| At last, there are some serious topics for discussion on this blog. It goes to demonstrate that this blog is truly getting mature as each day passes. Having read through the article, which Rimbaud has pointed to, below are my views. China is clearly stupid for whatever reasons, especially when most people already knew those T-bills and mortgage bonds will surely plunge in value. However, I see 2 good things come out of this: 1. China Central Bank is now under considerable pressure to reduce the commercials banks' reserve requirements to encourage growth as the Chinese economy is showing signs of slowing. 2. By buying these securities to support the U. S. Dollars, China help to stem the rise of the Yuan - [1] The Central Bank had been advocating a stronger Yuan whereas the Finance Ministry oppose a stronger Yuan to gain an edge for China's exports. So now the Central Bank has to bend to the Finance Ministry. [2] The Bush Administration and Congress can no longer bash China for not having a stronger Yuan, as China can say to them, "Hey look here, I'm helping you and I now suffer big-time loss, what more do you want from me?" Whatever it is, I still say China is stupid because US politicians are an bunch of selfish and ungrateful lot; especially if there is a shift to the Democrats who always accused the Bush Administration of being too soft towards China and Obama had indicated on many occasions that he cannot wait to beat up China. So whatever good done during the Bush Administration it will be all wiped out clean and forgotten. It is not worth giving away the Chinese people's hard-earned money to the "American International Bandits", who also created the late 90's Asian Financial crisis. I believe, the sub-prime/financial problems that are there all the times and now blown up are a ploy by the Bush Administration to cancel out their huge trade and budget deficits; as it is, the US Dollars' recent rise proves this. While there are mistakes made here, I feel that all is not lost as China has puchased debt securities and not US Dollars directly. Any Adminstration taking over the White House will have to take steps, such as raising interest rate, to prop up the US Dollars to deal with inflation at home that is hurting the men on the street. While high interest rate will affect debt securities, the exchange rate may be in China's favour. Afterall China can choose and time when to cash out. Up to a point, a strong US Dollar is good for all as it is still an instrument for trade, goods and services. However, a fine balance has to be mainained; and it is only greed that creates upheavals and sufferings for all. |
China-US Economy Discussion