What if china calls upon america debt?

[Dachs]

It get's kind of tricky with the term "superpower", but generally "power" doesn't go as naturally with military means as ZeletDude suggested. Actually that's the basis of the OP's concern (with which he isn't exactly alone).
If you are still not fine with that i can cut the wording into some thinner slices for you. If you feel this being a history forum and fun conversation being your profession makes that necessary.

I guess you're not following the conversation, and just seizing on apparent openings to make snide remarks to Americans. The original comment was about the fear of a 'world super power' being taken over by terrorists; it was claimed that this had never happened, and in response the OP said that Germany had been taken over by terrorists when Hitler became chancellor. (Whether you agree that the Nazis were terrorists and 'took Germany over' is irrelevant.) Now, I could be wrong, but I was under the impression that Germany was not a superpower in 1932-3. Does anybody seriously say this? Am I missing some major historiographical lacuna about a Weimar superpower here?

Then came the part where Germany was rightly described as 'not a superpower', not just because of military power, but because of heavy debt, international isolation, and economic recession...and you felt the need to qualify that? Really? I mean, it's not as though the dude even forgot economic stuff. Zelet covered most of the bases. While it's obvious that 'superpowers' and even regular 'powers' have dimensions of their power that is soft, e.g. trade, cultural influence, and so on, virtually every time this has been backed up with some kind of military force, either directly or via sockpuppets, otherwise the 'power' part rapidly becomes a farce. Hard power is the most important part about being a power.

 

[GamezRule]

Hitler took over in 33.

If China called in the debt, we would just borrow the funds domestically. Even if we borrow from corporations, it is in their best interests not to see the government collapse.

 

[civ_king]

we tell them that the majority of the bonds we have issued to them are of 5-, 10-, and 30-year vintage, and that they may call in those bonds when they have matured. And not before.

我也说这！
I was going to say that!

no!!!

Don't you understand how bonds work? They're like poker chips. China holds on to them and whenever china wants, they can go to tim geithner's house and say "我鍾意喺互聯網買嘢!!!"

这是什么？
What is this?

 

[metatron]

I guess you're not following the conversation, and just seizing on apparent openings to make snide remarks to Americans. The original comment was about the fear of a 'world super power' being taken over by terrorists; it was claimed that this had never happened, and in response the OP said that Germany had been taken over by terrorists when Hitler became chancellor. (Whether you agree that the Nazis were terrorists and 'took Germany over' is irrelevant.) Now, I could be wrong, but I was under the impression that Germany was not a superpower in 1932-3. Does anybody seriously say this? Am I missing some major historiographical lacuna about a Weimar superpower here?

I am contesting the notion that being a superpower is based on... having super-carriers.
That does not imply any claim the U.S. were not a superpower cause they have super-carriers. They most certainly are one.

The Germany example is relevant in that it demonstrates how shortlived military power (or its abcense) is and how other factors (economic potential, skilled citizenry) can be translated to military power much more easily than the other way around. The U.S. demonstrated that even better in the same context.
So some radical political group seizing control in some wealthy nation with a skilled citizenry would be fairly dangerous or at the very least inconvenient even today.
The point is that there is a whole pack of nations that could easily become "superpowers" in the sense of annoying the heck out of everybody with reckless foreign policy and immense military buildup if in the hands of "terrorists". They don't have to have a chance of actually surpassing the U.S. in any specific metric in order to do so (the super-annoying).

From that point of view it doesn't seem very prudent to disregard China as a "power" or "superpower" or whatever merely because they don't have supercarriers, the way Luckymoose implied (as a joke i hope).
I very much followed the conversation with that one. When i quote like seven posts in a post of mine those quotes and my answers may be connected in one way or another. Especially if they directly follow each other as in this case.

As far as the charge with the snide remarks goes: I am ready to debate that but it hardly seems to be the place. I will not appreciate you putting my username in a title in a negative context but if you feel like opening a thread about Anti-American sentiment in Europe and your perception of it, i will address it. Alternatively we can pick this up when the thread has run its course. Usually that is the place for excessive metacommunication anyway.

Economists, can someone tell me if I'm right? Doesn't Japan issue government bonds at a lower interest rate than the U.S. and would thus be better off issuing more debt (which I believe the Japanese government itself buys) than trying to dump U.S. bonds?

Does it make that much of a difference? Either way they would withdraw a huge pile of money from international markets to Japan. The point is that they can (opposed to Pakistan), not the modus, isn't it?

 

[El_Machinae]

Moderator Action: English only forum, please

 

[NedimNapoleon]

Actualy this happend to america, it was reported by one very independent news source called the onion http://www.youtube.com/watch?v=TRgRz3nSG7o

I would rather believe this then Fox News

 

[Camikaze]

Crosspost and a bit: Yeah, Germany would seem a good example, I'd have thought. That they weren't militarily powerful, yet still managed to climb to such a position of power is kinda the point, I think (I also think that 'superpower' and 'potential' are confusing the issue). And that after that again they were reconsidered to be potentially powerful despite immediate impotency would seem to further demonstrate the point; assuming the point is that it's either potential or realised power that could be hijacked. I think.

