Dick Bove points out  this is insane:

It is being reported that China Investment Corp (CIC) intends to purchase $2 billion of AAA rated, distressed mortgages in the United States. The press reports are suggesting that CIC is presently interviewing 9 American money managers.

These managers have been approved by the Treasury to participate in the PPIP program as servicers. CIC will pick one or perhaps two to manage its investment program.

Note that the PPIP program:

Has the Treasury matches whatever a private investor puts up, then credits 6X as much capital. So if the Chinese are buying $2 billion, the US  puts up $2 billion, and then the PPIP allows the purchase of $24 billion of distressed assets in the open market.

All for $2 billion dollars. Oh, and the FDIC would guarantee the debt being issued by the PPIP.

Hence, taxpayer dollars are subsidizing Chinese purchases of U.S. assets at a discount.

This is insanity . . .

Category: Bailouts

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

114 Responses to “Why is US Government Subsidizing Chinese PPIP ?”

  1. Onlooker from Troy says:

    How’s this going to play with Joe Q. Public? How do you think this will manifest itself in those town meetings? Of which I’m thinking there are going to be much fewer. Much too uncomfortable for our representatives.

  2. Bruce N Tennessee says:

    Buying Hondas with the cash for clunkers program, when Chrysler and GM went bankrupt…

    Also insanity…

  3. Transor Z says:

    I’m going to disagree with you on this one, Barry. Like Cash for Clunkers and the tax credit for homebuyers, the government is just trying to help move inventory. In this case, POS MBS. The fact that the holders are Chinese (i.e., not American) is a red herring. Who cares? They’re helping to move crappy U.S. paper.

  4. leftback says:

    Sort of makes you wonder about fees and commissions.
    Blackstone, Pimpco, Black Rock. The usual suspects, right?

  5. ben22 says:

    WTF???

  6. Transor Z:
    I’s bet it is the guarantee part that BR is most upset about.

  7. How is this new? Didn’t AIG pay out at 100 cents per $ to both domestic and foreign banks?

    Oh, that’s right:
    http://online.wsj.com/article/SB123638394500958141.html

    The beneficiaries of the government’s bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

    Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

    And have bank balance sheets actually improved, or are they still so laden with military grade horseshit that marking them to market would result in instant death?

  8. emmanuel117 says:

    So that’s why they’re all cool now with Geithner…

  9. spoonman says:

    Barry,
    Still long pitchforks and torches? I got stopped out about a month ago, but I’m looking to dip a toe back in the water…

  10. Mannwich says:

    When will China be purchasing California?

  11. DL says:

    “…taxpayer dollars are subsidizing Chinese purchases … This is insanity”

    First, I think that there examples of much more egregious wastes of taxpayer money than this. And second, the Chinese are increasingly in a position to make demands on the USG. They own, what, about $800B of Treasury issues? Hell, you can probably buy a Congressman for less than $25K.

  12. Bruce N Tennessee says:

    From Mish….

    http://www3.signonsandiego.com/stories/2009/aug/15/beyond-bizarre/

    “What’s wrong with this picture? Jobs are disappearing by the millions across the United States, and California is particularly hard-hit, with unemployment reaching a record 11.6 percent. Yet even as state revenue plunges, The Sacramento Bee reported that the state government has continued to expand during the deep recession, adding 4,000 new jobs since July 2008. ”

    …More insanity….Barry, government doesn’t have to make sane decisions…private industry doesn’t either for that matter, but if private industry makes too many really stupid decisions, they cease to be able to make them…not so Uncle…

  13. GB says:

    Look at the bright side. The Chinese are fair and have no secondary intentions…. wait a minute…

  14. The Curmudgeon says:

    The US taxpayer has been subsidizing Chinese purchases of US assets for quite some time, just as Chinese taxpayers have been subsidizing American purchases of McMansions and Mercedes Benz’s for awhile. The normal channel through which this on-going subsidy obtains is the exchange rate and the Fed’s loose money policy. With opening the PPIP to the Chinese, the subsidy is more explicit and concentrated, but the effect is the same as always–leveraging the American consumer to the hilt so his spending–even while his income declines–can support the Chinese oligarchy’s export machine. The only loser in this transaction is also the same as always–everyone in China that isn’t a part of the oli/plutocracy and/or the CCP, and the dopey American workers that are seduced by the siren song of bigger and better houses and cars because their meager wages can buy more on the installment plan.

