Category Archives: China

BREAKING: China Cancels US Credit Card

China, Debt, Economy, Federal Reserve Bank, Inflation, Republicans

We’ve been saying this on BAB for quite sometime: China has been a good sport about bearing the brunt of the American debt. Now a Republican admits the same:

“Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had ‘very legitimate’ concerns about its investments.”

“‘It would appear, quietly and with deference and politeness, that China has canceled America’s credit card,’ Kirk told the Committee of 100, a Chinese-American group.” By which he meant that “investors in China have sharply curtailed their purchases of bonds.” [My emphasis]

“The Republican lawmaker said that China was justified in concerns about returns from finance giants Fannie Mae and Freddie Mac, which were bailed out by the US government due to the financial crisis.”

Yes, it takes a change of fortunes for Republicans to quit dissing the patient Asians for their democratic deficits, and begin to be thankful that they’ve continued to finance America’s non-stop spending and consumption.

I suspect that were Bush at the helm, republicans would be cussing and carrying on in their usual sinophobic manner.

The patient Asians took what we dished–the dissing, the spending, and the exported inflation.

No more.

The Death Of The Mighty Dollar

China, Economy, Federal Reserve Bank, Foreign Policy, Individual Rights, Inflation

The trashing of the dollar by Bush/Barack is worrying those to whom we’ve been exporting our inflation. The US’s relationship with China is another fiasco. We’ve relied on that country to finance our debt, but kept up the sanctimonious preaching. (Search BAB’s “China” archive for details.)

How do you like that for hypocrisy, to say nothing of a performative contradiction? Preaching about human rights and individual rights while simultaneously fleecing your own people without flinching!

The patient Asians took what we dished, but now, they’re getting nervous about their finances.

From the FT.com:

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.

Big-Time Beggars

America, Barack Obama, Bush, China, Federal Reserve Bank, Inflation

The political class yaks about the fiction of our dependency on foreign oil markets, exploded in “The Goods On Gas.”

We are to believe that, while gas trading is oh-so dangerous to America’s national security, accruing debt and selling it to China—that’s just dandy.
China, reports Bloomberg.com, is worried that its “Treasury holdings [will] be eroded by “reckless policies.”

I wonder whose?

BAB readers will know that “China, the U.S. government’s largest creditor, is ‘worried’ about its holdings of Treasuries and wants assurances that the investment is safe.”

“We have lent a huge amount of money to the United States,” Premier Wen Jiabao said at a press briefing in Beijing today. “I request the U.S. maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

Honor? Come again!

“White House National Economic Council Director Lawrence Summers, asked about Wen’s remarks, said overseas ‘confidence’ in Treasuries would be hurt without the administration’s steps to end the economy’s decline. President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of debt sales to fund a $787 billion stimulus package.”

China is enabling Barack as it did Bush. The only reason it doesn’t put an end to the US’s spending addiction is that it stands to lose a lot if it does:

“‘China won’t sell the U.S. debt now as that will only drive down Treasury prices, hurting not only the U.S. but also the value of its own investments,’ said Shen Jianguang, a Hong Kong- based economist at China International Capital Corp., an investment bank partly owned by Morgan Stanley”

“‘China’s purchases of American debt have been one of the few bolts keeping the wheels on the global economy,’ said Phil Deans, a professor of international affairs at Temple University in Tokyo. ‘If China stops buying, where does Obama’s borrowing to fund his stimulus come from?’”

This reminds me how brain dead are the Sinophobes. Beggars can’t be choosy, and they most certainly can’t afford to be as arrogant as the US is.

Hillary Begging In Beijing

China, Economy, Hillary Clinton, Inflation

The proverbial hat in hand, Hillary is begging Beijing to continue to prop up the US’s stupendous spending. China, I suspect, is hip to Hillary.

Reports Reuters:

China is the world’s biggest holder of U.S. treasuries and Clinton said continuing to invest in them was “a very smart decision” for two reasons.
“First, because it’s a good investment, it’s a safe investment. Even despite the economic challenges sweeping over the world, the United States has a well-deserved financial stability reputation.
“And secondly, because our economies are so intertwined the Chinese know that in order to start exporting again to its biggest market, namely the United States, the United States has to take some very drastic measures with this stimulus package, which means we have to incur more debt.”

[SNIP]

China must know that the US is not good for it; that it has not a chance in hell of paying the debt it has incurred.

China is probably more likely to dump dollars than invest in them. First Bush, now Obama—the one devalued the dollar, the other is in the process of laying it to rest. The dollar will soon pass from the world as a reserve currency, and certainly as a solid currency.