Peter Schiff: Will China Print or Sell?
Make or break. Will Peter Schiff be right?
Will China sell US Treasuries to fund its stimulus package or will it print / borrow?
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China's Stimulus Spells Trouble for U.S.
This week, Asian markets were initially energized by China's announcement of a near $600 billion economic stimulus package for its own economy. Although I have never been a fan of government-fueled stimuli, the relative wisdom of the plan hinges on the source of funds the Chinese government decides to utilize. Their best choice would be the country's nearly $2 trillion in foreign reserves, the largest portion of which is held in U.S. Treasury and agency debt. This pile of dollars, which really amounts to no more than a subsidy for U.S. consumers, does nothing to benefit Chinese citizens.
If it does decide to employ this ocean of cash, China will become a net seller of U.S Treasuries just as the U.S. Government itself will be pushing up its issuance of new Treasury bonds into record territory. With two huge sellers and few major buyers (just about every major creditor nation having problems of their own), the Federal Reserve will become the only reliable customer. As a result, not only will the Fed monetize our own economic stimulus packages, but will be forced to provide the same service to the Chinese.
Most economists feel that China will maintain the status quo by borrowing or printing the funds for their own stimulus while continuing to hoard its trillions of existing U.S. dollars. Most also believe that the Chinese will substantially increase their dollar holdings in order to finance America's never-ending string of bailouts and its ballooning Federal deficit, which is soon to pass $1 trillion annually. These optimists are in for a rude awakening.
The Chinese cannot follow such a course without unleashing intolerable inflation at home. Selling down their vast reserves of U.S. debt and using the proceeds for domestic infrastructure projects (or anything else for that matter) is a vastly superior stimulus mechanism than "lending" to Americans so we keep "buying" their products. When Chinese authorities finally figure this out the United States will suffer the consequences.
As they have in the past my critics will cavalierly dismiss this view. However, as the following compilation of some of my 2006 and 2007 television appearances attests, my economic predictions have proved extremely prescient:
http://uk.youtube.com/watch?v=2I0QN-FYkpw
However, given recent global stock market and currency volatility, some are questioning the wisdom of my investment strategy. I am confident that the short-term effects suffered by foreign stocks and currencies as a result of financial de-leveraging and losses on bad U.S. debt will prove temporary. If so, my market forecasts will ultimately prove just as accurate as my economic predictions. Those who are currently patting themselves on the back for having had the apparent foresight to stay in U.S. dollars will be singing a different tune when the music stops playing.
Sincerely,
Peter Schiff
President and Chief Global Strategist
Euro Pacific Capital
I don't know,
but this shows Schiff has been vindicated.
http://andrewsullivan.theatlantic.com/the_daily_dish/2008/11...
Why Economics is not a Science
http://www.dailypaul.com/node/73027
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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that laffer guy is a moron!
that laffer guy is a moron! that one guy with the real long hair is an idiot!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
Yeah, I rarely watch CNBC
or Fox Business news, with the volume on at any rate.
“The ultimate result of shielding men from the effects of folly is to fill the world with fools.”
-- Herbert Spencer
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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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I remember thinking that
I remember thinking that last year, when I would see him on the television. I haven't seen him on the air in a long time now. Has he been let go?
Can we invest in this?
I have full confidence in Schiff's predictions. So if China 'dumps' it's US reserves, is there a way we can take advantage of the prediction?
(Besides converting our dollars into real assets.)
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...
Enjoy www.freetalklive.com
Short long term debt
You can buy the TBT or a few other short plays on the long bond. If int rates do go up this will go up at 1.5x the pace...it may go as low as 55-56 soon but we are close to a bottom and it looks like a buy, I have been slowly buying it in for a few days... please do your own research too!
If you really believe that China will dump US debt
Then your best investments may be in armaments...because it would mean war.
You could probably make a killing investing in defense contractors, General Dynamics, Boeing, Northrup, and all manner of other defense related companies.
I wouldn't count on it...we're more likely to just start dumping their market with heroin before they pull something like that.
All of these options on the table...and China knows it.
China isn't about to start dumping debt...they aren't that stupid.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
Do you honestly think the US
Do you honestly think the US would begin a war with China if they refused to purchase our debt/started to sell of some of it?? How would the US government be able to explain that to the people? We are going to attack China because we bankrupted ourselves and they are refusing to keep bankrolling us???
The Chinese can do whatever they want with their US Treasuries and the US isn't going to do jack sh*t about it because we can't.
