Thursday, January 15, 2009

Obama's stimulus-related bond sales could fail in China, overseas, raising interest rates, thwarting recovery


The Washington Times, in a front page article this morning (Jan. 15) by Patrice Hill, warns that US bond sales could fail on international markets during the attempt at economic stimulus, raising interest rates. The article suggests that China, especially, will resist purchases four times that of any other one-year debt purchase in history (the record is $455 billion). The story is titled “Debt burden tests global investments; Bond sales risk failure”, link here.

The Washington Times article, about half-way through, states that China (as well as oil states like UAE) began to sell off their holdings in mortgage-related pseudo-companies like Fannie Mae, and that they’re doing so might well have led to the sudden implosion of Lehman Brothers and AIG over a weekend in mid September 2008.

Media stories present inconsistent accounts about what China is likely to do. It seems as though it should not have been so vulnerable to the western financial collapse, but it has indeed faced massive unemployment and the prospect of dangerous political unrest, which its repressive policies (toward dissidence) might stir up further.

See related stories here Jan 11, 13.

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