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Old 14-11-08, 03:51 AM   #1
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Eek! Before Saving the US

The nature of the current global financial crisis is the biggest debt crisis in America’s history. The issuer of the world’s reserve currency, the US has been borrowing for quite a long time without any limit. America’s trade, international payment and fiscal deficits have existed for over 40 years (a fiscal dividend once occurred during Clinton’s administration but deficit soon returned). Statistics show that America’s internal and external debt exceeds $60 trillion, over 400% of the country’s annual GDP of a bit over $14 trillion. Of that total, family debt (including mortgages), financial and non-financial firms’ debt, and municipal and national debt come to about $15 trillion, $17 trillion, $22 trillion, $3.5 trillion, and $11 trillion, respectively, though it is hard to tell how these debts have been split up among foreign governments, financial firms, companies, and individuals.   

To relieve the crisis, the US must repay its debts, and to do that it needs to live a more frugal life instead of asking others to continue lending it the money to maintain its over-consumption.


The first thing the government needs to do is reduce spending and the deficit. Correspondingly, the US needs to cut military disbursement, stop its global expansion and the robbing of oil resources from other countries. Companies should also become thrifty and avoid highly leveraged operation. Families and individuals should stop anticipating their income to buy houses and travel globally. Instead, they should warmly welcome foreigners to travel to and spend money in the US.  

China Should Raise Conditions


But if the US must ask China to buy some portion of its national debt, what kind of conditions and principles should China we raise?  

The principle should be the same as the basic principle upheld by the US and IMF when “saving” other countries in crisis: cut fiscal disbursement and both the government and the people should save money. Besides that, there are six points: first, the US should cancel the limits on high-tech exports to China, and allow China to acquire advanced technology and high-tech companies from the US; secondly, the US needs to open its financial system to Chinese financial institutions, allowing all Chinese financial firms to open branches and develop business in the US; third, the US should not prevent Europe from canceling the ban against selling weapons to China; fourth, the US should stop selling military weapons to Taiwan; fifth, the US should loosen its limits on numbers of Chinese tourists and allow them to travel freely to the US; and sixth, the US should never restrain China’s exports to the US and force RMB appreciation in the name of domestic protectionism and employment pressure.


If the US should refuse to agree to the six principals, that only means it doesn’t really need China to save its market and buy its national debt. Then China’s choice is quite simple: rationally adjust the structure of its foreign exchange reserve assets and avoid the risk of the US national debt according to market rules.


What is worth special attention is that the prerequisite for China’s purchase of US national debt is that China has enough foreign currency to meet the exchange demand when hot money is flowing out in large scale. Otherwise China will have to sell US debt to relieve its lack of foreign exchange currency, which will lead to sharp depreciation of China’s dollar assets. What is even worse, China may immediately suffer a financial crisis led by the lack of foreign currency.


So if the US wants China to help save its market, the US government and the IMF must admit China’s right to manage its foreign exchange independently. Once large scale hot money outflows occurs, China has the right to take effective measures to restrain the speed and amount of hot money outflow, and the US and IMF can’t blame China for it. This is the most important prerequisite, even more important than the six principles mentioned above. If the US can’t agree to it, China may trap itself when saving the US. When exchange crisis happens in China, who can promise the US and the IMF won’t hit China when it’s down?

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Old 14-11-08, 02:31 PM   #2
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Multi, I'm fine with most of the stuff you copy and post, but please tell me you're not posting this Chinese propaganda because you agree with it.
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Old 14-11-08, 07:35 PM   #3
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Multi, I'm fine with most of the stuff you copy and post, but please tell me you're not posting this Chinese propaganda because you agree with it.
quite fine



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Old 14-11-08, 11:31 PM   #4
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Not at all, Mazer
More concerned that in time they could actually grow an official attitude like this... it would of course take much different circumstances than we have at the moment for it to be become reality

We will see what happens with the world markets next week....
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Old 15-11-08, 05:55 AM   #5
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I tend to think it's end of empire.
it happens to them all.


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Old 15-11-08, 06:39 AM   #6
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Leaders from developing countries -- which are expected to account for nearly 100 percent of global growth next year as developed countries fall into recession -- now see an opportunity to broaden their clout. At the summit today, they will push for more influence in the International Monetary Fund as well as the other institutions that are charged with maintaining global economic stability, but that still remain largely controlled by Europe, the United States and Japan.

Developing countries will also seek to cement their inclusion in global decision-making, pressing for entry into organizations such as the Switzerland-based Financial Stability Forum, which brings together developed world regulators, central bankers and financial officials.

more..

In the coming months we should all hope to see a redefining of an empire or possible the end of the age of empires . or the lines may change on the map and create the Islamic Empire and the Chinese Empire and the Western Empire.

Setting the stage for the conservative comeback in 12 or so years and WWIII
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Old 16-11-08, 10:09 AM   #7
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In the coming months we should all hope to see a redefining of an empire or possible the end of the age of empires . or the lines may change on the map and create the Islamic Empire and the Chinese Empire and the Western Empire.

Setting the stage for the conservative comeback in 12 or so years and WWIII
Been reading a lot of George Orwell, have we?
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Old 16-11-08, 07:51 PM   #8
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have done in the past, not recently though.
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