Is it true that if foreign countries (ex. japan or china) decide to collect their bonds, the US is screwed?

Question

I was looking at this forum about dubai when someone talked about how the US economy is screwed.

I was wondering if the US economy really is screwed. Especially about the bond thing; if japan and china decided to collect their bonds, will the US be in trouble?

There has to be some back up plan right? I do not want to believe that the people running this government are idiots.

I would like reasonable answers with backup information, not just opinions

Answer 1

yes but if they stop giving us loans we stop buying from them so they go down with us. but maybe we should stop borrowing money from them! its easy to figure out why with out backup info.its only common sense at least that's my opinion.

Answer 2

It depends.. what you are talking about will certainly sting. The biggest problem that would likely cuase sincere collapse is going to be when these oil producing countries move towards trading in Euros. FACT: We invaded IRAQ only after they began trading oil in EUROs.. Its a joke to imagine that a falling dollar is going to help the US Economy.. We don't make anything anymore.. So it helps out a small few number of folks lingering in our diminishing manufacturing base.. Dollars relative loss of value against other currencies is also bad because costs of foreign goods will soar, Fewer americans will travel abroad further isolating our society and contributing to the stench of apathy ever so prevelant. This is going to happen, its just a matter of when.. The real pain of bush is going to be felt in the waning days of his administration.. Some people may argue the stock market is a good indicator of a healthy and virulent economy.. well, it doesnt take a brain surgeon to see how big gas and oil have records profits (pay record taxes) but yet there is no trickle down from that.. We've taken those higher end jobs out of our system.. Companies here in the states can compete globally but fewer people enjoy the priviledge of a good salary..

Did we just do your homework assignmenmt for you?

Answer 3

I think if Japan or China, or even both of them at the same time, will decide to collect their bonds, there will be a tax increase on corporations (especially the ones that involve Japan and China; like the automobile industry in case of Japan) that will enable the government to repay the recalled bonds. This will negatively affect Japan and China in a first place, that is why it is very unlikely that these countries are going to recall their bonds.

Answer 4

It would seem that the bonds are spread out over a period of time and the U.S. could either give an IOU or pay them 10 cents on the dollar like the banks did during the great depression. If the U>S> ever got to this state of economical situation you would see gold go to $10,000 to $20,000 and ounce, and that would make the U.S. have to sell their enormous gold reserves and the whole world would be in a delicate position. Because the world economy evolves around the dollar now......pound gaining ground.......yen no problem it floats on $, euro very changeable, in fact it may be high now but, let a war break out and see which currency will be strong......

Answer 5

Theoretically, yes. But that won't happen. Other countries are invested in America for a reason, so they can make money, and reinvest back int their own infrastructures. If they collected all their bonds now, THEY would be screwed.

And don't forget that America is invested heavily in every modern country in the world, and even some un-modern ones. What if we recalled all OUR bonds?

An interesting question, but only a hypothetical. It would never happen.

Love jack

Answer 6

I fear people are overestimating the significance of the US market. Today, with aggressive growth in india, china and other developing nations, manufacturing nations would not go bankrupt if the US economy would collapse.

The only thing japan and china would lose is actual money. As long as they hold on to their dollars, they have a reasonable rate, but as soon as they start selling, they'd plummet in value and leave them not richer, but poorer than before the decision to sell.

So, they are not selling aggressively, but seeking to diversify to Euros and Sterling instead of the Dollar.

Answer 7

Check the nunbera and do the marh first. China could do it alone and along for decades with a complete US trade embargo

start looking your products for made in china then try to imagine how many of their products are marked made in the USA

In reality other nations would likely be the biggest buyers.

DON'T PANIC

Answer 8

Its important for America to interact with globalization. At times I think that the US borrows money too often. It is once of the world's largest debtors.

Imports are much higher than exports. No good for balance of payments.

America should interact with globalization efficiently.

Answer 9

Watch 9/11 - u will know more. Even the saudis share is about 8 - 12 %.

Answer 10

If you happen to look for Jobs in Dubai http://www.naukrigulf.com/ one of the best sites in Dubai region

Answer 11

Nothing to worry about.
People have talked about this for over 50 years.