October 28, 2006

The biggest ponzi scheme of all - borrow from China to buy China's crap

19 comments:

Anonymous said...

The NY Times is "alarmed" -- LOL!

Were they alarmed when Clinton's Treasury Secretary Robert Rubin, and Fed chair Alan Greenspan cut the original deal with China way back in '96?

Hell no. Rubin was their Golden Boy who could do no wrong. More revisionist bullsh_t from the MSM.

Anonymous said...

Keith, check this link, it is the latest from yahoo.
http://tinyurl.com/ybquhb

Anonymous said...

1996 is not 2006.

By the way Bob Rubin is now getting very worried.

Anonymous said...

We are so screwed.

Anonymous said...

When the US consumer can no longer
borrow to buy China's crap, the cycle ends.

And China will be left holding a trillion dollars worth of useless paper.

China and the US will reap what they have sown.

kkdoughnut said...

"And China will be left holding a trillion dollars worth of useless paper. China and the US will reap what they have sown."

Or the central bank of China (along with Japan, Korea, and Taiwan) could simply continue to loan us money. An electronic printing press never runs out of ink. Why do you predict an apocalyptic ending when it's not in the best interest for any of the parties involved in this game?

Come on tell us, what would trigger the end? And why would it be good?

Anonymous said...

"And China will be left holding a trillion dollars worth of useless paper.
"

Ha! That's what YOU think. China is quietly diversifying OUT of dollars, and Yes, China IS buying GOLD, so those numbers posted are probably as phoney as a hooker in a share holders meetng. He who has the gold WILL make the rules.

Tony1790 said...

What is left unsaid, when, not if, Chiina decides to take us on militarily over NK, Japan, Taiwan, Iran or whatever it comes down to. The first weapon fired will be economic, we can't field an army if we can pay for it.

Even without a war, could the mere threat of an economic showdown be enough for China to take what it wants from us?? I think so.

Take care, enjoy the last days of the empire.

keith said...

uh, don't look now but a 3rd world communist country just became the most powerful nation on earth

Anonymous said...

Nice sock puppet. Reminds me of the good ol' 90s tech bubble!

uknowwhoiyam said...

Ridiculous.

Is it a Ponzi scheme to borrow from Ford to by a Ford product? Of course not. But replace Ford with China and suddenly it is?

You really need to learn a new word; you've become The Boy That Cried Ponzi.

panicearly said...

china will continue to lend but can americans continue to borrow when they are barely able to meet minimum interest only payments on the debt.

Anonymous said...

"china will continue to lend but can americans continue to borrow when they are barely able to meet minimum interest only payments on the debt."

That's where the magic of inflation comes in. If you told someone in 1956 that in 2006 the average american home would cost $303K, they would have laughed. But here we are 50 years later and people don't think twice about signing on the dotted line.

Anonymous said...

"Is it a Ponzi scheme to borrow from Ford to by a Ford product?"

yes. if Ford lowered its profits, during its profitable days then, perhaps, fewer people would need loans.

universities, today, are apparently getting kickbacks from "student loan" providers and see it as a source of extra income.

ultimately, someone will have to pay the bill.

Anonymous said...

"universities, today, are apparently getting kickbacks from "student loan" providers and see it as a source of extra income.

ultimately, someone will have to pay the bill."


Did it ever occur to you that student loans themselves are nothing but government-backed subsidies for universities? Food stamps are government subsidies for the grocery industry. If the #@*! federal government would stop this handout nonsense, maybe prices at universities and grocery stores would decline.

Yeah, somebody ultimately has to pay. Got a job? Bend over pal...

Tom said...

What a bunch of ridiculous scare mongering, I like how this story had absolutely no hard facts in it other than the $1 Trillion is owned by Chinese.

If the Chinese stopped investing why would interest rates "skyrocket" as is claimed? US Government securities are sold at auction, so let's say the Chinese stopped bidding on these auctions. 30 year treasuries are at 4.8% now, so does any reasonable person believe that there aren't investors out there (Japan, Europe, Korea, Signapore, Taiwan, even US investors) willing to buy these for 5.0% still? How about 5.5%? How about 6.0%? Yes, interest rates would go up, but by no stretch of the imagination would they "skyrocket" as is claimed.

Anonymous said...

"so does any reasonable person believe that there aren't investors out there (Japan, Europe, Korea, Signapore, Taiwan, even US investors) willing to buy these for 5.0% still? How about 5.5%? How about 6.0%? Yes, interest rates would go up, but by no stretch of the imagination would they "skyrocket" as is claimed."

A reasonable/rational person expects a positive ROI for bonds purchased. Earning 5% when inflation is 12% is not rational behavior.

Just because those central bankers are acting irrationally, doesn't mean the general public will foolishly buy bonds offered at negative real interest rates. In a free market, interest rates will "shoot up" to some premium over the perceived inflation rate.

Tom said...

It almost sounds you're claiming that "perceived inflation" is already at 12%, am I reading that correctly?

Anonymous said...

China will not tank - they have restructured Asia to survive. If anything we will be left holding our dicks in the wind. Check out this article:

http://www.financialsense.com/editorials/phillips/2006/1027.html