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You raised an excellent question. I have to answer that in multiple parts.
The answer is quite complicated. Part 1 – the question of TRUST.
TRUST is a very abstract thing. Many Governments now guarantee Bank Deposits with no upper limit. If one trusts the Government, one will be happy to leave the money with any Bank including the newly formed Commercial Bank of Goldman Sache etc.
When the financial paper of questionable value matures, one may just convert it into cash and leave it with one of the International Branches of Goldman Sache where the Government has no-upper-limit guarantees. Thus Goldman Sache does not need to default on its financial papers.
Such an arrangement does not depend on the underlying value of the financial papers but on the Government guarantees. TRUST can be restored because the holders of financial papers feel that they will not lose any money.
(This is the reason why Goldman Sache and other Investment Banks became Commercial Banks.)
I agree. US government and China must have common interest in this are. They must have something to give to each other to make the agreement work.
Dossier de surendettement