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2009-04-21 10:02 by Karl Denninger
in Politics Ignore this thread
Squirrel Finds Nut: IRA

Buried in an IRA report was the following nugget:

Foreign bond holders, like the government of China, have reportedly told the Obama Administration that further losses to debt holders of US banks will result in a boycott of US Treasury auctions.

That's a declaration of economic warfare and the fact that such governments have issued that sort of threat, if its true, needs to be disseminated far and wide and needs to also result in an immediate and total consumer boycott of all products made by such nations.

I'm dead serious here folks.

Look, if there is anyone who is a "seasoned, skilled and knowledgeable investor" it is a sovereign.  They have the "best and brightest" available to their people and to govern their activities.

The fact of the matter is that all of these banks were engaged in mathematically impossible schemes in their lending. 

All of them.

Therefore, these foreign interests were intentionally buying something they knew was destined to default with the only possible way to avoid a loss being extortion directed toward the government.

That's a declaration of economic war and we the people of this nation must not permit it.

There is no other interpretation possible folks.

When you engage in a transaction that must mathematically lose money there are only two possible explanations for your act:

  1. You're too dumb to understand what you're doing.
  2. You intend to practice extortion when the inevitable result occurs, and you entered into the transaction because it allowed the other party to do something beneficial to you at the time - and which you intend to avoid the loss on through unlawful conduct later.

In this case China had every reason to desire Citibank to grant credit in a wanton and reckless manner to Americans, as that allowed Americans to buy their imported products manufactured in China at a rate that was otherwise impossible.

Since the mathematics of such "growth rates" in spending were impossible to sustain it was therefore clear and obvious at the time they bought the bonds that such "investments" would inevitably lead to a loss at some point in the future.

Since "stupidity" is not likely when a sovereign is involved I am forced to conclude that the Chinese government intended to extort The United States at the time of the purchase and thus this chain of events constitutes an act of economic warfare.

Since our government has refused to tell Wung-Funkem-You to go stuff it up his posterior we the people are therefore compelled to boycott all products of Chinese origin.

End of discussion.