And Just When You Think It Couldn't Get Any Worse

Is it reported anywhere how much money the USA has borrowed from China?

I am reading $863B and also $1.5 Trillion owed to Japan.

Can this be verified anywhere

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

The US has not borrowed this from China. China has bought Treasury bills - psychologically a very different thing.

Foreign countries end up investing in the US$ by buying US Treasuries when they have a balance of trade they can't spend in the US. It's like when you and I put money in a savings account. Unfortunately, for countries, there aren't savings banks, so they put their excess cash in what's the safest equivalent to a bank - US Treasuries.

Now, imagine if the bank you deposit your hard-earned retirement savings in tells you that they are going to de-value your savings, or that they aren't going to give you every dollar of your savings back. That's how China feels right now.... and to a lesser extent Singapore with only $57billion in Treasuries....

Edit:
Oh, also note that while UK seems to hold a high proportion of the debt, a lot of that is in Channel Islands and Isle of Man private banking centers - where the US rich and large US corporations hide their wealth. Same thing with "Caribbean banking centers".
 
Makes me wonder what the real value of the RMB is.
 
The RMB is exactly what buyers are willing to pay for China's exports. All of China's exports are denominated in US$ because the RMB is not a tradeable currency. You cannot take RMB out of the country, whereas you can bring US$ into almost every country in the world.

So, raising the value of the RMB (which is what the US wants) is going to raise the cost of almost every item in WalMart and Target. The US$ is low and falling right now, and export countries with non-pegged currencies are hit with a double whammy because not only has consumption in the US fallen, what they earn in their local currencies with which they pay their local labor has dropped. Despite growth of local consumption, China factories are closing down because their exports have fallen, and local inflation makes labor too expensive for the prices that the US buyer is demanding. Some of my component prices have gone up by over 50% since the US recession started in 2008.

The other way to look at it is that if the RMB goes up, the US will be hit with a double whammy because all their imports from China will cost more and if exports from China goes down, who is left to buy US debt? Soon, the debt ceiling will be irrelevant because there's no one to buy the debt. With the value of US Treasuries going down long term because of RMB appreciation, China will want much higher rates of return.
 
Food for thought from Mark Steyn's essay from today:

"Under the “historic” “resolution” of the debt crisis (and don’t those very words “debt crisis” already feel so last week?), America will be cutting federal spending by $900 billion over ten years. “Cutting federal spending by $900 billion over ten years” is Washington-speak for increasing federal spending by $7 trillion over ten years. And, as they’d originally planned to increase it by eight trillion, that counts as a cut. If they’d planned to increase it by $20 trillion and then settled for merely $15 trillion, they could have saved five trillion. See how easy this is?


As part of this historic “cut,” we’ve now raised the “debt ceiling” — or, more accurately, lowered the debt abyss. Do you ever discuss the debt with your neighbor? Do you think he has any serious intention to repay the 15 trillion racked up in his and your name? Does your congressman? Does your senator? Look into their eyes. You can see the answer. And, if none of these parties seem inclined to pay down the debt now, what are the chances they’ll feel like doing so by 2020 when, under these historic “cuts,” it’s up to 23-25 trillion?


Like America’s political class, I have also been thinking about America circa 2020. Indeed, I’ve written a book on the subject. My prognosis is not as rosy as the Boehner-Obama deal, as attentive readers might just be able to deduce from the subtle clues in the title: After America: Get Ready For Armageddon. Oh, don’t worry, I’m not one of these “declinists.” I’m way beyond that, and in the express lane to total societal collapse. The fecklessness of Washington is an existential threat not only to the solvency of the republic but to the entire global order. If Ireland goes under, it’s lights out on Galway Bay. When America goes under, it drags the rest of the developed world down with it. When I go around the country saying stuff like this, a lot of folks agree. Somewhere or other, they’ve a vague memory of having seen a newspaper story accompanied by a Congressional Budget Office graph with the line disappearing off the top of the page and running up the wall and into the rafters circa mid-century. So they usually say, “Well, fortunately I won’t live to see it.” And I always reply that, unless you’re a centenarian with priority boarding for the ObamaCare death panel, you will live to see it. Forget about mid-century. We’ve got until mid-decade to turn this thing around.

Otherwise, by 2020 just the interest payments on the debt will be larger than the U.S. military budget. That’s not paying down the debt, but merely staying current on the servicing — like when you get your MasterCard statement and you can’t afford to pay off any of what you borrowed but you can just about cover the monthly interest charge. Except in this case the interest charge for U.S. taxpayers will be greater than the military budgets of China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel combined.