  15. Marcus Aurelius says:

    Lets sell them all of our distressed properties and then jack non-resident property taxes to the moon.

  16. danm says:

    America made a deal with the devil. Now he’s making it dance and it is surprised?

  17. beaufou says:

    “taxpayer dollars are subsidizing Chinese purchases of U.S. assets at a discount”

    Whether taxpayers are subsidizing Chinese or our very own obligarchs, I always found the idea positively disgusting.
    But this is a new low, I wonder when we’re gonna see the bottom of our moral decline?
    You mentioned moral relativism this morning Barry, it is a lot more common these day that I ever imagined, hence the sad state of the US.

  18. Mannwich says:

    Say “hello” to our Chinese masters……in Mandarin, of course.

  19. HCF says:

    @ Bruce:
    >Buying Hondas with the cash for clunkers program, when Chrysler and GM went bankrupt…

    Many Hondas and Toyotas are made in the U.S., which in my books makes them more American than a GM vehicle from Canada or Mexico
    =)

    HCF

  20. danm says:

    Lets sell them all of our distressed properties and then jack non-resident property taxes to the moon.
    ————–
    What’s the diff? I’m sure they know America would be more than happy to stiff them with worthless paper. They will probably prop up the value of these worthless assets as long as possible so they can have more time to pick up as much resources as they can. Also, they can make America dance a little, which is probably a great source of entertainment.

  21. Bruce N Tennessee says:

    @HCF:

    Yes, I know…but they are Japanese owned…and competitors with GM and Chrysler…and again, my point is that the two companies belly up…we also subsidized their competition…

  22. Todd says:

    @Mann

    Ni hao ma ?

    Time to start picking it up with Kai-Lan on Nick. My kids like the show, but they won’r practice the words like they do for Dora.

  23. sinomania says:

    What’s insane? Why are relations with China always viewed through the prism of US vs. Them or Tiananmen 1989?? This move goes a long way toward assuaging Beijing’s loud – and damaging – remarks about the security of its American investments. Plus, caveat emptor, the CIC doesn’t have a very good track record so far in how it spends cash. As a citizen of California this move is just fine with me if it ends the property spiral in my little slice of coastal heaven. And why not start a bidding war with the Chinese for the part of “the industry” that Bollywood hasn’t gobbled up?

  24. investorinpa says:

    Better question is which is the worst US subsidy occurring at the moment…1) The US now subsidizing Brazil to drill offshore and sell back to us at market prices? 2) What Barry had mentioned? 3) the US about to subsidize more toxic bank loan losses. All 3 articles can be found here:

    http://contraryriches.blogspot.com/2009/08/america-land-of-subsidized-investment.html

  25. Mortimus says:

    Isn’t it about time someone put out an updated version of the 70′s “Crying Indian Commercial?”
    http://www.youtube.com/watch?v=j7OHG7tHrNM

    How hard would it be to find a crying, unemployed American in distress over this oligarchic garbage?
    I’ve been saying it a lot lately, but every day appears to be more depressing than the previous one. We’ve really degenerated into a sad directionless state. Where’s the poll of what percentage of Americans are hopeful for the future? Let’s see them spin that number as ‘better than expected.’

  26. cvienne says:

    Why oh why am I not in foreclosure and leveraged to the hilt?

    I’d be SO much better off :-(

  27. HCF says:

    @ Bruce:

    I see your point… I think this is where the problem with subsidies is. Someone is always unfairly helped or hurt by it. I really wish the Feds had more straight forward policy: No Cash for Clunkers, No Bailouts, No Corporate Welfare.

    I think we can expect that to happen, well, never….

    HCF

  28. Bruce N Tennessee says:

    And there is another way to help this healthcare mess…our group has been trying to attract FP and IM’s to little success for years…we could subsidize the debt from medical school for this type of physician, or just not have nearly enough in the years to come….

    read this carefully, and you’ll see why we have more than an Obamacare problem…we have a lack of warm, intelligent bodies going into primary care…

    http://www.usatoday.com:80/news/health/2009-08-17-doctor-gp-shortage_N.htm?loc=interstitialskip

    Doctor shortage looms as primary care loses its pull

    “Medical school tuition and expenses generally range from $140,000 to $200,000, according to Merritt Hawkins & Associates, a leader in recruiting and placing physicians.”

