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China Is Hunting for Foreign Buyers for Its Sovereign Debt

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Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#71

Post by SomeAmerican »

jazzyjackson wrote: post #63
nate_meurer wrote: post #61

Earlier quoted context omitted.

Which wars would those be?

Not all of these were hot wars, but the point of overwhelming force is, best case scenario, you don't have to shoot anyone. Hawaii, Panama, Nicaragua, Honduras, Haiti... Did you know that USA and allies attempted to keep the Tsars in power against the Soviet Revolution of 1918? I didn't until now... https://en.wikipedia.org/wiki/United_States_involvement_in_r...

The US/Allies were fine with the March 1917 revolution--the Karenski government kept shooting American/Allied bullets with American/Allied guns against the Germans on the eastern front. The Allies weren't happy with the Bolsheviks making peace with the Germans and then taking those guns and bullets and fighting other Russians with them.

Edit: In fact, the American president was more than pleased that in his request for the US to declare war that, with the "democratic" Karenski government, the war had become Democracy vs Autocratic and it was ok to enter at that point on the side of Democracy.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#72

Post by nate_meurer »

jazzyjackson wrote: post #64
nate_meurer wrote: post #60

Earlier quoted context omitted.

A habit... really? Based on examples from two centuries past?

The purpose of the US Navy is to keep trade routes open. When countries close their ports we have an absolute conniption. The entire 20th century was a war between globalization and the self-sufficient dream of communism (I don't know why they couldn't find a happy compromise myself, but alas) -- a fight to keep "trade" flowing -- this often manifests in the west extracting resources from less powerful countries (not…

> The purpose of the US Navy is to keep trade routes open.

That's an important function of every blue-water navy, but it's hardly their sole purpose.

> When countries close their ports we have an absolute conniption.

You're still on this? When has this happened? Please give us even one example that's less than 150 years in the past. Forget the conniption part; can you even point to an example of a country "closing their ports" to all trade?

The U.S. (along with every other powerful nation in history) has a long and storied history of military aggression in service of its own economic good, and American military policy has often been plainly captured by corporate interests.

But the assertion you're making here, based on something that happened two centuries ago, is complete nonsense, and makes light of the ills that actually do afflict American foreign policy.

When countries erect barriers to trade with the U.S., our government's reliable response is... wait for it! ...to erect reciprocal barriers in the form of quotas or tariffs, and then relentlessly work toward free trade agreements, preferably under the auspices of an international trade organization. Is that perhaps what you mean by having a conniption?

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#73

Post by hermitdev »

kmonsen wrote: post #39
hermitdev wrote: post #32

Earlier quoted context omitted.

I'm not sure exactly what you're asking, but there are probably an untold number of factors when analyzing risk on sovereign debt. Probably amongst the forefront would be history of payment on bonds, currency stability, GDP, tax collection, and government stability. For instance, I wouldnt buy an Argentine bond - they've failed to make bond payments to such an extent they had a warship seized as collateral in a forei…

This is why there are different rates for bonds, if you only want the safe ones the return will be small as well.

Of course, this is not in question. It is very typical that bond yields are inversely correlated with risk. Higher the rating, lower yield. Lower rating, higher yield, but increased risk of default.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#74

Post by beatgammit »

nate_meurer wrote: post #70
jcranmer wrote: post #69

Earlier quoted context omitted.

US "interventions" in Honduras, Mexico, Haiti, Cuba, and probably some other countries I'm forgetting. Even the entry in WWI is largely a trade-or-death policy move, as it was predicated in large part on Germany's hostility to American shipping interests.

You're taking a lot of liberty with the term war here :) And in none of your examples was trade even remotely as great a consideration as were strategic regional rivalries between global powers, e.g., Germany in pre-WWII mexico and carribean, the Soviets for the rest of the century... The United States' entry into WWI had nothing to do with forcing Germany to trade. Literally nothing. I'll let you refresh your own me…

To be fair, the US was smuggling guns and other aid to Germany's enemies, so it makes sense for them to put an end to that. The US was already involved in the war, they just didn't have the full military on the ground, which needed a declaration of war, which the attacks on the transport ships allowed.

