China's $1 trillion in foreign reserves

[lovuian]

http://feeds.bignewsnetwork.com/?sid=c51d74830dff47f9

China's holdings of foreign currencies and securities are about to rise to more than $1 trillion, an amount that far exceeds the nation's actual needs.

As of Sept. 30 its reserves totaled $987.9 billion, and they increase by some $20 billion a month. That means that in the next few days China's total foreign reserves will go to 13 figures.

Because about 70 percent of China's foreign reserves are in U.S. government bonds, the price of those bonds has stayed high and -- because bond prices and yields vary inversely -- U.S. interest rates low. But because most of China's foreign reserves are in U.S. dollars, any decision to exchange such securities for non-U.S. holdings could have disastrous consequences for the U.S. economy.
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We have been such fools

[Vexatious Ape]

1. grim times ahead

Do you think it's time to start stockpiling canned food, or will it just be a recession?

[Poll_Blind]

2. Circa 2217, archaeologists unearth "Prosperity Banners" from dying America

A few hundred years from now, they're going to be digging up current America from Chinese soil

x(

PB

[knitter4democracy]

3. I've been saying this for awhile.

The recession's going to get worse when that s*** hits.

[EVDebs]

4. All that paper is worthless if no one is left with ability to buy China's

products. Just a reminder.

[cassiepriam]

5. US recession would help China? People will only be able to afford the

inexpensive goods that China produces. Every one will shop walmart?

[EVDebs]

6. US GDP is about 1/4th of the world's entire GDP

It's a downward spiral; besides if China holds "worthless" US paper we will be able to redirect some of that trade. Wal Mart is a 'monopsony'

http://en.wikipedia.org/wiki/Monopsony

A downward spiral doesn't help either country. Besides, if oil's price rises in the future, it pays WalMart to direct purchases of goods in a more local trade scheme. Low oil prices subsidize WalMart.

[cassiepriam]

7. Gotcha thanks. So it is in china's best interest for US economy

to stay strong?

May I ask you why China is holding all our paper then?
What advantage is it to them in practical terms?
Political power? I know the Chinese are long term thinkers and very smart about this kind of thing.
What is their strategy?

[EVDebs]

8. Ask the Japanese who hold much US paper/real estate

BTW, they aren't holding "all our paper". Wealthy US hold much; Saudis etc. too.

See foreign holdings of US debt
http://www.house.gov/tanner/foreignholdings.htm

and US Treasury link in link above for fully examination
http://www.treas.gov/tic/mfh.txt

and see Consequenced of foreign ownership of US debt at
http://www.answers.com/topic/united-states-public-debt

China seems to have become a part of the US web of economic interconnectedness that is intended to prevent wars in the future: you're less likely to fight your trading partners.

Weathly in the US (that 1 and 1/2 % we hear so much about, and 'Bush's base') hold 56% of the public debt, foreign interests hold the remaining 44%,

""It is common for individual Americans and businesses to buy bonds and other securities, though much of the debt is now held overseas. At the end of 2004, foreign holdings of Treasury debt were $1,886 billion, which was 44 percent of the total debt held by the public. Foreign central banks owned 64 percent of the Federal debt held by foreign residents; private investors owned nearly all the rest (figures are from the Analytical Perspectives of the 2006 U.S. Budget, page 257 <1>). The country holding by far the most debt is Japan which held $679 billion at the end of March, 2005. In recent years the People's Republic of China has also become a major holder of Treasury debt, holding $223.5 billion at that time.""

'Structure of the debt' at
http://experts.about.com/e/u/u/U.S._public_debt.htm

The more pressing issue is wealth accumulation at the highest income percentages along with the issue of wealth redistribution, or, as Louis Brandeis once said, "you can have great wealth or a democracy, but you cannot have both".

[cassiepriam]

9. I think we are an oligarchy now.

Thanks for all the info.

PS I didn't realize that Japan held the highest
amt of our debt.

[Deja Q]

10. Logical.

Re: Trading partners are less likely to war against each other.

Bizarre, but it too is a form of symbiosis...