 

[Lillefix]

Actualy this happend to america, it was reported by one very independent news source called the onion http://www.youtube.com/watch?v=TRgRz3nSG7o

Octavia has the same national anthem as Norway!!!!!!!!!!!!!!!!!!!!!!!!!!

And death to debts. American or otherwise.

 

[Cutlass]

Economists, can someone tell me if I'm right? Doesn't Japan issue government bonds at a lower interest rate than the U.S. and would thus be better off issuing more debt (which I believe the Japanese government itself buys) than trying to dump U.S. bonds?

Japan cannot dictate the interest rates of the bonds they issue. Neither can we. It depends on what the market is willing to buy. Japan should get a pretty good rate because they are a pretty good risk. The recent disaster doesn't really change that. They may sell some portion of their US bonds. A question I would need answered is how many US bonds are held by the Japanese government as opposed to Japanese private citizens and businesses. Privately owned US bonds probably won't be sold off in big numbers. Government owned bonds might be.

But either way it doesn't really affect the US situation. Just as a Chinese government sell off of US bonds won't affect the US government all that much. And if they do it all at once, they'll take a big loss on the face value of the bonds. The markets will only absorb so much of a sell off at once without a drop in price.

In short, a fast sell off costs them more than it costs us.

 

[Verbose]

To perhaps return to the OP, I would think the watershed isn't so much China trying to call in massive US debt in one go somehow, as China deciding the US credit isn't good enough any longer.

Not that I think that might happen until the domestic Chinese economy starts growing through self-sustaining domestic demand. Then it can decouple itself from the US, if it likes. For now they will keep piggy-backing. If I've understood what's going on?

 

[Theige]

China can't "call in" debts

 

[Neonanocyborgasm]

This whole idea of China "calling in debts" is just recent right-wing fearmongering. It is not possible for a state to "call in a debt" to another state. States are independent actors, and there is nothing compelling them to do anything. If China demanded the US pay its debts on bonds, and we didn't have the money, we would just respond by stating that we don't have the money right now. China couldn't do anything about it, short of declaring war (which still wouldn't assure it gots its money anyway). Furthermore, the US is one of China's biggest trade partners. China's economy couldn't exist without the US, and it knows that. It will never want to destabilize that, for fear of shooting itself in the foot.

In short, China calling in its debts to the US is as good as a declaration of war, which China has no intention of doing.

 

[GoodGame]

But how about the reputation loss if China does call in the debts and we don't pay? It might be a good competition strategy to make the US look bad in the world political view if we appear to default on our financial obligations.

 

[GamezRule]

Life is not a game of Civ. Most other countries are in the same debt pickle that we are in.

 

[Cutlass]

But how about the reputation loss if China does call in the debts and we don't pay? It might be a good competition strategy to make the US look bad in the world political view if we appear to default on our financial obligations.

You can not call in the debt. There simply is no mechanism for doing so. It is a false premise. It has been said above by more than one person. The debt is held in medium and long maturity bonds. We have no obligation in any way to redeem those bonds before their maturity. All they can do is dump the bonds they own on the international markets. And if they do that, they lose a ton of money in the process. They hurt themselves by "calling in the debt", not us.

 

[Brian Shanahan]

You mean like in Afghanistan?

You accusing the US of being a terrorist?

 

[Theige]

Seriously guys, don't think of U.S. treasuries as "I lent x amount of money to X, and I can demand repayment of said loan at any time I want."

That is not how U.S. Treasuries work.

If you have more questions, I suggest starting here:

http://en.wikipedia.org/wiki/Bond_(finance)

 

[lordsurya08]

They won't do it, since it will collapse there economy also and that is not in China's best interests.

Agreed, but only for now. China and US are highly dependent on each other at the moment...China will not destroy the US until is it considerably more powerful, which it will soon be. *shudders*

 

[metatron]

Life is not a game of Civ. Most other countries are in the same debt pickle that we are in.

Debt =/= Debt.
If the U.S. government would owe all the debt it owes to China and Japan and weird Arabians to its on citizens instead (like in the olden days) there wouldn't be that much of a problem.

You can not call in the debt. There simply is no mechanism for doing so. It is a false premise. It has been said above by more than one person. The debt is held in medium and long maturity bonds. We have no obligation in any way to redeem those bonds before their maturity. All they can do is dump the bonds they own on the international markets. And if they do that, they lose a ton of money in the process. They hurt themselves by "calling in the debt", not us.

The calling debt faction allready got that, i suppose.
The point is that right now the U.S. are effectively running an open tab (is it called that?). The moment they make it a policy not to buy any further bonds and to cash in the ones they have as soon as they are due, you have a problem on your hands.
Of course it's possible that you find other people to buy all those bonds but it's not exactly a given.
(Please note: I allready stated multiple times that i am quite sure China would not do that. It's purely hypothetical.)

 

[Theige]

Debt =/= Debt.
If the U.S. government would owe all the debt it owes to China and Japan and weird Arabians to its on citizens instead (like in the olden days) there wouldn't be that much of a problem.

The current situation is not a problem either.