta ask. IIRC, you used to be one of the gloomier posters around here

but now you're on the opposite side. What changed your perspective? I ask because my perspective is going in the opposite way lately, as I used to be more optimistic but now I'm having trouble seeing a way out of the giant mess we've gotten ourselves into.

BTW, nice avatar. I've taken to watching Futurama on CN adult swim and it's hillarious.

[KoKo]

9. Isn't the Telegraph owned by Murdoch? If so...it's propaganda to

counter the Bad Press that China is getting for sending polluted goods all over the world. The Supply Siders are getting in a tizzy that the backlash against China might just start to crush their huge support of the Global Economy...and how Great Capitalism is when the Economy is Global.

Those folks over at CNBC like Kudlow (Reagan Administration Supply Sider) are getting worried that their GAME is almost over if the people rise up.

[KoKo]

11. From the article....looks like Paulson and China angry about Senators calling for Trade Tarriffs on

China.

From the article:

The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters

[Mr_Jefferson_24]

20. But how far will they permit U.S. imperialism to...

...go before they jerk the rug out from under our economy?

[phantom power]

3. They could probably crash it just by refusing to purchase any more of it.

[ThomWV]

8. They dam near did about 6 months ago

As I recall they didn't show up for the auction and the markets panicked

[L. Coyote]

7. "The Chinese government has begun a concerted campaign of economic threats..."

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

FROM: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1539053

[whistle]

10. Who would buy the paper? Our national debt is over $9.0 trillion

...whoever holds that paper is stuck with it and really has to wait to get their money out or lose a significant portion of their claims. Or maybe China could began placing liens on our government buildings, public transportation systems, U.S. Postal System, National Parks and so forth. :shrug:

Something else BushCo never told the American people when he gave over $2.5 trillion in tax cuts to the wealthy. :wtf:

[roamer65]

21. The Federal Reserve will simply monetize it.

They'll fire up the computers and use Bernanke bucks to buy it all up. Then we'll have to endure the devaluation and resulting hyperinflation.

[madrchsod]

12. huffed and puffed but they are`t going to blow nothing down

they only own about a 460 billion. it ain`t going to happen

[DemocratSinceBirth]

19. Doesn't The Debt Have Call Dates?

eom

[OHdem10]

13. This is a perfect example of how disingenuous our Congressment

appear when they say "we are going to get tough on China".

China is our Banker. They hold our debt.
They can send us Tainted Food, Toothpaste, Pet Food,
Toys and God knows what else----We Complain and try to
punish them. Yo---China holds the trump card.

They are paying for our war--lent us the money that is.

When I hear Congress say--we have to get tough on China.
I think. The Corporates will have your head for messing
up their sweet deals with China(exploiting for cheap labor)
and China will threaten to put us into another Great Depression
by screwing around with out debt.

So much for Globalization which has been unregulated and
unrestrained.

Rather than raising taxes in this country to pay for the war
Bush put it on the Credit Card and Congress approved. This
is the first war we nevcr taxed.

[ben_meyers]

14. Japan tried that before

And their economy went into the tank for 15 years! I hope China does try to dump our debt. If they "collapse" the dollar on the world market I guess we'll just have to crank up our own factories! That will be a good thing. Let them eat their contaminated seafood.

[NewJeffCT]

15. it won't happen - for a few reasons

1) the US is still - by far - the world's largest economy. If China dumped $1 trillion of US holdings, it would impact China's economy far more than ours. $1 trillion is about 1/4 of China's economy, but less than 8% of our economy. Now, it would certainly hurt, and cause a severe recession... but, Japan, Korea, Saudi Arabia and probably some European countries would buy the debt to keep our economy from totally collapsing.

2) After that happens, laws will be enacted preventing US corporations from locating any business in China. The companies will move to India, Brazil, Mexico, eastern Europe, Russia, etc. And, then China's economy goes from depression to long-term stagnation.

[Liberal In Texas]

16. Just the THREAT can be used as leverage with our Congress.

Look how the congress caved on the wire-tap law with the threats bushco trotted out before the recess.

Congress needs to get some balls and stop reacting to threats and do what's best for the country.

[piedmont]

27. Yeah. This congress does seem too vulnerable to threats.

spineless.

[AuntPatsy]

17. There is no need of such a threat, they already own us, they would only be

selling themselves.

[dkofos]

18. I think it would hurt China just as much. But that won't stop the threats.

That is how they operate, and our govt. will let them get away with it.

[ProfessorGAC]

22. Nonsense

The two economies are totally interconnected. One crashes, the other crashes. The overall supermacro economy (global) is far too interactive for any such thing to happen. It would be an economic murder-suicide.

Never going to happen.
The Professor

[TahitiNut]

25. We have an acronym for that. MAD.

Mutually-Assured Destruction.

(The youngsters probably didn't listen in History - or had lousy teachers.)

[ProfessorGAC]

26. You Are, Of Course, Correct

It would be the "nuclear" option of macroeconomics. And, as long as they're holding that paper, and using it to prop up their economy by balancing their growth debt, they cannot live without it. Selling it would only be because they've got serious nationwide cash flow problems.

If they're still selling goods to the U.S., they won't have cash flow issues. So, selling it would strictly be to commit macroeconomic suicide.
GAC

[nadinbrzezinski]

24. Here you go with the article

http://blogs.telegraph.co.uk/business/ambrosevanspritchard/july07/willtheusdollarcollapse.htm