When an individual gets into financial difficulty, defined as spending more than the person is receiving as income, the process goes through several defined steps. The first step is to borrow money, usually from the seller who wants to continue to sell to the spender even though the spender can no longer afford the goods and services.
When the ability to borrow money is exhausted, the borrower starts to liquidate assets, using the proceeds from the sale of items to pay the interest and principal on the debt, or in some cases to establish higher credit so they can borrow more and spend more. The process stops only when the person runs out of assets.
A nation goes through a similar process. The
United States has for years purchased more from China then it sells to China, and so has had to borrow money from China to
finance those purchases. Far from being
reluctant to lend, China has
been eager to finance America’s
trade and budget deficits, as it results in increased purchases from China and
stimulates their economy. But even China has a
limit on how far it will go with this scheme.
The result is that
China is now using the dollars that it
accumulated from its trade surplus with the United
States to S. assets. The
latest purchase is the movie chain, AMC. buy
If approved by U.S. and Chinese regulators, the $2.6 billion acquisition will create the world's largest theater group, the companies said. The move,
biggest corporate takeover to date in the , highlights the rising
financial strength of its top firms. USA
This purchase is just one of many, as
China is using
its financial muscle and accumulation of foreign currencies to buy assets all
over the world. It is the new world
conquest model; you don’t send armies across borders, you send dollars and euro’s
and pounds and the rest.
As for the
States, what do you do when you run out of
movie theaters to sell?