Recession is here and is confirmed by many economy experts. Now two world leaders, US and China, will try to do everything to save their country and minimize the impact on their country. But can they do it without crossing path of other side?
Obama have made a $850 billion plan to bail out US economy from this recession. From where this money will come? China is largest buyer of Treasury Securities, so surely US need to work with China for pulling this money out of US Treasury. Basically as China hold major US dollar, US will take loan from China for arranging this money.
And, Money doesn't come free, boviously it's money. China will like to have some advantage in terms of increasing its export to US and tax relaxation. But that would be just against US bailout plan. This move will actually go against stablizing it's doemstic market and current bailout plan might fire back if this is the case.
Making the situation worse, what could happen if China dumps its major Treasuries in US to arrange money for its own use? It is difficult for US to give a good return and so it makes sense to invest elsewhere where China could see a better advantage..may be a gonid down Us company??
US can't let it happen and would plan something to stop China from doing all this which won't make China happy. All this could create tension between two World Leader country and who knows, what it has in store for result... Keep watching..
Note: Let me know what you think on this topic. Please leave comment to discuss on this.
Tuesday, December 30, 2008
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