China Needs U.S. Guarantees for Treasuries, Yu Says

[lostinblue]

http://www.bloomberg.com/apps/news?pid=new...id=aG_eSDsmh7rw

 

Feb. 11 (Bloomberg) -- China should seek guarantees that its $682 billion holdings of U.S. government debt won¡¯t be eroded by ¡°reckless policies,¡± said Yu Yongding, a former adviser to the central bank.

 

The U.S. ¡°should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,¡± Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

[Guest Tony n Terrific]

The US has been the policeman of the world since the end of World War 2. We have disrupted our society 4 times since then to fight the Korean War, the Vietnam War, Desert Storm and the war in Iraq. How many times other then the Korean War has China when it was a puppet state for the old USSR disrupted their society?

Guarantees? Yea we can give them guarantees. We are not going to allow Chinese goods into our country.

[whome?]

The US has been the policeman of the world since the end of World War 2. We have disrupted our society 4 times since then to fight the Korean War, the Vietnam War, Desert Storm and the war in Iraq. How many times other then the Korean War has China when it was a puppet state for the old USSR disrupted their society?

Guarantees? Yea we can give them guarantees. We are not going to allow Chinese goods into our country.

 

Big talk .... but they hold most of our debt so they win in an economic war. Protectionism will not solve the US problems. Having resonable, responsible and ethical businessmen and politicans will ..... know any?

[Jeikun]

Completely hypothetical... I know there are a billion reasons against it... but suppose the US one day did what Iceland did essentially. "We will honor no foreign debts" What would anyone REALLY do? It would kill our credibility true, but who could afford not to do business with us?

[Sebastian]

MIght be the right time for a USD to EUD swap-out, forget any US guarantees entirely.

[FuManChu]

Completely hypothetical... I know there are a billion reasons against it... but suppose the US one day did what Iceland did essentially. "We will honor no foreign debts" What would anyone REALLY do? It would kill our credibility true, but who could afford not to do business with us?

 

 

Definitely not something, I would like to ever see or even think about. The modern world would united and crack down on the US faster then a WWE wrestler. Who is going to do business with a country that doesn't honor its obligations? The collective harm to this country, that for the most part, is too soft to weather any type of hardship would be rocked into anarchy.

 

The global economy is so tied together, its sometimes easy to forget that politicians from this side of the world or the other..are posturing. MAD was a political theory of assured destruction in nuclear arms race with the soviet union. Would this be any less absurd economically for the world?

Edited February 12, 2009 by FuManChu (see edit history)

[lostinblue]

China has invested here because of one thing. We are the most stable country on earth. We can worry about many things (most of which we are not allowed to discuss on this board) but the break up of the united states is not one of them.This being said I can see the worry that china would have at our printing press working overtime to bail us out of the mess we are now in. Inflation really taking off and the value of the notes they hold falling out of sight. Will someday in the future china offer "suggestions" in dealing with US policy in the same manner that is being played out in washington with the bankers being scolded.