We’re going to modify loans and sometimes even just “forgive” some debt to those poor owners who apparently had no idea that they shouldn’t be buying $500k homes when they work as warehouse clerks for WalMart. What message does that send out when we’re asking China for a couple of hundred billion dollars in loans?
Uncle Sam to China: ”Don’t worry. Our credit is good. We honor all debts. We’ll pay off yours, no problem.”
Uncle Sam to banks/noteholders: “No. Your contract is no good. They don’t have to pay you.”
No wonder the Chinese gov’t is asking for guarantees on their future loans.
I hope someone in Chinese gov’t has some common sense.
Related posts: