Would you swap 1T USD in debt with China for equity in US Companies?

[a500lbgorilla]

John Milligan-Whyte and Dai Min's column--English--People's Daily Online

It's an interesting article that appears to know what it's talking about. It's also an enticing proposal though I'm not sure I understand all the ramifications of it as my brain is running really slowly this morning.

About the source: People's Daily - Wikipedia, the free encyclopedia

[Warpe]

GM IPO. http://english.people.com.cn/90001/98705/99725/7082238.html

Better for the US Government to divest itself of its equity positions and use the proceeds as it sees fit, buying back US Treasuries being one of many options.

[Ash256]

am i the only one who reads all these large numbers and thinks "fuck man, i just wanna provide for me and my people"

[spoonitnow]

am i the only one who reads all these large numbers and thinks "fuck man, i just wanna provide for me and my people"

+1

[wufwugy]

No, I wouldn't, but it's a better option than what we've been doing. The article misses the real problem, which is faux free trade. US-China trade is corporate protectionism and middle class oppression. We created China by deregulating our corporate enterprise and letting them go to China where they can write their own regulations.

Our debt to China is not an issue. At all. The debt isn't even one-sided in the first place. The issue is that which creates the debt. The White House and most economist know that the problem is Chinese market protectionism which we can't force them out of without destabilizing our own markets for a time. Some kind of equity investment doesn't come close to the mark, but it's probably the best that Barry can get away with

The article makes a whole lot of simple mistakes. Things like extrapolating the growth of China's economy without factoring in incredibly important stuff. China has serious internal problems that no other developed nation had to deal much with except perhaps Russia or Japan to some extent. The US will remain top dog for a very long time, likely the rest of the century, and really our only problem is that faux trade that lets US corporations trade 'freely' yet protects China.

End faux trade, open up both markets instead of just one, then watch as that article never gets written in the first place

[kiwiMark]

You can swap $T on 2p2 pretty easily I think.

[Warpe]

...The US will remain top dog for a very long time, likely the rest of the century...

Go on...

[wufwugy]

Go on...

I slightly misspoke. China will surpass all in GDP in just a few decades. However, their per capita GDP will still not be close to fully developed nations' levels. Over this century we will see US lose a bit of room in their role as economic warhorse, but overall top dog status will remain for quite some time due to things like military and political centralization and infrastructure. Also, we are still the hub of all things rich. If we pursue policy that uses that well then US will grow quite quickly again.

EU is already bigger than US, yet not as much of a superpower, Brazil will become huge over this century, and East Asia, excluding Japan will grow immensely. A problem, though, with Asia is a overpopulation, awful demographics for growth, low infrastructure, and poor human rights. Demographics alone is an enormous problem for extended growth. Russia and Japan have the demographics problems, and they've been hurting for decades now, yet their demo problems aren't even close to China's

Also, the rise of China doesn't mean the fall of US, but more a balancing act. They'd have to give up a shitload of manufacturing jobs in order to get where we are, and they aren't even close to wanting to do that yet. China has an extremely imbalanced system, and fixing their problems will benefit US and EU and many other places. The only reason they're so big now and growing rapidly is because they oppress their populace, economy is largely slave-ish, they depress their own currency by not trading it and buying up a ton of USD and this allows them to corner the market on manufacturing, but that's a looooooooooong way from being on the level of a developed country, especially the US

One thing to keep in mind is that the global economy is run by corporations primarily. The US-China dynamic isn't even close to natural, and if we ever start regulating our economy well again it will go a long way to fix imbalances and bring super dynamism back into areas like US.

If I had my way I would work on improving North American relations and trade with Mexico and even Brazil in order to rival what is becoming a trade juggernaut of Asia/Australia, invest much more in infrastructure, and actually tax the rich. If we did those the US would remain the on top yet not with as much space for the rest of the century. We wont do that, but we're gonna do some stuff that will help the cause.

Also, China is partly forcing US to do more for themselves than otherwise. We've shipped so many jobs over to them that we have to do something to fix unemployment and any policy that would do that would put a big fork in the plans of Chinese world domination

IMO, the demographics and population problem alone will keep China down in many ways for over a century

[wufwugy]

Also, global warming is going to kick the shit out of small and densely populated regions. I predict that as sea levels rise and desertification ensues, some of the best places to live will be US and Canada

[a500lbgorilla]

Yeah, I'm not sure how that's possible.

America is transitioning into a generation of people who want to save before they want to spend. Germany is transitioning out of one. China and India will become incredible consumer markets by virtue of their 2.4 billion total population. If you were a company looking to re-invest some capital back into yourself, would you look to tap a receding American market or the India/China markets that'll be going gangbusters?

I think America will be tops for the better portion of my life because of our military and financial sector, but I see very little reason to assume they'll endure for a century.

edit this should be above wufwugy's two posts. I'm really slow today.

[a500lbgorilla]

If I had my way I would work on improving North American relations and trade with Mexico and even Brazil in order to rival what is becoming a trade juggernaut of Asia/Australia, invest much more in infrastructure, and actually tax the rich. If we did those the US would remain the on top yet not with as much space for the rest of the century. We wont do that, but we're gonna do some stuff that will help the cause.

Legalizing all illegal drugs, what would that do for our Mexican relations? Is there possibility for a whole new trade relationship there?

[wufwugy]

America is transitioning into a generation of people who want to save before they want to spend.

I don't think that's happening. That's normal during recessions and we've had lots of them. Our demos and mentality are still hugely hugely consumerism. China, OTOH, is the opposite, and viciously so

China and India will become incredible consumer markets by virtue of their 2.4 billion total population.