    …If you truly want physicians to enter these fields, this would make a much better subsidy than building a new jet fighter nobody really wants…

  29. Pat G. says:

    Isn’t the USG subsidizing just about everything these days? As long as someone is buying who cares who it is? To them, it’s just another day at the office.

  30. Thor says:

    “Say “hello” to our Chinese masters……in Mandarin, of course.”

    Replace Chinese with Japanese and you have the 90′s all over again. How did that end up working for the Japanese? ;-)

  31. KevinM says:

    “Buying Hondas with the cash for clunkers program, when Chrysler and GM went bankrupt…
    Also insanity”

    Yet I’m trying to do it. I want to swap my Silverado for a Honda Civic at 30% off. Unfortunately:

    1) The local dealerships have suspended participation until Uncle Sam ponies up. He owes the biggest dealership around here over a million.

    2) The dealers are adding the clunker discount to the sticker price as a starting point for negotiating. If they play the “limitted time only” angle well, they’ll collect most of the benefit as profit.

    Even as a traitor, there is no benefit for John Q. Public.

  32. Mannwich says:

    @Thor: Different country. Different demographics, far different dire situation in the U.S. You’re clearly not comparing apples to apples.

  33. HCF says:

    @ Thor:

    The key difference right now between China and Japan (circa 1990) is that the Chinese have been making a concerted effort to invest in the means of production worldwide. Oil in Africa, Minerals in Australia, etc. etc. The Japanese wasted their wealth on Pebble Beach and Manhattan skyscrapers…

    With that said, extrapolating out too long is dangerous. The Chinese could shoot themselves in the foot just as well. For that matter, so could we.

    HCF

  34. Thor says:

    Manny – yes, very different countries – Japan was and is a first world country with a huge consumer class, cutting edge science and technology and an extremely homogenized (albeit shrinking) demographic.

    China on the other hand, is to all extents and purposes a third world country with a somewhat prosperous coast. They have an extremely fracturecd demographic, have an economy almost entirely dependent on manufacturing products sold to the US, EU, and Japan. They continue to build more factories through their stimulus program adding to their already massive over-production problem. China is buying up oil and other resources in many third world countries around the world – none of which they will never be able to hang on to should local conditions (think Venezuela) change for the worse. They have no Navy and no real way of projecting their military might (should they ever decide to move in that direction) beyond the China sea without Japan, India, Russia, etc moving to offset them.

    No – China is not Japan, they are far less prepared to take the role on the world stage all the China Bulls seem to think they might.

    Yes

  35. manhattanguy says:

    Agree with HCF. Chinese are the best capitalist in the world. They have been managing their economy pretty well except for their stupid investments in U.S companies and hedge funds.

  36. call me ahab says:

    mortimus-

    I like where oyu are going with your idea- if I remember wasn’t the crying Indian a USG government service announcement- can’t pull up youtube at work so can’t check it myself-

    anyway- who would finance that but the Reupublicans- right? And right there you would have another media event on whether the ad was appropriate/inappropriate with all the usual talking feigning outrage at the ad or outrage over the response to the ad-

    no win situation- this country is hopelessly divided-

    however i think the whole bankster issue and people’s disgust at bailouts and protection of special interests crosses party lines- maybe a third party could show the ad and gain attention at the same time-people may start to understand that the current two parties are hopelessly corrupt and in bed with special interests and beyond repair

  37. call me ahab says:

    tc-

    good points as usual

  38. Mannwich says:

    @Thor: This is more about OUR decline as a country than China’s resurgence, IMO.

  39. leftback says:

    They are trying to wean the Chinese out of Treasuries and into junkier asset classes again as domestic demand for government debt eventually supplants foreign investors. Of course they will need an equity crash to complete this. Believe me there are going to be a lot of pension funds de-risking and that will keep the Treasury market healthy.