When interest payments consume about 20 percent of federal revenues, that means a fifth of your taxes are entirely wasted. Pious celebrities often simper that they’d be willing to pay more in taxes for better government services. But a fifth of what you pay won’t be going to government services at all, unless by “government services” you mean the People’s Liberation Army of China, which will be entirely funded by U.S. taxpayers by about 2015. When the Visigoths laid siege to Rome in 408, the imperial Senate hastily bought off the barbarian king Alaric with 5,000 pounds of gold and 30,000 pounds of silver. But they didn’t budget for Roman taxpayers picking up the tab for the entire Visigoth military as a permanent feature of life.


And even those numbers pre-suppose interest rates will remain at their present historic low. Last week, the firm of Macroeconomic Advisors, one of the Obama administration’s favorite economic analysts, predicted that interest rates on ten-year U.S. Treasury notes would be just shy of nine percent by 2021. If that number is right, there are two possibilities: The Chinese will be able to quintuple the size of their armed forces and stick us with the tab. Or we’ll be living in a Mad Max theme park. I’d bet on the latter myself.


Did you know there’s a U.S. Bureau of the Public Debt? Hey, why not? There’s a bureaucracy for everything else. I’m sure somewhere or other there’s a CBO graph showing that by 2050 all federal revenues will be going either to the Chinese Politburo or to the lavish pension plans of retired officials of the Bureau of the Public Debt. At any rate, the BPD is headquartered in Parkersburg, West Virginia, and it’s easy to find because it’s the only building in the state other than the Klan lodge not named after Robert C. Byrd. The Bureau uses as its motto the words of Alexander Hamilton: “The United States debt, foreign and domestic, was the price of liberty.”...

No author writes a dystopian apocalyptic doomsday book because he wants it to happen: Apart from anything else, the collapse of the banking system makes it hard to cash the royalty check. You write a doomsday book in hopes you can stop it happening. But time is running short. If you think we’ve got until 2050 or 2025, you’re part of the problem."
 
One of the weaknesses of a "democracy" is that folks will always vote to give themselves more entitlement. If you're a congressman, and someone says to you, "Why don't you vote to receive a lifetime salary pension even if you only serve one term?".... What would most people do? Same for golden health care (not available to their constituents), etc.

Will the average person choose to continue receiving welfare, etc. instead of actually working a job? How many folks do you know that have (or are attempting to get) disability who don't really deserve it?

There is an underlying plague that has partially consumed the US. When 50% of people pay no taxes, and there is a movement to legalize 20 million illegal aliens (who'll vote for more entitlements), who will bear the burden?

Lee
 
In Elliott terms if the market continues to accelerate down today(-525),this pretty much is classic 3rd wave action. although markets tend not to "waterfall" on the first wave down,it is possible under the supercycle interpertation.

As a side note,this market is probably the most overvalued in history as prices have been "pooled higher" just like 1929. With that in mind it will get ugly!
 
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Roger --

How much do you feel Elliott Wave is actually predictive vs. explaining things post facto?
 
The US has not borrowed this from China. China has bought Treasury bills - psychologically a very different thing.

This is correct. And lots of countries have bought US Treasury bills, and the overwhelming majority of them have been bought by US citizens. China holds 8%. All of this talk about America being deeply indebted to China is mostly just that -- talk. Political talk. Is it bad that our debt is high? Yes. It's also bad that our trade deficit is high, that our unemployment rate is high (and rising) and that we have got an inexplicable, or at least new, paradigm in which the markets and interest rates can be going down at the same time, leaving investors with no place to hide. It's not just bad, it's alarming. So is this wonderful, relatively new phenomenon called "the jobless recovery." There is lots of bad. And it's really not helpful to pretend it's all one thing while addressing almost nothing. It's just political. Take everything you hear from an American politician with a huge grain of salt, and look closely at "subject matter experts" to check if they are politically sponsored, affiliated, financed or promoted. The BS is very, very deep right now. Deeper than it has been in a very long time.

Tim

Now, imagine if the bank you deposit your hard-earned retirement savings in tells you that they are going to de-value your savings, or that they aren't going to give you every dollar of your savings back. That's how China feels right now....

I'm not sure why they'd feel this way right now, Gary, this hasn't happened to them.
 
Well another perspective is that by mid-decade, the interest the US pays on Chinese held US debt will completely fund the budget for the People's Liberation Army.
 
Roger --

How much do you feel Elliott Wave is actually predictive vs. explaining things post facto?

No matter what people think Elliott is just a "tool" and open to a lot of different counting it will always be after the fact. That being said the Character of the waves are unmistakable as human psychology never changes and that's what Elliott is best at. Forget about sentiment,because when you have the Central banks intervening in such a bold manner most technical analysis is useless.
 
