“Basically: “Oh please Mr. Saud, please continue to take our funny money for your oil and buy our treasuries with it.”

……..when discussing Saudi Arabia.

When you think about it, the Chinese are probably going to keep buying our debt while “our” corporations keep building factories over there. When we stop building factories over there (because they are all there–LOL), is when the Chinese will take a very hard look at whether buying our treasuries is worth it.

The situation is basically this:

A formerly super-wealthy nation has several “maxim guns” in the form of nuclear ICBM’s and submarines equipped with more nukes. This formerly wealthy nation also has the world’s largest air force and navy and can project real mouth-busting force anywhere on the planet, in two places at once. This formerly wealthy nation also has satellites all over the sky that can spy on other nations and tell whether or not they are building big maxim guns as well, and is attempting to make sure no other nation does so.

We have lost a good third (at least that) of our manufacturing capability here in the US, the formerly wealthy nation. Wealth is the ability to make stuff from raw materials, or pick something from a tree, or mine it from the ground. Our wealth is increasingly from things that others in the world wont buy from us, and even things like our raunchy entertainment will be going south before too much longer, because the rest of the world will have the ability to make junk food for the mind just as well as we do. We manufacture good large weapons, but we dont really want other nations to have those. Just about everything else can be made cheaper in China or India.

If China, Saudi Arabia, Russia, and Japan quit buying our T-bills, we will have some very hard decisions to make. Cut the military way back? Seems inconcievable now, as we have hedged our bets on it as a nation and its the basis of our foreign policy (our stick). Cut entitlements? Would there be huge riots in the streets if we done so? “Re-build” tons of factories? Stuff would be more expensive to make here, and our laws demand we employ lots of very difficult employees in this legalistic nation. The insurance alone in America is probably more vis-a-vis than Chinese manufacture’s labor cost. Discrimination lawsuits, finding jobs not as physically demanding so that women can do them, et cetera. A few really lazy employees who are hard to fire. There are obstacles.

The US -really- screwed up when they let big ticket manufacturing leave our shores. China was OK as long as they were making shower shoes and trinkets, but as we moved electronics and more over there, we basically built the factories for them that make wealth out of raw materials that any country can mine. Factories, simply put, are the wealth-creating machines of the world. Its very foolish to leave one’s nation without them.

I think, and its unpopular, that our outrageous housing prices are the genesis of our decline, and a big reason for our outrageous housing prices is …………………drum roll please……………….diversity.
Whites in particular will pay a good deal more money to live where they feel safe and their kids get to go to white/asian schools. They need more money to do this than what they otherwise would. If we still had $40K starter homes like in the 80′s, we could pay people 8 bucks an hour in factories and it would be like making $18 bucks an hour now. Apartment rents are now $500 bucks for a bedroom in second-tier cities in “fair” parts of town, not to metion the sought -after areas. If apartment rents were still $250 a month for decent areas, we could pay employees much less and we’d be much more competitive. How much it costs to live in any given place to have a reasonable dwelling in a safe part of town dictates indirectly how much labor will cost in an area.

I personally dont think we should trade with any country that treats its workers as lousy as China does (employees living in cinder-block “dormitories”, working 12 hours a day, 6 days a week for what………….a dollar an hour? Would we let anyone do that here?). If we merely traded with Japan, Europe, Russia, Australia, South America we’d still be fairly competitive, but not with China. Nobody can compete with China. They have a smart populace with a good work ethic and their employees are cheaply housed..

Lunacy like this Climate-Bullshit bill will make it that much harder for us to be competititve. Making “stuff”/growing exportable food/mining exportable raw materials is the basis for any economy. One cannot have an economy based on health care/entertainment/services alone unless they are one big vacation destination (Orlando, Florida for example). Other places have to make stuff, grow stuff, or mine stuff. We still grow stuff, we are hampered by hippies from mining stuff as competitively as we might, but still pull it off, but we are not making enough stuff that sells well—————–and our corporations are the reason for it. They “built” China and India. H1B has undercut our technological prowess by cutting the pay of our “discovery” and tech-savvy class also, which has wound up steering many of our great minds into being financiers, quants, lawyers (we -really- dont need any more of those), doctors**,and other things seen as un-outsourceable.

** A note on health care: Its a shame we dont really educate our kids on better eating and moderate excercise. If we ate right, and every person was GIVEN (yes I said GIVEN) a free treadmill paid for by the taxpayer for their home, really hammered with knowledge about the effects of smoking/over-consumption of alcohol/poor diet, I’d bet we could cut our health care costs dramatically over the next 30 years. I mean it, I think we’d be shocked. We are costing ourselves much unecessarily here, in a way that buids no wealth whatsoever. If a person eats healthy and gets some excercise, they likely wont have any health issues until old age after having had a productive life. If a person smokes, drinks heavily, gets fat, is sedentary he will likely be diabetic, have lung problems, liver problems, develop at least one chronic condition and have beacoup doctor visits, prescriptions, drug store visits, much lost work time, twice as many surgeries, an emergency room visit or two, much higher insurance costs, cut short his work life, and probably another externality or so Im leaving out. Its such a waste. Its a quiet drag on the economy.

He has written several.

Welmar@
Have you read Jim Rogers book/ I’m midway through and am finding it to be very, very, interesting.

Listen, our government and wall street thugs suckered the Chinese. And while the Chinese realize it now, they don’t know of a way out of it. When you finance a loan that goes bad, all you get is the collateral on the loan (I.E. the house). Chinese banks are going to go under in great depression like numbers in the next 3 years.

Note this is not a national default. They made loans on things that failed. A default would be the government bailing the debit it owes.

I would guess the Chinese will hate us for it (I would too). And they may very well cut off trade and crash the US dollar. Life is going to be shit for them as well as us. But it also gives us a chance to start making our stuff again and the Chinese can make things for their own people instead of American consumers.

I don’t like it either, but you can’t get something for free and when you make bad loans, you get screwed. Frankly we scammed them. And we deserve what’s coming to us.

A national default on our part would prompt a very nasty retribution.

It would be a true economic apocalypse.

Like the Japanese before them, they will find playing games with American real estate will result in almost nothing gained.

On US government debt they hold… not really sure what will happen.

On thing is for sure, we are all in for a very rough ride. We got away living for free on credit without making much for the last 15 years and now it’s time to feel the pain of our bad behavior.

Going through the depression this is going to be painful for the Chinese. But China should do well once they leave the sucking black whole that is American credit consumer culture. They will be able to make goods for themselves and enjoy the fruits of their labor. And hopefully Americans will learn to work hard again and produce their own goods.

I never bought into the credit consumer culture that developed in the US. It seemed like people were buying things to make themselves feel good about themselves, kind of like a low grade narcotic.

We already sold China rocket technology (I believe that counts as aerospace) back in the 90s — through Loral I believe.

I remember sitting next to a Canadian jet propulsion engineer on a flight to Beijing, and he told me that his company was giving everything the government would allow to the Chinese, and then some.

I also know that Caterpillar was helping build Chinese tanks.

When our backs are against the wall, do you think we would give China any less? Seriously, now. People want, above all, to get paid.