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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (2357)	9/12/2008 7:40:41 PM
From: RetiredNow	Read Replies (1) \| Respond to of 86356

OK, Tim. Fair enough. Let me spell it out for you. We spend more than we earn, therefore, we have to borrow money. 40% of our borrowings come from China to finance our budget deficits. After the last 8 years of that, the dollar has been devalued by a significant amount. China, realizing this, starts to divest itself of some of its dollar denominated currency reserves. Nobody wants those dollars around the rest of the world. So what to do? China's smart. The only country who wants dollars is the US. So China uses their dollars to buy US assets and US revenue streams. They formed a China sovereign fund for that purpose. Some of the high profile purchases have been Lenovo's purchase of IBMs PC division, China's $5B investment in Morgan Stanley, it's $1B investment in Citibank and Bears Stearns, and its investment in US hedge funds such as $1B into Blackstone. As our financial markets are melting down, who do you think is providing the liquidity? The US government? Yes, but only after they borrow hard cash from China to do so. You may not see it in your day to day life, but US revenue streams and US wealth is being sold off to finance our deficits. This is called a transfer of wealth from the US to China. When have we seen this before? Remember in the 80's when the Japanese were doing the same thing? I hope we will rise again, but this time around no one seems to be paying attention and we're losing the competition. Back then, there was widespread attention being paid to "Buy American" and learning about Total Quality and Kaizen and other such Japanese specialties that made them more competitive. We haven't even begun to try to compete or to staunch the flow of red ink in this country. Wake up, man. This is no joke. This country is in big trouble financially.