China to Downgrade U.S. Debt

Just when you thought the pain wouldn’t come, the big red boot kicked in the door waiting a vintage 1953 Kalashnikov and telling you to get your lazy American ass in shape. Well, not exactly but Dagong’s threat to downgrade U.S. debt is an interesting signal. One that can certainly be interpreted differently by bears and bulls.


If the debt limit is raised and the public debt continues to grow, it will further damage the US debtpaying ability, which is a key factor in Dagong's evaluation, and we will consider loweringits ratings accordingly. If the raised limit fails to pass and the US faces default, the rating will be immediately andsubstantially downgraded

So, according to Guan Jianzhong, Chairman and CEO of Dagong. Mr. Dagong fails to recognize a crucial fact of life, however. China really has no alternative investment strategies. They must continue to buy U.S. debt. The threatened downgrade is really not much more than an attempt to get a discount on a purchase they already have to make.

As I have stated previously, the currency wars are the crucial financial event of our current era. That pretty much sucks for rational investors and people who like to analyze numbers inside and out, but it is pretty cool for those of us who like a good old fashioned Mexican Stand-Off.

America has already done a pretty good job of dragging Europe into the gutter as a result of currency competition and many have long been saying that China is the real target. Though I wouldn’t agree with the policy if true, it certainly makes economic sense. China has been allowed to manipulate global economics with its Yuan stranglehold for far too long.

As the old saying goes, if you can’t beat’em, join’em. With their youthful population advantage dwindling, public calls for greater wealth redistribution and the Arab Spring weighing heavily on Chinese officials’ minds…this is certainly turn of events, indeed.

So what say you, folks? Am I the only here who is starting to see the (potential) brilliance of the U.S. currency strategy towards China? It does clash with my libertarian values, but I will be damned if it doesn’t feel good to make the other guy squirm…

 

When you owe the bank $1 million, the bank owns you.

When you owe the bank $1 trillion, you own the bank.

Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.

This isn't the US's doing, it's free-market capitalism's. Mercantilism is a dangerous road to go down that eventually ends with a bunch of worthless tulips or manufacturing infrastructure.

 
IlliniProgrammer:
When you owe the bank $1 million, the bank owns you.

When you owe the bank $1 trillion, you own the bank.

Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.

This isn't the US's doing, it's free-market capitalism's. Mercantilism is a dangerous road to go down that eventually ends with a bunch of worthless tulips or manufacturing infrastructure.

I completely agree. The only reason China is doing this is because they are pissed off and trying to make it seem like they're taking the "high road" by courageously taking this stand. I hope people see right through that and see the obvious reason that China is just pissed because they own all of our debt (or most of it anyways).

What they really should be doing is backing the U.S. up in this debt ceiling crisis to cover their own stake and so we dont default on paying them their money.

 
IlliniProgrammer:
When you owe the bank $1 million, the bank owns you.

When you owe the bank $1 trillion, you own the bank.

Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.

This isn't the US's doing, it's free-market capitalism's. Mercantilism is a dangerous road to go down that eventually ends with a bunch of worthless tulips or manufacturing infrastructure.

This is completely the fucking case. Its kind of like how I can throw about 100mph, fast as fucking shit. Atlanta thinks it signs my checks bit in reality they need me to continue filling their stands. I own their fucking balls

My drinkin' problem left today, she packed up all her bags and walked away.
 
Kenny Powers:
IlliniProgrammer:
When you owe the bank $1 million, the bank owns you.

When you owe the bank $1 trillion, you own the bank.

Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.

This isn't the US's doing, it's free-market capitalism's. Mercantilism is a dangerous road to go down that eventually ends with a bunch of worthless tulips or manufacturing infrastructure.

This is completely the fucking case. Its kind of like how I can throw about 100mph, fast as fucking shit. Atlanta thinks it signs my checks bit in reality they need me to continue filling their stands. I own their fucking balls

Oh really? lol ! this is comical. You don't think they cant find some kid in the dominican republic to do the exact same thing as you but 10x cheaper? You are expendable just like every other player on the field. Very very very few players are not expendable and that usually relates to the QB in pro football.

Because finding a great QB is very rare thus why there are only 20 or so in the entire world that can play at the NFL level and succeed. Most wash out.

Now someone who can throw and hit a baseball and play left field? or pitch 1 inning of relief? Well compared to a QB in the NFL they are a dime a dozen.

The one who does not fall, does not stand up
 
IlliniProgrammer:
When you owe the bank $1 million, the bank owns you.

When you owe the bank $1 trillion, you own the bank.

Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.

This isn't the US's doing, it's free-market capitalism's. Mercantilism is a dangerous road to go down that eventually ends with a bunch of worthless tulips or manufacturing infrastructure.

oh here we go again. What are you talking about? Mercantilism ended a long time ago replaced by Capitalism, David Ricardo's comparative advantage etc etc

Only left wing liberals believe that mercantilism is what goes on around the world today.

