Or arbitrarily block your account without giving you a reason beyond "ToS violation", and then a few days later, restore access, again without explanation.
I wish this stuff worked. I wish you could rely on it. It would make life so much easier...until they blocked access to my account.
TFA doesn't specify, but since this is meant to run their existing catalogue, that means Windows. Which is a shame. There was an opportunity for Valve&co to create an Android-like dedicated gaming operating system, free from licensing costs. Linux-for-games-consoles, instead of XBox-for-Steam.
Because that's why NASA exists after all: to help private investors monetize the products of publicly funded research.
Errr, yes.
The National Aeronautics and Space Act: "Congressional declaration of policy and purpose: (a) Devotion of Space Activities to Peaceful Purposes for Benefit of All Humankind. (b) Aeronautical and Space Activities for Welfare and Security of United States. (c) Commercial Use of Space.--Congress declares that the general welfare of the United States requires that the National Aeronautics and Space Administration seek and encourage, to the maximum extent possible, the fullest commercial use of space."
It was also the sole reason NASA's predecessor, NACA, was created, to support the US aircraft industry when it was being threatened by European manufacturers.
Well the TFA is about Telstra not wanting to replace their perfectly fine POTS connection,
No, TFA is about Telstra requiring all customers rent a copper line in addition to a fibre connection, whether they want it or not. That's $30/month for no added service.
(And a coax line, if they want Foxtel's on-demand service, even though the on-demand service would be delivered over fibre.)
Neighbourhood has fibre and copper lines installed. People ring Telstra to get fibre for broadband, they decide to switch off their $30/month copper line since they have cell-phones and can get VoIP from anyone. (Or perhaps they never bothered to have copper before, using mobile broadband.) Telstra says, "No. All fibre customers must also pay for a copper line. $30/month extra please!"
No other provider has this requirement, because no other provider owns the copper lines.
Wholly owned startup is no different to in-house development spun off into a subsidiary. By giving the developers a share of the startups, you encourage independence and entrepreneurship. Plus, obviously, you encourage developers to explore ideas which they weren't willing to give to the mothership (or had rejected because it didn't fit The Plan) but can't afford to pursue on their own.
If it can identify the idiosyncrasies in your writing, it can identify them in others'. I wonder if it can alter your "anonymous" controversial rant to look like that other.
The way to survive is to not be found. So stand off a long long way. Shed heat out of system, put a cloak on yourself from an insystem perspective. Send in your drones to locate the enemy and destroy them.
"Send"? The moment you fire any kind of propulsion, you light up like a supernova. With propulsion type (chemical, ion, fusion) and strength obvious from the exhaust spectrum, you give every watcher in the solar system your propulsive energy and vector, your acceleration then gives them your ship mass. From there you are utterly predictable until you fire your engines again, and then you are unpredictable only until the light reaches the enemies' sensors. Even small course correction burns will be visible over millions of kilometres.
Shed heat out of system, put a cloak on yourself from an insystem perspective.
Unless your entire enemy consists of one ship in the entire solar system, and your entire war consists of a single attack, your enemy probably consists of more than one observer and your radiators are visible to someone. Worse, I doubt you can sufficiently freeze you enemy-facing side down to background temperatures (around 4K) to avoid glowing like a star in infrared or microwave. And the more you try to cool your facing side, the more energy you need, the more heat you need to dump, the bigger your radiators need to be, and the "brighter" they are.
People have been debating this stuff for decades. Stealth, decoys, counter-measures, etc. The physics doesn't work. You can't hide in space unless there's a magic "cloak" technology, a la Star Trek, and reactionless thrusters. For anything realistically near-future, everything in space is visible. Every object is tagged and tracked, every move instantly obvious (relatively, haha).
It seems to me that if the only people buying the underpinnings of the dollar is the country that uses the dollar internally (the Federal Reserve), then the rest of the world has effectively moved away from the dollar and it is worthless.
I think this is where a lot of people get confused. What do you mean by a "worthless" US Dollar?
It could never truly be worthless because it has value inside the US, it is the only currency that the US government accepts taxes and other payments in, and they only currency they pay out in. So in finance terms, it means the US Dollar is trading lower against other currencies. Ie, instead of 1 Euro buying US$1.25 (or whatever it is today), 1 Euro would buy US$50, or US$100. Suddenly US goods are massively cheap on the international markets. US exports go through the roof sparking a manufacturing boom. 50:1 might be a bit much, but a falling US dollar would be good for America right now.
But US$1 still buys $US1. By that I mean, if you have a wage in US dollars, and a mortgage in US dollars, and savings in US dollars, it doesn't affect you.
If you owe money in foreign currencies, you're screwed. This is what happens to a lot of developing countries which have massive foreign debt. But the entire US govt debt is in issued Treasury bonds, most of which is owned domestically. (Only 30% is foreign owned.) The same is true with almost all private debt.