Take everything you hear from an American politician with a huge grain of salt, and look closely at "subject matter experts" to check if they are politically sponsored, affiliated, financed or promoted. The BS is very, very deep right now. Deeper than it has been in a very long time.

Campaign finance/lobbying is at 3.6 billion/yr and nothing will change until the amount flowing through our government and over the airwaves is cut. But neither side has the balls to really to do this.

Just got back from an amazing trip in Brazil where I programmed a pair of Scaenas for a guy there (will detail this in a separate thread) -- they're horrified at what they see happening here. They have better government than we do right now, though that's not saying much. So much for world leadership.
 
"The BS is very, very deep right now. Deeper than it has been in a very long time."

People tend to forget that real capitalism depends on 'free markets" and in the end the market is the final arbiter of financial balance sheets.how many times will this "supreme fact" need to be learned. A phony propping up of the economy or the continued destruction of a nation's currency never leads to positive results. All it brings is wars,misery and lower living standards. The only positive thing is the "end" where a new monetary system is put in place,not because of anything but the people will demand it.

Let me not forget less freedom!
 
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Well another perspective is that by mid-decade, the interest the US pays on Chinese held US debt will completely fund the budget for the People's Liberation Army.

That is another perspective, and certainly a provacative one. But it's also a completely different question, one that asks, should we, as a nation, do business with countries we don't like/disagree with/feel threatened by/whose advantage may be to our disadvantage/whose values are extremely inconsistent with our own, etc. Great question. One we should be thinking about pretty seriously. But the answer is going to take you down a lot of roads that aren't as politically easy and rhetorically simple as "we're selling America to the Chinese." The answer(s) will have you questioning many (most?) of our "allies" and trading partners, and all kinds of relationships thar are in our strategic and economic advantage. The money we pay for oil in the middle east, for example is enough to fund the training of most of the world's Islamic terrorists, and in many cases, does. You want to dump our relationships with the Saudis, UAE, Pakistan...and walk out of the ME? My answer to that incredibly difficult, nuanced question with it's labirynth of potential and unseen repercussions is maybe...

When it comes to global politics, a real good rule of thumb is if it would look really cool on a bumper sticker, that's probably where it belongs.

Tim
 
People tend to forget that real capitalism depends on 'free markets" and in the end the market is the final arbiter of financial balance sheets.

Roger people tend to forget this because it was never in their memory in the first place. Every developed nation on the face of the planet is a hybrid between free market capitalism and progressive government; ours is one of the most right-leaning at the moment, but it is a hybrid like all the rest (possible exceptions: North Korea, Cuba, to the extent that you can call them developed).

There is no free market unfettered by government oversight and regulation, and on any scale worth talking about, there never has been. So when we talk about free markets being the final arbiter of anything, it is a purely speculative, philosophical conversation. A completely free market that really is the final arbiter might work, and it might not. I seriously doubt if, above a feudal or tribal level, we'll ever really know.

Tim
 
should we, as a nation, do business with countries we don't like/disagree with/feel threatened by/whose advantage may be to our disadvantage/whose values are extremely inconsistent with our own, etc.

And this only gets increasingly knotty as economies become more and more interdependent. If ethics come up in such international discussions, it's nearly always just as a political tool.

Since the oil embargo in the 70s if not before, it's been plainly obvious for economic, geopolitical, and environmental reasons that we need a long term strategy to get off oil. We'd be a different country with different relationships had we started on that path then. There's a fun and depressing montage avail of every president since Nixon giving bits of their 'get off oil/energy independence' speech.

People tend to forget that real capitalism depends on 'free markets" and in the end the market is the final arbiter of financial balance sheets.how many times will this "supreme fact" need to be learned.

Roger, if your argument is that the markets aren't free enough, how do you reconcile this w/the sub-prime crisis?
 
There's a fun and depressing montage avail of every president since Nixon giving bits of their 'get off oil/energy independence' speech.

It needs to run back to back with a montage of American presidents kissing Saudi princes. Jon Stewart probably has it. If I were running for president, I'd hire Jon Stewart as my campaign manager. I'd lose, but I'd laugh a lot.

Roger, if your argument is that the markets aren't free enough, how do you reconcile this w/the sub-prime crisis?


Quite a few people have found a way to wash the market's hands of the sub-prime crisis and blame it all on government agencies and irresponsible home buyers.

Tim
 
Roger, if your argument is that the markets aren't free enough, how do you reconcile this w/the sub-prime crisis?

You're implying that the markets were free before the sub prime crisis. A free market cannot exist with Illegal activity,corruption and government interference. The protection of the free market through regulation and policing is for the benefit of all society. Since when has a wolf guarding the hen house been considered in the best interest of the people.
 

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