The US is crying and begging for helps again. This is ridiculous. It's ok countries like Germany and Japan lend money to the US - they are first world countries and most of their citizens are living fine and dandy, but how come China is lending hundreds of billions to first world countries like the US while China's still a third world country herself and with a majority population wanting to escape from underdevelopment and poverty? It's a sad state of affairs and China cant do a thing about it. Either way, some Chinese kids living in rural areas will still have to climb mountains to get to school everyday while American kids suffer from obesity. If I was the Chinese government I wouldn't spend a dime on these crooks. You help them today they'll back-stab you and screw you over tomorrow. The Chinese government are far too nice. If it was the other way around the west would have given the Chinese the middle finger already. If the follow video is true, I sure hope China can foreclose US if they do default. http://www.youtube.com/watch?v=mVuYSeCcdj8&feature=related
I suggest you look it up. The amount they donated was a joke. If you and I were millionaire, we could have lend a bigger hand than the world's sole superpower. It's embarrassment, man, even some 3rd world countries contributed more.
this is extremely sad that they must ask for help from China... but on the other hand, China is better off at the moment due to their high export rates, with the amount that they export, it is possible that their economic growth is still greater than the US right now, although the total PPF may be lower than US.
hey don't you know US has been feeding to the Chinese one way or the other ? Most of the products that imported to the US is from China (everyone knows this well)---> provide hundreds of thousand jobs to the people from china. Plus, US got the strongest economy in the world if US is sick, the other countries would never be fine. Especially China, they got billions dollars debt need to collect from the US. If they dont help US, who's gonna pay the debt to them (China) ??? The Rule is: NOTHING IS DAMN FREE IN THIS WORLD!
US economy recovering? let's first see if GM and Chrysler are going bankrupt soon then talk about recovery. US economy is in a deep sh!!t hole every1 knows that maybe except a bunch of American capitalist slaves. Well keep in your good hope, the worst might come soon. "China's central bank is run by the government! The government sets out all their fiscal and monetary policies. So who is there to monitor, aside from international non-profit organizations, China's economic actions?"! Yeah, US federal reserve is privately owned and has more or less f*ced up in it's done. Greenspan apologized on TV....so you have monitoring, but it doesn't mean shiiit.....Looks like the Chinese central bank is doing a better job.... Oh, I forgot to add...Chinese banks are all on the stock markets and for your information the worlds' top 3 banks are now all Chinese. Blame the Chinese government -tongue2 The american Citibank 2 years ago still #1 bank in the world, now only worth 1/10 of one of Chinese top bank. Blame the lovely bloddy sucking capitalists-tongue2 Last week ICBC (China's biggest bank???) announced it made a whopping 37% profit. Blame the Chinese government, again yo! -tongue2 ICBC and CCB are the two banks you should not miss out for ur long term investment portfolio yo!
im quite sure i know this without the report i am seeing places close down left and right here it sux...
well, I am Canadian too. Born N raised in Canada of Toishanese descent. good for you..keep your money, dude. Goldman sachs, bank of america, barclays, tamesk and many many more all invest in China's STATE-OWNED banks When did we say we want to server our relationship with the US? If anything, we fee off of them. As for being transparent is better, that's a flawed argument now. What the US and Europeans are doing with their banks is exatly what China already has done:nationalizing the banks and creating a good bank and a bad bank. All 4 major chinese state owned banks have a NPL managment company that takes the bad loans off of their books. Seems the west is taking a page from the Chinese, yo! hahaha
They pride themselves as the richest country and economy in the world. Well, it's all a big hoax, just like mardoff. The US is the world's biggest debtor. Their principle is 'live on tomorrow' The housing debacle is just an example. If you don't have it, don't buy it. Now they can't pay and who suffers? The world economy
It's about time they bit the bullet. Did you know they killed over 3000 people each day in Iraq? Not a joke. The war in Iraq and bad economic management backrupt their economy.