Everyone who owns US debt is highly exposed to any fall in the US dollar. The US is not exposed. It's counter-intuitive, but it's true.
(This is why Greece and the other PIGS are so boned. By adopting the Euro, they've effectively put all their debt (public and private) in "foreign" currency.)
If they flooded the market, the dollar value would drop... a lot. [...] So, even assuming the SS trust fund could cash out 1.3T from night to day [...] it would be dollars - witch would evaluate next to nothing.
If the value of the US dollar crashed, the value of China's portfolio of US bonds would crash too. Remember they are purely a US Dollar item. (This is why countries who can, issue debt bonds in their own currency, rather than taking foreign-currency loans. It eliminates this risk.)
A country in debt cannot generate instant wealth by itself, that's why there is foreign debt.
Again, I think you confuse bonds with foreign loans. The overwhelming majority of bonds are held by domestic buyers. If they were suddenly selling at below face value, converting your one million US dollars in cash to two million US dollars face-value in Chinese-owned bonds is free money for you, unless you intended to change out of US dollars, which most domestic buyers don't. (Whereas it gains the Chinese seller $1 million in falling value US dollars which they have to try and convert back to Renminbi.)
And I'll point out again that the Chinese have stopped buying US bonds, and are slowly reducing their holdings. Yet there hasn't been a bond crash because of it, and it hasn't somehow given China some massive power over the US (which, again, is the point of the conspiracy theory.) If anything, China trod gently-gently during the global financial meltdown, not wanting to crash the US dollar. They didn't do that out of a love for the US. China is massively exposed.
A drop in the value of the dollar [...] You are also assuming the US wouldn't have competition in their exports, which again would be taking out of equation countries like China, India, Brazil, Russia, Japan, etc.
No, I'm not. I'm saying the opposite. A drop in the US dollar makes US exports cheaper compared to other countries' goods.
Ie, we start at USD1 = RMB1 = Euro1. Just to make the maths easy. A US-made grommet-thimble costs USD1. Therefore it costs RMB1. And Euro1. Chinese-made grommet-thimble costs RMB0.50. Therefore USD0.50 and Euro0.50. US grommet-thimble makers can't compete, even in their own country.
Then the China does its devil business. Suddenly USD5 = RMB1 = Euro2. US-made grommet-thimble costs USD1, still. Therefore it costs RMB0.20 and Euro0.40. (Maybe USD1.20 if it relies on imported raw material. So RMB0.24 and Eu0.48.) Chinese-made grommet-thimble costs RMB0.50. Therefore USD2.50 and Euro1.
So US-made grommet-thimbles become cheaper then Chinese made ones anywhere in the world, even in China. And Chinese-made ones become unaffordable in the US. The US becomes the grommet-thimble manufacturing capital of the world.
Exaggerated example. But it shows what I was getting at. This has happened as the USD has lost value since the recession, good for US manufacturing. But the crisis in Europe has slowed the fall of the USD, which has softened the effect, delaying the recovery. It's counter-intuitive, but a drop in your currencies value is a good thing during a recession. A rise is a good thing during high-inflation, full-employment boom periods.
You'll note that the Chinese are holding the value of the Renminbi artificially low against the US Dollar. Allowing it to rise naturally would weaken their manufacturing/exporting base. Estimates are that it's 1/3 below its natural value, causing inflation in China.
My own country's currency is strong against the US dollar, which makes our exports more expensive, US imports cheaper here. Not good for our manufacturers.
Greece [...] Also, their main creditors are Germany and France, so their debt isn't in a foreign currency.
Because Greece doesn't have its own currency, it is functionally the same as having debt in a foreign currency. It's one of the quirks that economists have been pointing out about the Euro for years.
The trust is probably scattered along long-term stable investments, and probably some of them outside the US. How do you think those investments would turn out when faced with a significant depeciation of the currency?
The international ones would suddenly become much more valuable. If they traded out of them, back into US dollars to buy Chinese-owned bonds that are suddenly trading below face value, they would make a killing.
Do you understand how currency works? If you hold, say, UK bonds, which are paid and traded in pounds-sterling, and the US dollar drops in value against the pound (and every other currency), then your UK bonds are worth more to you.
Why do you think China is trying to keep the yuán as low as possible against the US Dollar? They do not want the Dollar to fall further in value, it would either trigger massive domestic inflation in China, or force them to increase the international value of the yuán, which makes Chinese goods more expensive, cutting their manufacturing sector. Look at how gently China tread during the financial crisis, they are massively exposed.
Pension funds would evaporate, as well as every single penny deposited on a US bank.
