Recession Opens U.S.-China Rift Paulson Talks Bridged

Recession Opens U.S.-China Rift Paulson Talks Bridged

news.yahoo.com

Dec. 29 (Bloomberg) -- The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over.

Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.

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This is rather interesting, yet another stimulus package worth around $850 billion and who is the intended buyer "China"! As if we need to owe even more money to them. If $7.4 trillion couldn't do it, how do they expect another $850 billion will? Your comments and please do not turn this into an Barack Obama bashing or praise thread. It is not about him but the proposed stimulus package.

news.yahoo.com
(visit the link for the full news article)

Not surprising. If China no longer has much use for America as a consumer then there is little reason to continue to pretend to have good relations or continue keeping the dollar alive. It will be interesting to see how much growth they loose when making their economy more internal focused. I think Chinese becoming the main consumer of Chinese made goods with money accumulated from years of selling to the US was always the plan of their government but now they have to make the change over earlier then expected.

Unless of course they think the US economic situation is retrievable and to be honest I would almost feel more comfortable lending money to GM then the US government these days. Not that I would lend to GM even if I had shares in them, I don't throw good money after bad. It will be interesting to see how China plays this, continuing to lend money to keep the US propped up will keep to status quo for now, that's one option (somewhere down the track I feel they will have to bite the bullet regardless) and while there may be more risk in the other option I also think there would be more long term reward.

[edit on 30-12-2008 by Jacob08]

reply to post by pstrron


I will admit that I am extremely jaded right now and in my mind Paulson is a lying crook who should be tried for treason. So, with that in mind I can't help but think that China is upset because he fed them a package of lies which led to them buying a ridiculous amount of our debt. Now they see what he was up to and they are upset.

No body in the world, arm-twisting aside, is going to buy new Treasuries
(with a return of under 1%) to Fund the new administration stimulus package.

That is the reason the Federal Reserve itself is proposing to issue bonds...
these new type of bonds are seperate from the US Treasury bonds.


China is worried more about the US policy of devaluing the dollar... which is really eating away of the value of the $1-2 Trillion in Treasuries they now hold...
China isn't seriously considering rolling over any maturing Treasuries much less buying additional debt of the USA....

heck- they are shutting down hundreds of industrial plants that sent goods to the USA...And many workers are returning to their family farms to ride out their recession

I agree with Karl Hungis...both in name and opinion.(He fixes the cable?)

In a debate over the bailout, many people were saying that the executive officers of the Wall St. businesses had unnecessarily high salaries and could be linked to why the companies were hemorrhaging money...and Paulson was at the top of the list of highest paid CEOs before he took the treasury position.

In regards to the stimulus package, I'd say that Obama would have to be some kind of moron if he was trying to come off as a bringer of change, only to continue the same mistakes his predecessor mapped out with an amazing attention to detail.

People have be saying for a long time that china could pull the carpet from under America any time it wanted to, the only thing thats been stopping them is they don't want to disrupt their gravy train. I get the impression that this is all starting to change now, china has been creating quite a big international presence recently everywhere from africa to russia and europe to Taiwan -they've even been increasing relations with South America. I think the main reason for this is that like everyone else they've seen the end of western economic dominance and predicted a period of highly chaotic reorganizing is coming in the near future.

With the collapse of the current economic systems china is positing itself to best cope with the doom thats coming, this could well mean it's time for china to start cutting ties with the american and british markets - weather they do this is a drastic fashion or subtly depends on their longterm game plan, if they would rather smash america's imperialistic ways or tie on so many life lines that when it's over all china needs to do is tug on the strings to make america dance.

How china responds to yet another plea for cash from the USA is going to be a really good indicator of what they've got up their sleeve for the next phase of this giant economic arm wrestle. The talking heads in china are already saying china should cut the rope and let american opulence fall but china knows when ropes start getting cut that means the knives are out, how sure is china that she's not going to get one in the back?

I suppose it all depends on how well they've managed to prepare their military for the ensuing chaos that will come, if anythings going to start ww3 then it's the sudden collapse and removal of america from the world stage.

It would be prudent to remember that "Paulson" (our King of the Treasury) wasn't busy 'ironing out' relationships with China of his own accord, but rather was sent to 'sell' the (GLOBAL) Strategic Economic Development (SED) process on behalf of our true masters..., the WTO.

China is suspected of suffering "buyer's remorse" already; and who can blame them, when their wisest and most respected members already knew, and made clear to it's eager 'commercially motivated' members that this was a 'dance with the devil' for which an unspecified price would be extracted.

The engineered nature of the economic turmoil becomes more evident everyday. The ISB and WTO, the IMF and the remainder of the Transnational Mafia are controlling things, and have successfully seduced the Chinese into the game. Now the Chinese are realizing this is a 'scheme' of some kind; and I suspect they are wondering if they really want to be a part of it. Whereas Paulson's job will be to convince them there is NO OTHER WAY TO SURVIVE THE FUTURE ECONOMIC ENVIRONMENT.

Hence the word "Strategic" in the titular "Strategic Economic Development."

Isn't it fun watching all these powerful "leaders' play games with our world?



[edit on 30-12-2008 by Maxmars]

Thanks Maxmars. You posted what I was suspecting and you wrote it very well. Thank you.

The Chinese have incredible wit and intelligence - the officials in Beijing watched and learned from the downfall of the Soviet Union. China has a plan, agenda and a strategy for dealing with America. The vast allocation of Chinese capital was, as Hilary Clinton pointed out, economic stealth and influence over United States foreign affairs - especially Taiwan.

Throughout this crisis, China has been increasing trading deals and economic ties with India. Within a few years, the Indian and Chinese will be the most important consumers in the World.

Paulson failed suaveness and open relations with China is drastically falling apart and it is obvious Beijing is not afraid to publicly castigate the US Treasury. And, more alarming to Washington, China wishes not to play Grandma any more.

Is it possible that the ISB, WTO and the IMF could be used to force China into accepting such a position? Frankly, I don't think they would, however that is just my opinion and the powers that be may in fact have another idea.