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Goldfinger

China Sells Treasuries

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

China ... sold a net $5.8 billion of Treasuries, the first drop in holdings since October 2005

...

That may push up yields on Treasuries, traditionally among the top investments for reserves, and erode demand for the dollar.

...

``It may not necessarily impact the daily market, but this does raise the concern about the dollar.''

...

``There's no clear sign they are going dump Treasuries,'' ...

:lol:

Foreign investors are also buying more U.S. agency bonds, which have higher yields than Treasuries. They purchased a net $36.1 billion in the securities issued by agencies such as Fannie Mae and Freddie Mac, the most since May 2006.

For how long? Subprime, anyone?

:lol::lol:

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke have repeatedly played down concern of a sell-off in Treasuries holdings by foreign investors. Paulson noted again in appearances this week that China's holdings amount to about one day's worth of trading in the Treasury market.

So what? According to the article they still own 10%. That's quite a bit.

Treasury Deputy Secretary Robert Kimmitt plans to lobby China and Russia to keep investing in the U.S. on trips to Moscow and Beijing next week.

...

Clay Lowery, the Treasury's top international official, told reporters after the release this week of the department's semiannual foreign-exchange report that he is spending a lot of time thinking about the subject, while declining to comment specifically.

:lol::lol::lol:

Sovereign wealth funds now hold a total of $2.5 trillion worldwide, according to estimates by Morgan Stanley.

:o

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Peter Schiff made an interesting and somewhat obvious point the other day in that China doesn't necessarily have to sell its US Treasuries; instead, all it has to do is wait for them to expire/mature then they'll just take the cash in return and spend it accordingly...

This is what I would have expected. Not to accumulate and take cash on expiry. This is why I think this article is remarkable. They're selling!

I think Heli-Ben won't have to get out the copter. There won't be no deflation. :lol:

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Merv King said the same this week, when the Chinese start selling bonds we're heading for higher rates.

Someone recently told me that the reason we had low inflation in the UK was because of Gordon Brown's economic policy.

Absolutely staggering, but it seems many other people believe the same nonsense.

The real reason we've had low inflation is because the Chinese have been lending us their savings and selling us their cheap labour.

Now their labour costs are rising, and they're wanting some of their savings back.

Hello inflation, hello higher interest rates...

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Peter Schiff made an interesting and somewhat obvious point the other day in that China doesn't necessarily have to sell its US Treasuries; instead, all it has to do is wait for them to expire/mature then they'll just take the cash in return and spend it accordingly...

Err... the yanks would just print dollars to pay them back, in which case the dollar would become worthless. Once you monetise debt it kicks off a hyperinflation, there's already enough IOU's out there to cause hyperinflation but at the moment they're all locked away in other bits of worthless paper called treasuries.

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Merv King said the same this week, when the Chinese start selling bonds we're heading for higher rates.

Someone recently told me that the reason we had low inflation in the UK was because of Gordon Brown's economic policy.

Absolutely staggering, but it seems many other people believe the same nonsense.

The real reason we've had low inflation is because the Chinese have been lending us their savings and selling us their cheap labour.

Now their labour costs are rising, and they're wanting some of their savings back.

Hello inflation, hello higher interest rates...

Indeed. The higher the rates the higher the currency goes. This is why the pound has soared beyond its viable market level. Exports are doomed and cheap Chinese tat floods in at an even greater pace as it becomes cheaper as the pound rises. With the UK now the most indebted per-capita nation in the world (next to Spain?) and with money supply growing faster (recent reports show Gordon is printing at the rate of 13% + YoY) than any other G8 nation things will certainly begin to get interesting. Our paymasters, China and Japan, hold the strings now and our dependence on cheap imports while exporting less and less will eventually erode sterling's value.

Gordon's miracle has landed us between a lump of granite and a piece of steel. Merv is frozen because of the threat to house prices and yet inflation continues to rise in the real world despite the now discredited "CPI" (Chinese Produced Items).