Again, this doesn't make any sense. They are US dollar holdings with US dollar liabilities. They are utterly unaffected by external changes in the value of the US dollar. (Unless they hold international reserves, in which case, a falling US dollar increases the value of those reserves.)
The only people who are harmed by a fall in the value of the US Dollar are people with debt obligations in a foreign currency, but their holdings in US Dollars. This is a tiny amount of the US market, and balanced by people who hold foreign currency reserves, US dollar liabilities.
Look, I'm not saying that there isn't some way to precipitate a financial crisis, that's proven by, you know, that whole financial crisis. I'm saying that there's no way for China to use US Debt to somehow damage the US to China's benefit. Hence there's no leverage held by China over the US, "Do what we want, American pigs, or we'll bust your economy!" Anything they did would hurt themselves more, and would have only a brief impact on the markets.
(Of course, the US can similarly shoot itself in the foot. As it almost did with the debt ceiling pretend-crisis.)
If China did dump all their investments without any regard for financial losses, very few would consider them "free bonds", and more like "a risky product", as they'd be suspicious the chinese investors knew something they didn't. The markets aren't driven by logic, but by risk assessment and rumors.
Panics are hard to maintain. The US govt would begin buying up the highest-interest bonds (as they do anyway). Eventually the more aggressive bond traders would say, "Fuck this, I want in", and start buying up the cheapest high-interest bonds left. Within a couple of days the markets would be racing to absorb the whole tranche before the party stops, and prices would be climbing again. Within weeks, the market will be back where it started as if the whole thing never happened.
Remember, although the markets are highly volatile, the markets are used to being highly volatile.
Also, most 1st world countries have liquidity problems right now, so probably they couldn't even sell them all at once.
You massively over-estimate the size of China's holdings. US domestic buyers alone could absorb dumped Chinese-owned bonds. Hell, the Social Security Trust Fund alone could absorb dumped Chinese-owned bonds, and if the price was right they would.
If they wanted to get rid of it, they could do it quietly over a period of time [...] Prices would go down, but it could be done if they're willing to sacrifice their profit.
For what purpose? Remember the thing I was responding to was the idea that China has some leverage over the US. That they could suddenly "call in the loans" and the US would collapse. The best you can come up is that China somehow causes a small gradual decline in prices, at their own loss. Ohnoes. The bond price is high, interest on new debt is low, the market would love someone to dump a bunch of bonds right now.
and probably even using other nations as proxy.
Treasury certificates are individually registered with the US Treasury. There's no way to "proxy" anything.
the world could face an unrecoverable devaluation of the dollar, with devastating effects to many countries.
A drop in the value of the US dollar would make US exports cheap. Increasing US manufacturing and farming. As well as encouraging import-substitution at home. Within ten years, the US would be a manufacturing powerhouse, and the US dollar would be climbing again. (IMO, the US dollar would be lower right now, except for the clusterfuck in Europe. That is slowing the US recovery.)
The inability for nations like Greece to do this is why they are in the toilet. By sharing the Euro, Germany benefits from a lower value currency, allowing it to export more cheaply, and reducing imports. If they still had the Deutsch-Mark, it would be going up in value, effectively raising German prices and wages, German exports would be more expensive, and foreign imports would be cheaper in Germany. Greece, OTOH, lost its manufacturing base, has high debt in a "foreign" currency, under normal circumstances the Drachma would drop in value, effectively lowering wages/etc and encouraging export development. But because the are locked into the Euro, and Euro debt. they've been drifting further and further out to sea until the GFC hit and precipitated a debt crisis.
The US is not in that position, and can't be put in that position, as long as it has it's own currency, and all its debt is in US Dollars.
If China stopped buying US bonds, not only that would have an effect on short-term liquidity, but probably would have a cascading effect
Okay. China has stopped buying US bonds. What now?
No, I don't mean hypothetically, China has stopped buying US bonds. It's allowing its holdings to decline as they mature. Yet the resale price is still high, the interest rates are still low. The market would love China to dump some US bonds at fire-sale prices.
and very few countries have China's buying power
China holds about 8% of US Treasury bonds.
Japan holds about 6%, the UK has increased its US holdings to about 4%. There's nothing special about China's ownership of US debt. There's nothing that gives them leverage. And, of course, US institutions, including the Social Security Trust, own about 70% of US Federal debt.
As I've said elsewhere, funding a launcher without a mission is a false economy. It costs you vastly more money, unless you expect to cancel SLS before it launches.
If you wait until SLS is finished, then start funding mission hardware, you have to keep SLS flight-ready until the mission is ready. And that costs about $3 billion per year, even when you're not flying (fixed costs.) So if it takes 8 years to develop hardware, that's $24 billion just on keeping SLS alive while it waits for hardware. And not a cent of that $24 billion goes to new hardware. So if you expect to burn that kind of money, why not put it into hardware development in parallel with the launcher, like Apollo with Saturn V. Unless you expect SLS to fail.
