Thursday, July 31, 2008

Who's Yer Daddy?


It seems there is a new terrorist lurking to strike on the U.S. And this will be a devastation beyond any current threat calculations.

We're talking financial terrorism:

China's holdings of U.S. securities have increased from $300 billion in March 2004 to more than $900 billion in June 2007, the latest date for which data are available. Given America's $250 billion trade deficit with China over the past year and the steady stream of money pouring into the country from abroad, economists believe China probably holds nearly $1.2 trillion in U.S. securities today, mostly Treasuries and corporate bonds.

And that doesn't include the roughly $140 billion in U.S. securities held by Hong Kong.


And more:

Meanwhile, China, particularly through its central bank, has become the primary financier of America's budget deficit by using much of its trade surplus with the United States to purchase Treasury debt. At the end of fiscal 2007, China owned 21 percent of the U.S. publicly held debt that was owned by foreigners, and it was buying more than half of the new debt being issued by the federal government.


And more:

"What's most disturbing about the U.S. situation is that as America's debts rise higher and higher, the less influence the American government will have over the critical decisions" that will need to be made to address these imbalances," Mr. Tonelson said. "Those critical decisions will be made in Beijing, not in Washington, and they will be made to promote Chinese economic and national-security interests."


Read more of the same here.

With this kind of financial/debt imbalance U.S. autonomy is just about eroded.

We can all look forward to the new world power: The Empire of China.

16 comments:

  1. Hi WWW

    Sounds like handy insurance to me. Given the grandstanding that's been going on this week at the WTO talks, I'm more nervous about agri-giants gaining irrevocable control of the world's food supplies.

    xxx

    Pants

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  2. I was feeling a bit down after looking at my bank balance - this has cheered me up somewhat - it can always be worse :-) That said, it is rather alarming! (US debt I mean, not my own which is only alarming for me)

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  3. Pants:
    Funny that actually. Personally,I am less worried about the giant agri-biz, due to serious aforethought and starting my own mini agri-biz. Though that said, concerned greatly for others. This looming economic cataclysm to me, is far more serious.
    ----------------------------------
    Laurie:
    Terrifying, I agree.
    ----------------------------------
    Conor:
    Big changes looming, for all our bank accounts I'd venture.
    ----------------------------------\
    XO
    WWW

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  4. This is bad. Global warming is bad. Nuclear proliferation is bad.

    "Life is uncertain - eat dessert first!" (My favourite advice). ;-)

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  5. T:
    'Tis all sad and bad and quite mad.
    Plant potatoes.
    Convert Equity to gold.
    Feed some chickens.
    Keep a goat.
    Buy a solar bike.
    XO
    WWW

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  6. As a Canadian I am comforted by our diplomatic relations with China that have been stoked (brilliantly) by our immigration and economic policies during my lifetime.

    Canada has always been smart in forming key economic relationships with superpowers (England/France first...then the States and now Canada).

    Canadians will benefit from the Chinese rise to superpower status....I do not doubt this.

    If we do not then we are well able to support our own....our population density is FAR less than theirs.

    Aside from nuclear arms that is....sigh. And oh yeah...carbon emissions too....double sigh.

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  7. Orla:
    Yes: I agree, we have forged economic bonds with China that should weather us well through the future.
    If, as you say their isn't the madness and devastations of other catastrophes.
    Our neighbour to the south, though, is in dire straits. On all levels.
    XO
    WWW

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  8. I don't know exactly where that puts me as a Dutch person, but I think I am in better shape than the average American, because the Dutch always know which side their bread is buttered on and are smart traders. I think we may be on very good terms with the Chinese and will make sure it stays that way, because first and foremost we are capitalists and always see the power of the Euro or the Guilder when we still had that. We have always been a nation of profiteers, I doubt our Socialist leanings have changed any of that.

    Our Queen is our best ambassador and she very diplomatically can broach the subject of human rights without fear of being rejected from the country. She does have her wily charms, that good woman.

    One in three people on this earth is a Chinese. I guess it is time we face the music.

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  9. Extraordinary times, Irene and money, as always, talks and with China in the driver's seat anything can happen.
    XO
    WWW

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  10. So it'll soon be the United States of China then and China will take over the country. That might not be a bad thing if they wound up all the brutal wars and military activity. On the other hand, if they treated the poor and powerless the way they get treated in China....

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  11. Not forgetting the way they treat Tibet, Nick. I think that is symptomatic of how they would treat other cultures and entities.
    I think it already is the U.S. of China :^/
    XO
    WWW

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  12. I don't think China will come demanding its 'pound of flesh' anytime soon. The tragedy is that America has sold itself down the financial river due to short-term greed, rather than longterm investment. That chicken is bound to come home to roost, and one day China may be sufficiently powerful to dictate terms in a way it isn't as yet.
    I'm so glad I'm sixty, and not sixteen.

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  13. Who's to say it's not already dictating terms, RJA?
    I'm talking the corporations, of course. Who are running the US.
    Interesting financial times ahead.
    XO
    WWW

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  14. About time somethings changed. I love the status quo smashed to bits, I love the tilting of the scales.
    Great post WWW, I haven't heard / read this before. I will have to follow the news on this now.
    Cheers,
    Gxoxo

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  15. Hi Gaye:
    yes, the status quo needs changing for sure, where the wealthy are getting obscenely rich and a million mortgages are foreclosed in the US alone. the new poor and homeless.
    A whole world order needs shaking up.
    XO
    WWW

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