China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

Zero Hedge ^ | April 24, 2011 | Staff

[rawhide]

Hmmm, wonder how this would effect the markets tomorrow? If I were China’s top money man, I would definitely start ridding my country of US dollars as quick as possible. obamma and his RAT thugs are taking this country down into a sewer hole very fast. Hyperinflation is coming!

[wiggen]

if anyone thinks (no posts this thread yet) the Chinese would hurt themselves by selling treasuries and hurting market value the vast issuance has been short term paper,bills and notes as opposed to bonds. They can dump the longer end and simply let the shorter paper mature which would be a pretty painless way for them to lower exposure.

[dennisw]

Blame Obongo & Democrats suicidal debts and spending and Federal Reserves Quantitative Easing programs. These are so in your face to the ChiComs that we are trashing the US dollars they are holding. They know we have been playing them for suckers and they want out. They can easily dump US dollars and buy-—>>

gold
silver
copper
Canadian dollar bonds
Australian dollar bonds
Oil companies around the world
Natural resources companies around the world

[wiggen]

This would bring down the current administration which has no intent of reducing spending. The one mitigating factor normally would be other nations stepping in to buy higher yielding treasuries. I’m not sure who’s left out there to buy our paper.

[CynicalBear]

>> That sounds like an awful lot of work. Can't I just use my food stamps?<<

Sure! They will be worth exactly what a dollar will be.

[mlo]

"Chinese aren't stupid. If they want to do this they will do it in a way not to crash the dollar. They are tied to us as their biggest trading customer. You don't impoverish your biggest customer especially when your own economy is straining to hold its own in the face of rising commodity prices."

It's not so much about something the Chinese do to us as it is what we are doing to ourselves. The Chinese are just facing the reality of a devaluing dollar. They can't stop it, but they can make the best possible choice concerning their existing dollar holdings. If they get it out of dollars and into tangible assets they can try to protect what they have. Not a bad strategy for anyone.

[Sawdring]

Maybe this is the reason why all of those US Senators are on a trip to China for undisclosed reasons. An international begging trip.

[RockinRight]

That’ll work great till people lose their homes...

No home = no yard = no garden.

[fhayek]

Watch gold and oil prices tomorrow. That will tell you what the world is thinking.

[library user]

Watch gold and oil prices tomorrow.

And Silver too. Never forget about Silver!

[fabian]

and eliminate the illegal income tax!

[BenKenobi]

Selling Low and Buying High? This is awesome. Single-handedly destroying hundreds of billions of accumulated wealth that they’ll never see again.

All I know is that I’m still long on the USD. :D Dollar drops again, I can buy more USD.

[BenKenobi]

Yes, but now they take it in the shorts. Massively.

They are getting whipsawed, with few to any chances of recouping that money because they are buying into stuff that’s already high.

What happens with the long term deflationary effects bite and commodity prices drop again?

[Oldeconomybuyer]

"It's time to fundamentally change the way that we do business in Washington. To help build a new foundation for the 21st century, we need to reform our government so that it is more efficient, more transparent, and more creative. That will demand new thinking and a new sense of responsibility for every dollar that is spent."

-Barack Hussein Obama

[ChildOfThe60s]

I suspect that China can unload a lot fairly quickly by simply not rolling them over as they come due. I don’t know this for a fact, but it seems logical that they are holding short term stuff.

[CynicalBear]

>> That’ll work great till people lose their homes...<<

That’s why I sold my home and live in my motor coach and live on land paid for. People need to downsize if they can. This coming time is not going to be for the light hearted.

Vegetables can be grown with hydroponics also which I am doing on a small scale in case I need to know how. Very little space is needed.

[Shady]

So will we see 7500 on the Dow tomorrow?

[Magic Fingers]

“That’ll work great till people lose their homes...
No home = no yard = no garden.”

Which is already the case for the millions who live in apartments, or homes where raising chickens in the back yard is prohibited, or the back yard is the size of a postage stamp.

[unique]

Who would be on the buying end? That’s a lot of money.

[RobertClark]

I suspect that China can unload a lot fairly quickly by simply not rolling them over as they come due. I don’t know this for a fact, but it seems logical that they are holding short term stuff.

Therein lies the problem. If they do not accept new debt in increasing amounts as payment for the maturing bonds, we have to 'pay the note'. Where in heaven's name are we going to get that much cash from? Printing it would collapse our currency into a Zimbabwe style hyperinflation.