China and North Korea: What Can China Do?

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Pointblank

Senior Member
nosh said:
If Europe is in trouble then investors will put their money somewhere else. Is Asia is also in trouble then the investors will have to put their money in US. Currently US desperately needs investment. This explains why US is doing its best to paint a glooming future for Europe and Asia, and to create economical, political, and military instability in/around these two continents.
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No, they will pull their money and place it in what are considered safe havens in the investor world: Gold, and large, financially secure companies. The there is plenty of capital in the US to invest, it is just that investors are right now too spooked to shell out their capital due to the recent financial crises that hit the US.

nameless said:
This makes no sense, according to your logic if investors are spooked with Greece then they will pull their money from economies like China, US and rest of the world? If anything they pull money to where its relatively safe. Even Germany with much closer ties to the eurozone has been has had solid growth this and past year.



No it is not, the types of inter-dependencies inside the Europe such as the Euro does not exist between China and SK or to be more precise the dependency is one sided.
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If demand weakens in one nation, it affects neighboring countries. Think of it as a dropping a stone in the water; it creates waves that spread out over a large area. Right now Greece is on the brink, and if the debt crisis is not resolved without Greece defaulting on all of its loans, the ramifications will hurt Europe as a whole as other financially weak nations will follow suit, shrinking demand in those nations. As those nations collapse financially, it will spread out and hurt the economies of the stronger Euro nations, no matter how financially secure they are.
 
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nameless

Junior Member
Pointblank said:
No, they will pull their money and place it in what are considered safe havens in the investor world: Gold, and large, financially secure companies. The there is plenty of capital in the US to invest, it is just that investors are right now too spooked to shell out their capital due to the recent financial crises that hit the US.
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That did not happen initially, the USD was considered a safe haven and that is what exactly what happened when the Greek debt crisis originally started last year. At least for the short term it boosted the USD's status as the reserve currency vs the euro. Of course Gold and silver really took off as the US debt crisis became more apparent.

If demand weakens in one nation, it affects neighboring countries. Think of it as a dropping a stone in the water; it creates waves that spread out over a large area. Right now Greece is on the brink, and if the debt crisis is not resolved without Greece defaulting on all of its loans, the ramifications will hurt Europe as a whole as other financially weak nations will follow suit, shrinking demand in those nations. As those nations collapse financially, it will spread out and hurt the economies of the stronger Euro nations, no matter how financially secure they are.
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It does not work that way, as far as demand is concerned a small market like Greece is does not have much of an impact on regional and global import/export. The problem is NOT demand, its the currency and the interlinked financial institutions in Europe. One could argue that it would be best for everyone for Greek to default and go back to their drachma, thus cutting its ties with the euro.
 
Phead128

Phead128

Captain
Staff member
Moderator - World Affairs
America will eventually privatize her federally owned assets (ie. federal buildings, land, infrastructure, equipment, buildings, etc...), this is worth up to $35 trillion dollars, because drastic spending cuts and significant tax increases are out of the picture, as well as inflating the debt away through more stimulus quantitative easing to reboot the economy since investors will ask for higher yields to hedge against inflation risks, which would drive up mortgage prices, which would impact the already barely recovering housing market.

Asian sovereign wealth funds will eventually own major stakes in America's infrastructure, providing much needed capital to rejuvenate America's ailing infrastructure, because the money isn't going to come from Washington, because America is dead broke.

Bottom line: China will become a major investor in privatized federal assets in the United States, whether the Americans like it or not.
 
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nosh

Junior Member
Pointblank said:
No, they will pull their money and place it in what are considered safe havens in the investor world: Gold, and large, financially secure companies. The there is plenty of capital in the US to invest, it is just that investors are right now too spooked to shell out their capital due to the recent financial crises that hit the US.
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There is a limit of how much money can be put on other options like gold. If wars (or other crisis) erupts in Europe or Asia, US will be considered safehaven and investment will move to it. As nameless has pointed out, when Greek debt crisis erupted in 2010, US stock market went up. When NATO started bombing the Serbs in Bosnia in 1995, US stock market went up. When Kosovo war erupts in 1999, US stock market went up. All the three events that benefited US were initiated by US. What a coincident!
 
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nosh

Junior Member
Phead128 said:
America will eventually privatize her federally owned assets (ie. federal buildings, land, infrastructure, equipment, buildings, etc...), this is worth up to $35 trillion dollars, because drastic spending cuts and significant tax increases are out of the picture, as well as inflating the debt away through more stimulus quantitative easing to reboot the economy since investors will ask for higher yields to hedge against inflation risks, which would drive up mortgage prices, which would impact the already barely recovering housing market.

Asian sovereign wealth funds will eventually own major stakes in America's infrastructure, providing much needed capital to rejuvenate America's ailing infrastructure, because the money isn't going to come from Washington, because America is dead broke.

Bottom line: China will become a major investor in privatized federal assets in the United States, whether the Americans like it or not.
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U.S. to China: Invest in our debt, not our companies

The message is clear: U.S. officials are happy to take China's $900 billion investment in Treasuries, but they greatly fear a $2 million corporate takeover.

The opposition arising from Washington lawmakers is nothing new. And it's bound to grow -- China's outward direct investments are forecast to rise in the coming years as the country looks to continue diversifying its economy beyond exports. In 2010 Chinese firms spent $4.9 billion on acquisitions and new facilities in the U.S., up from $2.8 billion in 2009, according to estimates from Rhodium Group. Investments in industrial machinery and equipment topped the list, followed by electronic equipment, utility services and coal, oil and gas.
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So far, China has only been allowed to invest in US debt. US has been extremely hostile to Chinese investment in anything else. That may not change any time soon.
 
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