View Full Version : US-Chinese Ponzi Scheme

26-07-2009, 10:11 AM
from MSN-Money, dated today:

"Beijing thought it had discovered the perfect scheme for establishing independence from the West, yet it has instead made its dependence worse than ever. And he observes that one unspoken reason that China has gone whole-hog on its massive, $650 billion fiscal stimulus program -- creating more factory capacity in a country that is already reeling from overcapacity -- is that the effort gives it cover to stockpile copper, oil, iron ore and other hard assets that it considers to be better stores of value than dollars."


"China and the U.S. together built the most monstrous liquidity bubble in world history as each pursued what it believed to be logical self-interest without any regulator, such as a stern global central banker, telling them that they were on a path of mutually assured destruction.

Now it's reached the point where global capital markets will impose their own discipline. Because most money generated over the past decade was spent on consumption rather than investment -- it's as if Madoff's clients blew their fake money on chartering jets rather than buying real property as a store of wealth -- there are few new buyers of goods. This has killed U.S. retail sales, crushed employment, lifted the foreclosure rate, stymied homebuilders and undercut loan demand."

Me: The bull has run amok in the China Shoppe and since China will NEVER be a true Global Power, it looks grave. In the terms of Bones (Star-Trek) "Jim, I'm a doctor, not an accountant for God's sake! The operation was a success however the patient died".

26-07-2009, 12:02 PM
Yes I agree with the article and your comments.
But the same thing happened in the 70's Arabs put oil up, Arabs bought US fighter planes, Arabs invest in US real estate.
Also the Japanese had a huge trade surplus with the USA and bought a lot of US dollars and real estate.
But it is not just the USA it applies here in NZ and Europe and much of the rest of the world. China is making everything and factories are closing down world-wide.
But other countries must be able to export something so that they have the cash to pay for Chinese imports, they cannot borrow for ever ! (But we in NZ have been doing that for years and we have one of the highest overseas debts per capita and per GDP in the world.
But what is the answer ? we all want cheap stuff and we all buy they stuff China makes and retailer buyers are always looking for the cheapest they can get.

It will sort it self out eventually when overseas investors will no longer lend to countries such as NZ and we will have to cut our cloth to get a loan from the IMF.
Also it is well known, that the Chinese are getting worried about the value of their investments in the US (value of the dollar etc). And they have the cheek to tell the USA to save more and stop importing so much !