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Wednesday, January 19, 2011

America gets a bailout-- thanks China

You've probably heard that the President of China has come to the US to meet with Obama to talk economics, repayment of the massive debt that US owes and other less important issues to both leaders like China's human rights violations.  And while together, a lovely feast will be served--  More than 200 guests will dine on a main course of dry-aged rib eye steak with buttermilk crisp onions, double stuffed potatoes and creamed spinach, after a first course of pear salad and a second course of poached Maine lobster with orange-glazed carrots and black trumpet mushrooms.

According to Reuters, "China is officially the United States' biggest foreign creditor, with roughly $900 billion in Treasury holdings ... That means it could do severe damage to U.S. debt markets if it suddenly started selling large amounts."   China also knows the US is in really bad financial shape- more so that it or its mouthpiece, mainstream media is admitting.

Sometimes if you lend someone lots of money over time, and they look like they're collapsing and you may never recoup your loans, rather than pull the plug and take major losses at pennies on the dollar, you actually lend more to keep the 'bum' afloat a little longer in hopes that he/she can get their financial house in order so you can get back more of your bad investment at a later time.

Thus, China is giving the US financial assistance in the form of purchasing more of our exports.  It is called a bailout...

From AP News:  "Seeking to build ties with an economic rival, the White House said Wednesday that China would purchase $45 billion in U.S. exports, including a highly sought-after $19 billion deal for 200 Boeing airplanes.

"Our goal here today was to make sure that we break out of the old stereotypes that somehow China is simply taking manufacturing jobs and taking advantage of low wages, the U.S. is importing cheap goods and thereby having cheaper products, but also putting strains on our employment base,"  President Obama said. "

~  Ok, lets stop here a moment-  that so-called "stereotype" is 100% Absolutely Correct.  US manufacturing jobs Have been and ARE continuing to be shipped to China and third-world nations with Extremely low wages.  This is also true of most European nations' manufacturing capacities as well.  The US Does get cheap goods in return like $3 sandwich makers and toasters which Target hawks every Black Friday and this inequity DOES put incredible strains on our employment base because the only with the exception of government jobs and finance, we are a service and consumption based society.

So Obama's statement was 100% Bull, but he had to say what he did with America's biggest lender standing beside him..

One last point.. that $45 billion seems like a lot, but when you consider that through Quantitative Easing 2, Bernanke is spending $75 billion in taxpayer money every month to go directly to Wall St. and this is overlapping another $50 billion/month from QE1 making a grand total of $125 Billion/month spent to make everyday people think the markets are strong and not spook China from pulling its investments, that $45 billion Chinese investment over a 3yr period doesn't seem so Wow-like, does it?

continuing w/ AP article...

"In addition to the Boeing deal, China will also invest in U.S. exports from agriculture, telecommunications and technology companies, including General Electric, Honeywell and Navistar. The White House said the deals will support up to 235,000 jobs in the U.S. Executives from Boeing and General Electric were among the business leaders who will meet with Obama and Hu at the White House."

~ Notice the deals will "support" 235k jobs.. not Create new jobs..  simply support the ones already there.  Its subtle but there is a difference between job maintenance and job creation.

There is a very specific 'food chain' among nations now, which was assisted by 30years of terrible short-sighted economic policies of Presidents of both parties..  and the chain goes like this:

America bails out the world...  China bails out America.

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