RECESSION LOOMS WITH USA & CHINA'S MONETARY BONDS & FINANCE BONANZA KEEPS INCREASING

China owns about $1 trillion in U.S. Treasury securities, just about ½ of the $2.37 trillion stock of Treasury debt held by "foreign official" owners. The amount of U.S. debt held by China is even higher than that, with 70% of China's $2.4 trillion in foreign exchange reserves invested in $US treasury  bonds. That includes the over $400 billion in debt issued by U.S. government agencies, the likes of Fannie Mae and Freddie Mac, whose obligations are liabilities of the U.S. government.

The US is the world's biggest debtor and therefore not in the best position to get its way with China. China's mercantile policies generate the world's largest balance of payment surpluses and contributed to China's $453 billion increase in foreign exchange reserves last year — surpluses that are too large where  no other country has financial markets capable of absorbing them. The yuan is 25- 40% undervalued, in large part because Chinese authorities instruct the central bank to purchase massive amounts of dollars in order to peg the yuan's value to the dollar at a level much lower than it otherwise would be. U.S. national debt is set to exceed $14 trillion by 2011 & a 3% increase in interest rates would raise the annual cost of paying interest on that debt to over $400 billion alone so the USA has a real problem.

Chinese save around 40% of their salaries & go without. Americans can't save & spend & that’s the difference. The Chinese are used to living off fresh air and conserve & work whereas the US love credit cards and spending beyond their means. In the 80s Chinese never trusted Banks so used to keep their money in cardboard boxes at home. They never trusted the Banks as they were all Communist run so having too much money one might be looked upon as doing a capitalist business. There idea was save to buy the house and workshop first. They would save till they got the full amount then pay cash. That part over they then turned there backs on this property --it was safe and they move on to save for their next project that being their business. The US save very little and once they buy a house they have mortgages whereas a Chinese will not ---now that the difference --have what you need and no more but own it outright whereas the USA would buy one house then use that house to borrow for another ---then bingo--HELP.

When the dollar depreciates against the euro and the yen, the yuan declines as well, as the Chinese currency is pegged to the dollar so the Chinese are just playing a waiting game & the US can’t do nothing about it---just bleating. America by contrast is self-absorbed with its monetary policy. It has ignored warnings of rising inflation and a new asset price bubble -- and in doing so is isolating itself, also from the Europeans. In the meantime, China is forging new alliances and at home has lifted interest rates and made private banks hold more reserves whereas USA is doing the complete opposite.
The People's Republic has quietly been taking stakes in virtually all the world's regional development banks. Like a mini-World Bank, China has helped financially troubled countries in Latin America, Africa and Asia & pumped $50 billion in the International Monetary Fund. Brazil, India and Russia, are happy to have an alternative to the US bond market. They buy Chinese bonds, and the Chinese in turn use this money to buy Russian, Indian and Brazilian bonds. This has created a second monetary circuit alongside the dollar. They are about to take over Australia’s Rio Tinto and assisted countries where oil & minerals are. The USA is bleating but they caused their own dilemma not the Chinese who now thrive on their exports.

COUNTRIES WHO CRASHED In the last 20 years:

• 1989 ARGENTINIAN

• 1997 THAILAND

• 1998 RUSSIA

• 1999 ECUADOR

• 2001 ARGENTINIAN

• 2010 GREECE, SPAIN, PORTUGAL so whose next!!!!!!!!!!!!!!!!!!!!!!!!!

Some of the world's largest hedge funds are even saying that the Euro currency will sink to trade at an even level with the U.S. dollar.

[ China buying bonds & loans ]

The most terrifying prediction for 2010 involves Nostradamus "Satan's arch of fury". Although the precise nature of this prediction is left open to interpretation -could it be a comet, a war but definitely a disaster??? eg. Russian drought; Pakistan flooding has started

Are we heading back to recession with $$$ dropping & foreign currencies starting to fall as at March 2010 [ World Population exploding ] [ China Vs USA finance situation 2010 ] [ China buying bonds & loans ] WHY ARE MANUFACTURERS & BUSINESSES LEAVING NZ: [ Read the story ] [ Compare to Thailand ] [ Check WHY THAILAND ] is better for Manufacturers & any Kiwi Company. Why NZ is lost [ NZ Deficit increases ] Yes we owe money????? [ Government $250m a week borrowing ] [ Transmission Gully Impact costs ] [ NZders lose out ]

"You believe me now that the world population needs to be addressed.

Don't tell anyone as most think its untrue & don't give a meow "

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NZ 2010 ARE WE HEADING FOR RECESSION AGAIN [ NZ- lost ] [ Kiwisaver good or bad ] [ NZ- deficit ]

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