open Democracy News Analysis - BREAKING: Even Motley Fool is predicting a U.S. market crash, - Comments

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Tue, 21 Aug 2007 16:57:02 +0100

Chris, And here I thought we were finally making some progress! :-)

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...but I say they already have used this leverage simply by threatening to use it (which you agree they have)...~ Chris

I would suggest it's not a black and white issue so much as it is a Chinese reality that a threat contains only as much leverage as the targets willingness to accept the credibility of Chinese willingness to execute the threat. There is significant evidence to suggest that China would pay an unacceptably high international price for exercising the nuclear option--a price that undermines the credibility of the threat and thereby the amount of the leverage. And that's all I have to say about that.

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Tue, 21 Aug 2007 13:38:02 +0100

['get it--Chinese have a nuclear option and have threatened to use it.']Mike Great! We're in agreement then. China has significant economic power and leverage it COULD exercise against the United States. Now, you think China would never use this leverage because everything in your world is either black and white (i.e., China can only either only choose an economic 'nuclear option', or chose to do nothing), but I say they already have used this leverage simply by threatening to use it (which you agree they have), which the article you've quoted sums up quite nicely by pointing out how these type of threatening statements are designed to weaken counterparts at the negotiating table. As I said, the US has put themselves in a precarious position by becoming so indebted to the Chinese which has now even limited the options your government has with respect to dealing with China/US trade relations. And that's all I have to say about that.

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Mon, 20 Aug 2007 20:33:12 +0100

Thanks Chris, Here's my point in a nutshell. I get it--Chinese have a nuclear option and have threatened to use it. But the reality (reported even in The Telegraph) is there is no leverage in making an "empty threat."

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Unease at China's threat to sell dollar Our report about China's use of economic threats against America reverberated around the world yesterday. At the last time of counting, our website version had been read by more than half a million people. China's comments, that it could cause a further crash of the dollar by selling US Treasury Bonds, upset an already paranoid nation but it's an empty threat. It reminds me of Vladimir Putin's warning earlier this year that he would point nuclear missiles at Europe. Both are statements designed to destabilise and weaken counterparts who regularly sit across from these states at negotiating tables. But neither really wants the outcomes they threaten. China owns $900bn of US bonds and even Beijing can't afford too much damage to its own substantial wealth tied up in these securities. It needs a strong US economy to sell its wares and the huge trade surplus China enjoys will quite possibly work its way through over the next few years as the yuan is devalued and inflation in China is brought under control.

It's not being defensive or holier-than-thou, just illogical to feel threatened very much by an enemy who stands to lose as much as you--pretty much economic mutual assured destruction, as I've pointed out (and you've ignored) repeatedly. My compliments to Roger--not sure of the meaning of your post, but at least it wasn't the normal cut and paste posting for which you are infamous. Fortunately "Iron Mike" is an alloy whose boiling point has not yet been reached. ;-) IM

Solve et Coagula on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Solve et Coagula — Mon, 13 Aug 2007 16:16:21 +0100

The melting point of Iron is 1535 º C. The melting point of Iridium would be 2410 º C.... good for you, Iron Mike... smile Best wishes from Switzerland LWWB Roger

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Mon, 13 Aug 2007 15:17:49 +0100

Mike, I'm not sure if you have a lesser mind, but you certainly do have a defensive attitude when it comes to anything you perceive remotely negative about America, and though you try hard to cloak it with words like optimism and a holier-than-thou attitude, I'm not really sure you've convinced anyone. Here's my point in a nutshell, China has an extremely large trade imbalance with the US which simply can't be sustained without hurting America in the long run. YOUR government recognizes this and is currently weighing their options which may include trade sanctions to force a Yuan revaluation that China opposes. Coincidentally two high ranking Chinese officials made comments last week about threatening to crash the American dollar. Now, China has not denied those comments, and enough newspapers have now referred to them to consider them real. What this means and here is where you can connect the dots Mike, ready? Is that China is using their ADVANTAGE of vast holdings of American DEBT and American DOLLARS as a bargaining chip to send a message to Congress that if you take measures against us we can take measures against you. As I said, America has compromised itself by being in such great debt to the Chinese. Sorry Mike, truth sucks I know, but some of us prefer living in the real world to the holier-than-thou one.