Obama Tested
Could it be the test which apparently Obama will face which "we don't even know about yet."
Probably not
It will probably be something with Russia...a orchestrated standoff similar to the Cuban missle crisis. Perhaps over the Polish missle shield, or Georgia/Abhazia nonsense.
What do you think about the war on drugs?
How about Operation Wall Street?
Shout it today!
http://www.youshouts.com/index.php
Go Peter!
Go Peter! School those fools like always.
Man you've been treated like a dick on the news when you were dead on correct!
Oh man I remember one whiny little weasel, a squirming vermin of a little man, who kept squealing "Peter. . ." "But Peter!" "Oh! No! Peter!" I wanted to smack him he was so distracting and over emotional that some people must have thought (incorrectly) that he was correct, just because he was so adamant, when in fact, he is just a bumbling, squirming, high pitched imbecile.
I don't remember the guys name but he was wholly ridiculous. . . Truly pathetic.
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"So this is how liberty dies... with thunderous applause."
* * * * * * * NEW R3VOLUTION HIP HOP TRACKS!! * * * * * * *
Http://www.YouTube.com/mortisnoctu
I hope Schiff is right. So
I hope Schiff is right. So far I've been on the losing end of his advice when it comes to the market. I'll give him the benefit of the doubt though and say that almost any sector of investment has been losing.
With as many soldiers deployed
Most really don't have a whole lot to spend on. Most get to save, others burn through any cash they could have saved. Especially since they have FORD over here giving "deals" to soldiers for their "dream" car when they redeploy. Yea, drop that $20K you saved up on deployment on that sweet $45K sports car or suv. Sooooo worth it. They even have their own HARDENED structure while I spent the entire deployment in a canvas tent with AC that only worked 20% of the time. Wonderful priorities huh?
Preying on them is all they're doing.... pathetic.
"...mankind are more disposed to suffer [...] than to right themselves by abolishing the forms to which they are accustomed. [...] It is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."
"...mankind are more disposed to suffer [...] than to right themselves by abolishing the forms to which they are accustomed. [...] It is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."
China purchasing their own goods
People argue that the Chinese citizens are unable to purchase their own products. This is only true because the Chinese government does not allow them to. The people have no security, health care, retirement, rights to work land,education etc - they must pay for everything, therefore they do not spend any of their hard earned money. If their government allows them to feel more secure in any of these ways , they will spend just like we have. Watch and see.
A Little Of Both, I Suspect
That would be the smart thing, I believe. It's not in China's interest to dump all these dollars at once, but a measured liquidation would appear to be in order. I doubt they'll announce it.
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"Make the lie big, make it simple, keep saying it, and eventually they will believe it." -- Joseph Goebbels
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"Make the lie big, make it simple, keep saying it, and eventually they will believe it." -- Joseph Goebbels
fully agree they'll stop buying T-bills and slowly get out of
the dollar meanwhile refocusing on making Asia the world's economic engine - cities in Asia are like Chicago in the thirties, the middle classes in India and China are increasing at an ever accelerating pace.
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“The Roots of Violence: Wealth without work, Pleasure without conscience, Knowledge without character, Commerce without morality, Science without humanity, Worship without sacrific
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"The essence of freedom is the proper limitation of government". ~ Founding Fathers
and I'm glad to see it. An
and I'm glad to see it. An enormous middle-class in Asia would be helpful for liberty everywhere, imo.
Hope it continues.
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"Make the lie big, make it simple, keep saying it, and eventually they will believe it." -- Joseph Goebbels
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"Make the lie big, make it simple, keep saying it, and eventually they will believe it." -- Joseph Goebbels
Interesting take on China
http://www.kitco.com/ind/nadler/nov102008A.html
Haven't had time to read the entire thread here, but this article struck me as relevant to the discussion. Scroll down a ways and see one insider's take on the Chinese economy.
Incidentally, Nadler over at Kitco always has very interesting columns.
Nadler is wrong on China & gold IMO
I don't believe Nadler theory of falling gold prices will come true. The Chinese don't need to sell their gold to "feed" their people. They have 1.5trillion dollars. That is a lot of money! Then they have some serious guns and ammo and don't have to worry about rebellions too much. Their people are not armed either. Look, government atrocities are here every day and Americans, armed Americans haven't done anything about it.
But I agree that China is a big bubble that is starting to deflate. When you have a dictatorship running this big country don't expect anything good coming out of it. There is no free markets there, betting on China and chinese economy by westerners (Peter Schiff included) is definitely risky and I expect westerners to be very disappointed. I mean how can you know anything for certain in this country. You probably wonder if even the price of a bottle of water over there is really what it should be - sounds like the damn government is meddling in business everywhere.
