China warns it may drop its holdings of US Treasuries
Ron Paul has warned about the possibility of China losing faith in US debt, has that time arrived?
The timing of a U.S. economic recovery remains uncertain, with broad signs of deterioration including falling corporate profits, increasing bankruptcies and rising unemployment, according to Zhao Xijun, deputy director of the Institute of Finance and Securities at Renmin University.
"The United States should be more responsible in addressing the global financial crisis. The U.S. economic stimulus plans should focus more on maintaining financial and currency stability," Zhang said.
A weaker U.S. dollar would hurt that currency's international status, he said, which would "not be in the interests of the United States and other countries and would exacerbate the crisis."
Said Zuo: "U.S. dollar depreciation is inevitable in the long run. China should prepare and reduce its holdings of U.S. Treasuries to a proper size."
The country should also spend some of its huge foreign exchange reserves to buy more energy and resources, she said.
The Chinese government is already seeking to use its foreign reserves "more actively" and efficiently to boost domestic development amid the global economic crisis.
Fang Shangpu, deputy director of the State Administration of Foreign Exchange, noted Wednesday that the report released by the U.S. Treasury of the amount of government bonds held by China included not only the investment from the reserves, but also from other financial institutions."
More here:
http://news.xinhuanet.com/english/2009-02/18/content_1083991...
Chinese have no choice
If the US continues to monetize its money, the Chinese will have no choice but to stop buying dollars if they haven't already. It is now readily apparent that the debt can not be paid back. Checkmate.
More info on China...
Get the facts, straight from the mainland....in English...
http://www.chinadaily.cn/
Bookmark and stay up on things....
enjoy!
Bill Gates, Rule 1: Life is not fair
Tell me about it. I bought Vista! (not really, but I have seen it....ughh..)
China should realize ... were at the point of not observing the
validity of that "debt" !!!
Debt aquired by "illegal" and criminal governments...placed in office through voter fraud and political munipulation is "INVALID" ...period !
Time we research ( investigate ) this completely and take action.
Discover Costa Rica
Peter Schiff wrote an article on the continued foreign
purchase of U.S. government debt instuments. He published it on his site in 2007, so I'm sure you can find it there. He mentioned a comment, made by Alan Greenspan at a speaking engagement, to the effect that the Chinese couldn't "dump" U.S. Treasuries because there would likely be a lack of sufficient buyers to make that possible. In effect, Greenspan was implying that the Chinese were over a barrel. Schiff's counterpoint was that the Chinese do not need to engage in any kind of massive dumping of U.S. Treasures. All they need to do is to stop buying them and let their current debt mature (most are short term anyway), thereby making it more difficult for the U.S. to sell their debt instruments to foreign holders of U.S. dollars. In order to continue to sell massive amounts of debt, to finance government debt spending, yields are going to have to adjust in order to attract sufficient buyers (just like with any other sale) and that will likely mean, to taxpayers, an even greater portion of the budget going just for greater interest service. If you'd like to read Schiff's article, you can find it at:
http://www.europac.net/archives.asp?year=2007&qtr=2#
The name of the article is: "Good Money After Bad"
_________________________________________
"An economy built on fiat money is a society on its way to ashes."
_________________________________________
"An economy built on fiat money is a society on its way to ashes."
It is totally obvious that Chinese buying of US Bonds
was part of the 'free trade' deal. Access to US markets in exchange for bond buying. The Chinese now have our industrial base. When they get the family jewels (in progress), it will be over.
"Buy bonds. Support Leviathan"
--Bonhomme Moron
You still don't get it, do you ?
Would you rather me "not" buy our Bonds back from the Chinese at a profit (their loss) ?
Winnie, are you always this way, or are you just putting me on acting stupid ?
Try rethinking what capitalism means.
You just don't get it, do you?
Bonds support the Fraudulent Fed, the Leviathan and The Empire. I wouldn't touch them with a barge pole. By rights, the Chinese should now be able foreclose on US assets. They earned these 'dollars' the hard way, laboring at fifty cents an hour while Boobus AmericANUS shuffled papers at work, ran up his credit cards and drained 'equity' from his home. The Chinese will not be able to foreclose, of course, because the USSA will not honor its obligations.
You sound more like a Marxist than a Capitalist
That's what we Capitalist do... one man's loss is another man's gain.
If you want social Justice, I'm afraid you are going to have to wait until the Rapture. Socialism does not work as well as Capitalism.
Tell me you wouldn't buy back U.S. Debt from the Red Chinese below par, say like 8 % ? That is, if you have any evil Federal Reserve Notes ($) to invest ?
Give up, you are digging the hole deeper with your utopia rhetoric.
You sound like an a-hole who labels anyone who disagrees
with him a leftist/Marxist/commie. Do you have any idea how special that ain't? I wish I had an FRN for every time I have encountered your type on the net.
First of all - there can be no true capitalism under a regime of fiat money (where The State basically has a gun to your head with its legal tender laws and destroys capital by creating 'money' out of thin air).
Second - Respecting contracts is neither Marxist nor Utopian. As a matter of fact, I thought such things were the bedrock of capitalism. We will attempt to cheat the Chinese out of their hard earned financial victory. Is that your idea of capitalism?
