Skip to comments.After Dumping 30% Of Its Treasury Holdings In Half A Year, Russia Warns It Will Continue Selling
Posted on 06/18/2011 11:43:34 PM PDT by Nachum
Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys. The WSJ reports that "Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery, a top aide to President Dmitry Medvedev said Saturday. "The share of our portfolio in U.S. instruments has gone down and probably will go down further," said Arkady Dvorkovich, chief economic aide to the president, told Dow Jones in an interview on the sidelines of the St. Petersburg International Economic Forum." Well, with Russia out, at least we have China and Japan continuing to buy US debt.... Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds). Well, surely US households will step up to the plate. After all they all have so much "cash on the sidelines" courtesy of the RecoveryTM ©® that they can't wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return. Wait, what's that: according to the Fed, in Q1 US "households" sold $1.1 trillion annualized in Treasurys to the Fed? So, let's get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds,
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So . . .
Should the new currency issued by the ‘Untied States’ be called “ZEROES” or “BERNANKNOTES”?
Is that how I read it?
they are smart to sell while they can. don’t readers here wish they could completely decouple from the US Dollar personally?
China has cut their holdings too. QE2 ends and the inflation accelerates. We are so screwed.
Thank you, Russia and China, for not further enabling our addiction to debt. We’ll appreciate the tough love later.
True but it’s going to screw up Obama&Co. plan to socialise the country.
Foreign bond holders are afraid the US will default, so no matter what the interest rate return is there may be no willing buyers.
Of course on the other hand, I read China was only dumping long term US bonds and buying a lot more short term bonds, they almost have to. To continue the money-flow back to them from US consumers as the US is still the largest economy in the world and it will be a slow death by a trillion paper cuts (US dollars) as the US keeps printing (raising the debt ceiling).
gutless pigford repubs vote yes to fraud...
China is dong the same thing. But, The Bernank cannot let the US interest rates go up because the US govt already cannot afford the $1bn+/day interest cost of the $14 trillion national debt that Congress wants to / has to increase.
The US is too big to fail and its securities are toxic assets. China and Russia are net sellers of US debt.
My investments are mostly in overseas equities. I had a position in gold, silver copper and oil, but exited everything in commodities as silver went hyperbolic and QE came to an end last month. Now I am not sure what to do but stayed with the diversified international equities.
We left ourselves open and now our enemies that we borrowed from have us by the short hairs.
Is it so out of the realm of believability that they take advantage of the situation?
We broke Russia ,now iot’s payback time.
America wanted Hope and Change , we got the Change allright and China and Russia are about to shove it up our Azzes.
Zero is getting there.
The Socialist are coming after our IRA’s and 401K’s. Our government will force us to buy US Debt.
Even if we don't default, they have a currency exchange rate risk which if our dollar drops so will their investment.
‘The Socialist are coming after our IRAs and 401Ks. Our government will force us to buy US Debt.’
You know they will when they become desparate enough, but when will they reach that stage?