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China: Stuck with its addiction to U.S. debt
| Shanghai's Pudong district...built with help from the purchase of US debt. |
Officially, the response from China's government to S&P's downgrading of the U.S. late Friday was summed up by the state-run Xinhua news service: "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets."
This is a logical response from our largest creditor. The only problem -- it lacks teeth. China's enormous holdings of U.S. debt help keep its currency artificially low. That, in turn, keeps China's exports really cheap. And that keeps Chinese people employed. This is the formula China's economy has been based on for years (for more background, see my story about this from Marketplace last week).
China's trapped. Unless it wants to rapidly appreciate the RMB and set in place even more rapid inflation (a death wish for China's Communist party), it will not sell off U.S. Treasury bonds. In fact, all indications are that it will keep buying them at a steady rate, because there is no currency with more liquidity and flexibility than the U.S. dollar .The Euro comes close, but China's not going to dump U.S. Treasury Bonds for Euros when the economies of Greece, Portugal, Spain, and Italy are so terrible.
So the question isn't "Will the Chinese now sell off US treasuries?" Instead, it's "Is the U.S. a responsible steward of the global economy?" This is what our largest debt holder will continue to ask itself and the rest of the world. The downgrading is another argument the Chinese have in favor of the proposition that you just can't trust the United States of America with your money.
Heck, if you look at the numbers, you might deduce that you can't even trust the U.S. with its own money. The United States has debt approaching 100 percent of its GDP. China's official government debt is less than 20 percent of its GDP; almost none of it owed to foreigners.
The other more disturbing dilemma is what many Chinese have deduced about the U.S. political system after watching the three-ring debt circus in recent weeks: If this is how democracy works, why would we want that?
China spends a lot of time being lectured about how it doesn't understand the global financial system. Now China's government will relish lecturing the U.S. about the same thing.
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While other owners and league executives branded Davis a renegade, friends and former players found him the epitome of loyalty Players noticed Davis wasn't on the field as frequently for training camp or regular-season practices To make room on the roster, the Colts waived OL Mike TepperC the first regular-season game outside the United States Jackson was admittedly quite good in his 2 1//2 quarters of work before he was injured There are currently 112,205 shareholders who own a total of 4<br><br> "We got here last night, and then you wake up this morning and hear we lost our owner, the man who built this team for many, many years, it's tough to take in as a teamThe league played its first regular-season game in London in 2007 when the New York Giants defeated the Miami Dolphins 13-10"Al Davis was a good man, and we were friendly rivals," Pittsburgh Steelers chairman emeritus Dan Rooney said in a statement released by the teamSmith and Watt will be two players we will watch closely on Sunday, and here are five other matchups we will take note of this coming weekend:Buccaneers at 49ersMatchup: Patrick Willis vsStat of the Week: 325Tom Brady threw the first regular-season red zone interception of his career at the end of the second quarter against the Jets But his week Miller was benched losing his spot on the team<br><br> People keep saying, 'You've got to win the big one That and the fact that the next four weeks see the Bengals play Indy, rest for a week with the bye and then head out on the road for winnable games in Seattle and Tennessee should put them in a pretty good position once the tough part of their sked begins In this week The Chiefs rushed the ball very well against the colts last week which leads me to believe that Benson is in for a solid game Win lose or draw, he did it his wayNot anymore<br><br> A common draft was established, and the first Super Bowl was played following the 1966 season -- Green Bay beat Kansas City, then went on to beat Davis' Raiders the next seasonDoes Jacoby Jones have to be better? Yes, he doesFor me,<a href="http://www.authenticbengalsshop.com/">Official Bengals Jersey</a>, though, Davis' role as a coach,<a href="http://www.officialsaintsteamshop.com/cameron-jordan-jersey-c-15_44.html... Cameron Jordan Jersey</a>, general manager and owner while also innovating the vertical passing game and ushering in an era of more offense and creativity always will stand out There is a real place for that, and certainly there was a place for that in the NFL But before every big bang,<a href="http://www.officialsteelersteamshop.com/james-harrison-jersey-c-15_35.ht... James Harrison Jersey</a>, other elements are required to make it happen Nothing will change<br><br>Related Topics Articles：
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