If Merv remains "vigilant" (does nothing) then the currency traders look elsewhere for growing IR returns. Result: pound tanks causing imports to rise and inflation along with it.

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Treasuries and the $ are not historically connected. In any case if China were to decide to sell and devalue the $ what would that do to there export driven economy?

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Treasuries and the $ are not historically connected. In any case if China were to decide to sell and devalue the $ what would that do to there export driven economy?

Who says that the Chinese communists will act rationally anyway?

I guess it would be rational to squeeze the American consumer just to the extent that it is still cheaper to import than to procuce

in the US, on the other hand commodities get cheaper for China with an appreciating Yuan.

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I guess it would be rational to squeeze the American consumer just to the extent that it is still cheaper to import than to procuce

in the US, on the other hand commodities get cheaper for China with an appreciating Yuan.

Indeed. The Chinese aren't producing tat for our benefit, they want to get rich. And the easy way to do that is to push up the value of their currency after they've encouraged us to ship all our manufacturing out there.

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Err...you're stating the blimin' obvious, so your point is?

The Chinese would be mad to leave these bonds until maturity, the yanks cannot pay, all the they can do is print up another set of IOU but this time in dollar bill form, billions upon billions of them. Anyway, if the Chinese just stop buying new treasuries it will collapse the value of their existing holdings way before these notes expire.

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Maybe the Chinese in their wisdom, have figured out that war is futile. Lots of people die, it cost lots and there is no guarantee of success. This way they can get rich and slowly defeat their enemies. No one seems to be able to see what is happening.

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Maybe the Chinese in their wisdom, have figured out that war is futile. Lots of people die, it cost lots and there is no guarantee of success. This way they can get rich and slowly defeat their enemies. No one seems to be able to see what is happening.

I had mused for a while that we are in WW3 now.

Instead of blowing us up they will let us lanquish in poverty (real poverty not Browns idea of it) and starve us to death.

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I think you need to do more reading and less posting tbh.

Good Money After Bad

If it's OK by you, I rate Peter Schiff more than I rate you I'm afraid...

Ok, so the Chinese wait until maturity, how will the Americans pay? The Fed will just print the required dollars in order to pay down the nominal face value of the bonds and the purchasing power of the dollar will just go through the floor. Dollars are nothing more than Treasury promissory notes in a more liquid form.

What the Chinese should do is exchange the Treasuries for real assets and infrastructure in the US, things that cannot be inflated out of existence, which is exactly what they're now doing. The US is quite happy for foreign creditors to sit on bits of paper that can and will be inflated away at will, however as we've seen with Duabi Ports and Unocal they're less happy with creditors returning these IOU's back to the US in exchange for real assets. The US is in the position of a mortgagee that is coming to the end of its loan agreement, except the bank decided long ago to take half the equity in the house instead of an increasingly worthless mortgage payment.

This isn't some form of competition with Peter Schiff.

Edited by BuyingBear

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Ok, so the Chinese wait until maturity, how will the Americans pay? The Fed will just print the required dollars in order to pay down the nominal face value of the bonds and the purchasing power of the dollar will just go through the floor. Dollars are nothing more than Treasury promissory notes in a more liquid form.

I actually think there is regarding the final outcome not much of a difference between China letting the bonds mature, or selling them

prematurely (especially given that these bonds have shorter maturities anyway). If China decided to sell them, the bond market would

start collapsing (IRs would skyrocket). What do you think the Fed would do? They would do exactly the same as they would have done

on maturity: print the money to buy back the bonds. In other words, these Dollars will hit the markets the one or the other way anytime

soon. And that's gonna hurt the American consumer.

Edited by Goldfinger

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Does the US export military equipment to China or is there an export ban?

Would China purchase Russian MIG's, ICBMs, etc from Russia using US $ ?

Edited by Ash4781

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Does the US export military equipment to China or is there an export ban?

