Thread: China warns Obama deficit spending must stop

MONEYNETDAILY

China warns Obama deficit spending must stop

Beijing reluctant to keep bankrolling president's belt-buster budget

Posted: December 19, 2009
11:30 pm Eastern
By Jerome R. Corsi
© 2009 WorldNetDaily

One day after the Chinese Prime Minister Wen Jiabao snubbed President Obama at the United Nation's Copenhagen Climate Summit, the Chinese warned the United States that China's ability to continue buying U.S. Treasury debt was limited.

Zhu Min, the deputy governor of the People's Republic of China, told the Shanghai Daily that it is getting harder for the People's Bank of China to buy U.S. Treasuries because the shrinking U.S. current account
is reducing the supplies overseas.

This was dire news for the Obama administration that in 2010 and for the foreseeable future will be dependent on China to buy U.S. Treasury debt in order to fund the trillion-dollar federal budget deficits projected over the next decade.

The Shanghai Daily reported that Zhu told an academic audience that it was inevitable the value of the dollar would fall in value given the increasing reliance of the Obama administration on issuing U.S. Treasury debt to finance deficit spending.

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said. "Double the holdings? It is definitely impossible."

Zhu's warning was clear.

"The world does not have so much money to buy more U.S. Treasuries," he said.

China's warnings portend that the Obama administration's determination to expand the U.S. social welfare state will necessarily meet a limit when foreign nations lack the U.S. dollar foreign exchange reserves needed to purchase increasing amounts of U.S. Treasury debt.

Zhu's comments were a warning to the Obama administration that China does not approve of the large and continuing deficits the U.S. is projecting into the future.

The current account is a measure of a country's current surplus or deficit in international trade, plus international borrowing and lending, plus transfer payments such as foreign aid.

The largest component in a nation's current account is typically the balance of trade account.

Specifically Zhu Min was referencing the diminishing magnitude of the continuing U.S. balance of trade with China brought on by reduced demand for consumer goods in the United States.

According to the U.S. Census Bureau, foreign trade division, the U.S. balance of trade with China for the last decade is as follows:



By comparison, in 1990, the U.S. negative balance of trade with China was only $10,431,000; in 1985, the U.S. negative balance of trade with China was only $6,000,000.

This year may end up being the first year in over a decade where the U.S. negative balance of trade with China has been smaller than the negative balance of trade in the previous year.



Thus, while China's foreign exchange reserves have gained dramatically over time, reaching a current level of $2.3 trillion at the end of September – the largest amount of foreign exchange reserves any nation has ever accumulated in the history of international trade – the rate at which China is accumulating foreign exchange reserves has slowed, reflecting a reduction in the United States' purchasing of goods from China during the current global economic downturn.

According to the U.S. Treasury, China is the largest holder of U.S. Treasury debt, amounting to $798.9 billion in October 2009, with Japan second on the list at $746.5 billion.

http://www.wnd.com/index.php?fa=PAGE.view&pageId=119537

Now, Lets add back the import tariffs that worked so good at keeping Americans busy.

Bring back our 2nd industrial revolution!!
Screw China!

We are no longer a self supporting nation.

Originally Posted by Floorguy

Now, Lets add back the import tariffs that worked so good at keeping Americans busy.

Bring back our 2nd industrial revolution!!
Screw China!

We are no longer a self supporting nation.

ABSOLUTELY!! Protected Trade Now! Bring back the 31,250,000 good jobs Free Trade Treason has cost the United States and the American People.

If people really want to fix our economy and position to pay down this horrible debt and reduce government spending, we need to take all of the following 5 steps:

1. stop illegal immigration
2. pass the FairTax
3. protect our trade
4. legalize/regulate/tax under 2 the illegal drug trade
5. drill baby drill

Originally Posted by Floorguy

Now, Lets add back the import tariffs that worked so good at keeping Americans busy.

Bring back our 2nd industrial revolution!!
Screw China!

We are no longer a self supporting nation.

But if we did that we would hurt those companies profit margins! And these are American based companies! Oh my God! How could we even think of doing that! <sarcasm>

All we would need to do is re-instate the protective tariff that Wilson made Congress get rid of. As it forced a tariff that made cheap imports equal to the price of domestically made products. But since most of the imports were lacking in quality to domestically made products, people bought American made.

But it would force these companies to do the right thing. Move back to America, pay people right, and ethically run your business. All the corporate thievery over the last 30 years like companies raiding retirement funds then kicking workers to the curb, and unions doing similar things, has made it very scary for a lot of folks.

Originally Posted by Hylander_1314

Originally Posted by Floorguy

Now, Lets add back the import tariffs that worked so good at keeping Americans busy.

Bring back our 2nd industrial revolution!!
Screw China!

We are no longer a self supporting nation.

But if we did that we would hurt those companies profit margins! And these are American based companies! Oh my God! How could we even think of doing that! <sarcasm>

All we would need to do is re-instate the protective tariff that Wilson made Congress get rid of. As it forced a tariff that made cheap imports equal to the price of domestically made products. But since most of the imports were lacking in quality to domestically made products, people bought American made.

But it would force these companies to do the right thing. Move back to America, pay people right, and ethically run your business. All the corporate thievery over the last 30 years like companies raiding retirement funds then kicking workers to the curb, and unions doing similar things, has made it very scary for a lot of folks.

ABSOLUTELY, HYLANDER!!! Protected Trade Now! If you don't protect it, you will lose it.

Jobs Out (Free Trade Treason) + People In (illegal immigration) = Bankrupt Nation, yesterday, today and tomorrow.

We can't expect a different outcome and won't see one by continuing the same policies that caused this disaster. Reverse the policies that caused this disaster and American will fix our country in no time at all.

China(the impressive messenger?) is telling American politicians and the American people to prepare for the 2010 elections. Then we can raise taxes, cut services, or inflate our currency. There will be no cake walk for the Republicans when they take back the house.

If Americans do not like what the Commies are doing right now, they will not like what the Republicans will have to do after the next serve in this continuous game of ping-pong. JMO

So much for the free lunch.(Damn liberal base is chock full of idiots.) End the Fed.