Winnie, you just unwittingly labeled yourself
the a-hole, accusing me of your behavior.
If you recall, it was you, not I, that started ad homonym attacks (Bonhomme Moron) disagreeing; not the other way around. Are you also delusional or just poor memory ?
Like I said, you are too utopian with your, "True Capitalism", quest. Do you really believe Yankee Imperialism is going to disappear because it is not fair ? Not in my lifetime (66) and probably not in your's and your grandchildren too.
A bond is not a guaranteed contract as you imply, it is an investment that can go up or down, even zero. China made a bet and if they unload pennies on a dollar, I don't know about you, but I will be there to buy below par. Just like when you have a heart attack and go to a doctor - ones mans loss is another's man gain.
Bill Gates recently gave a speech at a High School about 10 things they did not and will not learn in school. He talks about how feel-good, politically correct teachings created a generation of kids with no concept of reality and how this concept set them up for failure in the real world.
Rule 1: Life is not fair - get used to it!
Guilty (It's ad hominem, BTW)
Is homonym a homonym for hominem? Close, but I don't think so. At any rate what are you saying? I know that the strong will always exploit the weak, but If you are not concerned with what is fair or right what makes corrupt Yankee Imperialism superior to Marxism?
As far as being "too utopian with your, "True Capitalism", quest.", you said nothing of the kind. You accused me of being a Marxist. By true capitalism, I simply meant capitalism as it is supposed to be. You know - free and open competition, legal protection of contracts, honest money - those kind of things.
You do realize correcting misspelling
is an example of ad hominem, the person not the debate ?
You could of fooled me about Marxism knocking and comparing parity with Capitalism the way you did. [Quote] "They [Chinese] earned these 'dollars' the hard way, laboring at fifty cents an hour while Boobus AmericANUS shuffled papers at work, ran up his credit cards and drained 'equity' from his home.[Un-Quote]
What part of Bill Gates, Rule 1: don't you understand ? "Life is not fair - get used to it!"
Remember, Capitalism by nature is mercenary and greedy. If not a Marxist, have you ever considered Missionary work ?
It was not exactly a spelling correction
You spelled homonym correctly.
I was not knocking capitalism. I was merely pointing out that the Chinese were far more industrious than their American counterparts. I did not mean to disparage the Chinese. They slaved away for a pittance yet managed to accumulate hundreds of billions of FRNs. Now, when the Wall Street Frauds brought the economy to its knees, the Chinese would have been within their (utopian?) rights to come in and buy up US assets with their accumulated savings. Did we allow that? No. We debased the currency and propped up failing institutions with thin air 'money', effectively preventing bankruptcy and liquidation.
OK. Let's cut to the chase. You approve of fraud, because this is the 'real world'? You don't believe in honoring contracts or your word in business dealings and anyone who holds these quaint notions ought to be a missionary? Your attitude as presented here has done more to deface your persona than any name I called you.
Approve of fraud ???
Are you kidding ? Since when did Ron Paul or anyone else (excepting you) saying, buying bonds in a free market becomes anything close to fraud ?
You are trying to blame me and everyone else other than China for their 600 B predicament. Listening to you, China was a babe in the woods before they bought our bonds... naively not considering America wasn't balancing its budget borrowing, coupled with unsustainable foreign trade deficits. We know you won't loan Uncle Sam money, but if the risk reward ratio is right, I will.
Don't feel sorry for the poor Chinese any more than the poor Japanese. If the Japanese had an Atomic Bomb WWII, they would of dropped it on you. Plain English: When it your turn, no is going to feel sorry for you.
Like I said earlier, consider missionary work, caveat emptor, and free markets dose not appear to be your calling.
BTW, my speech recognition software I use never makes a spelling mistake, but it has been known to have trouble with homonyms. Do you think I'd be stretching it, saying, I was defrauded (never makes a spelling mistake) ?"
Break a leg.
Look - We are cheating the Chinese
by debasing the money with which we will (or not) pay them back. I don't feel sorry for them. They have our industrial base, so who is the bigger fool? (Answer: The idiot who buys bonds and does not have the US industrial base to compensate for it). So go ahead. Back up your truck. It couldn't happen to a nicer guy.
We are not cheating anyone !
Caveat emptor: Latin for "Let the buyer beware." The idea that buyers take responsibility for the condition of the items they purchase and should examine them before purchase.
Years ago my attorney recommended I incorporate to separate my personal assets from business. He explained, everyday, corporations are going bankrupt and without that protection I stand to loose everything. The only caveat, the corporate veil does not protect in the event of fraud. I dissolved my corporation 13 years later and gave all my good will clientèle following to family. Besides always current, my creditors never lost a dime. I could of just as easily stiffed my creditors by bankrupting my corporation, but that's not me. However, technically, I did lay myself off, and was actually entitled to state unemployment insurance benefits, which I (my corporation) actually paid for from corporate profits. I love this country, try doing that in China.