The one who does not fall, does not stand up
 
ProdigyOfZen:
oh here we go again. What are you talking about? Mercantilism ended a long time ago replaced by Capitalism, David Ricardo's comparative advantage etc etc

Only left wing liberals believe that mercantilism is what goes on around the world today.

LOL, then why doesn't the Renminbi float freely?

America and the West has 400 years of experience on backwards China (suckers) in all of this. (Sorry if I offended anyone from the Party) Hopefully they have learned their (expensive) lesson that if you're going to trade with the west, the only way to make money is to play by the rules.

Because finding a great QB is very rare thus why there are only 20 or so in the entire world that can play at the NFL level and succeed. Most wash out. Now someone who can throw and hit a baseball and play left field? or pitch 1 inning of relief? Well compared to a QB in the NFL they are a dime a dozen.
This is fast becoming irrelevant. American Football quarterbacks are going to be replaced by Cricket Bowlers; in twenty years, football will become the impoverished business that Cricket and Rugby are today.

When it comes to knowledge of obscure Midwestern beers, I am 1 in 100 million. This is irrelevent to my ability to earn a paycheck, however. The ultimate question is how many people want what you produce, how badly they want it, and how many people want what those people produce. Bottom line is that everyone wants food, and the US shares an oligopoly on it with Australia, Canada, Argentina, and Russia. If this were a collusive oligopoly, corn would be at $30/bushel.

 
IlliniProgrammer:
ProdigyOfZen:
oh here we go again. What are you talking about? Mercantilism ended a long time ago replaced by Capitalism, David Ricardo's comparative advantage etc etc

Only left wing liberals believe that mercantilism is what goes on around the world today.

LOL, then why doesn't the Renminbi float freely?

America and the West has 400 years of experience on backwards China (suckers) in all of this. (Sorry if I offended anyone from the Party) Hopefully they have learned their (expensive) lesson that if you're going to trade with the west, the only way to make money is to play by the rules.

Because finding a great QB is very rare thus why there are only 20 or so in the entire world that can play at the NFL level and succeed. Most wash out. Now someone who can throw and hit a baseball and play left field? or pitch 1 inning of relief? Well compared to a QB in the NFL they are a dime a dozen.
This is fast becoming irrelevant. American Football quarterbacks are going to be replaced by Cricket Bowlers; in twenty years, football will become the impoverished business that Cricket and Rugby are today.

When it comes to knowledge of obscure Midwestern beers, I am 1 in 100 million. This is irrelevent to my ability to earn a paycheck, however. The ultimate question is how many people want what you produce, how badly they want it, and how many people want what those people produce. Bottom line is that everyone wants food, and the US shares an oligopoly on it with Australia, Canada, Argentina, and Russia. If this were a collusive oligopoly, corn would be at $30/bushel.

QBs in the NFL will only become irrelevant if the world goes to hell in a hand basket which very well could happen.

I would agree that every country wants and needs food for its populace. Thus the reason I am trying to make a jump into commodity trading haha.

We still make stupid retarded mistakes like creating subsidies to make ethanol from corn. One of the most stupid laws ever.

The one who does not fall, does not stand up
 
ProdigyOfZen:
I would agree that every country wants and needs food for its populace. Thus the reason I am trying to make a jump into commodity trading haha.
In volatile markets, market-makers tend to wind up making all of the money. In extremely volatile markets where real value starts getting lost, everyone starts losing their shirts; the folks who lose it the least tend to be closest to the production; the folks who lose the most are often the traders.

You really want to be a farmer. And you want to be reasonably self-sufficient at it. All of a sudden, my retirement plan involving an 80-acre farm on Lake Michigan doesn't sound so crazy.

We still make stupid retarded mistakes like creating subsidies to make ethanol from corn. One of the most stupid laws ever.
Actually, it was almost fairly smart. The problem was that we didn't get Argentina, Canada, Australia, and Russia to go along with us. If they did, we'd have a huge trade surplus and China would be bankrupt. Cutting production in an oligopoly only works if it's collusive. And the US pols are too dumb to form OPEC on grains to match their plan to increase grain demand.
 
IlliniProgrammer:
ProdigyOfZen:
I would agree that every country wants and needs food for its populace. Thus the reason I am trying to make a jump into commodity trading haha.
In volatile markets, market-makers tend to wind up making all of the money. In extremely volatile markets where real value starts getting lost, everyone starts losing their shirts; the folks who lose it the least tend to be closest to the production; the folks who lose the most are often the traders.

You really want to be a farmer. And you want to be reasonably self-sufficient at it. All of a sudden, my retirement plan involving an 80-acre farm on Lake Michigan doesn't sound so crazy.

We still make stupid retarded mistakes like creating subsidies to make ethanol from corn. One of the most stupid laws ever.
Actually, it was almost fairly smart. The problem was that we didn't get Argentina, Canada, Australia, and Russia to go along with us. If they did, we'd have a huge trade surplus and China would be bankrupt. Cutting production in an oligopoly only works if it's collusive. And the US pols are too dumb to form OPEC on grains to match their plan to increase grain demand.

