It doesn’t matter whether we owe China 2 trillion or 200 trillion.
By Daniel at 29 November, 2009, 7:49 pm
That debt will never be paid. We will never agree to tax ourselves enough to pay for our own government services - never mind paying the Chinese government. They know they will never collect on that debt. It’s not about the money. It’s far more strategic than that.
It’s about destroying our ability to produce goods. It’s the same philosophy Microsoft used to destroy its competitors in the early years. Give away the product while building an infrastructure that can never be challenged by a startup. It doesn’t matter how much gold we have. If we have no steel mills - we’re screwed.
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…China alone accumulated $150bn in reserves in the third quarter, pushing the total to $2.3 trillion. These are colossal sums. China is amassing almost as much each month as the United States ($63bn) has built up in the entire history of the country. True, the US understates the value of its gold, but you get the picture. Something big is going on.
So far, China has just 1.7pc of its reserves in gold, or 34m troy ounces. I was told by a top Chinese official that they are buying on the dips so as not to crowd out the market, which means of course that gold cannot “crash” unless you think China itself is going to crash — or stop building reserves (which is possible: Albert Edwards from SocGen says China may be in current account deficit next year, leading to a yuan move — down, not up).
The gold proportions are: Hong Kong (0), Singapore (0), Korea (0.2), Brazil (0.6), India (4.8) after its shock purchase of IMF gold, and Russia (5.5). Yes, the West still has a lot in percentage terms — US (86), France (78), Italy (72), Switzerland (33), Germany (25) — but they don’t count for so much any more..
- workersRconsumers
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