The government signs people up for welfare, gives ’em food stamps, free cash, free housing, free healthcare, free phones, free transportation. Over 100 million people are on welfare alone. And 12 million on disability, and 30 million union government drones (soft welfare), and all the pensions. It’s called “stimulus” by Obama and the liberal progressive socialists. And paying people infinite unemployment benefits “creates jobs”. It’s all become part of the normal USSA lexicon.
Thank God for China, taking our IOU’s for there products, and loaning us money. It’s a great big circle jerk: FSA gets EBT cash and SNAP; goes to Wal Mart and spends it all; 80% of the products at Wal Mart are made in China; China gets the cash; China loans the cash back to the USSA to redistribute to the FSA; and the whole cycle starts again. The only problem is our debt. But idiots like Krugman say the debt doesn’t matter. So thanks China, for loaning us money and allowing socialism.
How China helps pay for Medicare, Welfare, U.S. aircraft carriers
By Rick Newman
Chinese holdings of U.S. federal debt hit a new record high toward the end of 2013. We should probably be grateful.
At the end of November (the latest data available), China held $1,317,000,000,000 in U.S. Treasury securities. If all those zeroes make your head swim, that’s about $1.32 trillion, which exceeds the prior record, from 2011. China has been the largest foreign holder of U.S. debt since 2008, when it overtook Japan, which is now No. 2.
Chinese holdings of U.S. debt strike some people as a national-security vulnerability, but that’s largely a myth fed by fear-mongering xenophobes. For one thing, the debt held by China only amounts to about 7.6% of the entire $17.2 trillion in U.S. debt. About two-thirds of the national debt is held in the United States, with roughly 45% of that held by government trust funds and other federal agencies, much of it taxpayer money slated to be spent on Social Security and other entitlements.
Borrowing from all sources, including China, also helps Washington pay for more programs than Americans finance on their own through taxes. A trenchant irony of China’s lending to the United States is it helps pay for aircraft carriers, fighter jets, missiles and other military hardware that would menace China if there were ever a standoff between the two nations.
“One big pot of cash”
Funds from China also help pay for Medicare, welfare, highways, education grants, prisons, food stamps and most other things the federal government spends money on. A few programs — most notably, Social Security — have a dedicated source of funding. Medicare is partly funded that way, but money for some parts of the popular healthcare program for seniors comes from the Treasury Department’s general fund. For the most part, money from taxes and borrowing goes into the same pool at the Treasury, with no distinctions on how dollars from different sources are spent. “Whether the payments are derived from debt or taxes, it’s all one big pot of cash,” says Deborah Lucas, a finance professor at MIT’s Sloan School of Management.
China’s holdings of U.S. debt may actually be a bigger worry for China than for America. “When people ask ‘how bad would it be for the United States if China withdrew its money,’ the answer is, ‘how bad would it be for China if the United States went bankrupt?’” says Richard Kogan of the Center for Budget and Policy Priorities. “China has a big stake in the solvency of the United States. They want us to pay all their principal and interest and keep buying the stuff they make.”
There’s little or no evidence, in fact, that China’s foreign-debt holdings have ever been used for political purposes. China mostly invests its reserves the way any nation seeking financial stability would.
The vast scale of borrowing by the U.S. government is a different story altogether and a legitimate worry. Washington has made halting progress on its debt recently, with the annual deficit dropping from $1.1 trillion in 2012 to $980 billion in 2013. That should fall to about $860 billion this year, according to the Congressional Budget Office, and perhaps lower if the economy exceeds expectations and tax revenues rise.
There’s still no plan, however, for addressing federal budget gaps that are expected to explode starting around 2020, as spending on retiring baby boomers skyrockets. With luck, China will still have a lot of money to invest by then — and remain in an accommodating mood.
” ……. federal budget gaps that are expected to explode starting around 2020 … ”
Fucken A !!!! We got ’till 2020?? Things are waaay better than I thought. Party on, consumers.
BTW, China needs us to buy their shit, even if it’s with their money, even more than we need their shit.
In other words, China would be in even deeper shit than Amurika is for buying their shit if we actually stopped buying their shit, so China is trying to get other countries to buy their shit but those countries aren’t dumbshits like Americans so they tell the Chinks to go pack shit, and so they do, which means we are the shit-buyers of last resort.
“China’s role in global capitalism, despite its impressive growth figures, has been an assembly platform for foreign multi-national corporations. This system has brought wealth to a minuscule layer of Chinese capitalists while enormously profiting Western and Japanese companies, and their East Asian contractors.
Two-thirds of China’s exports are shipped from factories wholly or partially owned by non-Chinese companies. In high-technology industries, the ratio is higher: Wholly owned non-Chinese corporations account for 68 percent of high-tech exports and, if firms partially owned by foreign companies are included, the total is 83 percent.