I think you give our leaders too much credit. You seem to think they all know what they are doing and are thinking 10 years down the line and I would say they have no idea what they are doing and dont think past their constituency.

We will have to agree to disagree there.

I never said I wanted to be a farmer. I would to trade physical commodities where the firm I trade for has direct investments with the producer and has an insight to the supply and demand in whatever commodity they trade.

and to your above statement about China's Renminbi not floaing and you relating that to mercantilism I think is a bit far fetched.

You don't think the US did the same thing to the europeans in the 1800s? I mean the Europeans were complaining about the advantage of the cheaper products from America for damn near 100 years just like we are complaining about it with China and other SE Asia nations. In the future China will be complaining about the cheap labor and products from Africa.

All those asian countries have used an export led growth strategy to gain their competitive advantage. Yeah they are not playing by the rules but niether is the US.

and I dont agree with you that we would make China bankrupt by them forced to buy higher priced corn. They would just devalue their currency even more if that were the case. They are still our banker and once they replace more than 70% of their exports with other nations ex US you wll see how quickly they will drop our debt.

By that time they will also be able to step in and clain the role of world policeman that the US currently holds. This is less than 10 years away.

The one who does not fall, does not stand up
 
ProdigyOfZen:
I never said I wanted to be a farmer. I would to trade physical commodities where the firm I trade for has direct investments with the producer and has an insight to the supply and demand in whatever commodity they trade.
LOL, that's the worst thing you want to do. Just ask any Argentinian grain-producing company. Farmers are taking tractors and blocking intersections, making it tough to get grain to market to fill commitments, and the country is enacting an export tax. What you really want to do is work in a third world government and have relationships with the military. :D Or second to that, just own a farm and sit the chaos out.

One of my Dad's friends owns a PE shop that bought a Russian farm. There are now squatters on it and they got together and bribed some military generals to stick several tanks on the farm to keep out the owners of title. You want to own farmland, you want live on it, and you want to be a friendly neighbor and a member of the community. That's how you preserve value through more severe market volatility.

There's no good way to make money off of a global famine/economic dislocation except for a nation as a whole to benefit collectively from it by the disappearance of their economic rivals. The only thing an individual can do is try to preserve real value. We're either going to see significantly higher taxes on the wealthy here in the US, or we are going to see a breakdown of the rule of law. Either way, folks trying to manage large amounts of assets from a distance could lose their shirts and probably won't get rich off of this.

You don't think the US did the same thing to the europeans in the 1800s? I mean the Europeans were complaining about the advantage of the cheaper products from America for damn near 100 years just like we are complaining about it with China and other SE Asia nations. In the future China will be complaining about the cheap labor and products from Africa.
We didn't have export bonuses and crazy subsidies (aside from land giveaways) like Japan and China. We had cheap labor and massive coal and iron mines.
and I dont agree with you that we would make China bankrupt by them forced to buy higher priced corn. They would just devalue their currency even more if that were the case. They are still our banker and once they replace more than 70% of their exports with other nations ex US you wll see how quickly they will drop our debt.
If a worker can't produce enough value in goods to feed himself, though, you're still in trouble. China is a net importer of food. The one good thing the US has going for it is excluding more discretionary foods (like Peruvian raspberries) and ethanol, the US generates a massive surplus. Of course we would have to raise taxes to make sure most people in the US can afford to eat.
By that time they will also be able to step in and clain the role of world policeman that the US currently holds. This is less than 10 years away.
Doubtful. Regardless, they can't invade the US without triggering a nuclear war and we've got all the power we need over their 1.4 billion grain-consuming residents. Of course, this isn't really of benefit to US farmers but it could be of benefit to a shrewd political leader at the federal or even the state level. The world is about to hit its population carrying capacity anyways; this is the perfect time for the US to boost middle-class farmers.

Bottom line, the US has 35% of the world's arable land, 25% of the world's drinking water, and 5% of the population. China has 12% of the world's population and 5% of the world's arable land- and that land is shrinking fast to factories, highways, cities, and other infrastructure. So I am not really worried about China. We are an ocean away, nobody has staged a successful invasion from abroad in 400 years, between nuclear warheads, aircraft carriers, F-18s, and machine guns, nobody seriously thinks anyone will be able to successfully mount an invasion of the US in the next 100 years, regardless of how powerful China gets.

In reality, they won't get that powerful. The world will run out of food and China will go bankrupt or at least become as Democratic and cooperative as India/Europe before that happens.

 
IlliniProgrammer:
ProdigyOfZen:
I never said I wanted to be a farmer. I would to trade physical commodities where the firm I trade for has direct investments with the producer and has an insight to the supply and demand in whatever commodity they trade.
LOL, that's the worst thing you want to do. Just ask any Argentinian grain-producing company. Farmers are taking tractors and blocking intersections, making it tough to get grain to market to fill commitments, and the country is enacting an export tax. What you really want to do is work in a third world government and have relationships with the military. :D Or second to that, just own a farm and sit the chaos out.

