Someone please explain to me how China can hurt our economy

I have to admit, I am a little clueless when it comes to economics.

China's just doing what their corporate and government interests feel is best for their people.

Honestly, ask different people about China and each has a different bitch. Some complain about us letting them buy up tons of our debt to pay for the Iraq invasion (a lot of which comes from purchases at your local Wal-Mart...thank-you kindly...where do you think they're getting the cash?)...others about the intellectual properties issue of China zapping out tons of cheap CDs and software and underware and flooding the market (damn doesn't it suck when we get out capitalized by Commies???)...for others its the outsourcing of American jobs replacing a $40k a year job with a 4k a year one and all the won-ton you can eat...others complain about the Human Rights problems; such as Tibet and religious freedoms...and still others are stuck on the Red China military boogie man who not only controls the Panama Canal but is hiding under your bed right this moment.

So there you go...take your pick...

long ago ... china is buying bonds from the united states (which Bush hopes they will not want to cash in on ever ???) however, the might want to cash in those bonds whenever they decide to, and then, without taxes collected, or other sorts of revenue to make the bonds good.....we, the u.s.a. will be in a pickle (and we got sent there by the man who is married to pickles!).

What if we welched?

They call in the chips, we say sorry but we ain't payin'. Then what?

Actually, I hope some future Prez will have the balls to do just that. After all, we're in this hole thanks to WEALTHFARE and the "Mr. Pink" billionaires/corporations who refuse to kick in their fair share, not to mention the military-industrial complex. You can take away all the do-good programs for the poor, public education, foreign aid, funding for the arts; the deficit would STILL be off the chart, IMHO.

their guns at us, or even worse their nuclear weapons? maybe that is just what the bushie boy is looking for.
O, God, save us from the bushie boy!

Old Joe has his piece aimed at a bloodied Mr. Orange; Mr. White's gun is pointed at Joe; Joe's kid, Nice Guy Eddie, has his aimed at White. In this standoff, Joe shoots first, answered by White, who's nailed by Eddie but not to the point where he can't return fire on Eddie. So, all four guys are hit.

This has always been my understanding of the nukes world; a unilateral attack is virtually impossible. So, China would have to be feeling pretty suicidal to launch the ol' ballistics over a tab dispute.

all be in big doo-doo. but i admit that your argument is comforting and offers a good stabilizing thought for my mind which sometimes tends to wonder.

thanks!

They have specific terms on them. You may own a ten year bond for instance. If you want the money in five years you can sell them on the open market to someone else but you can't demand the money from the treasury.

It's not like the EE bonds you buy at the local bank.

:shrug:

That's what our Corporate Overlords do.

Think about what happened when Argentia defaulted on its debt.

Until the other world power completely marganalize our economy the USA tide raises or lowers all boats.

Simple example:

A person (name is Uncle Sam) uses his credit card to buy MP3 players, plasma tv and Hummer. Runs up credit card debt to more than income. The debt continues to grow because US only pays the interest on the debt and continues to buy on credit card.

The bank (name is Perminent Ready Credit) allows US to borrow for a time. Then PRC says pay up US in cash.

US does not have the cash. PRC has right to seize US real assets worldwide.

any intention of paying its debts to China?

Good faith pledge of a people's government.

they will find some way to seize China's assets.

back the promise.

borrowed money. They just declare bankruptcy and let others clean up their mess.

and invoke human rights or some other aspect of democracy that they have violated with impunity. They would be brave to raise issues re freedom of the press at this time, but they don't give a damn. They make and break rules ad nauseum.

Most of us here on DU have our own philisophical issues with China, but we borrowed that money from them, and if we didn't pay it back it would be stealing. All we have left in this world is our already tattered reputation and our big bad military. If we shirk our debt to China, or anyone else, we'll have nothing.

the ex slaves are still waiting for their forty acres and a mule. The West never pays debts. Their role on this planet is to loot not to repay.

Thanks. All the more reason why we shouldn't shirk THIS debt. I also understand that it will never happen, but does that mean I shouldn't believe that shirking this debt is the wrong thing to do?

with their history.

It's not possible. Dollars and T-bills ain't got no nationality except American. They are negotiable instruments that can be moved by the Chinese to anyone in the world, like markers a gambler has given out can be collected by whoever holds them.

