Do not bite the hand that feeds - China/US Relations

[PROFESSORI]

Looks like the Chinese are in way too deep,the whole relationship is being manipulated by the US to force countries like Japan and China into lending them ever increasing amounts of money,but the paradox is that the more money they lend,the riskier it gets and if they stop lending they risk losing the money they have already lent and destroying their economies at the same time,

A less subtle form of blackmail you could not ever find.How long will the Japs and Chinese stand for it?Read on…

* JANUARY 29, 2009

Chinese Premier Blames Recession on U.S. Actions
Beijing Rethinks Some of Its American Investments
online.wsj.com/article/SB123318934318826787.html

By JASON DEAN in Beijing, JAMES T. AREDDY in Shanghai and SERENA NG in New York

Chinese Premier Wen Jiabao squarely blamed the U.S.-led financial system for the world’s deepening economic slump, in the most public indication yet of discord between the U.S. government and its largest creditor.

Leaders in China, the world’s third-largest economy, have been surprised and upset over how much the problems of the U.S. financial sector have hurt China’s holdings. In response, Beijing is re-examining its U.S. investments, say people familiar with the government’s thinking.

Mr. Wen, the first Chinese premier to visit the annual global gathering of economic and political leaders in Davos, Switzerland, delivered a strongly worded indictment of the causes of the crisis, clearly aimed largely at the United States though he didn’t name it. Mr. Wen blamed an “excessive expansion of financial institutions in blind pursuit of profit,” a failure of government supervision of the financial sector, and an “unsustainable model of development, characterized by prolonged low savings and high consumption.”

Chinese leaders have felt burned by a series of bad experiences with U.S. investments they had believed were safe, say people familiar with their thinking, including holdings in Morgan Stanley, the collapsed Reserve Primary Fund and mortgage giants Fannie Mae and Freddie Mac. As a result, the people say, government leaders decided not to make new investments in a number of U.S. companies that sought China’s capital. China’s pullback from Fannie and Freddie debt helped push up rates on U.S. mortgages last year just as Washington was seeking to revive the U.S. housing market.

online.wsj.com/article/SB123318934318826787.html

[Proximo]

The Chinese have a lot to learn Professori. They are nouveau riche, getting cocky, and about to experience the biggest single bust in this entire episode in world economic history. If they get through it, they may, possibly, emerge as the world’s dominant economic player. I would not put money on it just yet though.

Either way it’s a 25-50 year play. Currently, they are FUCKED. Pure and simple.

There is no escape route for China. They can’t even hide. What’s that stuff they make again ? Oh yeah … now I remember … all the stuff we buy.

Congrats on spotting the biggest manufacturing bubble in human history …

Sell China.

[superpiper]

i heard emmet oliver on newstalk, talking about this.

He is very worried about a return to protectionism, and the effect of china and russia not buying US debt anymore.

I was spooked, by how much he was spooked!!!

[PROFESSORI]

From the Sunday Times:

From The Sunday Times

February 1, 2009
Spat with China raises fears of a trade war
Irwin Stelzer: American Account
business.timesonline.co.uk/tol/b … 627402.ece

The new American Treasury secretary uses a Senate hearing room to accuse the Chinese of manipulating their currency, and the Chinese premier uses the Davos gathering of the moguls to accuse America of wrecking the world financial system. Not an auspicious beginning for Sino-American relations in the new era of the great believer in softly, softly diplomacy, Barack Obama.

Tim Geithner has settled into his new job at the Treasury. It no longer matters that Geithner was the Fed’s man on Wall Street while the excesses and chicanery reached their peak. Or that he failed to pay his income taxes despite routine notifications from his former employer, the International Monetary Fund. Or that it was Geithner, along with his predecessor, Hank Paulson, who decided to let Lehman Brothers go under, bringing the financial system to the verge of collapse. That’s all behind him.

What might be ahead is a trade war, triggered by Geithner when he told the Senate during his confirmation hearings that he believes China is “manipulating” its currency to maintain it at a low value so as to stimulate its exports. “Manipulate” is the word that upsets the Chinese, and imports are the things that most upset the trade unions and congressional Democrats who see them as destroying jobs in America – never mind the benefits to consumers.
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