One of my Dad's friends owns a PE shop that bought a Russian farm. There are now squatters on it and they got together and bribed some military generals to stick several tanks on the farm to keep out the owners of title. You want to own farmland, you want live on it, and you want to be a friendly neighbor and a member of the community. That's how you preserve value through more severe market volatility.

There's no good way to make money off of a global famine/economic dislocation except for a nation as a whole to benefit collectively from it by the disappearance of their economic rivals. The only thing an individual can do is try to preserve real value. We're either going to see significantly higher taxes on the wealthy here in the US, or we are going to see a breakdown of the rule of law. Either way, folks trying to manage large amounts of assets from a distance could lose their shirts and probably won't get rich off of this.

You don't think the US did the same thing to the europeans in the 1800s? I mean the Europeans were complaining about the advantage of the cheaper products from America for damn near 100 years just like we are complaining about it with China and other SE Asia nations. In the future China will be complaining about the cheap labor and products from Africa.
We didn't have export bonuses and crazy subsidies (aside from land giveaways) like Japan and China. We had cheap labor and massive coal and iron mines.
and I dont agree with you that we would make China bankrupt by them forced to buy higher priced corn. They would just devalue their currency even more if that were the case. They are still our banker and once they replace more than 70% of their exports with other nations ex US you wll see how quickly they will drop our debt.
If a worker can't produce enough value in goods to feed himself, though, you're still in trouble. China is a net importer of food. The one good thing the US has going for it is excluding more discretionary foods (like Peruvian raspberries) and ethanol, the US generates a massive surplus. Of course we would have to raise taxes to make sure most people in the US can afford to eat.
By that time they will also be able to step in and clain the role of world policeman that the US currently holds. This is less than 10 years away.
Doubtful. Regardless, they can't invade the US without triggering a nuclear war and we've got all the power we need over their 1.4 billion grain-consuming residents. Of course, this isn't really of benefit to US farmers but it could be of benefit to a shrewd political leader at the federal or even the state level. The world is about to hit its population carrying capacity anyways; this is the perfect time for the US to boost middle-class farmers.

Bottom line, the US has 35% of the world's arable land, 25% of the world's drinking water, and 5% of the population. China has 12% of the world's population and 5% of the world's arable land- and that land is shrinking fast to factories, highways, cities, and other infrastructure. So I am not really worried about China. We are an ocean away, nobody has staged a successful invasion from abroad in 400 years, between nuclear warheads, aircraft carriers, F-18s, and machine guns, nobody seriously thinks anyone will be able to successfully mount an invasion of the US in the next 100 years, regardless of how powerful China gets.

In reality, they won't get that powerful. The world will run out of food and China will go bankrupt or at least become as Democratic and cooperative as India/Europe before that happens.

Well well, I also never said that I would be trading grain. Who says I am going to be trading with only Argentina or just Argentina? Yea they are a corrupt place just like most places.

How do you think all these international commodity traders have existed for over 200 years? I am sure they are in good with the government in all these nations and those countries NEED to make money aka from exports like Argentina.

And here we go again, who says China needs to attack us directly? They could potentially have 20 million programmers/hackers attack the US financial, electricity grid whatever they want and we would be powerless to stop them.

I dont think China is going to be invaded anytime soon either and they are quickly catching up to us militarily.

They could have more hackers attack our networks than we have children in the US.

See I can think of far fetched ideas as well !!!

The one who does not fall, does not stand up
 
ProdigyOfZen:
Well well, I also never said that I would be trading grain. Who says I am going to be trading with only Argentina or just Argentina? Yea they are a corrupt place just like most places.
My point is that as the world approaches its carrying capacity, everywhere is going to become corrupt. Europe once had feudalism; it can have it again.
How do you think all these international commodity traders have existed for over 200 years? I am sure they are in good with the government in all these nations and those countries NEED to make money aka from exports like Argentina.
Perhaps, but the grain market as a whole lost a lot of money when Argentina started effectively subsidizing food for Argentinians.
And here we go again, who says China needs to attack us directly? They could potentially have 20 million programmers/hackers attack the US financial, electricity grid whatever they want and we would be powerless to stop them.
Won't get food to China. And those programmers will be pretty hungry soon. What is China's plan for getting food in the US across the Pacific to China?
They could have more hackers attack our networks than we have children in the US.
I've seen programmers go without food for about four days.
See I can think of far fetched ideas as well !!!
This is hardly a far-fetched idea. The world's agricultural carrying capactity is being reduced by global warming while at the same time, populations are increasing. We're already seeing rioting and revolts in the middle east as a result of high food prices. As we continue to get hit by more climate change and more agricultural productivity gets taken off the table and more people are born, we will seen the unrest move up the food chain of food-importing countries until it eventually hits China.

So it's hardly far-fetched. Egypt has already been driven to revolt largely as a result of high food prices and the long-term 100-year trend towards reduced carrying capacity for the planet is going to continue. It's only a matter of time until it hits higher-up third world nations like China.

