Done Deal – The U.S Is Now China

The plans/suggestions emerging from the weekend’s meetings in China are staggering!!

Ok ok….a little dramatic and perhaps overstated but get this…..

As part of an evolving proposal Beijing has been developing quietly since 2009 to convert more than $1 trillion of U.S debt it owns into equity, China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss!

The Obama administration, under the plan, would grant a financial guarantee as an inducement for China to convert U.S. debt into Chinese direct equity investment. China would take ownership of successful U.S. corporations, potentially profitable infrastructure projects and high-value U.S. real estate.

These points have been discussed for several years now so it’s really not anything new ( although I’m sure it’s the first you’ve heard of it ) but the message is very clear.

China will not tolerate / watch their dollar denominated assets ( treasury bonds ) go up in smoke via currency crisis and crash of the U.S dollar – BUT WILL ACCEPT HAVING THIS DEBT TURNED INTO DIRECT INVESTMENT IN OWNERSHIP OF U.S BUSINESSES AND LAND.


Brilliant…..absolutely brilliant.


17 Responses

  1. Warren November 11, 2013 / 11:11 am

    In this day and age to be successful do as the Chinese do! I’ve got orders set below current prices in long JPY vs EUR, GBP, and AUD.

    • Forex Kong November 11, 2013 / 11:12 am

      You bet…..I’ve been anxiously awaitng “what plans” might develop moving forward, and frankly – hadn’t expected something as “interesting” as this.

      Wow…..converting the debt into land and assets on U.S soil. All backed and guaranteed by Gov.


      • Warren November 11, 2013 / 11:25 am

        Well the Chinese discovered N america first and they are just reclaiming what was rightfully theirs. If colonialism was good enough for the Europeans then it is certainly good enough for our new masters 🙂

        • Forex Kong November 11, 2013 / 11:50 am

          You got it Warren.

      • Graham Herbert (@mistergmh) November 11, 2013 / 6:13 pm

        Guys its bigger than just america … the chinese have been buying up prime farmland in Australia at an alarming rate and they tried an amalgamation with RIO TINTO recently which fell through … I was in APIA Western Samoa last year which is a stones through from American Samoa … our guide was so excited about China’s donation of a parliament house, Hospital and police station which were huge for the tiny Atoll … I have been in major steel fabrication for the last ten years and China companies are winning 90% (no exaggeration) of the tenders due to the fact that they fabricate and deliver the finished product for just about the amount we needed to buy the raw steel … Then there is the problem of Taiwan / Formosa …

        If you don’t know after ww2 there was a civil war in China between the Christian and communist factions which the USA negotiated (Bullied) a peace accord whereby the christian faction was given Formosa now Taiwan and the communists kept the mainland … The US signed a treaty with Taiwan and sent a warning to the communists that any interference from them would bring down the might of the US military against them … The problem is that China has and will always consider Taiwan as their property and want it back …

        Here is another problem … ever since John Adams first borrowed the funds to have the fledgling new country survive the USA has relied on international loans to continue to survive … hence it has become a political football today … Up until recently most of the US bonds were picked up by Japanese banks … some 30 years or more now Detroit carmakers were close to failure due to the fact they continued to build the Yank Tank … Japanese small car makers were flooding the market to their detriment … the US tried to fix that problem by putting a number embargo on Japanese car imports … The Japanese Government who has more control of their bankers (at that stage they had the ten biggest banks in the world) not to buy the US Government bonds … You can imagine the drama … They did however buy heavily just before the closing date … Obviously the restrictions were lifted but today the Koreans are getting into the act as well … This is the same time that Iacocca saved Ford with the release of one of my all time favorite cars the Ford Mustang … He later went on to save Chrysler with the small 6 seater mini bus I think they called it … Read his books he was quite brilliant …