  40. Thor says:

    Also, let’s not assume that somehow the Chinese people are going to suddenly change spending/savings habits and become the new world consumer. Their savings habits are not only a product of hundreds of years of cultural pressures, but also almost mandated by the complete lack of services for the elderly provided by the state. In short, the average Chinese citizen has always been a saver and more than likely always will be – Look at how poorly and how long it has taken the Japanese government to get their citizens to save less and spend more.

  41. Thor says:

    manhattanguy – with all due respect – how do you know the chinese are managing their economy better than us? Because of the statistics reported by their one party government? Seriously?

  42. Mortimus says:

    @Ahab

    Yea, I’ve been screaming for a third party in my mind for the last few months now (Absolutely no on the Republicans, I find them dangerously stupid and out of touch). If there EVER was a time in this country’s history to crack open this BS it would be now. No better way to a message to these insulated crooks than with a little loss of power.

    It wouldn’t even be hard for the 3rd party to come up with their slogans, just steal Obama’s and sprinkle in a little snark and they should be golden: “Change….no, no, really, Change, you know, the real kind”

  43. call me ahab says:

    thor-

    manhattanguy is Chinese- didn’t you get the memo?

  44. The Curmudgeon says:

    @Capt. Ahab…thanks

    @LB…exactly. We’re turning the Chinese (back?) into subprime mortgagees. Confuscious say, “you fog a mirror, we lend you money. So long as we hold your dear uncle’s balls in our hands.”

  45. Thor says:

    I agree with LB on this one. Americans will more than likely stay in our “new normal” which is spending less and saving more. Equities seem to be a very risky at the moment and given their track record over the last decade I wouldn’t be at all surprised if the average American saver starts putting a lot more of their money into government debt rather than the stock market.

    I also wouldn’t be at all surprised if this scenario hasn’t already been planned out by the powers that be.

  46. danm says:

    none of which they will never be able to hang on to should local conditions (think Venezuela) change for the worse.
    ———-

    Maybe but I’ll bet that owning resources will be a better bet than holding onto their US treasuries.

  47. Moss says:

    Payback is a bitch. China funded the US over consumption for a few decades. Now they have the cash and we have the clunkers. Beggers can not be choosers.

  48. VennData says:

    Who cares. If they qualify and they can do it. let ‘em do it.

  49. Thor says:

    Damn – perhaps, but in a world of scarcer resources holding on to those resources will be key. Can you imagine a scenario where the US might invade a foreign country to secure a resource like oil? (that’s a rhetorical question). Can you imagine China invading Bolivia or Peru to hold on to mineral resources they have purchased?

    Physically owning a resource will never be able to compete with having the military force to hold those resources in a worst case scenario. China does not now, nor will they any time soon, have a military that they can project beyond the China Sea. Heck, they’re still trying to reverse engineer an old aircraft carrier bought from the Russians!

  50. manhattanguy says:

    @thor: Chinese are reducing their reliance on U.S economy. Refer to HCF post. China became Brazil’s top trade partner beating U.S. They are gobbling up resources left and right in Africa, Asia and S.America. India is already projecting a 7-8% GDP growth next year. Brazil is doing great as well.

    I think Developing and Developed nations (Europe, Japan) will get out of this recession quicker than U.S. We are already seeing a decoupling of their economies from our own. We will be the only bagholders sitting with a huge bag of debt once this crisis is over.

    @ahab: I am not Chinese. You don’t have to be Chinese to know this. Read a book or 2.

  51. danm says:

    If you add up worldwide resource market cap and consider that China has 1 trillion or more in reserves, you start to realize that even if China manages its economy extremely badly, it can still cause huge havoc in the Western world economies.

    Considering, that most countries are built up to export and the US needs to export to fix the world imbalances, it is not surprisisng that many emerging and resource exporting countries are currently looking into making deals with China in order to protect their future.

    On top of it, China does not have the entitlement mentality that the masses have here in the Western world so their government probably has more leeway.

  52. Thor says:

    As for debt purchases – again, who really has the upper hand here? There is at least remote possibility that great US consumer could turn into the great US saver – it’s happened before and until the 70′s Americans were great savers. It is conceivable that over time, the US saver could be the main purchaser of US Debt. If the savings rate in this country goes up to 10% and stays there for an extended period of time, how much in dollar terms is that exactly? Hundreds of billions? Trillions? It is conceivable that much of this savings (especially for baby boomers looking for a more secure place to park money through retirement) could go into US Debt.