The ONLY way we could really repudiate the debt would be through inflation, that way we repay them with cheaper dollars, and that's only a matter of repudiating it in part by value attrition.

Bush is a junkie, and China is his supplier. He's hooked on DEFICIT spending, and he gets the good stuff from China to keep him high.

Hey, that might make a decent cartoon ....

i think people are being silly, usa has every intention of paying its debt

ever heard of usa defaulting on even the smallest savings bond, i don't think so bunky

the worst i've ever heard is bitching that usa called in treasuries paying 9 percent interest and paid them off early, so investors could not continue collecting this huge, huge interest rate at a time when the going rate was closer to 2 percent -- but that's a luxury complaint that you loan money & it gets paid back to your early

china is buying usa treasury bills because this is the safest investment in the history of the world

you know, it's the 21st century, people should be a little more comfortable w. abstraction by now, our paper agreements have far more value than, say, a precious stone that is easily duplicated now in a factory in russia

for a situation where tangibles aren't as valuable as abstract. :shrug:

Julie

Waltz over to Japan and take something of ours? Invade us and a seize a few square miles of Manhattan real estate?

This credit is all based on faith. Those bonds are not securitized.

The fact is that with a debt this large to such and important peice of the world economy they'd have to "work with us" so to speak.

If they tell us to pay up and the president and Congress refuse, the courts can't do anything about it.

Just like when the DOD was ordered to turn over the new abuse photos, by the court, and then no one made them do it. No one is enforcing that order.

out USA.

We are a government of laws for poor people, not for rich people.

That would bankrupt China as well, since the US dollar is only as good as the government. Siezing US assets--assuming these assets are even put up for collateral, which I doubt--would make the US dollar worthless, which would crush the world economy.

We are like Donald Trump, or like Turkey at the beginning of the 20th century. We are the new Sick Man of the World. The world has to prop us up, or the economy collapses. Only a war or an amazing recovery will allow them to get rid of us. And we have too many dangerous toys for anyone to want a war with us.

and if they decided to call up that debt we are in deep doo-doo. Their general economy and quality of life is rising, which is good for them, but they're going to be wanting their money back. Most likely sooner rather than later.

Also, we buy so many cheap products from China that retailers make something like a 500% profit on the resale, if not more, but still refuse to pay their employees a decent wage, or give them decent benefits (think WalMart). If Americans made those products, it would be more expensive, but much much better for the economy in the long run -- more jobs for Americans, the money being spent by Americans on other Americans, and we would be less dependent on semi-allies/semi-enemies for the products that America is addicted to.

By US citizens own choice we allow US companies to send our jobs to China that causes fewer jobs here in the US. No one knows how many fewer jobs because the government does not track it. By US citizens own choice, we buy cheap junk from China and China buys very little from us, causing fewer jobs here in the US. Again no one knows how many jobs have been lost to cheap imports. China can sell us this junk at a much lower cost than here in the US because China uses child, convict and sweat shop labor.

By US citizens own choice our government borrows money from China. A borrower has a legal contract. As long as our government makes the payments on the loans we are ok. But when the payments on the loans becomes higher than what our country brings in in taxes etc. then China can come in and take our property. If China is smart, they will continue giving us loans until we can no longer make the payments. China will then have won the cold war.

In the meantime our jobs are disappearing and our middle class is shrinking. Our middle class is borrowing from the equity in their homes to stay solvent. We have the lowest savings rate since the Great Depression. (If our economy is in such great shape as the corporate media likes to tell you, then why are the credit card companies complaining about loss profits due to bankruptcy filings?)As our jobs disappear and our economy continues to decline, the government will have less money in taxes etc. to pay out on the huge loans we have made.

individual, family or country who view life as a non-stop shopping spree will crash and burn.

The company outsourced the widget work to China where slave labor toils for $12.00 a week (or less). The American widget factory closes, Dad loses his job, China ships the widgets back to America where they're sold for half their previous price, ensuring all widget jobs remain in China. Meanwhile, Dad is looking for work, but all widgets are now being made in China and all widget factories are closed. Christmas comes. No presents for you.

but the real problem is that when the rest of us earning slave wages were bawling about the neoliberal project most of America remained silent. Do you have any idea how many of our governments were toppled by disinformation, violence, coups etc. so that the IMF,World Bank and WTO could take over the agenda. Now that the same project has reached America, people who could have made a difference from the 1980s are finally waking up. Nothing changes until we all take back our government from the corporations and special interests.