        So China would have seen all this playing out and put it in their memory banks because they are an extremely patient people and now that they have become a juggernaut the gambit is well and truly on … Can you imagine the strength of Over a billion people as well a countless number of them throughout the world motivated similar to the american dream can achieve … They also remember when the “civilised” countries of the world deposed the Boxer Queen in 1901 and then carved up china for their own interests (Read about the Boxer rebellion)

        So my outlandish prediction is that China will not defeat or try to defeat the USA in a War situation but will do it financially..
        China in my lifetime will have the USA relent and negotiate (Bully) Taiwan into coming home and by the end of this century will be where they believe is their right to be as the dominant country in the world … Its just a pity I wont be around to see if I am correct …

        Sorry this is a bit long but being an old dude its our nature to ramble on a bit … Dont let me bore you just let me know if its a bit much …

        • Forex Kong November 11, 2013 / 6:19 pm

          Short and sweet…I’m a firm believer that “that war” the “financial war” has already more or less played out yes – China has no need for guns n ammo as they’ve already made such incredible tactical moves financially.

          I can ony imagine / wonder how “if needed” they may choose to “roll things out” a touch more aggressively .

          The huge surge in gold purchases is interesting, as well I understand – the number of broker / dealer offshore companies / means to attack financial markets / computers etc….

          Then of course the amount of treasuries owned….and the list goes on.

  2. ezyfx November 11, 2013 / 5:37 pm

    I have seen no mention of this as a major policy shift or move in the news lately mr Kongman.

    I did find this…
    quote… “The China Securities Journal cited government researcher China Center for International Economic Exchanges as saying in a report that the country should aim to start a tax on individuals’ property nationwide in 2015. ”

    That sounds ominously like any other growing economy in the last 2,000 years or so.

    • Forex Kong November 11, 2013 / 6:12 pm

      Yes yes I’ve jumped a head here a little – and hope the headline wasn’t “too misleading”.

      These ideas have been thrown around for several years now with growing concerns for the collapsing US Dollar, and the amount of debt held by the Chinese. It’s certainly “not” going to be on the news tomorrow morning.

      My angle on things is / was moreso the implication’s “at some point” should dollar devaluation reach “levels of ridiculousness”, and not as much for the people of China – but those of the U.S

      The idea of China “flippin it’s dollar denominated debt” into hard assets in the U.S such as land , infrastructure , business etc under a u.s government gauranteed program ( in my view ) puts an entirely “new light” on the American governments complete and total negligence as – citizens working to pay taxes / gov debt/spending as it is…then in turn to “essentially” doing it for the Chinese?

      How far down the rabbit hole can we go?

      Yu Qiao, a professor of economics in the School of Public Policy and Management at Tsighua University in Beijing – he advised on it back in 2009.

  3. ezyfx November 11, 2013 / 5:43 pm

    I do accept that China has been investing directly in other countries worldwide tho, but this has been going on for many years already… especially in Africa and the Middle East.

    In Australia China has been buying massive area’s of good farm land… as apposed the the Japanese in the 1980’s buying massive area’s of wasteland and building golf courses that nobody ever visited… 99% of former Japenese built golf courses are now covered in Australian privately owned houses on canals.

  4. JSkogs November 11, 2013 / 6:15 pm

    The concept sounds great. Probably pretty tough to make happen though. Given that this would require confiscation of shareholder assets. Legally it’s a poo storm which is probably why it’s been talked about but never done. Write downs or missiles is probably how it will end. Happy I know but likely a shred of truth.

    • schmederling November 11, 2013 / 11:55 pm

      It’s already happening – China is buying up more & more of everything in the US….. but if you think your going to hear it hitting MSM well that’s not going to happen….. you hear little bits here & there but the larger moves are happening behind closed doors.

      When this becomes news it’s already going to be too late – the game will be over & the last chess move will have been played!

      Sad my true – either way we will not have much longer before this unfolds in real-time!

  5. Eric S November 11, 2013 / 8:04 pm

    Let them buy it all up. I don’t see how that would work here. Will be interesting to see the owners of these businesses and real estate give it up. If my memory serves me correct, back in the 80’s everyone was worried that Japan would be the owner of the US. And good luck with the government guarantee. Worthless, just like now.