    What would/could China do in this situation? Without a massive purchase of US debt each year, how else would the prevent their currency from rising? As Chinese good become more expensive as a result, what does this do to the “competitive advantage” of Chinese industry?

    Not saying this is a given – but it is at the very least, just as likely as many other scenarios

  53. danm says:

    Thor:

    The US is net importer of oil and that is using stats that don’t even include used by emerging markets to produce goods that were sold to the US!!!

    It’s going to get harder for the US to fly those bombers if they don’t have enough energy.

    You’re definitely going to need the right allies… those with the oil! lol

  54. call me ahab says:

    manhattanguy-

    i did read a good book here recently- “hella nation” by Evan Wright- pretty good snapshot of the seamier side of the American dream- also recently-

    re-read “Heart of Darkness” by Conrad- gets better every time- also-

    I was j/k w/ thor- why you would take offense makes me chuckle

  55. HCF says:

    @ Thor:
    > Physically owning a resource will never be able to compete with having the military force to hold those resources in a worst case scenario.

    Your point about the U.S. military is very true… So long as we have the best technology and the most nukes, America’s power will not be usurped, regardless of the condition of our economy. However, I would argue that China’s long-term strategy is not like that of the U.S. You might say that what China is offering is an “alternative” to the U.S. , an “Apple” to compete with America’s “Microsoft.”

    When the U.S. trades, we preach… Democracy, freedom, human rights, anti-communism, pro-capitalism, etc. It doesn’t hurt that we are the most powerful economy and have military bases within a few hours flight of EVERYWHERE in the world.

    With China, the transaction is simple. You have oil? Here’s some money for it… You have some agricultural products we like? Here’s some money for it…

    There is no “we’ll pay more for your bananas as long as you have a coup” or “We won’t buy cigars from you until your communist dictator dies” thing going on. I’m not saying how China does it is better or worse than, just different.

    HCF

  56. Thor says:

    Manhattanguy -

    I’m not sure anyone is reporting or really thinks that either Japan or the EU are going to get out of this mess before us. All projections and predictions I have read so far point to the exact opposite.

    I’m also not sure where on earth you got that Brazil is now China’s largest trading partner – Brazil is not even in the top 10. (see below)

    http://www.uschina.org/statistics/tradetable.html

    And again – buying resources is not the same as holding resources in a pinch. Nor does it do the Chinese any good to own resources in a world of continuing deflation in commodity prices.

    Damn – no, China does not have the entitlement mentality – they will very soon though. Or would you argue that China’s “one child” policy isn’t going to have disastrous affects on their economy within the next 20 years. You think the demographic problems in Japan are bad now, just wait. What do you think life is going to be like in China when all of those only children have to take care of not only themselves and their own families, but their parents?

  57. Onlooker from Troy says:

    These arguments are all well and good, and intelligent. But I go back to, how’s this going to play on Main Street in the middle of everything else? Explain to average Joe/Jane (or below average, if you will) why we’re subsidizing the Chinese in their purchase of this crap, on top of all the money thrown at the banksters. It will not play well.

  58. danm says:

    Net-net, the whole world is set up to sell to the American consumer.

    The American consumer is tapped out unless you create huge inflation which permits him to keep on buying pushing the problem into the future.

    Short term, worldwide forces are set to keep the American consuming but longer term the forces are for the households who worked hard to serve America to get richer. The treasuries that the US sold them should give them the right to buy US products but I don’t think Americans will be able to fairly pay back because they were expecting someone else to foot the final bill. When you’re 55 and you still have a 300K morgtgage with no savings, you were expecting some sucker to foot your bill. Now Americans have realized that they have run out of American suckers. Now they will try to pass it onto to the emerging markets.

    I don’t know about you, but I’ve seen fights over more trivial issues!

  59. emmanuel117 says:

    I’ll believe China decoupling when they get rid of the dollar peg.

  60. HCF says:

    @Onlooker:

    > Explain to average Joe/Jane (or below average, if you will) why we’re subsidizing the Chinese in their purchase of this crap, on top of all the money thrown at the banksters.

