No More Us Debt for China!

We all know that China is the country bearing the debt of the US. However because of the intensity of the economic downturn, China is keeping more of their money at home. This causes problems for those wanting to borrow in US.

On Tuesday, President-elect for the coming year Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the country most keen on taking the foreign debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s. However, China, whom in the last five years have spent about 1/7 of their money on collecting foreign debt, but now Beijing is seeking to pay for its own $600 billion stimulus

The Economic Club of Toronto held its annual outlook conference Wednesday with top economists of Canada’s big five banks. Here are some of the highlights:

Don Drummond, chief economist Toronto-Dominion Bank, on Canada

Forecast: Sees 1.5% real GDP drop for 2009; a $12-billion to $14-billion federal fiscal stimulus package

Warren Jestin, chief economist Bank of Nova Scotia, on the international outlook

Forecast: Sees all major economies declining in 2009 and emerging economies and asset markets weakening in a “remarkable synchronicity.”

Sherry Cooper, chief economist, BMO Capital Markets, on the United States

Forecast: Sees 3% peak-to-trough GDP decline overall for the U.S. and the worst recession in the post-WWII period; four-million jobs lost; first decline in annual CPI since 1955; sub-1% core rate.

I know this is about how Canada’s doing, but I want to focus on the world not just one country.