(Worse, Congress wants a cargo-only 130 ton "SLS-ELC". So mission hardware will be competing for funding against yet another launcher. Which will justify yet another delay until that rocket is finished. So then, finally, when you start to develop mission hardware, you are now also funding the fixed costs of two launchers, which limits funding for mission hardware, which delays development, which wastes even more money keeping the two launchers flight-ready. It's just a dumb plan.)
Re: BRICS as an organisation not a casual grouping.
I stand corrected. I didn't realise they had formalised their relationships to that degree.
Nonetheless, it's hard to see India, for example, siding with China in a dispute with the US. Or Brazil.
and a lower availability of cheap products from China won't make their life easier).
Hmmm, I'm not sure that would hurt the US as much as it would hurt China. After all, most "cheap Chinese imports" that matter are US designed and owned or are easily substituted with US owned products. Moving that manufacturing to the next lowest market on the list, and hell, bringing some back home, would not damage the US. And a slow change, which you mentioned, would be even easier to adjust to, with no benefit to China. Frankly, what China is doing, using US companies to leverage itself up the manufacturing food-chain, is much smarter.
(The exception is in resources, such as rare-earth metals, oil and gas.)
Is there a leverage for US (and other First World nations) to get tougher on China as the OP suggested? Or is it also a hysterical nonsense?
Well, it's hysterical, but not nonsense. There's the normal diplomatic pressure, threats to preferred trade status, etc. Not the sort of thing the OP meant, of course.
Re: Response of the other BRICS.
I'd rather think they'll get around, rally and lower the level of trading with US;
Again, why? If China tried to use its ownership of US Treasuries to somehow threaten the US, and the US responded by cancelling or freezing those assets, why would the other BRICS nations feel threatened? "BRICS" is just a traders acronym for five high growth nations, it is not a trade alliance. The five have absolutely no loyalty to each other. If China did something stupid, they'd be more likely to step away from China than step away from the US.
This thing carries 5-6x the payload of the largest commercial rockets. If we ever even want the option of sending astronauts beyond Earth orbit, this is it
But they aren't funding BEO missions. They aren't funding BEO hardware. And, as I said elsewhere, such hardware won't materialise suddenly and without warning, so it's not like you have to be ready. If it takes another 8 years to develop mission hardware, you're spending $3 billion per year just keeping SLS flight-ready. $24 billion to not fly missions while waiting for the hardware. The only way it saves money not developing mission hardware until SLS is finished is if you expect to cancel SLS.
Saturn V was designed around a very specific mission, Apollo. And it was developed in parallel with the mission hardware. It was used as an expensive generic heavy-lift launcher afterwards, but it wasn't built as one. And it was cancelled because it cost too much to run as a generic heavy-lift vehicle. In spite of being paid off, modular, flight-proven, and cheaper than SLS.
SLS is a bad investment, made using bad reasoning, with no purpose.
I'm addressing the incessant refrain that China somehow can "Call in" US debt, as if they were regular loans. There's no mechanism by which China can use US Treasury issued bonds to harm the US. There's no mechanism by which they can even threaten it. There is no leverage. People need to stop uncritically regurgitating this hysterical nonsense.
I see... and all the other nations (especially those in BRICS) will be happy to hear US started to default on bonds issued to China and will do nothing, right?
"If China acted to damage the US using Treasury bonds"
Exactly the same as freezing the assets of a dictator who threatens the US, which has happened any number of times without destroying the financial system. And why would Brazil, Russia, India and South Africa get between the US and China in a dispute? Why would they avenge China if China did something stupid and came off worse for it?
And you can image how quickly they'd scoop up Chinese-owned bonds if China was stupid enough to dump them all at give-away prices.
I don't know why this "China has leverage over the US", "China owns the US", "China can foreclose on the US" crap is so pervasive. Why do people so want to believe it?
If they try then China will simply foreclose on the USA's debt.
How?
Treasuries aren't "loans". They are investment products. They have a fixed expiry date, fixed interest, and are paid in US dollars. Buying US debt gives China no power over the US, instead it exposes China to any crisis in the US.
Each bond is unique. The US Treasury registers and approves the owners of all Treasury issued bonds. If China acted to damage the US using Treasury bonds, they would suddenly find themselves the owners of worthless paper. The same would happen if the US and China went to war (even by proxy, like Korea.)
Slashdot Mirror
Or arbitrarily block your account without giving you a reason beyond "ToS violation", and then a few days later, restore access, again without explanation.
I wish this stuff worked. I wish you could rely on it. It would make life so much easier ...until they blocked access to my account.
