Investor Shock Dubai Calls For Debt Standstill/Could Default

[Sanket]

Are you saying America is going to give the money back to countries like China ?

I think that is never going to happen & I am also waiting for the Trade War to Start.

[bararallu]

Are you saying America is going to give the money back to countries like China ?

I think that is never going to happen & I am also waiting for the Trade War to Start.

Yes it absolutely will, it may not be direct but it will be fully equivalent.

Monetary policy is just one side of the bill man... trade is far more varied and there are immense amount of pivot points on that variation (environmental aspects for example, joint ventures for another), all can be reduced to a $ figure. And the Chinese (not to Mention Japanese and the rest) have good bean counters to understand that they are getting their due.

BTW, pulling their 'stock' out of the US basically destroys their own economic growth, so that will not happen in it's own right. The actual business interests in China will be against a trade war- who cares if you have all this money if you cant do anything with it?

[Sanket]

Let's wait & watch. Trade war will be started by America.

China has started interfering in your domestic policies - Health Care.

[Mediocrates]

Since Dubai forbids any dealings with Israel, Israel will be largely passed over by this calamity like it's Pesach.

http://haaretz.com/hasen/spages/1131347.html

[bararallu]

ok... and now for another view on the show me the money.

[wat0n]

Since Dubai forbids any dealings with Israel, Israel will be largely passed over by this calamity like it's Pesach.

http://haaretz.com/hasen/spages/1131347.html

It might still affect Israel (and other emergent economies) if investors become more risk-averse, but it's unlikely.

There's a somehow higher chance that emerging markets (stocks) won't perform as good as they have been doing until now, but even that is not certain, I guess it depends if Dubai defaults or not.

[bararallu]

Wat0n,

Israel has long emerged as an economy .

[wat0n]

Wat0n,

Israel has long emerged as an economy .

It's still considered an emergent economy by some, but not for long.

South Korea is also considered an emerging economy, so I woudn't worry: The classification is based mostly on how its financial markets work rather than human development.

Now, for "real" emerging economies like my country, this may have some risks. Though specifically in our case the gov't saved some 20% of GDP when copper prices were high, so I don't think this should affect us too much.

[Sanket]

http://www.bloomberg.com/apps/news?p...N5otYtH0&pos=4

Within Europe, the largest portion of U.A.E. exposure is held by U.K. banks with $49.5 billion followed by France with $11.3 billion, CreditSights said, citing data from the BIS.

Royal Bank of Scotland Group Plc was Dubai World’s biggest loan arranger since January 2007, according to JPMorgan. RBS, the largest U.K. government-controlled bank, fell 4.4 percent to 33.18 pence.

[Sanket]

Let's wait & watch. Trade war will be started by America.

China slaps duties on U.S., Russian steel

Thu Dec 10, 2009 12:11pm EST

BEIJING/MOSCOW (Reuters) - China, the world's biggest steel consumer, said it will impose anti-dumping duties of up to 25 percent on specialized steel imports from Russia and the United States, stepping up a trade row with Washington.

[Sanket]

US urges China against sanctions


by Shaun Tandon Shaun Tandon – Mon Feb 1, 4:24 pm ET

WASHINGTON (AFP) – The United States urged China on Monday not to slap sanctions on US companies selling arms to Taiwan, as the firms tried to stay out of President Barack Obama's biggest row yet with Beijing.


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[Sanket]

Let the fight begin

During last year’s G-20 summit in Pittsburgh, US President Barack Obama said that “global fiscal imbalances” had to be addressed for the world to get over its economic hangover. This wasn’t a Madison Avenue turn of phrase. But in its nerdiness was embedded a big geopolitical subtext. This manifest itself in the next few months as the US and China go for each other’s jugular. Godzilla versus Destoroyah. It doesn’t get bigger than this.

The origin of what one Washington lobbyist called “a tectonic shift regarding China in the US” is a consensus within the Obama administration that the source of the financial crisis, the reason the recovery has been jobless, and the primary reason why the crisis may happen again, is “fiscal imbalance”.

This school of thinking argues that during the Lehman Brothers Era the world was economically divided between those with China-like qualities and those with US-like ways and means. The China camp exported like crazy and used the resulting currency reserves to subsidise consumption in the American-style countries. The Americans lived off the cheap credit, imported like crazy but also used the money to blow up asset bubbles. Such imbalances are not unknown. In a market environment, however, the resulting imbalance corrects itself through exchange rates. But in one where the Chinese government pre-empts the market and deliberately keeps the yuan low, the result is crisis.