I predicted Fukushima would be a horrible disaster before the breach of containment happened. Like a GE BWR with a Mark I containment, the world is a complicated system too, but the results are fairly predictable over the long run. The world will not have enough food to feed China. They will probably have a war with Russia to grab farmland and both countries will go back to the stone age.

This is great news for the average US citizen worried about the rise of China, but there will be few ways to profit off of it. Just sit back and watch the show.

 
IlliniProgrammer:
ProdigyOfZen:
Well well, I also never said that I would be trading grain. Who says I am going to be trading with only Argentina or just Argentina? Yea they are a corrupt place just like most places.
My point is that as the world approaches its carrying capacity, everywhere is going to become corrupt. Europe once had feudalism; it can have it again.
How do you think all these international commodity traders have existed for over 200 years? I am sure they are in good with the government in all these nations and those countries NEED to make money aka from exports like Argentina.
Perhaps, but the grain market as a whole lost a lot of money when Argentina started effectively subsidizing food for Argentinians.
And here we go again, who says China needs to attack us directly? They could potentially have 20 million programmers/hackers attack the US financial, electricity grid whatever they want and we would be powerless to stop them.
Won't get food to China. And those programmers will be pretty hungry soon. What is China's plan for getting food in the US across the Pacific to China?
They could have more hackers attack our networks than we have children in the US.
I've seen programmers go without food for about four days.
See I can think of far fetched ideas as well !!!
This is hardly a far-fetched idea. The world's agricultural carrying capactity is being reduced by global warming while at the same time, populations are increasing. We're already seeing rioting and revolts in the middle east as a result of high food prices. As we continue to get hit by more climate change and more agricultural productivity gets taken off the table and more people are born, we will seen the unrest move up the food chain of food-importing countries until it eventually hits China.

So it's hardly far-fetched. Egypt has already been driven to revolt largely as a result of high food prices and the long-term 100-year trend towards reduced carrying capacity for the planet is going to continue. It's only a matter of time until it hits higher-up third world nations like China.

I predicted Fukushima would be a horrible disaster before the breach of containment happened. Like a GE BWR with a Mark I containment, the world is a complicated system too, but the results are fairly predictable over the long run. The world will not have enough food to feed China. They will probably have a war with Russia to grab farmland and both countries will go back to the stone age.

This is great news for the average US citizen worried about the rise of China, but there will be few ways to profit off of it. Just sit back and watch the show.

First you believe in global warming, ouch....... that hurts. I won't comment on that. But you are cherry picking like crazy. You site trends in the world wide production of food yet don't see a trend in the warming and cooling cycles of the earth?

How on earth did China feed those 1.4 billion people before? Or India for that matter? Its been done before and it will be done again.

The reason why there were riots in the Middle East etc is yes due to food inflation but NOT from the cause you say. It was due to the massive printing of money by the FED causing spikes in food prices worldwide since tons of investors piled into something that is tangible like commodities

You can thank the Bernank for that.

The worlds population is increasing at 1.14% per year which means that the worlds population will double from 7 bil to 14 bil in the next 61 years. This is unsustainable and something will happen to cause the world population to shrink or level out.

Yes I do think at some point food demand will far out strip food supply but we are not there yet.

The problem is you are too biased toward the US. Every scenario you think of has the US coming out on top which I dont think is necessarily true.

And while we are talking about "trends" I will say that the last 500 years of a Western civilization having the largest economy is an anamoly. Before that China had the largest economy in the world for thousands of years and it would stand to reason that the "trend" will shift back to China and not continue with the US.

The one who does not fall, does not stand up
 
ProdigyOfZen:
First you believe in global warming, ouch....... that hurts. I won't comment on that. But you are cherry picking like crazy. You site trends in the world wide production of food yet don't see a trend in the warming and cooling cycles of the earth?
I never said anthropogenic global warming. What is interesting, however, is that the average temperature on the planet is much higher than it's been in a thousand years, and that temperature seems to be climbing. Whether or not you accept man-made global warming, we all see that climate issues have been causing increasing problems for farmers and the geological evidence suggests that the current climate has been deviating from its historical norms in a way that we didn't in the past.

You can read into it what you want, but I'm pretty sure that the economy at least influences the makeup of earth's atmosphere. Of note was a pause in CO2 concentration increases during the 1973 oil embargo. The world was consuming less fossil fuels and CO2 concentrations stopped going up in 1973 and 1974.