TFA doesn't specify, but since this is meant to run their existing catalogue, that means Windows. Which is a shame. There was an opportunity for Valve&co to create an Android-like dedicated gaming operating system, free from licensing costs. Linux-for-games-consoles, instead of XBox-for-Steam.
Wolfenstein is an old game. The ray-traced version is being used as a "Utah Teapot", a standard object to develop and compare rendering techniques.
Because that's why NASA exists after all: to help private investors monetize the products of publicly funded research.
Errr, yes.
The National Aeronautics and Space Act:
"Congressional declaration of policy and purpose:
(a) Devotion of Space Activities to Peaceful Purposes for Benefit of All Humankind.
(b) Aeronautical and Space Activities for Welfare and Security of United States.
(c) Commercial Use of Space.--Congress declares that the general welfare of the United States requires that the National Aeronautics and Space Administration seek and encourage, to the maximum extent possible, the fullest commercial use of space."
It was also the sole reason NASA's predecessor, NACA, was created, to support the US aircraft industry when it was being threatened by European manufacturers.
Well the TFA is about Telstra not wanting to replace their perfectly fine POTS connection,
No, TFA is about Telstra requiring all customers rent a copper line in addition to a fibre connection, whether they want it or not. That's $30/month for no added service.
(And a coax line, if they want Foxtel's on-demand service, even though the on-demand service would be delivered over fibre.)
You misunderstand TFA.
Neighbourhood has fibre and copper lines installed. People ring Telstra to get fibre for broadband, they decide to switch off their $30/month copper line since they have cell-phones and can get VoIP from anyone. (Or perhaps they never bothered to have copper before, using mobile broadband.) Telstra says, "No. All fibre customers must also pay for a copper line. $30/month extra please!"
No other provider has this requirement, because no other provider owns the copper lines.
Hoping that it's dark enough to require a flashlight seems like the worst security policy I've ever heard.
Compared with hoping the burglar is afraid of lamps?
Wholly owned startup is no different to in-house development spun off into a subsidiary. By giving the developers a share of the startups, you encourage independence and entrepreneurship. Plus, obviously, you encourage developers to explore ideas which they weren't willing to give to the mothership (or had rejected because it didn't fit The Plan) but can't afford to pursue on their own.
If it can identify the idiosyncrasies in your writing, it can identify them in others'. I wonder if it can alter your "anonymous" controversial rant to look like that other.
The way to survive is to not be found. So stand off a long long way. Shed heat out of system, put a cloak on yourself from an insystem perspective. Send in your drones to locate the enemy and destroy them.
"Send"? The moment you fire any kind of propulsion, you light up like a supernova. With propulsion type (chemical, ion, fusion) and strength obvious from the exhaust spectrum, you give every watcher in the solar system your propulsive energy and vector, your acceleration then gives them your ship mass. From there you are utterly predictable until you fire your engines again, and then you are unpredictable only until the light reaches the enemies' sensors. Even small course correction burns will be visible over millions of kilometres.
Shed heat out of system, put a cloak on yourself from an insystem perspective.
Unless your entire enemy consists of one ship in the entire solar system, and your entire war consists of a single attack, your enemy probably consists of more than one observer and your radiators are visible to someone. Worse, I doubt you can sufficiently freeze you enemy-facing side down to background temperatures (around 4K) to avoid glowing like a star in infrared or microwave. And the more you try to cool your facing side, the more energy you need, the more heat you need to dump, the bigger your radiators need to be, and the "brighter" they are.
People have been debating this stuff for decades. Stealth, decoys, counter-measures, etc. The physics doesn't work. You can't hide in space unless there's a magic "cloak" technology, a la Star Trek, and reactionless thrusters. For anything realistically near-future, everything in space is visible. Every object is tagged and tracked, every move instantly obvious (relatively, haha).
It seems to me that if the only people buying the underpinnings of the dollar is the country that uses the dollar internally (the Federal Reserve), then the rest of the world has effectively moved away from the dollar and it is worthless.
I think this is where a lot of people get confused. What do you mean by a "worthless" US Dollar?
It could never truly be worthless because it has value inside the US, it is the only currency that the US government accepts taxes and other payments in, and they only currency they pay out in. So in finance terms, it means the US Dollar is trading lower against other currencies. Ie, instead of 1 Euro buying US$1.25 (or whatever it is today), 1 Euro would buy US$50, or US$100. Suddenly US goods are massively cheap on the international markets. US exports go through the roof sparking a manufacturing boom. 50:1 might be a bit much, but a falling US dollar would be good for America right now.
But US$1 still buys $US1. By that I mean, if you have a wage in US dollars, and a mortgage in US dollars, and savings in US dollars, it doesn't affect you.
