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March 7, 2009

China and the US Bond Market

When Hillary Clinton recently went to the chinese to basically try to convince them to buy more US Government Bonds, was the equivalent of a Wall Street dog and ponny show. She is trying to convince the chinese that it is of their interest to keep loaning us money. This all thing is ridiculous.

Here is the idea. She is going to the chinese and she is saying "that in order to help our economy you should take your money from your own citizens and give it to us, so that we can spend the money on the products your citizens are producing and keep your citizens employed.

Why don`t the chinese just cut out the middleman? Why they don`t let their citizens keep their own money so that they can buy the stuff that they produce?

Why do the chinese need the United States? The reality is that they don`t.

The market rallied early in the week on talk of the chinese stimulus package ans they are the only country that is actually capable of stimulating their economy. Because the chinese are actually sitting on a pile of cash. Our cash, that they can spend.

THe difference is that when China wants to stimulate their econmy, China has the money to do it. When the United States government wants to stimulate the economy, we have to go to China to borrow the money.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.
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