How on earth did China feed those 1.4 billion people before? Or India for that matter? Its been done before and it will be done again.
They didn't have 1.4 billion people in the past. In fact, China has more citizens than the world had population in 1900. China did have issues in the '50s and '60s when it had to supply its population with food without outside help and contend with a number of weather issues like flooding. China muddled through it with 600 million people back then, but it also had much fewer factories to run and infrastructure to keep up and less land paved over by roads. I am not sure what will happen there this time- I hope we don't have a repeat, but it seems unlikely that they'll get along just fine as a superpower at least. As a human, it scares me a great deal what people will have to go through there- I don't wish famines on people, but as a rational individual, I have to accept that things will be very very difficult for the average Chinese citizen in 20 years and that Chinese population will probably have to decrease substantially over the long-term to the point where it is roughly as large as the US. Long-run, a country's food is a matter of national security and therefore as long as we have a national system of world government, populations will approach agricultural productivity over the very long run. China exceeded its agricultural productivity a few decades ago. Regardless, the upshot for the US, Australia, Canada, and some parts of Europe is "good" news on the geopolitical and economic front. This would also be "good" news for Russia if China weren't neighbors.
The reason why there were riots in the Middle East etc is yes due to food inflation but NOT from the cause you say. It was due to the massive printing of money by the FED causing spikes in food prices worldwide since tons of investors piled into something that is tangible like commodities.
The fed was not printing their countries' currencies. Also, food production is down significantly this year while population has been rising. There is a fundamental imbalance between food supply and demand that will continue to grow worse.
The problem is you are too biased toward the US. Every scenario you think of has the US coming out on top which I dont think is necessarily true.
I was very worried about the US five years ago when the constraint looked like oil. Now I think it could be food. And the US is the Saudi Arabia of food.
And while we are talking about "trends" I will say that the last 500 years of a Western civilization having the largest economy is an anamoly. Before that China had the largest economy in the world for thousands of years and it would stand to reason that the "trend" will shift back to China and not continue with the US.
In the early 1800s, Malthus noticed that the size of an economy over the long-run- hundreds of years- was ultimately correlated with resources and agricultural productivity. We've got plenty of natural gas and plenty of food. When we can grow corn in skyscrapers, China will have the upper hand. I don't think that will happen soon, however.

Before China, it was Rome. A number of factors made Europe a great place for a large economy in the 1500s-1700s, but the biggest was agriculture. And as much agricultural productivity as there was in Europe, there was even more in North America, which may have been part of the reason that the Union and Confederacy were the richest and second richest per-capita countries on earth just before the Civil War. This was followed by the UK which also had a great deal of agricultural productivity and certain geographic advantages relative to Europe.

China will- actually it has- recovered its status as a significant empire. Eventually it will be able to get the US Navy to steer clear of the South China Sea in the same way China stays out of the Gulf of Mexico. But at the end of the day, wealth and populations are driven by agriculture, and China may have exceeded its carrying capacity. If you have family in China, this might be a good time to think about buying a small farm in Australia or New Zealand.

 
IlliniProgrammer:
ProdigyOfZen:
First you believe in global warming, ouch....... that hurts. I won't comment on that. But you are cherry picking like crazy. You site trends in the world wide production of food yet don't see a trend in the warming and cooling cycles of the earth?
I never said anthropogenic global warming. What is interesting, however, is that the average temperature on the planet is much higher than it's been in a thousand years, and that temperature seems to be climbing. Whether or not you accept man-made global warming, we all see that climate issues have been causing increasing problems for farmers and the geological evidence suggests that the current climate has been deviating from its historical norms in a way that we didn't in the past.

You can read into it what you want, but I'm pretty sure that the economy at least influences the makeup of earth's atmosphere. Of note was a pause in CO2 concentration increases during the 1973 oil embargo. The world was consuming less fossil fuels and CO2 concentrations stopped going up in 1973 and 1974.

How on earth did China feed those 1.4 billion people before? Or India for that matter? Its been done before and it will be done again.
They didn't have 1.4 billion people in the past. In fact, China has more citizens than the world had population in 1900. China did have issues in the '50s and '60s when it had to supply its population with food without outside help and contend with a number of weather issues like flooding. China muddled through it with 600 million people back then, but it also had much fewer factories to run and infrastructure to keep up and less land paved over by roads. I am not sure what will happen there this time- I hope we don't have a repeat, but it seems unlikely that they'll get along just fine as a superpower at least. As a human, it scares me a great deal what people will have to go through there- I don't wish famines on people, but as a rational individual, I have to accept that things will be very very difficult for the average Chinese citizen in 20 years and that Chinese population will probably have to decrease substantially over the long-term to the point where it is roughly as large as the US. Long-run, a country's food is a matter of national security and therefore as long as we have a national system of world government, populations will approach agricultural productivity over the very long run. China exceeded its agricultural productivity a few decades ago. Regardless, the upshot for the US, Australia, Canada, and some parts of Europe is "good" news on the geopolitical and economic front. This would also be "good" news for Russia if China weren't neighbors.
The reason why there were riots in the Middle East etc is yes due to food inflation but NOT from the cause you say. It was due to the massive printing of money by the FED causing spikes in food prices worldwide since tons of investors piled into something that is tangible like commodities.
The fed was not printing their countries' currencies. Also, food production is down significantly this year while population has been rising. There is a fundamental imbalance between food supply and demand that will continue to grow worse.
The problem is you are too biased toward the US. Every scenario you think of has the US coming out on top which I dont think is necessarily true.
I was very worried about the US five years ago when the constraint looked like oil. Now I think it could be food. And the US is the Saudi Arabia of food.
And while we are talking about "trends" I will say that the last 500 years of a Western civilization having the largest economy is an anamoly. Before that China had the largest economy in the world for thousands of years and it would stand to reason that the "trend" will shift back to China and not continue with the US.
In the early 1800s, Malthus noticed that the size of an economy over the long-run- hundreds of years- was ultimately correlated with resources and agricultural productivity. We've got plenty of natural gas and plenty of food. When we can grow corn in skyscrapers, China will have the upper hand. I don't think that will happen soon, however.