I recommend everybody to consider buying U.S. Treasury, Bills, Notes, and Bonds when interest rates get 7.5 % or better or whatever is best for your needs. Remember, the last time 7.5 happened was 1/95. That 7.5 % would of happened again in 2000, but China was greedy and drove yields down with demand, 600 B worth. You can buy them from a month to 30 years from your broker or the very Evil Federal Reserve Bank in major cities. Remember if you go to the FRB, you will need a Cashier's or Certified Check and you want to place non-competitive bids in the auction (form you fill out and leave with your check) or risk loosing out as a successful bidder. Competitive bids are best left to experts. You can always buy through your broker after the auction to know exactly what you are buying; they are liquid and can be transfered back and forth between Treasury, you and your broker. Remember, interest is paid up front unlike a CD (rear end) and no state tax ! I love this country, and the Chinese must too, they bought so many of them, 600 B worth.
I bet even Winne is double-thinking (no pun intended) Treasury's now, lol.
Update on this issue...
SAN FRANCISCO (MarketWatch) - A big jump in foreign sales of long-term U.S. securities raised concerns Monday that the U.S., in the midst of a massive debt issuance to fund its economic revival plans, may run into trouble getting other countries to finance its deficit.
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Foreign purchases of long-term U.S. Treasurys, Fannie Mae (FNM:Fannie Mae bonds, corporate debt and stocks -- netted for acquisitions of foreign debt from U.S. residents -- dropped to negative $43 billion in January from positive $34.7 billion in December, said the Treasury Department Monday.
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January's sales marked a record low, said currency strategist Michael Woolfolk, and the reasons for the plunge could spell bad news for the U.S. dollar.
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"This was a truly awful report, throwing into question the funding of the U.S. current account deficit," said Woolfolk, senior currency strategist at the Bank of New York Mellon, in emailed comments.
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The continued selling of agency and U.S. corporate bonds suggests a structural problem within the U.S. balance of payments "that could begin to undermine the USD," Woolfolk said.
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.
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At first splash of Eden we race down to the sea,
standing there on Freedom's Shore....
What can be said of a people who would sell their own children into slavery, using the rational that it is to protect their freedom?
I'm confused
In the first sentence the article stated that foreign sales of Long Term securities are UP not down. So how does foreigners buying our debt translate into foreigners NOT buying our debt?
I don't get it.
From what I understand....
foreign countries and investors buy and sell (trade) US debt instruments just as US investors buy and sell foreign debt instruments. Typically, foreign entities buy much more US debt than they sell. But apparently recent activity (according to the article) suggests that they are selling much more than in the past. But I think the confusion is because in parts of the article, it is refering to US debt instruments, and in the second paragraph, it is speaking of the net transaction (combined buying and selling of US vs foreign debt). I think you can access the full article here:
.
http://www.marketwatch.com/news/story/Foreign-debt-sales-rai...
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Hope this helps.
.
.
At first splash of Eden we race down to the sea,
standing there on Freedom's Shore....
What can be said of a people who would sell their own children into slavery, using the rational that it is to protect their freedom?
Ah thanks.
I mistook the reference to "foreign sales" as the U.S. increasing their sales to foreigners rather than foreigners as the ones doing the selling. The article makes much more sense now.
Rembrandt is dead! (Silver Streak, 1976)
"according to Zhao Xijun"
"Zhang said"
"Said Zuo"
"he said"
"she said"
"Fang Shangpu"
Well, I guess there are a lot of them!
"Shaka, when the walls fell. Timba, his eyes wide open. Darmok and Jilad at Tenagra."
Funny, I was telling my grandma the same thing
I understand nothing you have written. But I guess sometimes tomatoes sit in the sun while the pine trees hide the sugar.
Explore Orthodox Christianity
HUH?
*
This whole topic is simply inflamatory
China dumping dollars or our debt is of little consequence. Though on their scale they could influence the market and drive the price of Tbills up or dollars down. But in every case, you cannot SELL without a BUYER.
So if someone else winds up owning those dollars or T bills, why should we care?
The one thing I fear is that China could start selling our bonds in quantities that make it hard for our Treasury to compete... so our Treasury will just turn to the FED to Monetize that debt. That would be inflationary.
Think about it.
Hey, I was pissed when they were buying Treasury's
and I hope they don't want them, I'll back up the truck and buy all I can.
No state tax too ! Not to mention they are front loaded (interest up front, not at end).
Best game in town if the yield is right, dump away !
I love this country ;)
BTDT
If they were actually
If they were actually selling fast, as in "dumping," the results would not be pretty.
...
That's the issue john2k,
That's the issue john2k, they CANT sell them fast. As soon as they begin trying to *dump* everyone and their mother figures out what's going on and the value of the t-bills plummets precipitously. The Chinese wind up losing a ton of money if they try to *dump*. Besides, to dump, someone HAS to BUY. catch 22.
I agree that they can't sell
I agree that they can't sell them fast if they insist on certain prices. If that's the case, then yes, they will need to wait until they have buyers at those prices. In addition, as you mentioned, if they do try to dump the value will plummet. But that is basically what I meant by saying that the results would not be pretty if they did actually being to dump.
...
the way they dump them is to
the way they dump them is to use them to buy oil, gold, silver, concrete, cement, food etc.. that is how they will dump them slowly but surely..
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
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