If you owe money in foreign currencies, you're screwed. This is what happens to a lot of developing countries which have massive foreign debt. But the entire US govt debt is in issued Treasury bonds, most of which is owned domestically. (Only 30% is foreign owned.) The same is true with almost all private debt.
Everyone who owns US debt is highly exposed to any fall in the US dollar. The US is not exposed. It's counter-intuitive, but it's true.
(This is why Greece and the other PIGS are so boned. By adopting the Euro, they've effectively put all their debt (public and private) in "foreign" currency.)
If they flooded the market, the dollar value would drop... a lot. [...] So, even assuming the SS trust fund could cash out 1.3T from night to day [...] it would be dollars - witch would evaluate next to nothing.
If the value of the US dollar crashed, the value of China's portfolio of US bonds would crash too. Remember they are purely a US Dollar item. (This is why countries who can, issue debt bonds in their own currency, rather than taking foreign-currency loans. It eliminates this risk.)
A country in debt cannot generate instant wealth by itself, that's why there is foreign debt.
Again, I think you confuse bonds with foreign loans. The overwhelming majority of bonds are held by domestic buyers. If they were suddenly selling at below face value, converting your one million US dollars in cash to two million US dollars face-value in Chinese-owned bonds is free money for you, unless you intended to change out of US dollars, which most domestic buyers don't. (Whereas it gains the Chinese seller $1 million in falling value US dollars which they have to try and convert back to Renminbi.)
And I'll point out again that the Chinese have stopped buying US bonds, and are slowly reducing their holdings. Yet there hasn't been a bond crash because of it, and it hasn't somehow given China some massive power over the US (which, again, is the point of the conspiracy theory.) If anything, China trod gently-gently during the global financial meltdown, not wanting to crash the US dollar. They didn't do that out of a love for the US. China is massively exposed.
A drop in the value of the dollar [...] You are also assuming the US wouldn't have competition in their exports, which again would be taking out of equation countries like China, India, Brazil, Russia, Japan, etc.
No, I'm not. I'm saying the opposite. A drop in the US dollar makes US exports cheaper compared to other countries' goods.
Ie, we start at USD1 = RMB1 = Euro1. Just to make the maths easy.
A US-made grommet-thimble costs USD1. Therefore it costs RMB1. And Euro1.
Chinese-made grommet-thimble costs RMB0.50. Therefore USD0.50 and Euro0.50.
US grommet-thimble makers can't compete, even in their own country.
Then the China does its devil business. Suddenly USD5 = RMB1 = Euro2.
US-made grommet-thimble costs USD1, still. Therefore it costs RMB0.20 and Euro0.40. (Maybe USD1.20 if it relies on imported raw material. So RMB0.24 and Eu0.48.)
Chinese-made grommet-thimble costs RMB0.50. Therefore USD2.50 and Euro1.
So US-made grommet-thimbles become cheaper then Chinese made ones anywhere in the world, even in China. And Chinese-made ones become unaffordable in the US. The US becomes the grommet-thimble manufacturing capital of the world.
Exaggerated example. But it shows what I was getting at. This has happened as the USD has lost value since the recession, good for US manufacturing. But the crisis in Europe has slowed the fall of the USD, which has softened the effect, delaying the recovery. It's counter-intuitive, but a drop in your currencies value is a good thing during a recession. A rise is a good thing during high-inflation, full-employment boom periods.
You'll note that the Chinese are holding the value of the Renminbi artificially low against the US Dollar. Allowing it to rise naturally would weaken their manufacturing/exporting base. Estimates are that it's 1/3 below its natural value, causing inflation in China.
My own country's currency is strong against the US dollar, which makes our exports more expensive, US imports cheaper here. Not good for our manufacturers.
Greece [...] Also, their main creditors are Germany and France, so their debt isn't in a foreign currency.
Because Greece doesn't have its own currency, it is functionally the same as having debt in a foreign currency. It's one of the quirks that economists have been pointing out about the Euro for years.
The trust is probably scattered along long-term stable investments, and probably some of them outside the US. How do you think those investments would turn out when faced with a significant depeciation of the currency?
The international ones would suddenly become much more valuable. If they traded out of them, back into US dollars to buy Chinese-owned bonds that are suddenly trading below face value, they would make a killing.
Do you understand how currency works? If you hold, say, UK bonds, which are paid and traded in pounds-sterling, and the US dollar drops in value against the pound (and every other currency), then your UK bonds are worth more to you.
Why do you think China is trying to keep the yuán as low as possible against the US Dollar? They do not want the Dollar to fall further in value, it would either trigger massive domestic inflation in China, or force them to increase the international value of the yuán, which makes Chinese goods more expensive, cutting their manufacturing sector. Look at how gently China tread during the financial crisis, they are massively exposed.
Pension funds would evaporate, as well as every single penny deposited on a US bank.
