Out of Pod Experience

http://en.wikipedia.org/wiki/Wedge_issue

edit: Also, and most importantly, it makes for a good joke every now and then.

The worse thing than China owning over one trillion of those Treasuries bonds is that the debt is over 14 trillion and projected to be over 16 trillion soon.

This is not a good thing. Barack Obama is adding more debt than any other president in history, by any meaure and he is running an election campaign on the fact that he wants to keep on doing it.

Hopefully the Americans wake up and put someone in there with some fiscal sanity or all of the developed world is going to go the way of Greece, Spain, Ireland, Italy et al.

But while you are factually correct - you are fundamentally incorrect.

If China did call in 8% of the debt it would mean that they lost confidence in the ability of the US governments ability to pay the interest on the debt. Once one loses confidence, everyone starts to run out the emergency doors and the premiums which were 'cheap' last week are all of a sudden quite expensive and are unsustainable. It becomes a domino effect.

Look at the EU's inablity to backstop this happening in Greece, Italy and Spain. No one is able to backstop the US.
So yes, while China 'only' owns 8% they do hold a large, strategic trump card on the fiscal future of the US. If perceptions on the bond market start to change, the economic survival of the USA could well be in China's hands at crunch time.

If you think that is a good thing then you have nothing to worry about.

If not, well....

Riedle

It's not a trump card unless they can convince everyone else that the investment is bad. If they are doing it in conjunction with a move on Taiwan, as part of a disagreement over the South China Sea, or some other overt political move then it wouldn't cause a crash. Obvious political move is obvious, and the markets would happily lap up the profits. It'd have to be the last straw, there would have to be weeks/months of bad news. The US Treasury has to take a huge blow and lose the status of "Safe Harbor" before the model of Greece or the EU to even apply. Now, I'm not saying it's not a problem. It definitely is a problem. That being said, it's not an immediate problem.

That's funny. I seem to remember the economic collapse beginning with sub prime mortgages -- you know, the ones that Democrat Barney Frank forced banks to issue to people who they knew couldn't possibly repay the loans by way of the Community Reinvestment Act that Democrat (and spiritual Obama predecessor) Jimmy Carter signed into law.

I bet the Greeks hate it that their country is bankrupt but thinking happy thoughts won't make it better.

We'll either have to adapt our economic model of 'inifinite growth' or move on to extreme capitalism and people starving in the streets.
Knowing mankind it will be the latter.

No they wouldn't have to convince anyone else. Fear is a powerful motivator particularly when your retirement funds are involved.
Rationality doesn't necessarily have much to do with it, at least in the short term.

Timing: It may not be an immediate problem but when you look at demographics and the fed spending and promised entitlements and then add on state, local, corporate and personal debt.. well it's a LARGE problem and it getting worse, fast.

The horizon is coming up faster and faster every day.

I say this only as an interested observer who depends on my country selling you lots of stuff.

Is this satire with regards to the intellect on the part of the far left still stubbornly clinging to their entitelments and demanding more when they are plainly unsustainable?

Or are you smart like tractor?

Well, a thought, the US's pretty much been printing paper money just like a farmer farms uncountable amount of isks from an EVE isk faucet.
The funny thing, it hardly devaluates. So where is the sink?

Basically, you have the other countries getting conned into supporting the paper printing by providing the necessary sinks. Take for example, an economy which does not use US dollars in transactions. By opening its market to US dollars or buying into US dollars, it effectively provided a bucket for excess US dollars to flow in and circulate. The cycle continues until you run out of buckets.

So, instead of running a single scam (aka the US Federal Reserve), its actually running double-scam worldwide.
When you follow it further, you come to the simple conclusion that the world is bank-rolling the US to do what it does.

Food for thought eh?

Strumwolke: Mostly because dollars wear out, international trade is mostly done in dollars so other government rely heavily on having large stockpiles of US Dollars laying about, and we've been consistantly short on the amount of Dollars in circulation for a couple of decades.

No one is forcing anyone to accept Dollars in their stores, but a company or government trying to buy a large number of cars, iphones, or technical expertise finds it easier to get these things in Dollars than other currencies. This is the same as when Pounds Sterling or Roman Denarius were the big currency on the block in international commerce. It will be the case when the US ceases to exist as a major economic power and a different currency becomes to the medium of international trade.

Also, how is the Federal Reserve Banking System a scam?

dexington: Making fun of financial problems is all well and good, but I tend to prefer higher quality in my trolling. Generic default lines wear out quickly for me. So, a little bit of wit and innovation would go a long way to making me feel better about it.

Again, I'm ranting because it's be repeated so often that some folks are beginning to believe that it's true, even when it's demonstrably false.

That is exactly what is happening and it is fine and dandy so long as the fundamentals line up to the perception that the US is a afe harbour. If the sprialing debt does not get under control the fundamentals will continue to deviate from perception until perception catches up and the whole thing comes to a reckoning. It's not hard to see as we have ample evidence of it happening in other countries in this modern era.

Thank god for the Industrious American worker but even they are getting too exhausted to prop up this debt.