Re: Thanks Gustave. I hope we see some real job growth soon.
Well, let's face it... China (and Japan) won't buy US debt forever --neither trees nor T-bonds nor T-bills grow to the sky! At some point in the future, corporate China will seek to convert China's dollar reserves into productive assets in the US.... Just like US banks traded their Argentine and Brazilian bonds for factories, mines, and real estate in Argentina and Brazil. All in all, it's a fair deal: today, China merely lends Americans enough money to soak up Chinese output on the US market, problem is: China's debt is continuously depleted as the dollar weakens.... Now, you'll say the USD is pegged at 8.28 to the renminbi --that's right but the consensus is for a revaluation of the renminbi in the coming months anyway.
Now, it would make more sense for China to bail out corporate America by opening up shop and/or taking over existing companies in the US... That way, at least, China turns your idle workforce into worker-consumers who, in turn, keep China's export machine rolling.
Bottom line: sooner or later, China's mammoth claim on the US Treasury will come home to roost.....
Gus |