China a great power: Obama Hasan Suroor LONDON: Chinese President Hu Jintao and his American counterpart Barack Obama held their first meeting here on Wednesday where they vowed to work together to deal with the global economic crisis. The two leaders, meeting ahead of Thursday’s G20 summit, discussed issues of common interest with Mr. Obama praising China for its “constructive” role in international affairs. Mr. Hu declared that good relations with America were not only in the interests of the two countries but also “beneficial to peace, stability and prosperity of the Asia-Pacific region, and the world at large” . He said he hoped to establish “good working relationship and personal friendship” with Mr. Obama. Describing China as a “great power”, Mr. Obama said America’s relations with Beijing had become “extremely constructive”. “Our economic relations are very strong,” he stressed describing his talks with the Chinese President as “productive” and “open.” http://www.freerepublic.com/focus/f-news/2220179/posts
The funny part about focusing on the "bonus" money that was paid, is that when you compare the original 700 Billion dollar bailout (it's even more now) to the 165 Million AIG bonus money that everyone is bitching about, it's like paying a $7,000.00 bill and then arguing about $1.65 or so. In other words, we're talking about a figure that is so comparatively small that it is near moot. But the anger that people have in them, which is then misdirected at companies like AIG as a whole, has the general public calling for allowing it to fail over the 165 million (of which the bulk was never even given as many AIG execs gave all of their bonus money back or declined it). Because of this, if AIG failed, then the life insurance polices, business insurance, or many of the other things that they underwrite, would be left without insurance protection that some of which cannot legally operate without. Food for thought, eh? In terms of China's financial positioning and the overall public perception that the US is solely to blame for the over extension of credit, an interesting viewpoint appear in the Washington Post a few days ago. Now I won't pretend to know a lot about the intricacies of international monetary policy. But the article seems to state that the issue is a lot more complicated than seen on the surface, and that hands previously perceived as clean, perhaps weren't so clean after all. Read on: In a rush? For a quick synopsis, just read the red highlighted lines. I won't even argue about the money gap in Chinese society, which is, in many ways, starkly similar to the excesses that people criticize the wealthy in the US. What I want to comment on is rather Chinese over reliance on the fortunes of exports. The fatal economic flaw is that your paycheck is held by someone else. A simplistic way of looking at this is, that China may have a stable economy right now, but that's because it has a great job working for the US. It works for a high paying boss and had built a house and bought a car and sent its kids to school, et cetera; all from the wages of this great job. But now, the US is going out of business as its being foreclosed. China needs to look for a new job or find another way to earn money, and it ain't easy. The next biggest economy, Japan, has also gone broke. This simple model hasn't been lost on the PRC government. It has been steadily trying to build up a native consumer base to take over from lost customers in the US (which is still China, Inc's best customer). But the problem is this, outside of the very newly rich, the bulk of Chinese citizens have almost zero in buying power. I remember seeing an article that discussed the inability of Chinese products to find the same level of consumerism that it had been accustomed to overseas; that even with government subsidy assistance, customers balked at the high prices. Inotherwords, Chinese products have been price beyond the affordability of the average Chinese citizen, and now that it has no foreign buyers, it cannot afford to sell at a loss to domestic consumers. I know that a lot of pro-PRC anti-US people tend to look US economic woes with a gleeful sense of schadenfreude, but for the near future, IMHO, Chinese fortunes remain ultimately tied and dependent (to a large degree) on US economic health.
What I think the OP missed here is that the PRC didn't come to the 'rescue' of the US in any way, but actually is the largest holder of US debt securities. The difference being that China was investing in the US in order to make money on what it thought to be an economic sure thing (by investing in what was assumed to be the world most secure and stable economy). But, I guess the Chinese money gurus were just as blindsided by this as was the rest of the world's business gurus (including the US's). Nobody saw it coming (except for maybe a few self serving bloggers who are now beating their chest and telling anyone who would listen the "I told you so's") Had China been really that financially astute, they would have quietly liquidated their US position before the bottom fell out; but since they didn't, one would suspect that they weren't. I'm sure they're quite pissed about the whole thing. Notice that when Wen met with the US president, the first thing out of his mouth was (in a paraphrase), "Are you good for it?" BTW, the second largest holder of US debt is Japan, and they're equally as pissed. I personally don't know of anyone who has ever had money owed them delight in seeing the debtor go broke. Despite the gleeful Shadenfreude of some Chinese nationalists, one has to realize that the biggest holder of the US debt right now is the PRC. So they can dance around the huge pile of IOU's and gloat if they need to. Such a 'victory' is Pyrrhic at best. If the US defaults, the only people left holding the (empty) bag would be the Chinese. That's not that happy a thought IMHO. Oh, and that video is a non starter. Even the poster of the thing amended it to point out that no credible sources were found.