    Because if they don’t buy it, nobody will!

    HCF

  61. danm says:

    Thor:

    I don’t think China will be going through an easy time. I think the world economy is going to go through the wringer because protectionism has rarely been good for growth.

  62. Thor says:

    HCF – here’s what’s going on with China’s purchasing up of these resources. Let’s take a mine in Africa as an example as it’s not uncommon. The Chinese come and purchase the mine, they then ship in all their own equipment, their own workers, they build compounds for their employees to live in, not only that, they bring in their own shop owners to supply the workers with consumer goods and food. Local employment and local involvement in the running of these mines is minimal. Someone gets rich in the sale of these resources to the Chinese but the people of these countries (think Sudan) get nothing. Yes, you’re right, it’s not better or worse than what we’ve done, it’s just different. Although not so different imho.

    Your second point “Because if they don’t buy it, nobody will!” is one I can’t argue with. :-)

  63. manhattanguy says:

    @thor
    here you go..

    and oh yea continue to dream that we are the best while everyone else leaves us where we are now

    http://news.xinhuanet.com/english/2009-05/05/content_11316255.htm

  64. Thor says:

    Ugh, so sorry to hijack the thread (at least it was mostly on topic). I just can’t control myself when it comes to China.

  65. Todd says:

    Average Joe / Jane doesn’t really care. They don’t really watch the news, they don’t listen to the news. If it doesn’t affect them directly by getting them booted to the street, then they don’t care. All of this is just a bunch of what if’s off into the future. Future to them means not today, and if it is not affecting them today then it really doesn’t matter.

  66. investorinpa says:

    i have to say, as bothered as I am about the China subsidy, I am more troubled by the fact that the US is paying Brazil to find their own oil reserves to sell back to us at full price. Its amazing how the more apparent and obvious danger (brazilian oil) is being minimized in favor of the China story on here. We already are in it deep to China…they can probably dictate those terms, so the whole PPIP thing is not surprising…other than they should call it PIMP instead.

    http://contraryriches.blogspot.com/2009/08/america-land-of-subsidized-investment.html

  67. danm says:

    Ugh, so sorry to hijack the thread (at least it was mostly on topic). I just can’t control myself when it comes to China.
    ——-
    I know the feeling. I get very upset when I think of how the US wields its power and how Canada just sits back and watches.

  68. danm says:

    We already are in it deep to China…they can probably dictate those terms, so the whole PPIP thing is not surprising…other than they should call it PIMP instead.
    ———–
    It’s probably a sign of how deep the US is.

  69. Thor says:

    Manhattanguy – Was mistaken – thought you were saying Brazil had become a bigger trading partner to China than the US. My bad. Nevertheless, this makes your original argument even more irrelevant.

  70. Onlooker from Troy says:

    Todd

    I think you’re wrong about that. This is exactly the kind of thing that gets the headline and stirs up Average Joe/Jane. They may not understand it (and most often really don’t), but they don’t like it for all kinds of reasons; from xenophobia to just downright jealous resentment. It’s the kind of thing that gets them riled up at town hall meetings with their reps.

  71. jrm says:

    maybe america should thank china for buying their crap. who else can anyway?

  72. bergsten says:

    Has it occurred that China (with a long tradition of respect for “the land”) understands the intrinsic value of “real” estate and cares not a whit for our foolish paper money?

    Years ago I thought of writing a “Tom Clancy” style novel where in the near future (say 50-ish years) India and China went to nuclear war over who got to own North America (their homelands would be destroyed by fallout, etc.).

    Seems I was overoptimistic as to timing, and didn’t even consider the subtlety of them simply buying the US piece at a time using worthless currency.

    So now my money’s on China winning.

  73. Thor says:

    Bergsten – Seriously? Have you missed the environmental catastrophe that is the Three Gorges damn? Or that the Yellow River is the most polluted large river in the world? Or that Beijing is one of the most polluted city in the world? Or you must have missed the massive run-up in Beijing and Shanghai real estates prices. Come on, you can do better than that ;-)

  74. Thor says:

    PS – let’s take another look at India 50 years from now when the glaciers that supply 60% of the water for their 1.2 billion people have melted.

