Financial collapse redux in china?
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Financial collapse redux in china?
http://www.washingtonpost.com/blogs/worldviews/wp/2013/06/20/chinas-economy-is-freezing-up-how-freaked-out-should-we-be/
Propagandhi711- Posts : 6941
Join date : 2011-04-29
Re: Financial collapse redux in china?
What will happen if China decides to sell the foreign-held U.S. Treasury Securities since it has over 26% of the total and well over 1.2 trillion dollars? The domino effect could be devastating. Kris can probably shed some light on the role of banks on such matters.
goodcitizn- Posts : 3263
Join date : 2011-05-03
Re: Financial collapse redux in china?
Let us say you have a very rich neighbor and he knows everything that goes on in your household since you do not believe in curtains. The guy knows you are gainfully employed and produce 16 dollars worth of output in a year. You host a lot of parties and there is revelry all around. The neighbor has a set of binoculars. And your name is Gatsby.
Whenever you run short, the neighbor is ever-ready to give you more loan since he knows if he gives it to his own children, he may never get it back. Right now, he has given you 4 dollars. He hopes your parties and the people that come to them will come up with ideas to give him a good interest rate. He also knows there is not much else going on, in the town and everyone is in a miserable state just like his own home.
If he even thinks of selling a dollar of this loan to someone else, he would be taking a huge hit on the rest of the loan and be forced to write-off losses. So, even as he slurps on his noodles, he watches you, mr.gatsby, enjoy your foie gras; me? you ask... i am over there at gatsby's international food section enjoying the malai kofta and avial.
Whenever you run short, the neighbor is ever-ready to give you more loan since he knows if he gives it to his own children, he may never get it back. Right now, he has given you 4 dollars. He hopes your parties and the people that come to them will come up with ideas to give him a good interest rate. He also knows there is not much else going on, in the town and everyone is in a miserable state just like his own home.
If he even thinks of selling a dollar of this loan to someone else, he would be taking a huge hit on the rest of the loan and be forced to write-off losses. So, even as he slurps on his noodles, he watches you, mr.gatsby, enjoy your foie gras; me? you ask... i am over there at gatsby's international food section enjoying the malai kofta and avial.
Petrichor- Posts : 1725
Join date : 2012-04-10
Re: Financial collapse redux in china?
That's what I meant when I cautioned about the domino effect. China is in a tough situation along with Japan, Taiwan, Brazil, UK, Russia, Switzerland, Germany and the rest who all hold huge amounts in Treasury Securities.
goodcitizn- Posts : 3263
Join date : 2011-05-03
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