Before China, it was Rome. A number of factors made Europe a great place for a large economy in the 1500s-1700s, but the biggest was agriculture. And as much agricultural productivity as there was in Europe, there was even more in North America, which may have been part of the reason that the Union and Confederacy were the richest and second richest per-capita countries on earth just before the Civil War. This was followed by the UK which also had a great deal of agricultural productivity and certain geographic advantages relative to Europe.

China will- actually it has- recovered its status as a significant empire. Eventually it will be able to get the US Navy to steer clear of the South China Sea in the same way China stays out of the Gulf of Mexico. But at the end of the day, wealth and populations are driven by agriculture, and China may have exceeded its carrying capacity. If you have family in China, this might be a good time to think about buying a small farm in Australia or New Zealand.

I think you have read too much of Jared Diamond's Guns, Germs and Steel :) And Diamond is an avowed Socialist/Communist.

You should stop and think, if China cant feed its people why do you think they won't go out and take the means of agricultural production by force?

Also China in the last 10 years has been going all over the world buying up production in Agriculture/Mining etc. They are preparing for an event like what you describe. They are not stupid. They now own the land for means of food production or at least are part owners in it with another company.

Look i agree agriculture was very important but what you fail to realize is it takes HUMAN INGENUITY to create that agriculture OR to domesticate animals. So please stop using the argument that Jared Diamond uses.

The one who does not fall, does not stand up
 
Best Response
ProdigyOfZen:
You should stop and think, if China cant feed its people why do you think they won't go out and take the means of agricultural production by force?
Well, what neighbor would they get the land from? Russia is a nuclear power. India is a nuclear power. North Korea? LOL. Maybe Vietnam or Cambodia. Regardless, I'm not sure if they can win a war if the rest of the world stops trading with them and starts funding an insurgency.
Also China in the last 10 years has been going all over the world buying up production in Agriculture/Mining etc. They are preparing for an event like what you describe. They are not stupid. They now own the land for means of food production or at least are part owners in it with another company.
Until those countries decide to pull a Russia and restrict food exports.
Look i agree agriculture was very important but what you fail to realize is it takes HUMAN INGENUITY to create that agriculture OR to domesticate animals. So please stop using the argument that Jared Diamond uses.
Who is Jared Diamond?

I'm running all the numbers and scenarios, but I'm not sure I see things working out for China. During a crisis, geography trumps assets. China needs to get cracking on increasing domestic food production. Unfortunately, they won't be able to steal this technology from the west; they will have to develop it themselves.

 
IlliniProgrammer:
ProdigyOfZen:
Well well, I also never said that I would be trading grain. Who says I am going to be trading with only Argentina or just Argentina? Yea they are a corrupt place just like most places.
My point is that as the world approaches its carrying capacity, everywhere is going to become corrupt. Europe once had feudalism; it can have it again.
How do you think all these international commodity traders have existed for over 200 years? I am sure they are in good with the government in all these nations and those countries NEED to make money aka from exports like Argentina.
Perhaps, but the grain market as a whole lost a lot of money when Argentina started effectively subsidizing food for Argentinians.
And here we go again, who says China needs to attack us directly? They could potentially have 20 million programmers/hackers attack the US financial, electricity grid whatever they want and we would be powerless to stop them.
Won't get food to China. And those programmers will be pretty hungry soon. What is China's plan for getting food in the US across the Pacific to China?
They could have more hackers attack our networks than we have children in the US.
I've seen programmers go without food for about four days.
See I can think of far fetched ideas as well !!!
This is hardly a far-fetched idea. The world's agricultural carrying capactity is being reduced by global warming while at the same time, populations are increasing. We're already seeing rioting and revolts in the middle east as a result of high food prices. As we continue to get hit by more climate change and more agricultural productivity gets taken off the table and more people are born, we will seen the unrest move up the food chain of food-importing countries until it eventually hits China.

So it's hardly far-fetched. Egypt has already been driven to revolt largely as a result of high food prices and the long-term 100-year trend towards reduced carrying capacity for the planet is going to continue. It's only a matter of time until it hits higher-up third world nations like China.

I predicted Fukushima would be a horrible disaster before the breach of containment happened. Like a GE BWR with a Mark I containment, the world is a complicated system too, but the results are fairly predictable over the long run. The world will not have enough food to feed China. They will probably have a war with Russia to grab farmland and both countries will go back to the stone age.

This is great news for the average US citizen worried about the rise of China, but there will be few ways to profit off of it. Just sit back and watch the show.

