US Addicted to Chinese Loans

Here’s what I think will happen if and when China changes its currency policy, and those cheap loans are no longer available. U.S. interest rates will rise; the housing bubble will probably burst; construction employment and consumer spending will both fall; falling home prices may lead to a wave of bankruptcies. And we’ll suddenly wonder why anyone thought financing the budget deficit was easy. In other words, we’ve developed an addiction to Chinese dollar purchases, and will suffer painful withdrawal symptoms when they come to an end.






One response to “US Addicted to Chinese Loans”

  1. myke Avatar

    the chinese currency is artificially fixed low with being pegged to the dollar anyway … i wonder if the chinese govt’ will actually go thru with actually letting their currency float fully with the market. if nothing else, they may do so to slow what could be a to fast moving economy

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