FugitiveVisions
Junior Member
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US Financial Crisis/Bailout, China's Role
- Thread starter FugitiveVisions
- Start date
Back at the CMF, someone said that China had a raw deal buying US Treasuries.
Nothing can be further from the truth now, because in times of crisis, Treasuries are considered safe haven, and people are just swarming to it now. A US Treasury bond is far more secure than any bond put out by a investment house because the Treasury has the complete backing of the US government.
Frankly it is the US government---and the US taxpapers---that is getting the rawest deal here because the US government is buying worthless paper from the failing banks and investment houses. Literally paper. The savings and loans crisis a decade ago like involving Lincoln Memorial actually deal with real and tangible property, deeds, titles everything. That crisis happened because the bubble broke and the cost of the titles became less than it was mortgaged for. When the government bailed this out, it actually got some land out of it, and years later, when conditions were much better, they can turn around the land and even manage to sell it at a profit.
Today, what you're paying is some fancy piece of paper for a bond that is essentially bad debt repackaged over and over again in some pyramid scheme.
So if the Chinese loaned money to the US government, they get a US Treasury Bond, which actually is worth something because its backed up. In turn, the US government uses the money to buy back the junk bonds and mortgages that, unlike the Treasury Bond, are worth trash and has no redeeming value down the road. So the US government---and US tax payers---put themselves on a deeper _shit hole_ down the road. But they have to do it, sacrifice the future to save the present, before the financial situation cascades to other banks and into people's personal savings.
Bush is a very die hard Republican, and probably like McCain, believes in the Freedom to Fail concept. But the facts displayed to him must be so chilling he had to turn around and do the largest government intervention in the US economy since Franklin Delano Roosevelt, called both Obama and McCain to his office and even made a public appeal to the people. I lost my faith in Bush after all these years, but what he is doing now is the best thing he can do and the only thing he can do now.
Nothing can be further from the truth now, because in times of crisis, Treasuries are considered safe haven, and people are just swarming to it now. A US Treasury bond is far more secure than any bond put out by a investment house because the Treasury has the complete backing of the US government.
Frankly it is the US government---and the US taxpapers---that is getting the rawest deal here because the US government is buying worthless paper from the failing banks and investment houses. Literally paper. The savings and loans crisis a decade ago like involving Lincoln Memorial actually deal with real and tangible property, deeds, titles everything. That crisis happened because the bubble broke and the cost of the titles became less than it was mortgaged for. When the government bailed this out, it actually got some land out of it, and years later, when conditions were much better, they can turn around the land and even manage to sell it at a profit.
Today, what you're paying is some fancy piece of paper for a bond that is essentially bad debt repackaged over and over again in some pyramid scheme.
So if the Chinese loaned money to the US government, they get a US Treasury Bond, which actually is worth something because its backed up. In turn, the US government uses the money to buy back the junk bonds and mortgages that, unlike the Treasury Bond, are worth trash and has no redeeming value down the road. So the US government---and US tax payers---put themselves on a deeper _shit hole_ down the road. But they have to do it, sacrifice the future to save the present, before the financial situation cascades to other banks and into people's personal savings.
Bush is a very die hard Republican, and probably like McCain, believes in the Freedom to Fail concept. But the facts displayed to him must be so chilling he had to turn around and do the largest government intervention in the US economy since Franklin Delano Roosevelt, called both Obama and McCain to his office and even made a public appeal to the people. I lost my faith in Bush after all these years, but what he is doing now is the best thing he can do and the only thing he can do now.
Schumacher
Senior Member
China already has close to 10% stake in Morgan Stanley bought earlier at a much higher price than now, that's why there're many opposition by Chinese to buying more of US financial stocks. I have to say I agree with those who oppose.
However, if/when US does allow China to buy some of its technology/resources stocks for sure China should go for it but I wouldn't hold my breath for this.
With all these trillions thrown at the problem, US is obviously trying to inflate away all the debt problems which is bad news for China & other holders of US$. China should definitely have a gradual but steady long term strategy of diversifying away from US$ & many other 'paper currency' for that matter.
antimatter
Banned Idiot
WHy you keep on insisting China buying useless, junk, no real product produced financial institutions of US?
Outside of US, China has much better luck.
Buying awilco of Norwegian oil drill fleet, Midwest iron ores from Australia, tangayika oil field of canada.
Blackstone, morgan stanley, lehmen brothers are garbages, causing china to lose billions already. It was horrendous decisions.
Say No to US financial institution investment.
FugitiveVisions
Junior Member
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FugitiveVisions
Junior Member
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antimatter
Banned Idiot
Keep in mind, more than 10% share of US companies will get subjected to congressional hearings and scrutiny. and potential political backlash.
China bascially said I have enough of that, no need for this type of abuses.
That's what China told morgan stanley essentially recently.
happy now.
China bascially said I have enough of that, no need for this type of abuses.
That's what China told morgan stanley essentially recently.
happy now.
antimatter
Banned Idiot
The house just rejected the $700 billion bailout plan.
Even the US government itself doesn't want to do it, you expect CHina has a role for that. don't be ridiculous.
Even the US government itself doesn't want to do it, you expect CHina has a role for that. don't be ridiculous.
Mr T
Senior Member
The US government IS for it - it's the legislative who are unsure because of pressure from the voters who don't understand the implications of doing nothing.
There will probably be another vote with further concessions made - Congress supposedly won't go into recess until the deal is done.