As I am posting this in a forum with lots of members far more learned and sophisticated in the financial world than myself, I want to say I am not attempting to pass myself off as any sort of expert or authority on the issue. I read a lot (maybe too much) and like everyone else, I have a vested interest in trying to get a grasp as to the direction of the economy and what variables I should focus on, pay attention to and those that aren’t so critical.
Anyway, the article, the first one I read, was in the WSJ, then more in businessweek the atimes and more. The estimated bad debt loaned internally is/was approximately 991 Billion US. Just because they have lots of cash due to massive foreign investment and trade surpluses doesn’t mean their unperforming loans aren’t cause for concern. The companies set up to start handling this debt are government owned and are being criticized for shuffling the debt from entity to entity. As the government controls the banks and the markets it isn’t readily transparent but eventually these loans if not settled in some way can cause a domestic bank crisis. Similar to the S&L crisis here.
O_M you mentioned the article in the Economist..when I read your paraphrasing I couldn’t help but think of Japan buying Real Estate like crazy here in the 80’s, I believe that was mostly disastrous for them in the long run.
So, I can see where they might/will buy Euros but they will stll keep a healthy chunk of it in US dollars.
