To quote the Washington Post:-
"The $700 billion package was approved by Congress but still needs to be implemented. Where is the money coming from? YOU. More precisely, the FED and Treasury have assets, and Treasury will sell securities to investors to make up any shortfall. Such are backed by the full faith and credit of the US government, making them the most secure investment possible. If investors stop buying ,then US will have to boost the interest paid on them to lure investors, raising the cost of debt financing to the American taxpayers." Such thought is a NO,NO in our minds!
"Will China own everything? China's economy is still going strong at 9% annual growth, and it has significant foreign reserves. ($1.8 trillion) China holds about $1 trillion in US debt, including about $400 billion in Fannie Mae and Freddie Mae debt. China apears unlikely to refuse to keep buying Treasury securities or dump much of what China has now. That is because such actioins could reduce the value of the dollar and thus the value of their own US holdings.
The market and the economy will improve only investors have confidence in the leadership. That may take months or even years." Such reasoning is the same as I sent my blogs in the past. Cf. www.Google.com
The readers can clearly see the nexus of Sino-American Economics as I cited above.
Francis Shieh a.k.a. Xie Shihao,a reader to keep other readers posted online apropos of the most important subject as the global issue: ECONOMICS,the inexact science. Let us wait and see who would get the Nobel in Economic Science to try to solve problems in economics.
October 10, 2008 at 6.38 a.m.