[Marxism] China's holdings of US Debt

[S. Artesian]

I  don't think China is a bit different from Brazil, or Russia, in this 
regard-- qualitatively; quantitatively, it has more rigorous capital 
controls then Russia, but I think the "inability" of the Brazilian Central 
Bank to deploy its "foreign reserves" without having recourse to the 
uncapped currency swap line provided by the Fed tells us much about how 
unready that bank was/is  to go "all in" and decide that the US is a burden 
rather than a support.

As I said, I have no doubt that China howled about the GSE's-- you know 
what?  So did the US banks,  the US mutual funds, etc, and the US banks even 
howled afterwards, so much so that the Fed had to amend its requirements 
about tangible capital, since the GSE stock,  if I can remember that far 
back, was a certified asset of bank tangible capital... but I think this 
attributing the actions of the US to the leverage of China is a little bit 
like those stories of Ohlmert pulling Bush off the podium to rein in Rice--  
supermarket tabloid political economy-- which is the highest expression of 
political economy, by the way.

Yes, that is exactly how the central bank in China gets its reserves--  
purchasing the dollars from the commercial banks which are deposited there 
by trading firms, manufacturers, shippers, etc. etc.  And if profit 
repatriation is also tightly controlled, as it is, then in essence those 
deposits can only be regarded as the property of either the CB or the 
government if they are expropriated.   So talk about howling-- you'll see 
plenty of it, and from right inside China, if the central bank decides to 
liquidate its dollar holdings.  Again, that is a possibility, but it is a 
possibility only if, and as, the entire network of capitalism disintegrates.

Yes, China has never been burnt by money flows, and it is that-- that 
"market" in currency that the US would love to have to use against China. 
If the US debt instruments give China any leverage, it is the leverage to 
resist just that demand from the US.

Yes, for Wal-Mart, establishing a domestic market, an expanding domestic 
market in China is critical.  Problem is, China can't do that-- not with 700 
million people tied to agriculture; with the average land-holding less than 
.5 acres.  It can't convert that into a domestic market without triggering a 
revolution.

China will find out, or perhaps already knows, that its holdings of US debt 
instruments give it about as much leverage over the US economy as Japan's 
did the day before the Plaza Accords.

----- Original Message ----- 
From: "Marv Gandall" <marvgandall at videotron.ca>
To: <sartesian at earthlink.net>
Sent: Tuesday, March 03, 2009 5:12 PM
Subject: Re: [Marxism] China's holdings of US Debt


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