Posted on 03/13/2009 11:41:54 PM PDT by bruinbirdman
Tremors felt in the U.S. Treasury market after China's Premier Wen Jiabao's expressed insecurity about China's U.S. assets persisted throughout the trading day as U.S. government securities' appeal as a safe haven bid was tainted by supply concerns.
"We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries," Wen said during a Friday news conference in Beijing.
Although investors largely put aside preoccupations about mounting government issuance this week following several fairly successful note and bond auctions, apprehension from China--the largest buyer of U.S. government debt--prompted a sell-off in the securities Friday morning. The government debt market largely took its cues from the U.S. equity market's choppy trading, but prices on Treasuries ultimately ended the session lower.
(Excerpt) Read more at forbes.com ...
Why would foreign banks gobble up all the Treasury offers so eagerly?
Tell the ChiComs that Chairman Mao would have condemned them for investing in the decadent West, and for betraying the People by turning themselves into one more capitalist country.
Tell them that if he were alive today, that Chairman Mao himself would lead the People back to Tiananmen Square to protest such behavior.
Hey, they’re effin’ with us, let’s eff with them, eh?
I send the Government money for Social security every other week, I too am concerned about my investment. The sad thing is, China has about the same chance of being repaid.
Because their economies depend on the US consumer having access to low-cost credit with which to buy the goods these countries export to the US.
If interest rates went up to where they should be[*], then US consumer spending would have taken a hit at least five years ago and these countries would have had their export-driven growth decline years ago.
[*] — Greenspan remarked some years back that it was a “conundrum” that as the Fed was hiking short-term rates, that the long end of the curve refused to budge. This was the result of the PRC sending billions upon billions into our credit markets to keep the US consumer consuming.
The result of our inability to keep budgets within the constraints required by Bretton Woods. It is simultaneously fortunate and unfortunate for us dollar-holders that this is now a global recession, because the system can't continue into infinity.
World wide what is called money is but paper and the lying words of government.
That is the foundation of which this world is built.
And people wonder why, especially planners, things don’t go according to plan.
People were willing to walk across the valley of doubt while euphoria anestized them, but became fearful when the true nature of the world economy became suspect.
Given the character of our national leaders (he himself is probably in a better position than us to know this, since they are the ones who have been making the payoffs) he should be very concerned.
Eventually, whether due to fear for our liquidity or for the need to raise capital to pay the Chinese laborer to prevent unrest, China is going to cash in their chips.
When they get to that point, the US will either have to pay up or raise interest rates to tempt them to reinvest in more treasuries.
Either one will wreck the US economy.
So what will happen when the typical chinese has enough disposable income to begin buying all the stuff they make and don`t need the US consumer anymore since they will have hundreds of millions of consumers themselves?
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