Fogbuster

We've be seeing this coming for a long time. Now it's here:


US May Face 'Armageddon' If China, Japan Don't Buy Debt

The US is too dependent on Japan and China buying up the country's debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC.

Julian Robertson
CNBC.com
Julian Robertson, founder of Tiger Management

"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."

Robertson said inflation is a big risk if foreign countries were to stop buying bonds.

Inflation a Risk Without Foreign Debt Buyers: Robertson - Economy * US * News * Story - CNBC.com


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"All that is required for evil to triumph is for good to do nothing."

Patters

That's been true for years, and far more private debt is owned by foreigners than public debt. According to Wikipedia, 25% of fed debt is owned by foreigners and 44% of private debt is owned by them. If foreigners stopped buying US debt it would put them at risk. Our global economy is largely interdependent, which reduces the likelihood of war. E.g., If someone owed you a billion dollars and is making regular payments, you'd think twice before killing them for some ideological reason.

Fogbuster

Yes, that's true as far as you have stated it, but if push comes to shove China *can* call in the U.S. debt that we owe to China if China so chooses. Then the U.S. would be forced to print even MORE money, making it even more worthless than ever, and soon we could see inflation sky-rocketing to the 20%, 30%, and even higher levels. Could even become HYPER-inflation to Zimbabwe-like levels, if things go totally off the rails.

China now holds about $2 to 5 TRILLION in U.S. debt. China wants to get paid back so for now she holds off calling in the chits. But that means that more and more China can start telling the U.S. what to do, and what not to do. So, for example, if China were to say: "Hey, USA, stay the hell out of Asia from now, get your military bases out of Japan and South Korea, even Guam, and all other Pacific areas ... then some weak president -- and I'm not mentioning any names here -- may be tempted to send up the white flag.

Not good. Not good at all. Unless you want to owned by China. Which I don't.


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__________________
"All that is required for evil to triumph is for good to do nothing."

efin98

All the posturing is really about striking a better deal on both sides in hindsight but it makes for good publicity towards their media and citizens.

China shows their force off Taiwan, US cuts them slack on electronic piracy and bootlegging...

US tries to sell Taiwan more naval ships and arms, China lowers the interest rates a bit and buys more food...

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"As long as we have Belichick, I always think that we're going to be just fine."...Tom Brady, in reference to his coach.

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Fogbuster

But all deals struck are producing the same thing: China is getting more and more dollars from America, while America is getting more and more video games and cheap clothing from China.

How's THAT going to turn out???

NOT good for America, guaranteed.


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__________________
"All that is required for evil to triumph is for good to do nothing."