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Sat, 11 Aug 2007 13:30:34 +0100

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When you say, [The] "US government has put themselves in a precarious situation," you have identified this dependency as a "vulnerability" and you reference an unsubstantiated threat by China to exploit it. You further defined an "end state" ---that of a negative effect on US economy and foreign/domestic policy. And your analysis of this threat is...what?

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I have not tried to quantify nor qualified this economical relationship...I have not implied that China would actually go through on any threats ~ Chris

No kidding? That's exactly my point. What I've argued is that you identified a vulnerability and threat, but failed to analyze the quantity or quality or degree of risk of this vulnerability/threat. The mere existence of a perceived vulnerability/threat, does not make an inevitable end state, without arguing "means, opportunity, and motivation." Your failure to make this case calls into question the existence of the threat itself. After all, what you call "China buying debt" a free market proponent would call, "China investing in America." It amounts to the same thing. It's no different than me "buying debt" through mutual funds shares. It's not enough to suggest an end state is inevitable, based upon a perceived, but unsubstantiated threat. I'm not trying to "inflate, confuse, and deflect" your posts. I'm trying (in vain apparently) to get you to be intellectually honest and "connect the dots" between your contention and your conclusion. If you see a threat...fine...PROVE it by analysis and "connect the dots." If it's so obvious, lay it out for all of us with lesser minds. Question: Do you often throw out unsupported contentions and whine if your logic is challenged in order to stop discussion on it?

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Fri, 10 Aug 2007 18:27:14 +0100

It does if it's a crack-pot!

Ron Allen on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Ron Allen — Fri, 10 Aug 2007 17:23:20 +0100

Any individual or business that puts itself behind the eight ball with debt is not financially secure from leverage. America leaves the door open to exploitation day by day as we maintain a staggering national debt. Living for today has its consequences; the example of billions of dollars in failed subprime mortgages being a perfect example. Spinning stark reality into optimism will not change the fact that China has a sizable portion of our debt setting in the palm of their hand. Optimism does not put a chicken in every pot, it simply provides the illusion that someday we might eat.

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Fri, 10 Aug 2007 16:48:28 +0100

All I've said is that the US government has put themselves in a precarious situation by becoming so dependent on China by being so indebted to them, and then I merely referenced a recent economic threat from China to underscore that point. I have not tried to quantify nor qualified this economical relationship – though you argue as if I did I have not implied that China would actually go through on any threats – though you argue as if I did I have not said the end of the world is coming - though you argue as if I did I have not eaten green eggs or ham, Mike I am. Question: do you do this on purpose, and by this I mean do you purposely try to inflate, confuse, and deflect a posters question in order to stop discussion on it?

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Fri, 10 Aug 2007 16:18:14 +0100

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...but this dosen't change the fact that the leverage of the creditor over the debtor exists.

Ok...I'll accomodate you there (if only to prove I'm capable of doing so), but would take it a step further and suggest there are very real limits to leverage. That's where we differ; you see any amount of leverage as gving a potential enemy control over the economy and foreign/trade policy of the US. I see give and take in an economic relationship that can be a win--win. Influence and coercion are two different things. Apply too much leverage and you have coercion and that's self-defeating. China has a stake in the success in the US economy. That interdependance will preserve the peace and in my simplistic mind, peace is a good thing.

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Fri, 10 Aug 2007 15:33:23 +0100

Too late, you're already in your golden years, hah! I can accept the term volatile, basically what I meant anyways - see I'm accommodating, you're not. ['The creditor WANTS the debtor to succeed in order to get a return on the investment.'] Agreed, but this dosen't change the fact that the leverage of the creditor over the debtor exists.

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Fri, 10 Aug 2007 15:02:29 +0100

Chris, Nicely done--both defensive AND patronizing! You have me beat! Please share some more of your "obvious" wisdom with me. Please enlighten me, Oh oracle of the great white north!

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...you needed people to state the obvious, but since you obviously do, yes, there is a risk to any economic action taken by China, or the US....not perhaps in your bizarre world where debt is a good thing, the creditor has the advantage over the debtor

Actually, in my bizarre world--one shared by the rest of the planet, the debtor and creditor are interdependant. The creditor does not seek the destruction of the debtor for fear of losing the debt. The creditor WANTS the debtor to succeed in order to get a return on the investment.

