China Has Begun Dumping Their U.S. Treasuries
Giordano Bruno
Neithercorp Press
And so it begins, just as Neithercorp predicted back in January of 2009:
http://neithercorp.us/npress/?p=74
As reported in August, 2009 by the state-run People’s Daily, China has begun openly cashing in their U.S. Treasury bonds, of which they originally held almost $1 Trillion. This means that China has lost enough faith in the Greenback to begin hedging their bets and reducing risk in case the dollar crashes, and it WILL crash. Obama’s recent admission that the budget deficit over the next decade will be increased to $9 Trillion:
http://www.reuters.com/article/newsOne/idUSTRE57K4XE20090821
and the fact that the Federal Reserve has printed more than $24 Trillion new dollars in less than a year’s time:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM
have guaranteed that our currency will hit hyperinflationary distress. I predict within 4 to 5 months China’s dumping of U.S. Treasuries will hit frightening levels and the value of our currency will begin to plummet. The Fed may make some moves to delay a complete collapse, and drag on the inevitable for another year, but the end result will be the same. Neithercorp will be keeping a close eye on China as this story develops…………….
China Cuts Treasury Holding To Fund Foreign Deals
August 20th, 2009
By: Wei Gu
Please don’t call it a liquidity crunch, but it rather looks as though China might have had to sell a sliver of its vast hoard of U.S. Treasury paper to fund its private sector’s big overseas foray.
China’s holding passed $800 billion in May, sparking speculation that it could reach $1 trillion within a year, but the net June figure, published on Monday, showed a 3.1 percent drop to $776.4 billion, the biggest percentage fall in nearly nine years.
It’s clear that China has been keen to use more of its reserves to secure strategic resources supply overseas, as well as diversifying them into emerging markets such as Africa to help create demand for Chinese exports. The unwinding of global imbalances also means China might have fewer dollars to invest, as its July trade surplus more than halved from a year earlier.
In the past, almost all outflows from China come from the government, which by default put the money into U.S. Treasuries. But now the private sector needs more foreign currency.
Just this month, China’s Yanzhou Coal Mining agreed to buy Australian coal miner Felix Resources for $2.9 billion, and Sinochem Corp. spent $878 million buying British oil and gas explorer Emerald Energy.
The government itself also seems to be getting more adventurous. Its $200 billion sovereign fund finished 2008 with almost 90 percent of its assets in cash, but is determined to put more money to work this year.
This week Reuters reported that the fund will soon invest up to $2 billion in U.S. mortgages as it eyes a property market rebound, and last week Reuters revealed the fund’s talks on a $1 billion-plus convertible bond investment in Fortescue Metals Group.
Not all the June sales of U.S. Treasuries were turned into cash. Half the sales of $51.8 billion short-dated debt were rotated into longer-dated maturities, indicating that Beijing now cares more about yield and worries less about the safety of its investment, reversing an earlier trend of reducing the average life of the holdings.
These monthly reports do not tell the whole story, because they exclude trades through London intermediaries. The more accurate numbers are not revealed until February, in the annual survey. Even so, China appears keen to diversify away from U.S. Treasuries, and as the authorities allow more private sector investors access to dollars, this process will accelerate.
SOURCE: http://blogs.reuters.com/great-debate/2009/08/20/china-cuts-treasury-holding-to-fund-foreign-deals/
PEOPLE’S DAILY ARTICLE HERE:
http://english.people.com.cn/90001/90780/91421/6734461.html
August 26th, 2009 at 8:09 pm
Com’on… stop quoting the MSM garbage. Investigative journalism is a Date Late and Billion dollars short when covering the FED, Treasury, OMB, CBO etc.
I would like to see… how the buying and selling have gone with the FED and CHINA and Foreign Currency Swaps/Draws/etc over YTD.
Tagged milestones, highs, & lows with the information. China is holding more debt than last year, just that they’re switching from longterm to short term securities.
Please report accurately in the future with FACTS and appropriate links.
August 27th, 2009 at 5:46 pm
Apparently Timmy, you seem much more interested in the “MSM garbage” than the important news going on right under your nose. What you don’t seem to understand is that regardless of what amount of U.S. Treasuries China has held in the past, recent developments have made such numbers irrelevant. Why? Because America has incurred such an enormous deficit
(9 Trillion projected in the next decade) that we NEED China and other countries to buy our Treasuries and invest in our debt. Our country’s economy and our currency CAN NO LONGER SURVIVE without foreign purchases of treasury bonds. Not only has China stopped purchasing treasuries, but they have begun dumping those bonds they have already accumulated. This mean that very soon, we will have an incurred debt of Trillions with no one to invest in it. THIS WILL CAUSE THE COLLAPSE OF THE DOLLAR. I hope that is clear enough for you. In the future, I suggest you stop worrying about manipulated numbers from the Federal Reserve (try asking them to report M3 and see what they say), and start looking at the fundamentals. Looking at charts of Foreign Currency Swaps of the past is not going to help you understand what is happening today, because what is happening today has never happened before in the history of this country. Again, learn your basics before embarrassing yourself with these paper thin criticisms, I implore you. It really is a waste of everyone’s time.