On Tue, Jul 19, 2016 at 12:43 AM Georgi Guninski
   <[1]guninski@guninski.com> wrote:

     On Mon, Jul 18, 2016 at 10:50:10PM +0000, Sean Lynch wrote:
     > The Chinese are pro-China, but they recognize that the US is a
     very large
     > market for Chinese goods, and for now their economy is built on
     exports.
     I think this is only partial explanation. China is _very big_
     exporter.
     > The problem is not that the US has too much debt. The problem is
     that the
     > US is running out of credit. And by "credit" I mean generically
     *trust.* No
     Not according to the financial rating charlatans. USA rating varies
     between AAA/Aaa/AA+ (AAA is best possible AFAICT) .

   Exactly. These are the same people who gave mortgage-backed securities
   the same rating. And we saw what happened the last time a ratings
   agency tried to downgrade US government debt: they got "investigated."
   All the ratings agencies have privileged standing in US law; many
   entities, in particular government pension plans, are only allowed to
   invest in "investment grade" instruments, with "investment grade" being
   determined by one of a specific set of corporations. Given that they're
   paid by the people selling the instruments rather than by investors,
   they'd just evaporate if they lost their special standing under US law.

     And this is after they were discussing default in congress and
     candidate
     president wants to pay only 85% of the debt... Pretty much the
     definition of Ponzi scheme.

   Yup. The Ponzi scheme most of the world's financial system is built on
   (is, really).
   So the question is, what form will its collapse take, and how long will
   it take? I'm not sure if I'd prefer that it be quick and extremely
   painful or slow to give people who have a clue what's going on time to
   insulate themselves.

References

   1. mailto:guninski@guninski.com