Would China purchase Russian MIG's, ICBMs, etc from Russia using US $ ?

Russia is not so keen on USD either. Don't they actually ask for ruble when they sell their oil and gas to Europe?

It's so clever! They export their inflation (M3 growth at annually 40%, I think) to Europe, since they have to gobble

them up to be able to pay for that gas.

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I actually think there is regarding the final outcome not much of a difference between China letting the bonds mature, or selling them

prematurely (especially given that these bonds have shorter maturities anyway). If China decided to sell them, the bond market would

start collapsing (IRs would skyrocket). What do you think the Fed would do? They would do exactly the same as they would have done

on maturity: print the money to buy back the bonds. In other words, these Dollar will hit the markets the one or the other way anytime

soon. And that's gonna hurt the American consumer.

Quite, the only thing the Chinese can do is to slowly try and realise the purchasing power of these bonds whilst they're still worth something, they can exchange this for inflation proof equity stakes and access to natural resources, I think that's exactly what we're seeing with bond prices over the last couple of weeks and announcements in regards Blackstone and the huge sovereign hedgefund. It's a calculated gamble, maybe it's worth sacrificing half their stock of Treasuries if they can salvage real value from the other half, the alternative is 100% of nothing (worthless dollars on maturity). The Weimar republic didn't hyperinflate for fun, they did it to destroy the real value of debts owned to creditor nations.

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Does the US export military equipment to China or is there an export ban?

Export controls on military and dual use equipment. Tech (microelectronic, semiconductor, telecomunications) and precision machine tools sectors are particularly hamstrung by these controls when trying to export to china against European rivals with far less controls.

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Export controls on military and dual use equipment. Tech (microelectronic, semiconductor, telecomunications) and precision machine tools sectors are particularly hamstrung by these controls when trying to export to china against European rivals with far less controls.

The Americans should sell the Chinese some cruise missiles, within 6 months the Chinese would be re-exporting exact copies back to the US for a fraction of the cost. Such a "just in time" supply chain would come in very handy in times of crisis, such as a potential conflict over Taiwan. :huh:

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:lol:

No not at all, it's just your ego getting the better of you once again...

Since you're so enlightened, perhaps you might like to offer your solution to the Chinese instead of wasting your time stalking me under various guises? <_<

What do you mean by "various guises" exactly? Can you only manage ad hominem attacks?

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:lol:

Fine, now stop being such a He-Bitch, you're trashing what would otherwise be an excellent thread...

PS. I don't believe you, now why do you find that so difficult to come to terms with? Does everyone have to agree with everything you say? Stop stalking me you weirdo! :lol:

:huh:

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As I said, weirdo who obviously isn't getting enough by the looks of it...

http://www.housepricecrash.co.uk/forum/ind...showtopic=49374

"Lord Harris appears to be somewhat of a carpet eater."

http://www.housepricecrash.co.uk/forum/ind...showtopic=49340

Hrm, I once had a gf like that. :)

Thai SheMale?

http://www.housepricecrash.co.uk/forum/ind...mp;#entry668476

"She wasn't one of those mail order things, was she?"

You're the expert!

http://www.housepricecrash.co.uk/forum/ind...mp;#entry663200

http://www.housepricecrash.co.uk/forum/ind...mp;#entry663226

"Regards the mortgage applications, didn't the banks know she was faking it?"

http://www.housepricecrash.co.uk/forum/ind...mp;#entry663195

"I love the stairway, one for each hoe."

http://www.housepricecrash.co.uk/forum/ind...mp;#entry653077

"This is the privatisation of society and can be expected in any cuntery that has a hugely divergent gap between rich and poor."

http://www.housepricecrash.co.uk/forum/ind...mp;#entry661168

Is she pretty? ;)

Internet Groomer?

http://www.housepricecrash.co.uk/forum/ind...mp;#entry668698

Oh my, you really are desperate! :lol:

deserves it's own seperate thread...

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