Again, this doesn't make any sense. They are US dollar holdings with US dollar liabilities. They are utterly unaffected by external changes in the value of the US dollar. (Unless they hold international reserves, in which case, a falling US dollar increases the value of those reserves.)
The only people who are harmed by a fall in the value of the US Dollar are people with debt obligations in a foreign currency, but their holdings in US Dollars. This is a tiny amount of the US market, and balanced by people who hold foreign currency reserves, US dollar liabilities.
Look, I'm not saying that there isn't some way to precipitate a financial crisis, that's proven by, you know, that whole financial crisis. I'm saying that there's no way for China to use US Debt to somehow damage the US to China's benefit. Hence there's no leverage held by China over the US, "Do what we want, American pigs, or we'll bust your economy!" Anything they did would hurt themselves more, and would have only a brief impact on the markets.
(Of course, the US can similarly shoot itself in the foot. As it almost did with the debt ceiling pretend-crisis.)
I was speaking hipoteticaly
Flogging a dead horse? Aren't we all?
If China did dump all their investments without any regard for financial losses, very few would consider them "free bonds", and more like "a risky product", as they'd be suspicious the chinese investors knew something they didn't. The markets aren't driven by logic, but by risk assessment and rumors.
Panics are hard to maintain. The US govt would begin buying up the highest-interest bonds (as they do anyway). Eventually the more aggressive bond traders would say, "Fuck this, I want in", and start buying up the cheapest high-interest bonds left. Within a couple of days the markets would be racing to absorb the whole tranche before the party stops, and prices would be climbing again. Within weeks, the market will be back where it started as if the whole thing never happened.
Remember, although the markets are highly volatile, the markets are used to being highly volatile.
Also, most 1st world countries have liquidity problems right now, so probably they couldn't even sell them all at once.
You massively over-estimate the size of China's holdings. US domestic buyers alone could absorb dumped Chinese-owned bonds. Hell, the Social Security Trust Fund alone could absorb dumped Chinese-owned bonds, and if the price was right they would.
If they wanted to get rid of it, they could do it quietly over a period of time [...] Prices would go down, but it could be done if they're willing to sacrifice their profit.
For what purpose? Remember the thing I was responding to was the idea that China has some leverage over the US. That they could suddenly "call in the loans" and the US would collapse. The best you can come up is that China somehow causes a small gradual decline in prices, at their own loss. Ohnoes. The bond price is high, interest on new debt is low, the market would love someone to dump a bunch of bonds right now.
and probably even using other nations as proxy.
Treasury certificates are individually registered with the US Treasury. There's no way to "proxy" anything.
the world could face an unrecoverable devaluation of the dollar, with devastating effects to many countries.
A drop in the value of the US dollar would make US exports cheap. Increasing US manufacturing and farming. As well as encouraging import-substitution at home. Within ten years, the US would be a manufacturing powerhouse, and the US dollar would be climbing again. (IMO, the US dollar would be lower right now, except for the clusterfuck in Europe. That is slowing the US recovery.)
The inability for nations like Greece to do this is why they are in the toilet. By sharing the Euro, Germany benefits from a lower value currency, allowing it to export more cheaply, and reducing imports. If they still had the Deutsch-Mark, it would be going up in value, effectively raising German prices and wages, German exports would be more expensive, and foreign imports would be cheaper in Germany. Greece, OTOH, lost its manufacturing base, has high debt in a "foreign" currency, under normal circumstances the Drachma would drop in value, effectively lowering wages/etc and encouraging export development. But because the are locked into the Euro, and Euro debt. they've been drifting further and further out to sea until the GFC hit and precipitated a debt crisis.
The US is not in that position, and can't be put in that position, as long as it has it's own currency, and all its debt is in US Dollars.
If China stopped buying US bonds, not only that would have an effect on short-term liquidity, but probably would have a cascading effect
Okay. China has stopped buying US bonds. What now?
No, I don't mean hypothetically, China has stopped buying US bonds. It's allowing its holdings to decline as they mature. Yet the resale price is still high, the interest rates are still low. The market would love China to dump some US bonds at fire-sale prices.
and very few countries have China's buying power
China holds about 8% of US Treasury bonds.
Japan holds about 6%, the UK has increased its US holdings to about 4%. There's nothing special about China's ownership of US debt. There's nothing that gives them leverage. And, of course, US institutions, including the Social Security Trust, own about 70% of US Federal debt.
As I've said elsewhere, funding a launcher without a mission is a false economy. It costs you vastly more money, unless you expect to cancel SLS before it launches.