And in contrast to misleading trade statistics, most of the money captured by this Chinese production is taken by Western and East Asian multi-national corporations, not by China. The world’s multi-national corporations profit immensely from China’s low wages and like the current Chinese system just as it is. […]
The dramatic increase in Chinese manufacturing is driven by multi-national corporations from the U.S., East Asia and Western Europe. State-owned enterprises account for 25 percent of China’s industrial output, down from 75 percent in the mid-1980s.”
It really isn’t China getting rich; it’s the multinational companies. All the corrupt Chinese that have made this happen (took bribes, skimmed) are the ones over here buying up homes, escaping the country they looted while they still have the hair on their heads.
How financially solvent is your state? http://mercatus.org/publication/state-fiscal-condition-ranking-50-states
US will be bled to death by China and Harvested for its Organs:
Those Chinese are dumber than I thought. They keep buying our debt.
They sell us things that we need and use while we give them back money that the government creates out of nothing. We get something and the Chinese get little in return.
What do the Chinks do with the money? Mostly they buy property in the US. Anytime we want we could seize this and the Chinese would have nothing.
So, like I said, the Chinese are even dumber than I thought. We get their goods and what they buy back is really ours because we could take it back in an instant.
“What do the Chinks do with the money? Mostly they buy property in the US.” — Anonymous
Not true.
http://www.ft.com/cms/s/0/1a7167c4-92b8-11e2-9593-00144feabdc0.html#axzz2qjKKMaIv
China banks look to overseas purchases
By Paul J Davies in Hong Kong
Chinese banks are set to embark on a fresh wave of overseas acquisitions this year as they look to expand in emerging markets where their industrial peers are already active.
China Construction Bank, which has not yet been active abroad, is a favourite to move first while ICBC is expected to continue to be aggressive and other banks and securities houses are actively looking at opportunities.
However, none is likely to do mega deals, with smaller takeovers in Africa, South America most likely, or investments in European institutions that have significant networks in those two emerging markets.
Standard Bank, Africa’s largest bank by assets, sold a 20 per cent stake for $5.5bn to ICBC in 2007 in a deal that underlined China’s ambitions in African banking.
Rob Sivitilli, head of M&A for Asia ex-Japan at JPMorgan, says that if he was to pick one area in Asia where there will definitely be good deal activity this year, it would be financial services. “Chinese banks are active and I think their approach is targeted at markets where their platforms can continue to grow – South America, the Middle East and Africa,” he says.
Another Hong Kong-based banker adds: “ICBC has been aggressive already, Bank of China has always been overseas, CCB is next in line to plant a flag overseas.”
The National People’s Congress, which met this month, cements the changeover in China’s leadership and is expected to give companies of all kinds more confidence in looking at overseas expansion once more.
A Chinese banker at one of the large mainland institutions, says his own bank is likely to pull the trigger on a deal. “I do think we will do something this year,” the banker says. “We have been conservative recently, but now the Congress is finished we don’t need to be conservative any more.”
China banks
FTSE share price index
There is growing appetite among Chinese state-owned enterprises for outward expansion, reflecting greater optimism after the political transition, according to an annual survey of Chinese M&A practitioners, conducted by Brunswick, the PR outfit. It found 75 per cent of them expected Chinese companies to be more active globally.
Chinese banks have been quiet on the international stage since a series of painful investments made in and around the 2008 financial crisis. ICBC has remained most active in the past couple of years, buying US and Canadian assets from Bank of East Asia and taking control of the Argentine subsidiary of Standard Bank.
Many bankers helping Chinese institutions to sniff out deals say that taking a stake in a European institution to access an existing network in African or South American countries is what Chinese banks want most to do.
China Three Gorges did a similar thing with its purchase of a 21 per cent stake in Portugal’s power company EDP.
“This idea is very consistent across Chinese institutions looking for access to emerging markets,” says one Hong Kong based banker. “Firstly, they can pay European valuations for emerging market operations, and secondly they can buy into a platform that has already shown a capability for international expansion. The Chinese have learnt from the Japanese experience and realise that may need help to expand abroad.”
However, very large deals are thought to be unlikely, partly because Chinese banks’ own performance – and share prices – have suffered, while they also need to develop more sophisticated businesses at home, which could require more capital.
“They have plenty of opportunities to develop their businesses at home,” says Marie-Soazic Geffroy Dernoncourt, co-head of the Asia Pacific financial institution group ex-Japan at Morgan Stanley. “China’s banks need to move to a more SME and consumer focused model, which requires more capital and different risk management.”