Homestead mailing list

[Juliana Dutra <kila01 AT yahoo.com>]

For those who want to blame Clinton, he didn't borrow
a cent from China, this is all GW handywork. Being
from the Oil industry as he and Cheney are, it sounds
the height of irresponsibility to saddle US with debt
on the eve of Peak Oil (or at least Peak Oil PRICES).
Surely they knew.
Oh, and BTW, who was the guy who first opened
relations with Communist China ? NIXON

    Risk of rebuilding New Orleans in deluge of debt

    In the wake of President George W. Bush's recent
speech in New Orleans, I have been wondering if anyone
has asked the Chinese how they feel about his decision
to spend "whatever it costs" to rebuild the city.
After all, they are the ones who will have to pay for
it.

    (...) the entire cost will be added to the $350bn
federal budget deficit, driving it close to $600bn.
(...) more than 75 per cent [of this deficit] is
financed by foreign central banks, among which the
People's Bank of China will soon pass the Bank of
Japan as the biggest lender.

    (...)

    The entire US economy is on life support from the
PBoC and the BoJ. In 2004, according to the Bank for
International Settlements, central banks funded 75 per
cent of the US current account deficit. This year, the
PBoC alone is likely to cover nearly 40 per cent of
it.

    (...) Americans are consuming more than they
produce and importing more than they export. The
resulting trade deficit will be close to $800bn this
year. To cover this gap, the US must have a net inflow
of capital from abroad of more than $2bn per day and
that must come mostly from China and the other Asian
countries whose trade surpluses mirror the US deficit.
Any slowing of this flow could cause a decline in the
dollar, a rise in interest rates, a slowdown in
growth, a rise in unemployment and declining home
equity and household wealth - in a word, a recession,
if not a depression.

So, the USA are losing control of their ability to pay
for NOLA reconstruction, buy energy efficient
equipment, and avoid recession, and are now relying on
the goodwill of foreigners, starting with China, to
keep on bailing them out. They've done it because they
hitched on the runaway US train to grow their own
economy, but it's becoming increasingly unsustainable.