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Assuming this headline is correct, what effects would that have on the global economy?
by greggarious 11y ago
Assuming this headline is correct, what effects would that have on the global economy?
- ktRolster 11y agoProbably small. China's financial system isn't entwined with the US/European system as much (the Fed buys bonds from the ECB, and vice versa). Commodities will be hit the hardest, because China will stop importing them. Alan S Blinder estimated that a very severe recession in China would affect the US GDP by .2% So that kind of gives you an idea.
- nickgrosvenor 11y agoFamous last words, we live in a global economy now.
- jcoffland 11y agoChina holds more US treasury bonds than any other country. How are we not intertwined?
- roel_v 11y agoYou've been saying that across this thread, but let's say that Chinese banks start to go bankrupt because of nonperforming loans. The Chinese central bank holds large amounts of US treasury bonds. What would be the effect of the bankruptcies? A sell-off to bail out Chinese banks? How would that work; they'd get dollars for their tbonds; then what? Would it depress tbond yields? They can't go much further before you have to pay to hold them... I don't understand the reasoning behind the 'but the Chinese hold lots of US debt!' argument. This isn't like a mortgage where the lender can call in the loan at any point, and if you don't pay they'll repossess your house; or a loan from a loan shark who'll break your kneecaps if you don't pay up. What would happen with or because of these debts?
- jcoffland 11y agoI answered this question elsewhere in this thread.
- ktRolster 11y agoThe US holds vastly more US treasury bonds than any other country. But look at the data: http://ticdata.treasury.gov/Publish/mfh.txt http://ticdata.treasury.gov/Publish/mfh.txt China holds about the same amount as Japan, and if you count Europe as a region, then Europe holds more than either of them. Furthermore it doesn't really matter: it's not like they can 'call the debt.' China has to wait for their bonds to mature just like everyone else. Really it's rather nice of China to loan us the money.
- jcoffland 11y agoYou're right it doesn't matter that China has loaned us tons of money. You can talk your way around it and Wall Street and the American media outlets have done this for years but it does not change the facts. China continues to grow as an economic threat to the US and we don't want to believe it.
- ktRolster 11y agoWhat exactly is an "economic threat?"
- foxhedgehog 11y agoJust piping in to say that this is correct.
- throweway 11y agoBuy bitcoins and ammo
- foxhedgehog 11y agoI wonder how much of investment in, i.e. Apple, is presently based on assumptions of future Chinese domestic consumption.