No nations on this report – I haven’t followed the links. This isn’t a good moment for me to be reading anything that requires concentration…!

http://www.americanthinker.com/blog/2008/09/who_owns_our_debt.html

Now, considering that the trade deficient will be narrowing, as the US consumer will have less bucks to throw China’s way, and that their costs of operation have still be increasing. They do have 1.3 billion (about 20% of the world’s population)people compared to our 300 million… a lot more population to support. They can see less income from the US on the horizon.

The PRC government has also claimed that, while mainland China runs a large surplus with respect to the United States, its overall balance of payments is not out of balance.

Also, China is criticized for keeping the value of the renminbi and yuan artificially low so as to make them more competitive. This currency devaluation causes problems too.

Financial consequences of revaluating or floating China’s Currency
The financial consequences of free valuation are complicated. Many economists believe that appreciation of the yuan would cause the PRC government to buy fewer United States treasury bonds, causing bond prices to fall and bond yields to rise, hampering improvement in the U.S. economy. The ensuing depreciation of the US dollar might price oil out of the reach of the American economy, causing stagflation, a collapse of US oil dependant industries, massive unemployment and other dire economic consequences.

However, the potential risk to global balances from mainland China’s inflexible exchange rate would be more critical if the PRC relaxed its controls on short-term investment flows without first introducing exchange rate flexibility. This is because shifting exchange rates nullify expected profits from investment flows seeking to take advantage of higher interest rates in another country. Without flexibility, speculative flows could quickly become large, as they did during the Asian financial crisis, and threaten economic stability and orderly world trade.

Now, when you consider that this bail out is likely to affect the dollar value, which will result in high oil prices again, those Chinese loans aren’t likely to translate to much, and they will most certainly keep their currency undervalued to maintain their competitive position in the consumer market.

Mind boggling this global world is, yes?

http://www.nypost.com/seven/09292008/postopinion/opedcolumnists/os_dangerous_pals_131216.htm?page=0

Mata…
Your article doesn’t seem to address the same issue…maybe I just fail to see the connection. I’m assuming that the DeMint statement refers to cash flow that China is loaning the US Government to fund our short term requirements. We have been borrowing too much for the functioning of the US national debt, and if China stops loaning us cash on a short term basis, the buck stops…literally!

They have beaucoup bucks to loan due to the trade deficit, if I understand it correctly…

Odd that you mention it, but I had archived a recent Asian Times article called “Red capitalism, or market communism?” by Sally Wong for the China Business section. As they have been moving towards a more western economy, they see the US moving towards a socialized economy with this bail out. There’s many Chinese economists that use this as a fodder to address their own real estate value problems… meaning stick with the socialization.

The difference between China and the US housing is that their housing… that also shot up very high, very fast, has not started to decline. Thus they think they are not necessarily in trouble. However private housing is beyond the means of the average Chinese wage earner. This will leer it’s ugly head in the future. Unsustainable high priced housing always ends up being a factor.

You can read the link I provided above, but here’s some pertinent excerpts. But all in all, nope… don’t think China’s in the position to bleed cash either. And if they were, it would behoove them to prop up the US economy, since they are one of the largest… if not *the* largest… beneficiary.

But as I’ve pointed out, this problem economy and nationalization of banking is, and has been, taking place in more than just the US.

But while China is moving closer to a free-market economy, the US now has to take more and more “socialist” measures to save its collapsing financial markets. For some Chinese economists, Washington’s bailing out of the two mortgage finance companies Fannie Mae and Freddie Mac, and American International Group (AIG) is a move of “nationalization”. And the George W Bush administration’s proposed US$700 billion rescue package is a further step in this direction.

“Washington’s moves serve as an eye-opener to free-economy believers in China who now realize that even in a market economy, the government cannot always keep its hands off the economy, however market-oriented it may be,” an economy researcher with the Chinese Academy of Social Sciences (CASS) said.

“On the other hand, the US moves seem to give those who have been demanding the Chinese government ‘rescue’ the plunging property and stock markets a ‘justification’ or excuse to cry louder, regardless of the different situations between China and the US.”

~~~

Now the Chinese government is facing demands from within to take steps to help its own property market.

According to National Business Daily on September 24, the semi-governmental China Real Estate Association has submitted a report to the State Council, or cabinet, proposing the government ease its tightening policy on the property market. Deputy president of the association, Zhu Yizhong, said the proposals included allowing local governments to “rescue” their real estate markets as well as to lower the housing transaction tax.

The association in effect wants Beijing to “legalize” moves that have been taken by some local governments to halt a plunge in housing prices in their localities, including to financially subsidize house buyers, the CASS economist said.

~~~

These cities have launched the rescue measures not because there are sharp drops in housing prices but because of a plunge in housing sales.

Housing prices in 35 cities gained 8% year-on-year in the second quarter, down from 9.8% in the January to March period, according to the National Development and Reform Commission and National Bureau of Statistics, suggesting Beijing’s efforts last year to rein in borrowing and prices is having an effect.

In Xian, housing prices rose 20.8% in the second quarter, but transactions dropped 20% by floor area. House prices in Xiamen were the third-highest among the 35 cities – at about 7,000 yuan (US$1,000) per square meter on average. But sales declined 64%.
Hence, their rescue measures have aroused fierce criticism. Critics say the city governments are defying Beijing’s policy just to sustain housing prices at a high level so they can reap more funds from land sales, which have become an increasingly important source of their fiscal incomes.

~~~

The internationally recognized reasonable housing price is three to six times a person’s annual income. In China, the ratio of housing price to average wage earners’ annual income is from 15 to 20 or even higher.

http://rightwingnews.com/#post12827

“The biggest creditor is China and that’s a big part of this equation that’s not being talked about. If America was not in such deep debt, we could deal with this problem much more effectively — but China has essentially told the U.S. that we make good on all the debt that they’re holding, which is nearly a trillion dollars, or they’re going to stop lending us money. To show that they’re serious, they’ve already stopped lending us money and if we can’t borrow money every day, literally hundreds of billions of dollars, we default on the loans that are coming due.”

This would be the same media that has managed to convey the Congress as clueless that the AUMF (Authorization to use Military Force in Iraq) really meant military action may and could be used.

When you can convince the masses that Congress didn’t know, when the entire resolution was named such, they can pretty much convince the US voter that the world is really flat afterall.

USA has to be the Leader in this World financial mess caused by leftists obsession of egality. US Government should drop the bailout plan immediately and allow a temporary recession. Market will self- heal if left alone without government intervention.

This is how communists manipulates things:

BARACK OBAMA AND THE STRATEGY OF MANUFACTURED CRISIS
http://www.americanthinker.com/2008/09/barack_obama_and_the_strategy.html

The strategy of forcing political change through orchestrated crisis. The “Cloward-Piven Strategy” seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

Cloward and Piven were inspired by radical organizer [and Hillary Clinton mentor] Saul Alinsky:
“Make the enemy live up to their (sic) own book of rules,” Alinsky wrote in his 1989 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system’s failure to “live up” to its rule book can then be used to discredit it altogether, and to replace the capitalist “rule book” with a socialist one. (Courtesy Discover the Networks.org…)

Their strategy to create political, financial, and social chaos that would result in revolution blended Alinsky concepts with their more aggressive efforts at bringing about a change in U.S. government. To achieve their revolutionary change, Cloward and Piven sought to use a cadre of aggressive organizers assisted by friendly news media to force a re-distribution of the nation’s wealth…

To read the rest click the link above.

This is very bad for free people, government caused the problem, and government increases it’s power as a result. Some solution.