trying to cool off the property market, the Chinese govererment have been restricting banks to offer loans to developers. and the developers have turned to off-shore financing. collectively property developers from China have issued $900 billion high yield bonds in HK, while the developers paying tens of billions of interests to froeign banks, the PBoC basically offers free loans to the US with the risk of default, this is one of the most stupid things you can think of.
Chinese Economics Thread
- Thread starter Norfolk
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AssassinsMace
Lieutenant General
China has already done it. Back during the Obama adminstration, China was buying oil on the cheap to fill their reserves. I believe this was around when Obama was bragging of US energy independence to the Saudis and the Middle East and then Saudi Arabia increased production, much like they're doing against Russia now, because cheap oil to fracking, to which how the US was energy independent required world oil prices to be at least $60 a barrel in order to be profitable, was a poison pill. So politicians were upset at capitalism complaining about China taking advantage buying oil low while they seem to think China can only buy when it was high.
if those developers go bankrupt, who will be left holding the bag?
One exception is too many. If you were Saudi government, would you be worried that the Americans would come after you also since many Americans are calling to hold Saudi responsible for terrorism.
Besides Americans have more assets in China than China has in America. It is better off for America to use the Fed as printing press to print it out of the fiscal mess. Inflation would devalue the debt.
Did they not sieze an Iranian building not too long ago accussing Tehran of supporting terrorism?
Justice Against Sponsors of Terrorism Act. It allows Americans to sue a foreign state for any foreign state's support for acts of international terrorism against the U.S. Multiple 911 victims have filed a sue against Saudi after this act is passed. For now, Saudi was assured by the US that its invesment in the US isn't under threat yet. But if China holding of the US treasury is seized and defaulted, then that is a complete different level of violation of sovereign immunity.
That is why Russia sold its treasury holding. China might sell its holding of the US treasury if things turn from bad to worse. At this moment, many people within China still hope to maintain its relationship with the US. As a sole superpower for a long time, the US has forgotten that many things have consequences.
PikeCowboy
Junior Member
maybe a virus will come from Japan the next time and that'll be the next special case? once you have one special case can you really guarantee there won't be more？
Jura The idiot
General
plawolf
Lieutenant General
Yes and no. Refined oil based products have a shelf life, unprocessed oil does not. The US stores vast quantities in literal caves.
If crude oil had a shelf life, we wouldn’t have so much of it now. Under the right conditions, crude can and does last for millions of years.
China could literally buy up vast quantities of oil and refill the old disused empty oil wells in Daqing if they have not been otherwise repurposed previously. All the transport, extraction and refining infrastructure would already be in place, so it should be a pretty cost and time effective thing to do.
Assuming the oil futures price is right, why not just buy oil futures or call option. Alternatively, perhaps pay the seller for storage,