China Foreign Debt Rises to $586 Billion at End of March
Posted by WARREN MOSLER on July 7th, 2011
Back door subtraction from reserves:
China Foreign Debt Rises to $586 Billion at End of March
July 7 (Bloomberg) — China’s outstanding overseas borrowing increased to $586 billion at the end of March from $548.9 at the end of last year, according to a statement posted to the website of the State Administration of Foreign Exchange.
Outstanding medium- and long-term debt was $174.3 billion at the end of March, rising from $173.2 billion at the end of 2010, according to the administration. Short-term debt was $411.7 billion, increasing from $375.7 billion.
July 8th, 2011 at 6:22 am
As a warrior of the Kansas City clan I have return from battle bearing good news. One of our friendly non-clan members, Joseph Stiglitz, has taken upon himself an assault within the comment section of his writings. I, for admiring his motives not his arguments, defended his honor to great pleasure.
To witness the battle scene I take shall take you there now
http://www.project-syndicate.org/commentary/stiglitz140/English#comments
Let me share with you the final blow of my axe upon thee victim’s head
“An currency issuer can pay back any and all debts denominated within it’s currency at any time as the the monopoly producer, lender and price setter of money. The paradox of thrift argument your eluding too assumes a monetary system in place.
One of the most important yet misunderstood roles of the issuer is to stabilize monetary operations by replenishing the savings extracted by currency users. When currency users save, it is the currency issuer responsibility to “spend” to replenish the currency within the system otherwise the overall level of output of decreases.
The point of all this to demonstrate that everything of value that is produced is “managed” at some level or another. Our modern capitalist system is no different. It’s rules are not naturally ordained but simply the outcome of political arrangements. Political arrangements defined by law though property rights, the corporation, and the creation of money. Among other reasons, this is why classical economists never spoke of “economics” but always of the “political economy.” The intended purpose of these political arrangements is to benefit of society by reducing risk and driving economic development.
@BonnaFide – Drop the theories and the ideology and come learn something about how monetary operations work. I say this with all due respect because not only you, but the author of this article, are misinformed about the role and responsibilities of a currency issuer. http://dollarmonopoly.blogspot.com/p/issuer-user-paradigm.html
I’m not even an economist and i can tell you the Kansas City school of economic is the only folks who have figured this stuff out. Why? Because they study monetary operations. Unfortunately “economic speak” gets in the way of people grasping what they are saying.”
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Tom Hickey Reply:
July 8th, 2011 at 9:46 am
@Dollar Monopoly,
Good one, Craig. Like your engineering approach to flow. Why don’t you be more explicit about it? It’s a strength.
Joe Stiglitz is another economist with his heart in the right place but his head is confused. Jeff Sachs, too. They are both big picture, global thinkers with a broad concern for the direction of the global economy, but neither gets the flow thing, They don’t see that supply is always available to draw on since modern money is more like energy than matter, and the transmission mechanism is now digital and it resides in spreadsheets. So “money lack” is like lack of bytes.
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Dollar Monopoly Reply:
July 8th, 2011 at 9:53 am
@Tom Hickey,
working on it. alot of these ideas came to me yesterday. i’m still flushing things out. I am planning on rewriting my whole site to position everything from an engineering perspective. i did finally get posted on NYTimes. I’m blasting comments all over to drive traffic.
http://community.nytimes.com/comments/krugman.blogs.nytimes.com/2011/07/07/more-anti-austerianism/?permid=15#comment15
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Art Reply:
July 8th, 2011 at 10:14 am
@Tom Hickey,
Tom, wasn’t Sachs the architect of Russia’s “shock therapy”? As far as I can tell, he’s done a severe amount of damage to countless numbers of people and made a pretty good living doing it. His heart’s probably a lot blacker than he thinks (apologies to the color black).
BTW, have you ever seen this? Hugh Hendry is an uber-austerian nut, but it’s a great line at 4:50 of the video. Sachs’ reaction is just as comical: http://www.youtube.com/watch?v=3oZtPK6hqLU
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Tom Hickey Reply:
July 8th, 2011 at 11:52 am
@Art,
Yes, Sachs blew it in Russia and now seems to be repenting. Moreover, I don’t think that he is a neoliberal ideologue using economics as a political tool to promote vested interests the way that many disingenuously are. I divide neoliberals into the redeemable and irredeemable, and a lot of the irredeemable should be in jail. I think that Sachs an be “saved.” MMT is a conversion experience. People just have to come to see the duck as a rabbit. I think Sachs is worth working on.
July 8th, 2011 at 10:04 am
Tom,
The hope that the other Warren gets it goes for a toss here:
http://www.cnbc.com/id/43670783/
Video here http://www.cnbc.com/id/43667112/ somewhere around the middle. 05:15)
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Tom Hickey Reply:
July 8th, 2011 at 10:23 am
@Ramanan,
His joke that the gun is pointed pointed at the wrong heads is funny, but then Buffet promotes Bowles-Simpson (Catfood Commission) just afterward.
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July 8th, 2011 at 10:26 am
Could be a fascinating story given the rumors around China’s financial system – short-term external borrowing up 10% in one quarter? Would have to take a look at the historic data to make a better assessment, but SAFE’s site appears to be down at the moment, unfortunately.
Whatever happens, if we’re lucky, Tom Friedman will finally, finally stop talking about China and all the other stuff that he’s clueless yet unbearably pedantic about! But probably not. This is from just last week: http://www.marketobservation.com/blogs/index.php/2011/06/29/thomas-friedman-on-china-and-america?blog=10
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July 8th, 2011 at 4:03 pm
Warren/anyone,
What is exatly meant by “Back door subtraction from reserves” relative to the report?
Thanks.
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macrosam Reply:
July 8th, 2011 at 6:53 pm
@Crake,
Net the FX denominated borrowings against FX reserves China already has.
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