China's Liquidity Crunch Slams Importers Who Are Defaulting, Reneging On Deals | Zero Hedge

Posted by straightlinelogic 11 years, 11 months ago to Economics
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The top candidate for the beginning of the end of the world.

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  • Posted by Danno 11 years, 11 months ago in reply to this comment.
    Faster? We are still in the "1913 Fed Period" play. That is why I think this part of that play is the end game. Going to be nasty.
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  • Posted by straightlinelogic 11 years, 11 months ago in reply to this comment.
    Oh, there are always fools willing to lend to governments, which as a class are historically the worst credit risks. However, if China quits buying our bonds, we may have to pay a few hundred basis points more interest, which our debt saturated economy cannot aford.
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  • Posted by Robbie53024 11 years, 11 months ago in reply to this comment.
    Correct, that's why I said that we'd have to shut that down. China slams it's doors shut on production, we slam our shut on their bonds. I think that China could more easily deal with the situation, but I think that we could as well, even if it would be more painful in the short term. It would also be the best thing that could happen to us - no more easy money would force DC to trim.
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  • Posted by Danno 11 years, 11 months ago in reply to this comment.
    Can't bring that volume of manufacturing back overnight. That is why I think War will come to quicken the readjustment and cleansing.
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  • Posted by straightlinelogic 11 years, 11 months ago in reply to this comment.
    Don't forget, however, that China is one of our largest creditors. If they were a forced seller of Treasury debt, it would cause massive indigestion in our financial markets.
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  • Posted by Robbie53024 11 years, 11 months ago in reply to this comment.
    Probably. I'm torn on it, as that could actually be good for the US. Bringing more manuf back here would be a good thing. It would require shutting off the borrowing and wealth transfer to China, which might be problematic.
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  • Posted by Danno 11 years, 11 months ago in reply to this comment.
    The Great Depression was caused by US Central Bank Vendor Finance (i.e. loan Europe money to buy American products to rebuild after WWI). China now has its own Vendor Finance problem. What will happen? Surely a large crash in China. Then America loses it outsourced factory???
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  • Posted by Robbie53024 11 years, 11 months ago in reply to this comment.
    The flaw is that China can slam the door at any time, default on all outstanding debts, and reduce the imbalance of male population. What that will do to their populace is of little concern to the leaders.
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