  75. manhattanguy says:

    @Thor: you are right about Glaciers melting as a problem for India. But it affects not just India, but rest of the world (remember food prices). I recommend watching a PBS video on that very same topic.

    But stop dreaming that America will do OK. We are in a much big deeper hole that you think.

  76. Thor says:

    manhattanguy – I watched the PBS documentary you are referring to. Not sure how you go that I think the US will be fine or that we’re not in a big hole. I think we’re as screwed as everyone else who posts here regularly does, I’m just not convinced China isn’t going to fall right along with the rest of the world. China, like the US, Japan, and the EU, has a lot more going against it in the near and distant future than it does going for it.

  77. HCF says:

    @ Thor:
    >China, like the US, Japan, and the EU, has a lot more going against it in the near and distant future than it does going for it.

    On this point, we do agree. All economies are coupled to some degree or another. With China, the dollar peg, owning tons of U.S. debt, and selling lots of goods to the U.S. bind the two nations together. What it seems like to me, however, is China is actively trying to diversify away from being a one trick pony. At this point, any crap that sticks to us will stick to China as much if not more. In 50 or 100 years, who knows…

    HCF

  78. Thor says:

    HCF – Agree on all points!

  79. HCF says:

    @Thor:

    To address your point on environmental pollution in China: China is filthy! However, to be fair, the way I look at it, China is basically mid-19th century Britain or late 19th century U.S. in terms of industrial development (with better technology, however). Glasgow and East London were once covered completely in soot during the industrial revolution, but alas, a country does eventually evolve and do things more efficiently and cleanly. Either that, or everyone eventually dies of black lung.

    HCF

  80. HCF says:

    @Thor:

    Looks like we’ve found some common ground! =)

    HCF

  81. Thor says:

    HCF – agree again. Not saying China could never eventually have a healthy and vibrant economy much larger than our own. I’m also not anti-china, if anything, I would rather China be and equal player on the world stage. I am a firm believer that the US as a whole does much better when we are directly competing with another country (think cold war).

  82. call me ahab says:

    “Or that Beijing is one of the most polluted city in the world?’

    realized it first hand- from the Forbidden City it is almost impossible to make out the Beijing skyline- and after a day out- the eyes will feel the effects of the pollution in the air-

    wasn’t impressed since their is technology to counteract pollutants spewed into the air- guess they find no importance to clean air

  83. dead hobo says:

    Genius plan.

    The Fed dumps a lot of worthless debt to repatriate dollars.

    If the debt appears to have value, great. We didn’t sucker them after all.

    If the debt is toilet paper, the FDIC pays off. Surprise. The FDIC uses cash from a brand new Fed program that provides cash to the FDIC for this purpose. The debt gets monetized. It gets taken off the books and replaced with fine inked paper.

    A perfect shell game. Masterful. Monetization of debt via shell game.

  84. bergsten says:

    You all made my point for me. The “ancestral homeland” is destroyed (for whatever reasons), they need a replacement.

  85. HCF says:

    I just realized the most insane part of the original post:

    “$2 billion of AAA rated, distressed mortgages”

    They are still AAA rated? WTF? AAA and distressed, by definition, should never be in the same sentence!

    HCF

  86. Jim C says:

    Bruce, the government already subsidizes medical education (GME). Even Primary Care physicians make $140k a year. If they want their loans paid off, signing up for the reserves has up to a $400k bonus for a physician…for signing up ONCE.

    I do not feel bad for physicians. The real problem is how long it takes to get them educated. PA’s go to school for less than two years and do the majority of things that primary care does. That is the primary care of the future, and you can bet the doctors will all bitch about it when they realize they are being replaced by a 2 year degree.

  87. batmando says:

    @ HCF at 3:14 pm

    Believe PPIP covers paper “originally rated” AAA

  88. Bruce N Tennessee says:

    @Jim C:

    I understand your answer, but you missed the point. The point is primary care is going away, and not coming back…you should read the article. Your PA’s have to be overseen by a physician. Someone has to take liability for the PA…we have 6 in the salt mine, with more to come.

    The point is that a neurosurgeon is not going to treat your pneumonia or swine flu. And if you read the article, you’d understand why financially MD’s aren’t going into primary care..

