The US should worry about its own Chinese debt: Asad Umar

[BRAVO_]

The US should worry about its own Chinese debt: Asad Umar
PTI leader and likely candidate for the post of finance minister in the upcoming government Asad Umar has said that the US should worry about its own Chinese debt and let us worry about our own.

US Secretary of State Mike Pompeo had warned that any potential IMF bailout for Pakistan should not provide funds to pay off Chinese lenders.

“One piece of friendly advice to the Americans: we’ll worry about our Chinese debt, but I think they better handle their own Chinese debt first,” said Umar.

He acknowledged that Pakistan does have a serious external debt problem, however, “we don’t have a Chinese debt problem.”

Decision on $12b to be made in six weeks

Umar said that the country needs around $12 billion and the decision about where to get this needs to be made soon.

“The decision needs to be made in the next six weeks. The further you go forward the more difficult, the more expensive the options become,” Umar told Bloomberg in an interview on Thursday.

He hinted that in order to increase its foreign reserves Pakistan can even go to the International Monetary Fund besides approaching friendly countries and issuing diaspora bonds.

This is in total contrast with the promises that PTI had made during its election campaigns. The party had said that it would not take any more loans under any circumstances.

The PTI leader said they have yet to approach any potential lenders. “No formal work can be started until the government is formed,” he said.
https://www.samaa.tv/news/2018/08/us-should-worry-about-its-own-chinese-debt-says-asad-umar/

 

[Jf Thunder]

SAVAGE

 

[Imran Khan]

yeah its great answer ye hoi na baat we have gov what we were dreaming since ages . well done asad

 

[gangsta_rap]

epic

 

[Nilgiri]

The type of debt is very different.

Pakistan is taking physical loans from the Chinese at quite high interest, to deploy into things like infra.

US debt held by China is in form of bonds, and that is China's way of keeping its exchange rate low and its employment + investment levels subsidized...i.e basically a consumption transfer from China to US. Consumption and infra (investment) have very different Mx ramps/velocities to begin with (even if US and Pakistan were carbon copies economically)....i.e because investment is broken up into a series of consumptions with time delays (and thus ROI delays) whereas consumption is much more direct.

The grand difference however is the level of seigniorage (i.e defacto fiat currency credibility) between the US and Pakistan. The best way to perceive this real time is the degree to which the US can print the dollar without worry for its deficit spending compared to Pakistan (which takes far higher credit hit for each percentage of fiscal deficit)..and the sheer size of their currency liquidity use worldwide.

These are the reasons why the interest rates on these debts are quite different (7% versus 3% for the 10 year maturity ones I believe).

So no, the US does not really need to worry about its debt w.r.t China as much compared to Pakistan....given the large chasm of the ramps and seigniorage in play.

That said though, these statements are more political than deeply financial policy based.

@LeGenD @Jungibaaz @waz @Chak Bamu @farhan_9909

 

[doorstar]

The type of debt is very different.

Pakistan is taking physical loans from the Chinese at quite high interest, to deploy into things like infra.

US debt held by China is in form of bonds, and that is China's way of keeping its exchange rate low and its employment + investment levels subsidized...i.e basically a consumption transfer from China to US. Consumption and infra (investment) have very different Mx ramps/velocities to begin with (even if US and Pakistan were carbon copies economically)....i.e because investment is broken up into a series of consumptions with time delays (and thus ROI delays) whereas consumption is much more direct.

The grand difference however is the level of seigniorage (i.e defacto fiat currency credibility) between the US and Pakistan. The best way to perceive this real time is the degree to which the US can print the dollar without worry for its deficit spending compared to Pakistan (which takes far higher credit hit for each percentage of fiscal deficit)..and the sheer size of their currency liquidity use worldwide.

These are the reasons why the interest rates on these debts are quite different (7% versus 3% for the 10 year maturity ones I believe).

So no, the US does not really need to worry about its debt w.r.t China as much compared to Pakistan....given the large chasm of the ramps and seigniorage in play.

That said though, these statements are more political than deeply financial policy based.

@LeGenD @Jungibaaz @waz @Chak Bamu @farhan_9909

you like hitting your head against immovable brick-walls, don't you?

 

[Nilgiri]

you like hitting your head against immovable brick-walls, don't you?

Just wanna see what people have to say

 

[IceCold]

The type of debt is very different.

Pakistan is taking physical loans from the Chinese at quite high interest, to deploy into things like infra.

US debt held by China is in form of bonds, and that is China's way of keeping its exchange rate low and its employment + investment levels subsidized...i.e basically a consumption transfer from China to US. Consumption and infra (investment) have very different Mx ramps/velocities to begin with (even if US and Pakistan were carbon copies economically)....i.e because investment is broken up into a series of consumptions with time delays (and thus ROI delays) whereas consumption is much more direct.

The grand difference however is the level of seigniorage (i.e defacto fiat currency credibility) between the US and Pakistan. The best way to perceive this real time is the degree to which the US can print the dollar without worry for its deficit spending compared to Pakistan (which takes far higher credit hit for each percentage of fiscal deficit)..and the sheer size of their currency liquidity use worldwide.

These are the reasons why the interest rates on these debts are quite different (7% versus 3% for the 10 year maturity ones I believe).

So no, the US does not really need to worry about its debt w.r.t China as much compared to Pakistan....given the large chasm of the ramps and seigniorage in play.

That said though, these statements are more political than deeply financial policy based.

Read the thread again and try to focus on "Should worry about its own". That remains true for Indians as well who are acting like cheerleaders here.