If you wait until SLS is finished, then start funding mission hardware, you have to keep SLS flight-ready until the mission is ready. And that costs about $3 billion per year, even when you're not flying (fixed costs.) So if it takes 8 years to develop hardware, that's $24 billion just on keeping SLS alive while it waits for hardware. And not a cent of that $24 billion goes to new hardware. So if you expect to burn that kind of money, why not put it into hardware development in parallel with the launcher, like Apollo with Saturn V. Unless you expect SLS to fail.
(Worse, Congress wants a cargo-only 130 ton "SLS-ELC". So mission hardware will be competing for funding against yet another launcher. Which will justify yet another delay until that rocket is finished. So then, finally, when you start to develop mission hardware, you are now also funding the fixed costs of two launchers, which limits funding for mission hardware, which delays development, which wastes even more money keeping the two launchers flight-ready. It's just a dumb plan.)
Replied at the wrong spot. Sorry.
Here
Re: BRICS as an organisation not a casual grouping.
I stand corrected. I didn't realise they had formalised their relationships to that degree.
Nonetheless, it's hard to see India, for example, siding with China in a dispute with the US. Or Brazil.
and a lower availability of cheap products from China won't make their life easier).
Hmmm, I'm not sure that would hurt the US as much as it would hurt China. After all, most "cheap Chinese imports" that matter are US designed and owned or are easily substituted with US owned products. Moving that manufacturing to the next lowest market on the list, and hell, bringing some back home, would not damage the US. And a slow change, which you mentioned, would be even easier to adjust to, with no benefit to China. Frankly, what China is doing, using US companies to leverage itself up the manufacturing food-chain, is much smarter.
(The exception is in resources, such as rare-earth metals, oil and gas.)
Is there a leverage for US (and other First World nations) to get tougher on China as the OP suggested? Or is it also a hysterical nonsense?
Well, it's hysterical, but not nonsense. There's the normal diplomatic pressure, threats to preferred trade status, etc. Not the sort of thing the OP meant, of course.
Re: Response of the other BRICS.
I'd rather think they'll get around, rally and lower the level of trading with US;
Again, why? If China tried to use its ownership of US Treasuries to somehow threaten the US, and the US responded by cancelling or freezing those assets, why would the other BRICS nations feel threatened? "BRICS" is just a traders acronym for five high growth nations, it is not a trade alliance. The five have absolutely no loyalty to each other. If China did something stupid, they'd be more likely to step away from China than step away from the US.
This thing carries 5-6x the payload of the largest commercial rockets. If we ever even want the option of sending astronauts beyond Earth orbit, this is it
But they aren't funding BEO missions. They aren't funding BEO hardware. And, as I said elsewhere, such hardware won't materialise suddenly and without warning, so it's not like you have to be ready. If it takes another 8 years to develop mission hardware, you're spending $3 billion per year just keeping SLS flight-ready. $24 billion to not fly missions while waiting for the hardware. The only way it saves money not developing mission hardware until SLS is finished is if you expect to cancel SLS.
Saturn V was designed around a very specific mission, Apollo. And it was developed in parallel with the mission hardware. It was used as an expensive generic heavy-lift launcher afterwards, but it wasn't built as one. And it was cancelled because it cost too much to run as a generic heavy-lift vehicle. In spite of being paid off, modular, flight-proven, and cheaper than SLS.
SLS is a bad investment, made using bad reasoning, with no purpose.
I'm addressing the incessant refrain that China somehow can "Call in" US debt, as if they were regular loans. There's no mechanism by which China can use US Treasury issued bonds to harm the US. There's no mechanism by which they can even threaten it. There is no leverage. People need to stop uncritically regurgitating this hysterical nonsense.
I see... and all the other nations (especially those in BRICS) will be happy to hear US started to default on bonds issued to China and will do nothing, right?
"If China acted to damage the US using Treasury bonds"
Exactly the same as freezing the assets of a dictator who threatens the US, which has happened any number of times without destroying the financial system. And why would Brazil, Russia, India and South Africa get between the US and China in a dispute? Why would they avenge China if China did something stupid and came off worse for it?
And you can image how quickly they'd scoop up Chinese-owned bonds if China was stupid enough to dump them all at give-away prices.
I don't know why this "China has leverage over the US", "China owns the US", "China can foreclose on the US" crap is so pervasive. Why do people so want to believe it?
If they try then China will simply foreclose on the USA's debt.
How?
Treasuries aren't "loans". They are investment products. They have a fixed expiry date, fixed interest, and are paid in US dollars. Buying US debt gives China no power over the US, instead it exposes China to any crisis in the US.
It is not like US can default only to China,
Each bond is unique. The US Treasury registers and approves the owners of all Treasury issued bonds. If China acted to damage the US using Treasury bonds, they would suddenly find themselves the owners of worthless paper. The same would happen if the US and China went to war (even by proxy, like Korea.)
"because it's in a "foreign" currency, the EU.
That's how a spastic spells Euro.