There is a trend now in World Affairs. Its call the "Blame it on China" strategy. There are many articles about, and I would be starting another thread about this in a few days time. Right now let me provide you with an article from FT that stoutly analyze the trade and currency situation between China and the US with FACTS. This article completely denounce those Rednecks racist squirts who choose to blame China for the current economic crisis. In all their pretension, they would then shore up their crap thesis and say that there are other factors that have contributed to the crisis, but the motive cannot be more clear. Why talk about China with all the singularity in focus blaming her and then try to play down the other factors with a few scant lines ? I call this the Weapons of Mass Distraction that the US have always been employing, and when it is delivered with the slogans of advancing democracy and their unique brand of freakanomics to save the world, the US can never do any wrong. Right, so they have to find a whipping boy. China seems like such a wonderful target. Big, Bright Red and beautiful for its lashings. Here is the article. Have a read. http://blogs.ft.com/maverecon/2009/01/when-all-else-fails-blame-china/ Subscribe User name Password Remember me on this computer Help,I forgot my username or password Back to Willem Buiter's Maverecon homepage Is the liquidity management of the Eurosystem balkanising along national lines? When all else fails, blame China January 24, 2009 9:43am Timothy Geithner, the nominee for US Treasury Secretary, has risked damaging the global economy even before his confirmation by the full Senate. In a written answer to questions from US senators, Geithner said: “President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency”. In the US, the words “currency manipulation” are fighting words. If the US administration were to formally name China as a currency manipulator, a range of trade sanctions could be imposed by the US government. The threat to world trade comes from the Omnibus Trade and Competitiveness Act of 1988. The section dealing with the exchange rate, bilateral current account balances and the overall current account balance is a monument to economic illiteracy. Under the Omnibus Trade and Competitiveness Act of 1988, “The Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” “If the Secretary considers that such manipulation is occurring with respect to countries that (1) have material global current account surpluses; and (2) have significant bilateral trade surpluses with the United States, the Secretary of the Treasury shall take action to initiate negotiations with such foreign countries on an expedited basis, in the International Monetary Fund or bilaterally, for the purpose of ensuring that such countries regularly and promptly adjust the rate of exchange between their currencies and the United States dollar to permit effective balance of payments adjustments and to eliminate the unfair advantage.” Should the US Treasury officially determine China to be a currency manipulator, the US Administration can unleash a range of remedies, including antidumping measures, countervailing duties, and safeguards. Although the World Trade Organization permits certain retaliatory responses from importing nations which can prove that they suffered material injury due to unfair trade practices, much of what the US Congress and some members of the Obama administration have in mind is likely to be in clear violation of the United States’ WTO obligations. It would certainly provoke a response from China. The bilateral trade war that is likely to result could easily spread to the EU, Japan and emerging markets outside China. Overall and bilateral current account imbalances and nominal and real, bilateral and effective exchange rates The overall current account deficit of the US is the excess of US domestic investment over US national saving. The overall current account surplus of China is the excess of China’s national saving over China’s domestic investment. Bilateral trade balances are of no economic interest, unless there are only two countries in the world. Note that the first quote from the Omnibus Trade and Competitiveness Act of 1988 slides seamlessly from overall current account imbalances to bilateral trade imbalances, ignoring the transfer payments and foreign investment income items that are included in the current account but not in the trade balance. Trade balances and current account balances (bilateral or aggregate) can and do move in opposite directions. There is no reason in economic theory or empirical fact why there should be any reliable correlation, between nominal exchange rates (bilateral or trade-weighted (effective) ) and the bilateral or aggregage trade balance, let alone a clear causal connection from any nominal exchange rate to the trade balance. Certain kinds of shocks and policy actions may produce an empirical association (not a causal relation) between a depreciation of the effective (trade-weighted) real exchange rate and an increase in the aggregate trade surplus. This is the case, for instance, for most aggregate demand shocks, e.g those produced by contractionary Keynesian fiscal policies. But supply shocks may produce the opposite correlation, that is, a depreciation of the effective real exchange rate and a reduction in the aggregate trade balance surplus. In any case, as Chart 1 below shows, there has been a steady appreciation of the real effective exchange rate of the Yuan since the beginning of 2005. JP Morgan’s broad real effective exchange rate index for the Yuan shows a 27 percent real appreciation since December 2004. The from a macroeconomic perspective uninteresting nominal bilateral US$-Yuan exchange rate appreciated 21 percent over the same period. Chart 1 Every fixed or managed nominal exchange rate is, by definition, ‘manipulated’. But only the most bone-headed of ultra-Keynesians believes that a country can influence its effective real exchange rate in a lasting manner by managing/manipulating its effective nominal exchange rate, let alone some bilateral nominal exchange rate. China is now enough of a market economy that its domestic