But I definitely agree that it has pretty much nothing to do with the OP's point.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#75

Post by beatgammit »

oyashirochama wrote: post #66
jazzyjackson wrote: post #63

Earlier quoted context omitted.

Not all of these were hot wars, but the point of overwhelming force is, best case scenario, you don't have to shoot anyone. Hawaii, Panama, Nicaragua, Honduras, Haiti... Did you know that USA and allies attempted to keep the Tsars in power against the Soviet Revolution of 1918? I didn't until now... https://en.wikipedia.org/wiki/United_States_involvement_in_r...

The Tsar would have probably been a better choice looking in hindsight. Most likely would have resulted in an eventual democracy.

I think not getting involved is usually the better choice. In hindsight, perhaps we could have prevented the USSR, but that would've required foresight that we didn't have. These days, we seem to make things way worse when we get involved, so we should just not get involved most of the time (beyond restricting trade, that is).

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#76

Post by beatgammit »

jazzyjackson wrote: post #55
aristophenes wrote: post #50

Earlier quoted context omitted.

Is your claim that good trade is not possible? I think in the 150 years since your examples there have been many positive examples of trade beneficial to both parties, and hardly any that are harmful, though there should be a handful. For example, South Koreas economy, in a single persons lifetime, has grown 60x per person, inflation adjusted. An entire nation pulled out of poverty. https://tradingeconomics.com/south…

My claim wasn't about trade being good or bad, rather, if an entity working out of self-interest is a good or bad actor. I'm also not entirely sure the ends justify the means when it comes to threatening war. Having the power to write the constitutions of other countries costs the US economy a pretty penny.

And we often get ourselves into additional conflicts because of that intervention. We basically created Osama bin Laden by funding the Mujahideen (under bin Laden) against the USSR, where he gained a lot of notoriety and power. If we didn't get involved in a proxy war with the USSR by funding terrorist organizations, I think it's likely bin Laden wouldn't have gotten powerful enough to create al-Qaeda.

There are a bunch of other cases where our involvement has made things decidedly worse, to the point where a policy of non-intervention would probably have had a better net result.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#77

Post by beatgammit »

nradov wrote: post #65
ajross wrote: post #17

Earlier quoted context omitted.

Sort of, but that's not why. Modern authoritarian governments, historically, are volatile. The Soviet Union lasted about 75 years, and that's pretty much a record for stability. The PRC is just getting to that age now. Who's going to buy a 30 year bond from a government that has about even odds of surviving to maturity?

You're right about the level of political risk. But even when there's a revolution or secession, the successor state is still legally liable for the debt. So investors might still get some of their money back.

Maybe, but they'll likely default. Revolutions are messy and often result in a poorer country. How can a country's government repay its debts when the country is rebuilding? Look at post-WW1 as an example of what could happen if they're forced to pay those debts.

Even if they do get their money back, it'll be late. Who wants that kind of risk?

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#78

Post by beatgammit »

coughupalung wrote: post #21
zawazzi wrote: post #16

Earlier quoted context omitted.

By the time it gets repackaged into derivatives and index funds, who will really know. Investor's aren't amoral, just creating plausible deniability via complexity.

When you say packaged into derivatives, what do you mean? I can sell you all sorts of derivatives today without ever owning the underlying.

You can. You can also sell derivatives on something you do own. If you get involved in human trafficking futures, you are still involved in human trafficking because your contacts could be taken to maturity, which means someone will have to provide the humans.

That's pretty much the definition of "complexity hides evil".

Index funds are a bit more direct since you're owning pieces of things you may not like instead of owning a contract that could be converted to something you don't like.

Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt

#79

Post by beatgammit »

seppin wrote: post #53
cm2187 wrote: post #15

Earlier quoted context omitted.

If the debt is in yuan and under chinese law, foreign investors don't have much say on their economy.

if they stop buying once they start, they certainly do

Like they did...
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