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In all the discussion about Mr. Boehner, the debt limit, and the Congressional Republican, I have not seen any diarist discuss the effect of a shutdown on the 1%, and specifically the large proportion of the 1% who make their money off government- actually a very large percentage.

Now FORBES has published an interesting article about exactly this topic.

china has to give permission

In their never-say-die efforts to defeat Obamacare, Tea Party Republicans brought the federal government a giant step closer to shutdown last night. What they seem not to have considered is how America’s foreign creditors will react

There is a lot of tea party hysteria over "government borrowing." In one way, this hysteria, while not justified, has a point: borrowing a lot of money from foreign interests has a tendency to give those foreign interests say over how America is run. Most borrowing these days is from China and Japan.

For example (from the above article)

One of the most important ways they [foreign investors] wield influence is through major Wall Street investment banks. These latter in turn spend large amounts on political contributions, typically backing both Republicans and Democrats. Their money gives them plenty of face time to advise American elected representatives on “good economics,” a term that more and more these days amounts to economics that serves East Asia’s interests.
I don't think the article writer is has a good take on exactly what those interests are. He thinks East Asia is interested in American stability, I think East Asia is interested in the US as a cheap source of raw materials. For the purposes of this discussion, the exact interest is irrelevant, as long as a government shutdown will annoy East Asia and lead to muscle flexing. The article suggests that stock markets may be sent into a tailspin. This would impact those who fund the tea party Congressfolk, and cause some very unhappy telephone calls to such folk from contributors.
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Comment Preferences

  •  Oops! (2+ / 0-)

    That'll teach the Koch Boys, Sheldon Adelson, and Pete Peterson about pissing away their money on screwballs!

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Sun Sep 29, 2013 at 04:59:12 PM PDT

  •  We are spending all our time on Tea Party, GOP, (1+ / 0-)
    Recommended by:
    JeffW

    Koch addict drunks.  Our need to pass other pieces of legislation must instead be spent indulging these creatures from the right like they are of consequence instead of the reptiles they are.  When they fall, they will make a big splat but they will stay down as the stake of truth is driven through their coal, dead hearts once and for all.  

  •  How is that going to work? (0+ / 0-)

    If US Customs is closed, how can Walmart import from Chinese prison labor camps?

    Walmart will not let the congressmen it owns shut down US Customs.

    "states like VT and ID are not 'real america'" -icemilkcoffee

    by Utahrd on Sun Sep 29, 2013 at 07:41:55 PM PDT

    •  American labor is getting pretty cheap (0+ / 0-)

      We're that desperate and there are that many of us out of work, plus Third World economies are slowly but surely pulling forward.

      Domestic politics is the continuation of civil war by other means.

      by Visceral on Sun Sep 29, 2013 at 08:14:01 PM PDT

      [ Parent ]

  •   People dont know, or understand, (1+ / 0-)
    Recommended by:
    koNko

    that we owe OURSELVES far more than anyone else. debt owed to the American people  dwarfs the money we owe foreign creditors. we owe about 4.5 trillion to foreign countries, the rest is owed to ourselves. we always pay our bills, and the debt ceiling is simply an artificial construct to create an artificial scarcity in money. as long as the us government has fiat control over its currency, we can never run out of money. The government is not a business, or family, those do not have access to unlimited funds.

    •  Unfortunately the American People (0+ / 0-)

      don't buy congressfolk. A lot of this is about which member of the 1% is paying the reelection bills.

    •  Good point. (0+ / 0-)

      And so, we can ask, why would Congressional Tea Baggers and others Republicans want to shit on American investors who pay their salaries and medical plans?

      However, that said, the amount held by foreign investors is pretty significant and is a good thing because (a) it binds countries together with mutual interest and obligation and (b) provides a sanity check on policy.

      Suffice it to say, the Obama Administration has found it just as useful to have the use of foreign support of the US Treasury as many of his predecessors have.

  •  Well, you are wrong, too (0+ / 0-)
    I don't think the article writer is has a good take on exactly what those interests are. He thinks East Asia is interested in American stability, I think East Asia is interested in the US as a cheap source of raw materials. For the purposes of this discussion, the exact interest is irrelevant, as long as a government shutdown will annoy East Asia and lead to muscle flexing. The article suggests that stock markets may be sent into a tailspin. This would impact those who fund the tea party Congressfolk, and cause some very unhappy telephone calls to such folk from contributors.
    East Asian and other investors (let's not have another round of Asian-bashing please, they are second only to African Americans in terms of voting Dem) in US Treasury Bonds are generally interested in:

    1. Investing US Dollars (the de facto global reserve currency) in safe financial instruments that guarantee a modest but reliable return.

    2. Promoting trade relations.

    They are investing in US Government debt not Wall Street securities, there is a difference.

    As for Chinese offering Americans financial advice, or Americans offering Chinese financial advice, the two government have regular bilateral meetings where they both dispense with that.

    But, yeah, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China, China.

    •  In response (0+ / 0-)

      Asians in the US are not the same as Asian investors in East Asia. Asians in the US do vote Democratic. Asian investors are interested in getting our oil, lumber and minerals at minimal expense. They don't vote because they are not US citizens. Totally different group of people.

      The two largest groups of foreign investors in US securities are China and Japan (not just China). Therefore they have an interest in the soundness of their investment.

      Please provide citation to prove that East Asian investors do not lean on Congressfolk as described in article

       

  •  Stockmarket plunging (0+ / 0-)

    U.S. Market  Stocks were lower at midday as most global markets showed concerns about the looming U.S. government shutdown if Congress does not reach a budget deal by midnight tonight. Treasury prices also fell on account of investor fears.

    ... who would have thunk?

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