    • JSkogs November 11, 2013 / 10:48 pm

      Didn’t China buy US debt for advantageous trade and currency reasons to begin with? If they actually let their currency float it probably would have risen w exports anyway causing a similar effect.

      I still believe in paying your debts but China isn’t innocent when it comes currency manipulation. Can’t have your cake and eat it too.

    • schmederling November 11, 2013 / 11:50 pm

      Then that leads to WWIII & 70% of nations against the US!! Every empire in history has failed from the Greeks, Persians & Roman’s why would this be any different………It’s like a poker game, when your thinking who the sucker @ the table is then it’s most likely YOU who are the sucker & will be taken to the woodshed….. Simple logic actually…. :0)

      Cheers Schmed,

  6. schmederling November 11, 2013 / 11:45 pm

    yeah I don’t think it’s very surprising, those following things closely & have removed their blinders it’s very clear what’s going on – what’s in the pipeline & more or less how it will be achieved. Those living in a bubble or refuse to see the writing on the wall sure have a very large wake-up call just ahead….. I would say 80% over Americans have not clue, have blind faith or just don’t want to know or just don’t care!!

    Perhaps this number is falling as people struggle to live in current conditions – food & fuel are eating up most likely 35-40% of a families income in todays world….sadly the large majority will just not get it until it too late & the final nail has been driven in the casket!!

    Rome kept it’s people in dark with GAMES…. gladiator events with one simple directive. ” The power’s back then brought the masses death & then loved them for it” sad but true. If one looks at how the current design is playing out it’s not very far off from historical days….. ” history has a funny way of repeating itself” !!

    China is VERY forward thinking – planning moves for decades in advance, quietly & patiently waiting in the shadows for the final move calling out ” Check Mate”

    One easy example is how industry was moved from West to East…. while North America only looking for quick gains in the moment the instant gratification & those endless profits off the backs of cheap labor….. LOL but could not see the writing on the wall then & now it’s too late.

    China’s moves over the last 2 decades reminds me of the Trojan horse – very simple yet extremely effective!!

    Cheers Schmed,

  7. Gan November 12, 2013 / 6:40 am

    @schmederling; you’re giving China too much credit for what it’s worth. China’s time has come (after more that a century of turmoil) – the best China can do is to seize the moment and not waste and screw it up. And Chinese are smart people; as are most established civilizations. But, fact it, the world turns round and round if you study your history. Chinese are strategic/smart, but so are Americans (American didn’t become dumb overnight) – But the tide is turning on the good old US of A , for the time being that it – but this “time” in respect of our lifetime can be long indeed.

    • Forex Kong November 12, 2013 / 7:06 am

      It’s an interesting debate – the actual “timing” of some kind of “blatant shift” as opposed to (what Schmed has made light of) the long / strategic / calculated planning we understand of the Chinese.

      Personally, ( and this is just my opinion ) I feel the time is coming increasingly closer, and that many “will” be completely surprised to hear of some “pretty big things” alot sooner than expected.

      Like you guys have said – many (if not most) of the larger pieces have already been put in place so…yes indeed this could continue to “quietly” play out for years n years n years. Then on the other hand “if” these pieces are in place – what’s to say “now’s not the time”?

      With respect to currency the clock is ticking for the U.S, but that won’t mean “instant conversion to Yuan” as the reserve. In fact…the Chinese don’t want the burden of that ( let alone opening up capital accounts ) so the likely path forward still appears to be via the IMF’s “SDR’s” and China’s inclusion down the road.

      This would “internationalize” China and the Yuan first, then pave the way forward.

      At that point I almost see China and the U.S attempting to appear “more partner like” as opposed to enemies, as the U.S just does what it can to steady the ship and stay with the program.

      Next week? Not. Next year? Not. Next 5 years? – I’m there…I think we’ll see something big by then.

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