Wednesday, August 08, 2007

Republicans and Democrats trying to hurt America

Please read this article:
<http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml>

This article discusses recent "threats" from China to the United States.

To make a long story short China has "pegged" their currency to the dollar. This is extremely wrong and is partially responsible for the increase in the trade deficit we have with China.

At the same time China is buying US debt each and every year. China (and Japan) own a huge amount of US debt. China is now threatening to "dump" the debt they hold onto the market. If China does this it will have a large effect on the US, it will:
1. Make the dollar fall even further (It is already at record lows)
2. Increase interest rates in the US. This would happen because of the huge sum of treasuries
being introduced to the market.
3. Most likely put additional stress on the US housing market in a time when it is already under
pressure.

I am sick and tired of watching Democrats and Republicans in Washington ignore our current problems.

Mike Sylvester

4 comments:

Jeff Pruitt said...

Mike,

This is only the beginning. The US is almost completely beholden to the Chinese government. It's only monetary and trade policies now but soon it will be foreign policy and likely defense expenditures. China will use its leverage against up to acquire technology and corporate power.

Bartleby said...

OK, Mike, I'll be your straightman here ... how can anything the Chinese do with their currency, not involving attacking Los Angeles or something, be "wrong?" Let alone "extremely wrong?"

If I were the Chinese, holding $1.3T in Washington's paper, I'd first wonder how I could ever have been so stupid. Then I'd be dumping it as fast as I could ... they'd be foolish to do otherwise. A nickel on the dollar is better than the bupkis they're going to get if they wait for the official default & repudiation. Or do you think Mordor-on-the-Potomac is actually going to pay off its debts? How?

Bobby G. said...

And here I was only worried about CHINA bringing their cars to America to sell...

What was I thinking?

Good reporting, Mike!

Anonymous said...

Well the great 2nd Roman empire must come to a close sometime. We just might be unlucky enough to see it.

NC