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....China doesn't even have to threaten the US economically to hurt it, all they really have to do is stop buying US debt, and then who the hell else is going to buy it given the US shaky economy

While it's true the US market is volatile (different from shaky), volatility = opportunity. The US market growth has far outpaced any other international markets, while unemployment is historically low, tax revenues are up and the national debt is decreasing. Good business suggests investing money in markets that show growth, not stagnation. The higher the risk, the higher the profit potential. I just think you and many others here are too alarmist. You on the other hand, think people like me are living in a fool's paradise. That's OK. You are also entitled to keep your money in a mattress and I'll keep mine in the market. We'll see who will be living on dog food in our golden years.

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Fri, 10 Aug 2007 13:41:40 +0100

['What is most puzzling to me is you seem unwilling to acknowledge the risk borne by China by threatening to or actually dumping US debt on the world market.'] Mike, I wasn't aware that you needed people to state the obvious, but since you obviously do, yes, there is a risk to any economic action taken by China, or the US. As to your parroting the number you are so impressed with – four percent, it might be important to remember that economics don't exist in a vacuum. Usually, though not perhaps in your bizarre world where debt is a good thing, the creditor has the advantage over the debtor. You see while America is scouring the planet looking for countries to but its debt (China being the biggest buyer right now) China is scouring the planet looking for places to invest its money. In fact, China dosen't even have to threaten the US economically to hurt it, all they really have to do is stop buying US debt, and then who the hell else is going to buy it given the US shaky economy (I thought I'd use that word again given the past few shaky days of the US investment markets, how's the denial going BTW)

Iron Mike on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

Iron Mike — Thu, 09 Aug 2007 21:42:05 +0100

Geez...now you're getting bit cranky and hyper-sensitive. Are you sure you're Canadian? Is English your second language? You really need to cultivate a sense of humor. I'm not suggesting you believe in the end of world and in an effort to keep you from taking it personally, I am merely suggesting that if one is predisposed to the negative, it will only be the negative that one sees. OK? If I inflate your position, it it only to demonstrate what I see as the weakness of your argument. For instance, you argued that ANY US debt owned by China gives them leverage over the US. OK...then in order of percentage of debt owned, the following countries have compromised our national policy and threaten the US economy? Japan, China, United Kingdom, Brazil, Luxembourg, Hong Kong, Taiwan, Korea, Germany, Carib Bnkng Ctrs, Mexico, Singapore, Canada, Switzerland, Turkey, France, Netherlands, Thailand, Sweden, India, Israel, Italy, Ireland, Belgium, Russia, Poland, Malaysia http://www.treas.gov/tic/mfh.txt Of course not! But taken together, they represent the oft-quoted and deceptive 47% of the US debt! For a debunking of that canard, here's a great article. http://www.optimist123.com/optimist/2006/03/three_card_mont.html What is most puzzling to me is you seem unwilling to acknowledge the risk borne by China by threatening to or actually dumping US debt on the world market. You do not see that threatening one of your largest customers is not good for your business? Not defensive--just wondering. IM

chris9234 on "BREAKING: Even Motley Fool is predicting a U.S. market crash"

chris9234 — Thu, 09 Aug 2007 20:49:58 +0100

['If you are of the mind to believe the end of the world is near and you have a front row seat for the big finale'] You see, this is exactly the kind of reason I find discussion with you difficult as well as tiring. Why the need to inflate my position? Do you not follow American politics? The current trade imbalance with China is fast becoming an important issue in your country, more certainly now that a Presidential election is on the horizon. The US Senate is currently weighing bringing in sanctions against China in response to perceived unfair trade practices by China and is why China has moved on the defensive and started making their own thinly veiled economic threats against the US. Ok, for you perhaps this isn't interesting, but for me to consider that the US has compromised themselves so foolishly by being in debt to a foreign country like China to the point of finding themselves now handcuffed, or at the very least limited, in making measured responses to China's trade practices is astounding. That's it. What's the big deal? Why all the end of the world talk? And you wonder why I think you're defensive.

BREAKING: Even Motley Fool is predicting a U.S. market crash,

Solve et Coagula — Tue, 26 Sep 2006 00:22:46 +0100

Reposted from JerseyThursday Even Motley Fool is predicting a U.S. market crash I often find their advice all over the place. But, this time I think they are suggesting something a lot of us have been saying for awhile now... the U.S. market and dollar dive. http://biz.yahoo.com/fool/060925/115919648505.html