it is in china's best interest to bail out everyone- thoughts?

Discussion in 'Economics' started by dumb_mother, Jan 3, 2011.

  1. i think china has decided it is in their best interest to bail everyone out one after the other to maintain the status quo as long as possible.

    i mean think about it- in the current status quo- china is basically the world's saver and while they are putting the vast majority of their reserves into a worthless low-dividend yielding investment (ie the rest of the world's debt) they are still putting some into buying up resources around the world and receiving that tiny dividend that gets further reinvested. (ie south american oil, african farmland...) the longer they can maintain this status quo, the more that portion of their investment in hard goods can continue to grow. in the future, when they finally allow the rest of the world's debt to crash they will have amassed an immense proportion of the world's physical assets (ie natural resources), much more than they currently control.

    i don't think it'll be in china's best interest to allow debts to fail for several more years, maybe even as much as a decade or two, but i can't see it going that much longer than that- demographics will eventually overpower them.

    wow, i'm not sure why it took me so long to figure this out, it was reading spains bailout talk that it all just clicked. anyone else have thoughts about this?
  2. Tsing Tao

    Tsing Tao

    im curious how you arrived to the belief that china CAN bail out ANYone.

    taking a deep look at where china is on domestic spending would begin to raise doubts that they, themselves, have the wherewithal to actually be able to do anything on a global scale.
  3. it was reading spains bailout talk that it all just clicked. anyone else have thoughts about this?


    I was wondering the same when I read about Spain. Somewhere, someone, I'm sure could sum up this situation in about 3 sentences along with the consequences but I haven't read him yet. I know this much, a country we import from should not be bailing us out, it's whack, what this means, don't know.
  4. Buying Spanish debt is otherwise known as vendor financing. It worked well for GE for a long time and then it nearly brought the company down. It'll happen to China too. Remember, all those reserves that China has are just the asset part of their balance sheet. Something called the yuan is on the other side and it is dependent on the asset side retaining value.
  5. that is true but if you think of it in end game results then all fiat currencies could be viewed as simply something that will eventually be = to zero, and thus ignored since in the endgame access to resources will be the only thing that matters.

    so at current state every year china increases it's control / ownership of the world's resources- each year longer that the game can be played china will increase the percentage of the world's resources it controls and owns. so the longer the game can be played the better. it will be interesting once china runs low on foreign natural resources to goble up ownership of.
  6. Thanks, sounds like you nailed it.
  7. 1) Did you compose your thread on a hand-held device? :confused:
    2) If the rest of the world falters, who will buy China's junk....whoops, I meant to say "exports"? :confused: :eek: :(
    3) China cannot expect to be immune from the "next" downturn. :eek: :(
  8. the thing is they won't care when the rest of the world falters because yes all paper money will become worthless, all paper debt will become worthless- the only thing left of value will be natural resources.

    right now they are perpetuating the myth of the value of these paper devices while simultaneously slowly amassing more and more natural resources. when the reset button is hit, yes they lose all the paper value (which in endgame sums is and always will be worthless)- but they will have more and more of the natural resources cornered the longer this goes.