prices and costs (in Yuan) are no longer controlled by the Chinese authorities. Instead they are driven by the same kind of monetary and other macroeconomic forces that drive US dollar prices and costs in the USA. China still controls its capital account to a significant extent. Judging from the havoc created by wide-open capital accounts in other emerging markets, the Chinese decision to liberalise its capital account gradually and slowly is a wise one. Most gross external investment by Chinese residents is done by the state. With capital inflows (mainly in the form of FDI) policy controlled, the large current account surplus of China has meant a massive increase in the external assets of the state. The state has, unwisely, allocated most of the task of managing its foreign assets to the central bank, which has been a terrible foreign investor. By choosing to invest well over a trillion US dollar’s worth of foreign assets in US Treasury bills, the Chines central bank has produced horrible real returns for the Chinese government and the Chinese people, and made a large capital gift to the US government and the US people. The returns on Chinese foreign investment through its sovereign wealth fund have not been any better of course. Like the Japanese before them, great manufacturers and exporters often turn out to be terrible portfolio investors, even when their own FDI investments abroad have done well. The accumulation of China’s external assets in the accounts of the Chinese central banks shows up statistically as an increase in official foreign exchange reserves. The Chinese authorities have been unable to sterilise this massive increase in reserves and China has seen rates of domestic cost and price inflation that have at times been uncomfortably high. This is the normal way in which management/manipulation of the nominal exchange rate fails to prevent the changes in the real exchange rate warranted by fundamentals. China is enough of a market economy that it cannot manipulate its real effective exchange rate. There are indeed global macroeconomic imbalances. The US saves too little or invests too much (I would argue the former) and has an unsustainable current account deficit. China saves too much or invests too little (I would argue the former) and has an unsustainable current account surplus. China is taking policy measures that will reduce its external surplus, mainly through expansionary fiscal policy measures aimed at boosting public sector investment (infrastructure) and at reducing private and corporate saving. The US is proposing policy measures that will increase its external deficit. The $825bn fiscal stimulus over two years proposed by the Obama administration will increase the US current account deficit. It will also strengthen the real effective exchange rate of the US dollar, unless there is a loss of faith in the ability of the US sovereign to service its debt in the future through higher taxes or lower public spending. In that case the nominal exchange rate could decline sharply, taking the real exchange rate with it in the short run, as market participants dump the US dollar and US dollar-denominated securities because they fear either a monetisation of public debt and deficits or a sovereign default. So China is undertaking actions to remedy its own external imbalances and global imbalances. The US is proposing measures to increase its external imbalances and aggravate global imbalances. Instead of saving more, the US government is desperately trying to get the already over-leveraged US consumer to save less. And just in case the US consumer balks at the fiscal carrots dangled in front of him, the already fiscally challenged US government is proposing to reduce its own saving and increase its own investment. The last thing the US economy needs is a large fiscal stimulus, or indeed any fiscal stimulus at all. A good argument can even be made for a US fiscal tightening. Expansionary monetary policy is the only instrument available to the authorities that will both boost the US economy and correct its external imbalance. With the Federal Funds target rate as close to zero as makes no difference, only aggressive quantitative easing and qualitative easing (what Bernanke calls credit easing) are available and the magnitude and timing of their impact is uncertain. That’s tough, but that’s the way it is. The belief- the faith almost - that there has to be a painless way out of the US economic dilemma is naive and will be disproven by economic record of the coming years. The notion that currency manipulation by China is a material contributor to America’s external trade deficit is either a dangerous form of self-delusion, or an even more dangerous form of pandering to xenophobic Congressional opinion, or both. Conclusion One reason I still nurture the hope that the current global recession will not become a second Great Depression, is that there has been no significant recourse to trade restrictions by countries trying to export their domestic demand deficiencies to their neighbours. There has been increased use of anti-dumping measures - the first recourse of the modern protectionist, beggar-thy-neighbour scoundrel - but less than might have been expected given the prevailing spineless political leadership around the globe. As unemployment and excess capacity increase, and corporate bankruptcies multiply, the calls for protection against ‘unfair’ foreign competition will multiply. Any excuse - environmental, social, labour standards, phyto-sanitary, national security - will be used to allow domestic industry and labour to find shelter from the storm. Old-style protectionists like Sarkozy find new converts such as Merkel, to push protectionist measures, including state aid for non-systemically important industries like automobile manufacturing. So while the protectionist genie is not yet out of the bottle, it is kicking and pushing against the cork, trying to escape. The verbal sabre rattling by US Treasury Secretary Geithner is a threat to the open global trading system. More stupidities along the same lines could bring us the global trade conflict that we have been fortunate to avoid thus far. January 24, 2009 9:43am