You make it sound like this is a great thing that 1.4 + BILLION people will have all sorts of shit storms ahead of them. We need less of this "us vs. them" mentality and more cooperation on a global level. Granted, I do agree that we are and will be facing long term geopolitical issues on a global level, especially concerning global warming and food shortages. That does not mean, however, that an isolationist approach and saying "screw everyone else" is a good idea, nor is it very humane. We need to encourage trade and innovation to move past these limits, not sit back on our asses and watch the rest of the world burn.

 
IlliniProgrammer:
ProdigyOfZen:
oh here we go again. What are you talking about? Mercantilism ended a long time ago replaced by Capitalism, David Ricardo's comparative advantage etc etc

Only left wing liberals believe that mercantilism is what goes on around the world today.

LOL, then why doesn't the Renminbi float freely?

America and the West has 400 years of experience on backwards China (suckers) in all of this. (Sorry if I offended anyone from the Party) Hopefully they have learned their (expensive) lesson that if you're going to trade with the west, the only way to make money is to play by the rules.

Because finding a great QB is very rare thus why there are only 20 or so in the entire world that can play at the NFL level and succeed. Most wash out. Now someone who can throw and hit a baseball and play left field? or pitch 1 inning of relief? Well compared to a QB in the NFL they are a dime a dozen.
This is fast becoming irrelevant. American Football quarterbacks are going to be replaced by Cricket Bowlers; in twenty years, football will become the impoverished business that Cricket and Rugby are today.

When it comes to knowledge of obscure Midwestern beers, I am 1 in 100 million. This is irrelevent to my ability to earn a paycheck, however. The ultimate question is how many people want what you produce, how badly they want it, and how many people want what those people produce. Bottom line is that everyone wants food, and the US shares an oligopoly on it with Australia, Canada, Argentina, and Russia. If this were a collusive oligopoly, corn would be at $30/bushel.

Haha IP kind of irrelevant to the topic, but are you a fan of any Spotted Cow brews? They aren't irrelevant anymore, but just a couple years ago a NYC bar owner was charged with illegally transporting 5-10 kegs across borders because Spotted Cow isn't licensed outside of Wisconsin.

 
IlliniProgrammer:
Completely by accident, the US has allowed China to dig itself into a hole. Meanwhile, we got ten years of all of this cheap stuff from China and they got a bunch of worthless infrastructure in return.
This is a great point, I'd like to add something. Throughout history, China always produced what other nations wanted: spice, silk, etc... and now they make cars, computers, and fuzzy dice. Other nations always ended up in a harmful trade imbalance, and even Imperial Briton depleted its gold supply this way. Gold flowed into China and did not leave, but in our case, they are left holding pieces of paper.

Such is the genious of our system. If they try to extort higher interest rates, the matter will be dealt with politically, with miltary action or isolationism being just two possiblities. Neither the US nor China want that, no matter how much the commoners on each side think they could 'win' in any meaningful way.

The bottom line is that China is its own worst enemy, and attempting to wage a trade war will only work against them....and they know this. Screwing around with ratings is unlikely to happen and would only harm everyone involved....including China. They would do better to liberalize their political structure so that huge demand / supply disparities won't continue to be created by the statist economy.

And America would do best to start living within its means.....

Get busy living
 

This is kind of humorous actually. Never thought of it this way. We owe china so much money that China now depends on us to pay them. Hence we are back in control. America, fuck yeah!

I didn't say it was your fault, I said I was blaming you.
 

I am yound and stupid... Why, if China owns such a large amount of US debt, would it want to hurt the $ by downgrading American debt. Wouldn't that just create less of a return on their investment?

"Now watch this drive." -W.
 
Conan Sobroen:
I am yound and stupid... Why, if China owns such a large amount of US debt, would it want to hurt the $ by downgrading American debt. Wouldn't that just create less of a return on their investment?
By downgrading our debt, they can "demand" higher interest rates on the bonds they buy. With higher interest rates comes lower bond prices. They're using our debt ceiling "crisis" as an excuse to gain a better foothold on the debt they already plan on buying, anyway.
 
jcness:
Conan Sobroen:
I am yound and stupid... Why, if China owns such a large amount of US debt, would it want to hurt the $ by downgrading American debt. Wouldn't that just create less of a return on their investment?
By downgrading our debt, they can "demand" higher interest rates on the bonds they buy. With higher interest rates comes lower bond prices. They're using our debt ceiling "crisis" as an excuse to gain a better foothold on the debt they already plan on buying, anyway.

So, you think they are just trying to essentially scare the market into thinking investing in American bonds is a bad idea only to lower the price of what they plan on buying either way? Isn't Moodys the only real rating that matters in this? (I know they are looking into lowering our rating already)

"Now watch this drive." -W.
 

If I was china I would be trading my us debt for emerging countries' currency at a discount, specially to latin america. Latam is so shortsighted and US-cock sucking that they would probably agree to the deal.

Valor is of no service, chance rules all, and the bravest often fall by the hands of cowards. - Tacitus Dr. Nick Riviera: Hey, don't worry. You don't have to make up stories here. Save that for court!
 

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