    That’s all…

  89. HCF says:

    @batmando:

    Thanks for the clarification…. Still, don’t you think they should call it “formerly AAA rated mortgages”?

    HCF

  90. Onlooker from Troy says:

    Bruce

    No kidding. The erosion of GP pay on top of the decreasing job satisfaction, increasing aggravation and stress, and increasing debt load for school, is a recipe for shortage. That’s just the bottom line.

    It’s never smart to take on a year’s salary or more in debt; whether you’re going to be a doctor or a secretary. That debt load acts as a huge drag for a long time and introduces lots of risk.

    I’ve got a son who’s a junior in H.S. who’s eying a medical career. He’s quite bright and diligent so it’s certainly feasible. We’re going to have to get smart about this over the next several years to see what the best course of action will be. He may change his mind in the meantime of course. So we’ll just have to play it one step at a time.

    But that debt load is the one thing that really haunts me about this. We don’t have a lot of means to significantly help him, so it will be a factor, assuming we don’t score on some kind of scholarship or grant. But those are more the exception than the norm. There is always the military option. Not sure about that yet though. I don’t like where our foreign policy is going, and God only knows where this global economic situation will end up taking us.

  91. Mannwich says:

    On the topic of health care. Part of me is with this guy. Maybe we should root for the current reform efforts to fail, since they’ll probably be so flawed anyway and maybe will not work. If we do nothing, then things will likely get bad enough down the road, that real ugliness (and then real, substantive change to the system that works) will ensue……

    http://www.cnn.com/2009/POLITICS/08/18/reinhardt.health.inflation/index.html

  92. bruerr says:

    PPIP is dirty-money-management, more of the corrupt program administration, behind Geithner, its designed by people other than Geithner. Its a disaster. Page 9-12. http://tinyurl.com/o36ocu

    Its white collar criminals, designing a plan to save themselves from scrutiny and prosecution. http://bit.ly/KZ8id

    I have a dead cow, and you have a dead horse. How do you say in Chinese: “I will pay you a premium for your dead horse if you pay a premium for my dead cow? …My name is Tim Geithner … do we have an accord?” http://www.youtube.com/watch?v=SU1IQRpmuDA&feature=PlayList&p=27739CB3C96B7513&playnext=1&playnext_from=PL&index=11

    This is just the beginning… all kind of cobwebs going to be coming out of this house. … As long as Geithner (a puppet, fall guy and fraud) is being told how to run this program, it is going to be one skeleton after another for the next 20 years. Sick.

  93. ben22 says:

    @Onlooker,

    Start getting your financials in order now if your son is a junior as a lot of colleges do a year look-back for financial aid purposes if you attempt to earmark savings in different accounts to be eligible for more aid or to have a lower amount of assessable assets. Make sure you fill out the FAFSA when the time comes, etc. If he doesn’t mind writing give fastweb a shot for some free money. Many of my clients kids have had success getting money from this site, every little bit helps if you can’t pay for everything out of pocket, which very few people can.

    Good luck to you.

    http://www.fafsa.ed.gov/

    http://www.fastweb.com/

  94. Mannwich says:

    Sorry BR, I just noticed that meant to post the above link in the “10 links” post. Mea culpa.

  95. Bruce N Tennessee says:

    @Onlooker:

    I was in the military during the Vietnam War. Tell your son ….No.

  96. contrabandista13 says:

    YAWNNNNNNN……. zzzzzzzzzzz…… Sorry, did you say China or something….? Can’t we just do a book entry…?

    I’m just getting so God damned cynical……

    Best regards,

    Econolicious

  97. Onlooker from Troy says:

    Thanks for the fastweb tip ben, I hadn’t see that one. My oldest is a senior now so I’ve been through the college drill. He got an almost full scholarship from a smallish private college so we had good luck with that one. The med school route presents a whole different set of challenges.

  98. Onlooker from Troy says:

    Bruce

    I just recently retired from the AF, so I’ve got some idea about things. If he did go the military route, the AF would be preferable in my mind for various reasons. I don’t think it will end up that way, but who knows.

  99. jc says:

    The only thing worse than Turbo Timmy without adult supervision is TT supervised by adult Chinese