I remembered this video
hahaha america
http://www.atom.com/funny_videos/haha_america/
Sort of a new mwaning now, huh ?
weird video, but truth....
/Mike
/Mike
Front Fell Off
http://www.youtube.com/watch?v=WcU4t6zRAKg
Peter Schiff to be on Lou Dobbs Tonight!
Wednesday, November 12th 7:00 PM EST.
Also Peter should be doing his weekly radio show Wall Stree Unspun.
http://europac.net/radioshow.asp
my 2 cents
the deflation would last longer and run deeper if people were actually doing the right thing.
but they aren't. the masses will not save as much as they should, and they will not cut spending as much as they should.
here on the Daily Paul, people are much smarter, they will cut spending to the bone, and save like rabid squirrels.
and when the economy slightly rebounds in late 2009 or early 2010, you should see some economic breathing room. THAT will be the time to continue saving, and live humbly....as the masses and their short term memories lure them back into the same old pattern.
Because the government is amplifying the very thing they wish to minimize....the volatility (some might say that's what they're actually trying to accomplish, maybe so)
so cut more spending and save harder then other folks, and when we see some daylight, you don't let up....keep saving and living humbly.
Following are next up turn will be some ugly inflation. It will likely cut short the small rebound.
this thing is not going to
this thing is not going to let up in late 2009 or early 2010... we are now leaving recession and heading into depression.
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
well we know it's a "thing"
well we know it's a "thing" as you call it.
I'm just attempting to be a little more specific. I know I know....a fools game, where I'll likely be proven wrong....but still I try.
In my latest attempt at the crystal ball,
I don't see stagflation. (inflation with stagnate economy)
I see either continued deflation with small inflationary pauses for another 3 years. (look at a dollar index that spans 15 years, you'll see where the dollar makes a really extended bull run, which of course means bears for the economy and the stockmarket)
On the other hand, I'm leaning slightly in favor of the dollar run ending sooner then later. I'm thinking late Spring or Summer. We'll see the economy start to turn. The dollar will start to inflate again. Prices will have come down to a point, where people will feel like taking risks, the strong dollar will purchase lot's of energy, commodities, supplies, and translate into lower dollar wages.......all this of course sets up the next inflationary bubble.
I'm not banking on it. I'm ready for most outcomes, including breadlines....it's just a gut feeling.
I've eaten crow before.
I'm thinking about buying metals and/or stocks soon.
But I'm not touching my "oh shit" fund.
d
I agree
I have been in detailed conversations with some friends of mine who are in the financial business and one that is in the manufacturing business directly related to Chinese imports and they are all telling me to save every dime I have because we are heading for a depression that will make the 30's look like a holiday and even worse than 1873.
YOU BETTER START SAVING NOW!
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http://www.jabronitools.com
Timely and interesting forum
I just read Dr. Jim Willie last night in his new posting
"See for instance the Chinese announcement to spend $568 Billion in a stimulus package. Although great news for the commodity and reflation trade, this cannot be seen as good news for the US Treasuries. They will lose a strong Chinese bid, or see outright selling." See more
http://www.gold-eagle.com/editorials_08/willie111108.html
excellent article Lysa,
excellent article Lysa,
pretty much explains it!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
China does not have to print
China does not have to print or barrow anything! they have 2 trillion in reserves! another words.. SAVINGS! the projects they are going to do they need to do anyway because of a growing middle class needing infrastructure!
don't beleive the stupid talking heads telling you that China's economy is imploding.. they do not have to print anything for this so called bailout.. what a crock of shit! they are using devaluing dollars that they hold to improve infrastructure that makes them even more competitive! there economy is still growing at a 9% rate! lol.....whats bad for the US is they sell of 600 billion in US treasuries which will devalue the dollar! hello inflation! hope you have silver!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
Savings held how?
How are China's savings held? Much of the 2 Trillion are held in U.S. Treasuries and other dollar-based fixed income instruments. Are the Chinese going to pay their people in FRNs? If not, they have to sell something to pay their people.
That is what Peter is saying. They CAN use their savings, but this would be at the expense of the FRN. They can sell FRNs (use their savings) to pay for the stimulus.
The question is... what if they don't? What if they just leave their savings as is and print up more Yuan?
Time will tell and the result will be significant either way. BTW, if you are right, then Peter Schiff is also right and the FRN and the US will be heading South.