 

[Nilgiri]

Read the thread again and try to focus on "Should worry about its own". That remains true for Indians as well who are acting like cheerleaders here.

Well Pompeo was commenting on not having IMF loan chase existing high ramp debt is all (that is better tackled by getting the particular specific creditor to refinance it). It was not really a statement on Pakistan's debt level..or worrying about it.

 

[IceCold]

Well Pompeo was commenting on not having IMF loan chase existing high ramp debt is all (that is better tackled by getting the particular specific creditor to refinance it). It was not really a statement on Pakistan's debt level..or worrying about it.

If Pompeo has such a problem than forbid IMF from giving loan at all, why whine and bitch about it? Once the creditor lends the loan, it none of its business where the debtor uses it specially when the debtor is not defaulting on anything. So quit cheer leading and admit it that this statement had an agenda of arm twisting Pakistan and nothing more.

 

[doorstar]

That said though, these statements are more political than deeply financial policy based.

or maybe this fellow is dumber than khwaja asif and in his head it sounded like a good point, since he has to pretend to be master of economics, and as you see, it impressed the hell out of illiterate masses especially since it looks as if the mighty economist has challenged the USA

Just wanna see what people have to say

waste of time, can't say any more lest I trigger some non-Pakistani masquerading as all conquering Pakistani hero, or worst still some juvenile Pakistani jihadi.

 

[LeGenD]

The type of debt is very different.

Pakistan is taking physical loans from the Chinese at quite high interest, to deploy into things like infra.

US debt held by China is in form of bonds, and that is China's way of keeping its exchange rate low and its employment + investment levels subsidized...i.e basically a consumption transfer from China to US. Consumption and infra (investment) have very different Mx ramps/velocities to begin with (even if US and Pakistan were carbon copies economically)....i.e because investment is broken up into a series of consumptions with time delays (and thus ROI delays) whereas consumption is much more direct.

The grand difference however is the level of seigniorage (i.e defacto fiat currency credibility) between the US and Pakistan. The best way to perceive this real time is the degree to which the US can print the dollar without worry for its deficit spending compared to Pakistan (which takes far higher credit hit for each percentage of fiscal deficit)..and the sheer size of their currency liquidity use worldwide.

These are the reasons why the interest rates on these debts are quite different (7% versus 3% for the 10 year maturity ones I believe).

So no, the US does not really need to worry about its debt w.r.t China as much compared to Pakistan....given the large chasm of the ramps and seigniorage in play.

That said though, these statements are more political than deeply financial policy based.

@LeGenD @Jungibaaz @waz @Chak Bamu @farhan_9909

I clarified the difference in this thread: https://defence.pk/pdf/threads/no-d...soft-in-the-world.570720/page-2#post-10682593

 

[Nilgiri]

I clarified the difference in this thread: https://defence.pk/pdf/threads/no-d...soft-in-the-world.570720/page-2#post-10682593

Yep, here I am just going fully on the china owned US bonds specifically (excluding the majority of US govt debt). I think @Hamartia Antidote and few others have highlighted this difference.

What I am getting at here is that its best for Pakistan to keep every option open. I get one needs to look tough compared to previous govts...but why throw away an IMF option with this bravado based word exchange if indeed there is possibility Pakistan can structure and finance only that which Pompeo mentioned US wants it to be used for (i.e balance of payments issue that is not chinese loan based)...and then delegate the latter separately with the Chinese etc. Cool heads ought to prevail for such important issues....but maybe I.K administration has already decided to not go for the 12 billion IMF loan and is playing a card early on it now...and score some political optical mileage. In which case I guess lets see how it shapes up.

Once the creditor lends the loan, it none of its business where the debtor uses it specially when the debtor is not defaulting on anything.

Actually it depends on the deal signed. There can be conditions imposed on what can and cant be done with the loan (esp when the loan is given in installments as a chain with each link dependent on the previous one used as stipulated). Its the IMF, they are way more particular about this than the world bank (can look to mexico example in say the 80s)...and US+allied bloc has something like 60 or 70% of the total SDR iirc.

 

[Thorough Pro]

So Pakistan is taking a "physical" loan and Americans are taking a "spiritual" loan? you must have puled this theory from your 5000 year old stinky Vedic arse ...

The type of debt is very different.

Pakistan is taking physical loans from the Chinese at quite high interest, to deploy into things like infra.

US debt held by China is in form of bonds, and that is China's way of keeping its exchange rate low and its employment + investment levels subsidized...i.e basically a consumption transfer from China to US. Consumption and infra (investment) have very different Mx ramps/velocities to begin with (even if US and Pakistan were carbon copies economically)....i.e because investment is broken up into a series of consumptions with time delays (and thus ROI delays) whereas consumption is much more direct.

The grand difference however is the level of seigniorage (i.e defacto fiat currency credibility) between the US and Pakistan. The best way to perceive this real time is the degree to which the US can print the dollar without worry for its deficit spending compared to Pakistan (which takes far higher credit hit for each percentage of fiscal deficit)..and the sheer size of their currency liquidity use worldwide.

These are the reasons why the interest rates on these debts are quite different (7% versus 3% for the 10 year maturity ones I believe).

So no, the US does not really need to worry about its debt w.r.t China as much compared to Pakistan....given the large chasm of the ramps and seigniorage in play.

That said though, these statements are more political than deeply financial policy based.

@LeGenD @Jungibaaz @waz @Chak Bamu @farhan_9909

 

[YeBeWarned]

Make America great again caps are made in China ... nuff said