I heard a report on the news that actually said, "Market rallies as China says it is 'All in' regarding European Bonds." Actually all China said is that they are not planning to sell their bonds. All in would imply they are going to bet all their money on Europe.
The bottomline is that China is screwed. You may have heard the saying: If I owe you $5000, I have a problem, but if I owe you 5 million, you have a problem.
That is the story with china. Europe owes about 750 billion and the US owes 1.5 Trillion. China will be lucky if they get 50% of that back.
The question is, do they realize they are getting screwed and secretly trying to prepare to get out this mess with as little loss as possible? Or are they as they seem in the news reports, actually believing that promises from Western governments are worth their weight in gold when they are actually only worth their weight in paper?
1 comments:
China is screwed even beyond what its owed and won't get paid back. For instance, if there's only 1 trillion in existence. Then China ends up with 1/2 of it -- China is happy it owns 1/2. Then the US prints another 1 trillion ... the US just reduced China's holding from 1/2 to 1/4 (without even taking into consideration a penny being borrowed). The sad part is ... the Fed screws everyone who has a savings like that, not just China.
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