It's actually not about population total, but about the right balance and type of population. They have a demo nightmare, and won't pick up close to our level of consumerism for a very, very long time. Also, as China consumerism increases, so will US production and exports, and that is honestly what we want.

If you were a company looking to re-invest some capital back into yourself, would you look to tap a receding American market or the India/China markets that'll be going gangbusters?

It's not that we're receding, but that we're having a correction. With bad policy we'll be in a pretty strong position for a while, but with good policy we'll grow well which would be huge at our already high position

Also, Asian markets are still developing and will hit tons of huge problems that will have destabilizing effects. China is already creating some big-ass bubbles and fudging numbers and things are so tough for them that they're shitting their pants if they grow at a super low annual 5%. Their enormous growth will not last that long, and it will hurt them like hell when it happens

I think America will be tops for the better portion of my life because of our military and financial sector, but I see very little reason to assume they'll endure for a century.

Depends on definition. Their GDP will be much bigger than US, but per capita much lower. Their infrastructure, politics, social factors will need the better part of the century to rival US, and even then there are serious population problems that will keep them down.

Also, in order for China to rival US per capita GDP, global GDP would have to increase by octuple or something stupid crazy.

[wufwugy]

Legalizing all illegal drugs, what would that do for our Mexican relations? Is there possibility for a whole new trade relationship there?

We already have very good trade with Mexico, but it could improve a ton. No problem for Mexico comes even remotely close to the drug contraband and gangs. Our retarded drug and firearm policy has been raping them in the ass forever. Simply by virtue of geography, Mexico could become an economic powerhouse if their gangs weren't so powerful.

A North American Union would be AWESOME, but it wont happen because of Republicans. US and Canada benefit off each other greatly, and we're missing out on so much by not helping Mexico. Imagine how much worse Germany's economy would be if France was Estonia. We're making a huge mistake by not capitalizing on hugely important geography

[rpm]

wuf, do you have a PhD?

[wufwugy]

I almost flunked out of high school

[gabe]

you think despite china and india having so many people, they wont turn into a big consumer economies because of cultural differences? why do we tihnk they are going to be so much like the US?

[wufwugy]

Not sure what you're asking

China and India are becoming huge consumer markets, in some ways similar to US, some ways not. Per capita will pretty much never come close to as high, even though both will surpass US in total. Maybe they will in some far off time when we're far beyond using fossil for energy and have fixed problems like population (which we never will, willingly at least)

Nobody can predict the when and how. My prediction is that even though US will be surpassed in total GDP, we will still be the global leadership hub this century. There will be much movement towards Asia taking over, but in order to take over the leadership arena that US now has many revolutions of all kinds will be required.

Also, the rhetoric of trying to isolate factors or ideas is a little confusing because it takes two to tango (at least). Currently, the global economy and 'leadership' revolves around how the USD and yuan exchange (Euro is important too, but not as much) and the relationship between Chinese production and US consumption (EU as well, but again not as much, even though they're technically the biggest economic engine on planet). Globalization will gradually mold things towards developing nations playing much much bigger roles, North America and EU will still reign on the per capita GDP basis, and US will have the strongest military and per capita vote power for a long time.

[a500lbgorilla]

Culturally, home ownership is huge in America. When someone owns a home, they need home-models to meet all of their needs. So long as we all want to carve out our own piece of land, have a house and a family, we'll be awesome consumers. But we're only 300 some million and we've been consuming via credit for so many years.

India and China have been the biggest economies of the last 2000 years, on the back of housing a great portion of the world's population. No reason for the post-world-war economic landscape to endure in-perpetuity. We may have created titans of certain industry, titans of the financiers and titans of the military, but those won't stand by virtue of themselves.

[BennyLaRue]

If this were Civ4, I'd respond to the financial growth of my international competitors by building more Universities and Observatories and beat them with science by building my spaceship first.

Civ5 is out in 30 days, btw.

[a500lbgorilla]

If this were SC2, a nuclear launch would be detected.

[Hawk]

If this were Civ4, I'd respond to the financial growth of my international competitors by building more Universities and Observatories and beat them with science by building my spaceship first.

Civ5 is out in 30 days, btw.

I can't fucking wait for civ5. I still play the shit out of civ4. i always turn off space race victory though, otherwise that's how it always ends.

[wufwugy]

Apparently there's a traffic jam in Beijing that has been going on for ten days and the cars are moving at an average half mile a day.

We cannot predict exactly what the the population problems will be as they develop, but we do know they will be problems problems problems and likely such enormous of problems that they can't be beaten without elimination of the source

[wufwugy]

YouTube - CHINA ~ meltdown imminent?

I really like this guy. His Capitalism Hits the Fan lecture is one of the best I've seen. Here he discusses his belief that China is lying and making an enormous bubble that could be worse than the housing bubble

[a500lbgorilla]

But he only has 3 months left on his prediction for a Chinese bubble bursting.

Still very interesting link.

[wufwugy]

But he only has 3 months left on his prediction for a Chinese bubble bursting.

Still very interesting link.

Robert Reich has been credited with predicting the financial crisis, but he facetiously discounts that by saying that he predicted the financial crisis right around the corner many different times, and that all economists make a whole bunch of predictions that don't hit their date. A huge problem with macroeconomics is that there's no laboratory and no controls. We think in terms of time periods so we apply those periods to our predictive analysis, but IMO it's more about the theory matching the numbers, not getting any sort of date right

Take peak oil for example. It is complete fact, but after we know we hit peak at some point in the past, expect to find most of the timeline predictions were wrong, but the fundamentals were still correct.

[ensign_lee]

I can't fucking wait for civ5. I still play the shit out of civ4. i always turn off space race victory though, otherwise that's how it always ends.

Start nuking people or bribe montezuma to do it and the game ends very differently.