Washington pundits say the US has concluded that putting the Great Recession out of the way, once and for all, means putting the Great Currency Fix out of the way as well. The Democrats’ favourite Nobel economist Paul Krugman has calculated that Chinese ‘mercantilism’ will cost America 1.4 million jobs over the next few years.
China must export less if the US is to save more. That means the yuan must rise. This, not love, will make the world spin this year.

Obama held his fire earlier because he needed Chinese assistance on a host of other international issues. Beijing was less than helpful on Iran and North Korea. It humiliated Obama during his November visit to Beijing, though he angered many in the US by refusing to meet the Dalai Lama beforehand. Insiders say Obama described the atmosphere of his meeting with Hu Jintao as “frigid”.

The straw that broke Obama’s patience was Copenhagen. The US believes it had a pre-summit deal with China on climate change. But Beijing reneged and dumped the US. It then rubbed salt in the backstab. It sent low-level officials to meetings with Obama and prepared the ground for the US president to go back home empty-handed.

The Danish caper proved a step too far. The Democrats, remember, include human rights activists, green types, labour unions, Free Tibet people and a lot of people uncomfortable with the Chinese government. Their congressional supporters have been restrained from taking action against Beijing only because the Obama administration would whisper the words ‘climate change’ and ‘T-bills’ to them.

Copenhagen removed the first inhibition. House Speaker Nancy Pelosi is a known Sinophobe in the US system. But she kept quiet during her visit to China last year. “You know why? Because climate change was more important to her,” said a former member of the US climate change negotiating team. “Now she sees no reason to hold back.”

The second inhibitor, the T-bill issue, refers to the fact that China holds a quarter of the US public debt in the form of some $800 billion worth of US Treasury bills. The standard view is that China is now ‘the US’s banker’ and has the sole superpower by the short and curlies.

This was always exaggerated. The present view in Washington is that it doesn’t matter. If China dumps Treasury bills, it will stab itself because the value of its holdings will fall and US consumers will buy less Chinese stuff. More to the point is that the world is knee-deep in capital right now and there are enough alternative buyers of T-bills. Krugman is one of those who argue the T-bill threat is a bluff. “It would probably weaken the dollar against other currencies — but that would be good, not bad, for US competitiveness and employment. So if the Chinese do dump dollars, we should send them a thank you note.”

The US is preparing to fire broadsides into the Chinese economy. The ebb of any political support to at least keep Beijing cooperative was evident when the US imposed tariffs on imported China tyres and steel. It was overt during the recent contretemps between Google and the Chinese authorities over internet censorship. The White House publicly supported the US search engine company. The lobbyist explained the significance: “Recall that along with labour unions, Hollywood, the Jewish community and trial lawyers, Silicon Valley — and Google specifically — is one of the financial pillars of the Democratic Party.” China is responding in kind. “Note that China is not sending anyone senior to the latest Permanent 5+1 meeting on Iran.”

A senior US multinational executive said that the Obama administration has warned US companies to “button down” their investments in China by April. “That’s when the fur is going to fly.”

When others close to the Obama administration were asked whether the US president would try to restrain the momentum against China. They said, “He believes Beijing has done nothing but kick him in the teeth since he became president.”

[Sanket]

Financial Times:China to lose ally against US trade hawks

Myron Brilliant, senior vice-president for international affairs, who has previously helped to protect Beijing from hawkish trade policies, told the Financial Times: “I don’t think the Chinese government can count on the American business community to be able to push back and block action [on Capitol Hill].”
...
Mr Brilliant said corporate America’s attitude had changed in response to a range of “industrial policies” pursued by Beijing, including the undervaluation of the renminbi, which made it harder for US companies to do business and compete with China.

Mr Brilliant has long supported China, including lobbying for China to join the WTO.

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WaPo: China's commerce minister: U.S. has the most to lose in a trade war

China's commerce minister warned the United States on Sunday that if it launches a "trade war" against China by levying punitive tariffs on Chinese imports, the United States will suffer the most.
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"You're not going to get 1.3 billion Chinese to change by insulting them," [Commerce Minister Chen Deming] said. "Could it be related to upcoming elections? I don't know. Because economically, it makes no sense."
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"[Obama] wants exports to double in five years, but I don't know whom he is going to sell them to."