Posted on 02/11/2009 4:43:32 PM PST by mojito
China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.
China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world’s largest holding of Treasuries.
However, the increasing US budget deficit and its potential impact on the dollar have raised questions about the future Chinese appetite for US debt.
Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.
“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”
However, Mr Luo said Chinese officials would encourage its banks to finance domestic mergers and acquisitions rather than provide rescue finance to distressed financial companies in other countries: “There will be no bottom-fishing of financial institutions, particularly in the US, because there is a lot of uncertainty about the quality of the books.”
(Excerpt) Read more at ft.com ...
If you want to crash the US economy by flooding the market with a trillion dollars worth of bonds all at once, first you need a trillion dollars worth of bonds.
Of course China will continue to buy US bonds.
Not a surprise actually, just part of a never ending cycle of cool dry winds for a few decades, then warmer wetter winds for a few decades.
You saw those fires in Australia, right? Their grain crop is garbage this year (again), as is Argentina's.
Russia might have some trouble coming ~ we'll see.
China is going to be BUYING grain from the US at very highprices. Some will argue that high grain prices are a sign of "Demon Inflation" rather than "Demon Famine". Ignore them.
With Chinese trade off 17%, they will certainly be buying less bonds than before.
The whole world is falling ot pieces.
When the Chicoms are worried about OUR books that says just about everything that needs to be said about where this whole jalopy is headed.
that guy is dumb? Only option? Wheres gold, theres silver, why aren’t these even considered? US bond give 0% interest and they depreciate. Gold and Silver gives 0% but the appreciate. Its an easy choice
Gold, silver, oil .... there are plenty of alternate benchmarks out there.
Actually if they wanted to F us they could get an oil bourse priced in renmembi and try and displacement.
Was there not an auction today?
Anybody know the results?
The Russians were providing the tech for the Iranians to set up an oil bourse. That must have bit the dust ever since oil started going down in July 2008
Something I read recently about China and 'starch stocks.' It said that China controlled the below % of world grain stocks(starch stocks):
* Wheat = 30%
* Rice = 50%
* Corn = 35%
I remember remarking to my neighbor that if I were India, I'd be concerned about the 50% rice number.
These numbers have gradually increased to this level since 2005 where they were previously much lower.
I found this after I wrote the above:
"Analysis: Allendale is well aware of the fact how dominate China is as a holder of starch stocks when compared to total world stocks. The facts are at present China holds 35% of the world corn end stocks, 50% of the world rice stocks and 30% of the world wheat end stocks. China’s starch holdings clearly dwarf those of any other country."
"Since 2005, China has been incrementally building stocks in all three starch grains. When compared to recent lows for the three starch crop, China’s share of world stocks have risen from 28% in 2005 to 35% in 2008/09, rice from 48% to 50% and wheat from 23% to 30%.
Now there's the world of "super atoms". You should look it up ~ transparent aluminum, silver with three different atomic weights, "we are not making gold now", and so on.
The future is happening right under our noses so fast it isn't funny ~ scientists claim "invisibility" is right around the corner!
They must be replaced regularly, and this year they are facing the loss of their wheat crop.
That doesn't mean they face disaster this year, but if they don't buy more reserves they may face disaster next year if this drought follows historic patterns and continues for two or three years.
Remember when Napoleon was freezing to death in Russia? That was a really bad winter ~ very cold, very dry for most of Europe, but in the Sapma/Sapmai in the far North in an ever widening arc down into China, it was an unmitigated disaster. Tens of millions of people starved. The Sa'ami on the Arctic Ocean virtually all emigrated somewhere else.
When it was over it was possible for a small group with several dog teams to traverse all the way from Eastern Russia to the Pacific UNMOLESTED by any other human beings. That's how the Russians got the idea of harvesting furs in Alaska (where there were still some people alive and kicking) and bringing them all the way back to Russia.
Think about it, they went through thousands of miles and there were no fur bearing animals, reindeer, muskox, foxes, wolves, elk, polar bears, black bears or tigers ~ and no people.
Those who could had moved South in that early 19th century famine. Those who couldn't simply perished.
Wed Feb 11, 2009 9:06pm EST
TOKYO, Feb 12 (Reuters) - Japan's Nikkei stock average fell 2.3 percent on Thursday as investors grappled with disappointment over a U.S. bank bailout plan, with a slightly stronger yen hitting exporters such as Canon Inc (7751.T). Mitsubishi UFJ Financial Group (8306.T) and other banks slipped, along with tech shares battered by falls in their U.S. peers.
The benchmark Nikkei .N225 shed 186.27 points to 7,759.67 while the broader Topix lost 1.9 percent to 763.49.
(Reporting by Elaine Lies)
Of course he's going to say that. I mean, if you hold billions of $$$ worth of anything you wouldn't announce plans to dump it.
I'm not saying they ARE giving up on US bonds, just that you can't draw any conclusions based on this statement.
Sounds like a major league sports owner.......who just gave the coach a “vote of confidence”...
and 2 weeks later....he’s canned......
Inflation means that prices inflate...that prices go up.
Prices on things like stocks...on things like homes...on things like condos...on things like salaries & wages.
Inflation is *not* about paying an extra $0.50 for milk at the grocery store. Your grocery bills for a century won’t buy a house and your 401k.
So people who claim that we are seeing inflation are claiming that everyone is about to get a big raise. That salaries are going up. That homes are going up in price. That condos in Miami and Vegas are about to cost more. That stocks are about to rally.
It takes some mighty fine weed-smoking to say that such things are going up...that inflation is somehow back.
We should be so lucky.
Instead, we’ve got the opposite: deflation.
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