Wen Jiabao Worried About the Safety of US Treasuries

I think put more spy ships around China would make them buy more US treauries!

 

China has no choice but to buy those treasuries. The global economy would tank if they didn't, and China's economy would tank as well. They're between a rock and a hard place

 

does anyone think the rating agencies would actually downgrade US debt?

 

They better not, if they do that's hundres of billions down the drain as interrest on the debt will rise.

 

Absolutely. I dare you to stop buying US treasuries.

Having said that....I think this becomes more of a concern in 10-20 years...when China has its own market to sell the goods it produces. The US needs to be addressing that coming reality.

 

Yes, once the economy start to rebound the debt needs to be the number focus.

 

Trade Deficit Declining


WASHINGTON — The U.S. trade deficit plunged in January to the lowest level in six years as a deepening recession cut demand for imported goods.

The Commerce Department said today the trade imbalance dropped to $36 billion in January, a decline of 9.7 percent from December and the lowest level since October 2002.

The improvement was better than the $38 billion deficit that economists had expected and reflected the fact that crude oil imports dropped to the lowest point in three years and demand for a wide variety of other foreign goods from autos to heavy machinery and household appliances declined.

America’s deficit with many of its trading partners declined sharply although the politically sensitive imbalance with China bucked the downward trend, rising by 3.5 percent to $20.6 billion. American exports to China plunged by 19.7 percent, a much bigger drop than the 1.3 percent decline in Chinese goods shipped to the United States.

The January deficit of $36 billion, if it continued for the entire year, would result in a deficit of $432 billion for 2010, a drop of 36.5 percent from the $681.1 billion deficit recorded in 2008. That deficit represented a 2.7 percent drop from 2007, the first year that the trade gap had narrowed after setting records for five straight years.

Many economists believe the improvement for this year will be sizable as the country’s most severe recession in decades trims Americans’ appetite for foreign goods.

U.S. exports are also falling as the recession that began in the United States spreads worldwide. However, so far, the drop in imports is larger than the fall in exports, reflecting in large part the fact that oil prices have plummeted from the record levels they hit last year.

The trade deficit has now declined for a record sixth straight month, beating the prior record for declines of five straight drops set in 2007.

For January, exports of goods and services dropped by 5.7 percent to $124.9 billion, the lowest level since September 2006. Demand for a wide variety of U.S.-made products from farm goods to autos to civilian aircraft all dropped in January.

Imports fell even more sharply, declining by 6.7 percent to $160.9 billion, the lowest level for imported goods since March 2005. The decline in imports was led by a 25.2 percent drop in imported crude oil, which fell to $11.9 billion in January, the lowest level since February 2005. The average price for a barrel of crude dropped to $39.81, also the lowest point since February 2005.

While exports have not fallen as sharply as imports, the declines that have occurred have pinched U.S. companies.

Boeing Co. and Caterpillar Inc., two of America’s largest exporters, have already announced layoffs due to falling demand for their products in key export markets.

By country, the U.S. deficit with Canada, America’s biggest trading partner, dropped by 10.7 percent to $2.5 billion, the lowest imbalance since May 1999. The deficit with Japan fell 18.4 percent to $4.3 billion, the lowest trade gap with that country since January 1998. The deficit with the 27-nation European Union plunged 50.1 percent to $3.5 billion.

Many economists are worried that the spreading global economic weakness could prompt countries to resort to raising trade barriers in an effort to protect their domestic industries.

Treasury Secretary Timothy Geithner was meeting in Britain on today with finance ministers from the Group of 20 countries, which include the world’s wealthiest economies and major developing countries such as China, Brazil and India. President Barack Obama is pushing the G-20 nations to adopt sizable economic stimulus programs to jump-start their stalled economies. The U.S. Congress recently passed a $787 billion stimulus package that had been championed by Obama.

Former Dallas mayor Ron Kirk, tapped by Obama to be the nation’s top trade official, told the Senate Finance Committee at his confirmation hearing on Monday that his main objective as U.S. trade representative would be to enforce existing law and insist that U.S. trade partners play by the rules.

 

wow something that you and I actually agree on.

 

Is this really what the global economy has come to? A global game of being either a loan shark or a blackmailer...

 

That was a pretty good story. But a country just cannot go on like that. I hope the democrats and the republicans see this. It is not just the government debt, the US must start producing things other country would want. We must trade something other than hot air for the things produced in other countries.

 

I've heard that metaphor before and my question is rhetorical. I'm asking it out of exasperation over the economy than looking for an answer.

 

This example fails to account for the fact that Farmer Chang can't eat his oranges, because he doesn't actually make oranges, rather he makes paper clips and other crap that he can't actually use himself, and that he has to make ever-increasing amounts of them as part of the social contract with his workers.

 

So you are saying China will never develop a large enough internal market like the US currently have. I could swear their internal market have took a quantum leap during the last thirty years, maybe what I saw was all smoke and mirrors. If China economy continues to increase, do you think they have to sell huge amount of goods to the Amiercans and the Europeans by 2030? They might still export alot, but their internal market could very well be much larger than the export market.

 

Yes, this is the reality. What the US is to the whole world is pretty much what Wall Street is to the US, everyone hates it for having caused the whole thing, but it is too big and important to be allowed to fail.

 

I agree with your assessment Weslinder.

 

Pretty much. If you owe the bank $15,000, you are in trouble. If you owe the bank $150,000,000,000, the bank is in trouble. The other aspect is that we just don't owe China a bunch of money, but we have a great say in how much that money is worth. Theoretically, we could start hyper-inflation and in short order wipe out the debt. Of course, that would cause other large-scale problems...