And with that we'd fall.

c'mon, what nonsense, treasury notes and bonds are cashed in all the time, and still we stand

We sell Treasury notes to keep our government functioning. China owns boatloads of them. If they decided to cash in we'd be screwed. I shudder to think of how bad off we'd be. No mere citizen owns nearly enough to cause a ripple. China owns enough to set off a tsunami.

Sorry if I miscommunicated my point the first time. :toast:

Julie

The bonds are sold for a particular length of time. They can't come asking for payment before the expiration date. What they could do is stop buying bonds in the future, which would force us to make major budget cuts. However, they can't just walk up and cash in the bonds they've already purchased at any time. They have to wait for the debt to come due.

I don't know exactly what kind of bonds we've been selling them, but if they're 20 year T-bills, it's not exactly an imminent threat.

And, now they are destroying us with it.

As Lenin said: "The capitalists will sell us the rope with which we will hang them."

china buys our treasury bills because they believe in the usa dollar & expect it to return a handsome profit

the more our economies are interlinked, the less likely we are to lob nuclear weapons at ea. other in future, taking down the usa economy also devastates asian economy, rich chinese in prada globe-trotting around europe for vacation are not interested in going back to straw huts, they are forward-looking

the element that cries out "yellow peril" has always been w. us but i prefer to focus on proven enemies, who make it clear that they want to distance themselves from our economy and ideals, such as al qaeda/taliban -- the dude who is happy to live in a cave as long as all women remain his slaves is the real threat to the usa economy for he has nothing to lose if he destroys it

sometimes it don't pay to overlook the obvious

Who would buy all those cheap Chinese goods if our economy goes in the crapper? Sure, the EU is a big market, but can any business lose nearly half its market and survive without some lumps of their own? While it used to be "If the US sneezes, the rest of the world catches a cold" it is now more like, "if the US catches a cold, the rest of the world gets a worse one"

The Chinese feel it is inevitable they will overtake the US as the world's economic superpower. They take a much longer term view than everybody in the US, so are willing to wait 10-20-30 years for it to happen. They just have to keep doing what they are doing.

When Bush took office, projections had the total Chinese economy overtaking the US in about 50-60 years in terms of GDP. Now, with Bush's mismanagement of the surplus, tax cuts for the rich and more, the estimates are now more like 40-45 years, maybe even a bit less.

So, why mess with something good when the long-term shows China overtaking us in a rapidly shrinking time frame?

Granted, even if China overtakes our economy in total GDP in 2040 or 2050, we'll still have a much higher GDP per capita due to our population being less than 25% of their population.

I do not see any malevalence in their monetary moves. They're shrewd. They're keeping their products cheap enough to find American markets, and they're keeping the US dollar high enough with purchases to keep the US govt. happy. They have taken the wind out of Bush's words, because they hold so much of his deficit in their hands.

They have clearly outsmarted Bush, who has no monetary policy except cut taxes and spend like there's no tomorrow.

dollar will devalue so severely that it will dramatically reduce the ability of the US to take care of its citizens.

The US has shipped dollars overseas for decades, however it has ensured that they come back in various ways. Development loans are made in US$s so that foreign countries have to buy more dollars to pay them back, and they're also structured so that US companies get hired to do the work. Saudi Arabia pays US companies tons of money to build things.

China's deal right now is that they buy our debt with the money they make from us. They'll probably keep doing this as long as possible, but it really gives them a great deal of power over the US economy. If, for some, reason they stopped buying our debt (while the US continued to spend more dollars overseas than the US makes overseas), the US economy would almost certainly tank.

That's the impression I get...

Chinese workers hardly benefit from those jobs, since it's the owners of those corporations who reap the profits from China's cheap labor and the absence of worker's rights.

In the mean time we're told it is because the Chinese are "more productive", and that US workers have to compete with the Chinese. Compete with people who make like $1 a day.

What they don't say is that "more productive" simply means that Chinese labor costs corporations less then US labor does - it results in more product per Dollar spent on production. That's "more productive".

The cheap products that come back to the US (sold by Wal-Mart amongst others) aren't cheap enough to help those without a job afford a decent living.

that is what is meant by slave labor, more or less. Should we become more like that?