Skip to comments.Exclusive: U.S. lets China bypass Wall Street for Treasury orders
Posted on 05/21/2012 1:24:27 PM PDT by PieterCasparzen
(Reuters) - China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters.
The relationship means the People's Bank of China buys U.S. debt using a different method than any other central bank in the world.
The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.
China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.
(Excerpt) Read more at reuters.com ...
U.S. politicians, as well as European, still refuse to admit to themselves that their insanely high borrowing against future taxes will not end in the ugliest of calamities.
They keep telling themselves that this is a "short-term" problem, that tax revenues will pick up.
The Fed "twists" to allow Treasury to issue more long-term debt; Treasury hopes things will get better before the long-terms come due. Twist was nothing more than that.
Where are the conservatives ?
But seriously folks. This administration has back-doored every market there is. It has demonstrated as little regard for market economics as it has for the US Constitution.
This sounds like a way for Obama to hide vast purchases of US debt by the Chinese and a way for the Chinese to effectively buy the US government without headlines.
I don’t think so. China has increased their holdings of U.S. debt very little while Obama was running up $5 trillion in deficits. It’s not the Chinese funding our $16 trillion in debt. I personally think it is the Fed.
The US government is a whore, a high priced $1.17 Trillion whore, but a whore all the same. The only problem is, it’s us that’s getting screwed.
Possibly, but do we even believe the aggregate information on US sovereign debt as reported by this government? I think the Regime would hide or distort financial reports in a minute if it was to their advantage.
“Where are the Conservatives?”
I think they are slowly becoming a dying breed. Even guys that claim to be conservatives i.e. Romney do some of the most progressive things such as Romneycare and set up abortion clinics everywhere and allow gays marriage rights.
But he is against all that now so its all good I guess.
A Chinese company bought the AMC movie theater chain today.
I don’t want to get your conspiracy antenna in an uproar, though.
IMHO, it’s about keeping them happy at this point. They avoid paying any markup by primary dealers, plus the idea that their purchases are less known. It doesn’t cost the cash-starved Treasury anything to speak of to provide the service.
The operation twist which replaced short term with long term borrowings, IMHO, also shows an underlying need to keep feeding the starving Congress beast cash in exchange for IOU’s that are becoming increasingly difficult to sell.
The primary dealers make a nice chunk of change reselling Treasury debt.
This deal cuts them out since China can buy direct as they do.
(See zerohedge for a quick summary on that).
I’ll reiterate my IMHO from other posts.
IMHO, big finance (primary dealers, etc.) think that they control American politicians as they support both sides and support the current party in power and they hold such immense financial influence.
IMHO, in the end, politicians will cut big finance loose, i.e., sell them down the river when things get messy.
Big finance may be casino owners, but government, pathetic as they are, ultimately governs the casino. Just ask Rick Blaine.
Where are the conservatives ?
They got suckered in by GATT, NAFTA, and the joys of the WTO global free trade where American goes into debt to buy everyone’s stuff as long as we can borrow the debt in dollars. Along the way, after strip mining our country and selling it to others to make more profit more quickly, we now reach the next phase where the producers and net savers start picking over our bones to see if there is anything remaining that they want before they cut off the money spigot.
For some reason, many conservatives and global free trade types thought this was the best idea in the world until just recently as the inevitable detrimental outcome to America by maintaining this system can no longer be debated. At least the Wall St. financial types cleaned house before they crashed our economy. Maybe at some point we can reverse this mess, but probably only after we have hit rock bottom and the true believers in this system have nothing left to defend.
This is not DEBT. Since the US govt has no way to fund itself with the exception of taxes, that's exactly what this funding is: PROMISED TAXES, NOT DEBT!
Eventually, this tax bill is going to come due and we're suddenly going to find ourselves taxed up to our collective hairline as far as the eye can see.
And in President Reagan's own words, (Paraphrased :) ) A tax is the nearest thing to immortality that any of us is ever likely to see.
The butchers bill is coming, but please, let's stop playing the lib/govt euphemism game and call a spade a spade: Debt = Tax
Great. AMC movie theaters will now only show “ reeducation” or Kung Fu movies. I don’t know which are worse.
It's amazing that I've had to debate others even on this site about “free trade” with China. We need to restrict the importing of china products (numeric quotas) and/or replace the income tax with high tariffs on imported products. America is being deindustrialized at a tremendous pace . the U.S. is losing the ability to manufacture even basic products , much less the high tech products that are necessary for the U.S. to prosper or even survive.At least replace property taxes with very high tariffs on china products and other imported products
The US government is a whore, a high priced $1.17 Trillion whore, but a whore all the same. The only problem is, its us thats getting screwed.
Where are the conservatives ?
Still looking for Constitutional Government.......