Oh, the Hugh Manatee Dugong!
Posted on 01/16/2018 3:32:14 PM PST by blam
I think it’s the opposite.
They own so much of our low yield paper that if rates go up they will take a bath. Remember that bonds trade based on the underlying plus return.
Exactly...
“They own so much of our low yield paper that if rates go up they will take a bath. Remember that bonds trade based on the underlying plus return.”
Absolutely correct. Add to that China manipulated currencies via US Treasury purchases. They can’t afford that now as they are deficit spending and borrowing as well. This is a last ditch attempt to do something about the USD declining in value vs. the Yuan (for a change).
Maybe its related to exploding US government debt, related to the recent tax cuts. Then again, the PRC has its own debt problems, as I understand it.
Oh, the Hugh Manatee Dugong!
I suspect that most of the big bankers and politicians are out of their minds. The national debts, state debts and other debts are crazy.
China is a sh*thole.
They own so much of our low yield paper that if rates go up they will take a bath. Remember that bonds trade based on the underlying plus return.
Yes, the value of the bonds/treasuries held by them will decrease if rates increase. If they downgrade our bonds/treasuries, the interest rate purchasers will require to purchase them will potentially increase, thereby potentially decreasing the value of their current holdings. If they were trying to manipulate the market to protect their current holdings wouldn't they upgrade them?
Go back and look at what they said the last time we almost had a shutdown. They actually do get worked up over the thought of bonds not being paid in a shutdown.
Fedzilla does not shut down. Just a few bits designed to scare and/or PO John Q Public. The rest is declared essential and keeps on running. Since the Treasury takes in enough money monthly to cover out debt obligation, the US won’t default.
This is the ChiComs trying to aid and abet the uniparty. They can all go to Hades.
Ok, I’ll do that...
“China is NOT our banker, as they currently hold 1.2 trillion out of 20 trillion owed.”
Correction, 1.2 out of 30 total outstanding.
China must have a few months worth of dollars, just to clear transactions at their ports, as they are critically dependent on energy and raw materials imports. That means that half of their Treasury holdings are effectively non-discretionary on their part.
China could disrupt US Treasury markets in the short term with a big sudden sale, but the Federal Reserve could just step in with a big sudden buy. The Fed already holds twice what China does, and they can just print dollars when they need to.
If China were to try to use such overt economic policy as weapons, America has much larger, and much more damaging, potential policies with which we could retaliate. China is much more dependent on exporting to the US, than we are on them. In net, China runs a trade deficit with the rest of the world, outside of the USA.
I think that this credit downgrade announcement itself (from China’s inconsequential “me too” attempt at a credit rating agency) is itself a sign of China struggling to find some leverage to respond to tightening of the economic screws, which the US is beginning to apply, to make China capitulate on North Korea’s nuclear program. The US has started to show them who is the boss, economically, and they are finding out that the US really is the boss, if we choose to be.
I believe while we pump 10 billion for a period, the Chinese do about 500 billion of QE for themselves. China is full of sht
Yes, not sure how they are going to keep their Yuan pegged to the dollar for favorable exports by dumping treasuries.
The Constitution gives the power to appropriate money to the people’s House of Representatives. The House controls the power of the purse and not one dime can be spent by any president without authorization from the House. The House of Representatives has been controlled by the Republican party since January of 2011. During that time the Hosue has not cut agencies, headcount, or failed programs. They have not required accountability from the executive branch. House Republicans no longer even make a pretense about fiscal discipline much less ending deficit spending. Recently they’ve been making noises about reinstating earmarks. The blame for deficit spending during the last 6 years of the Obama administration, and the first year of the Trump administration lies 100% on the Republican party which has the Constitutional power, not to mention responsibility, to bring spending under control. They have failed miserably.
Look at the budget process with Republican control of the House and Senate as well as the White House. The current fiscal year began October 1, 2017. Over 3 1/2 months later there has not been a budget passed for the current year and there is the potential for a government shutdown unless another continuing resolution that perpetuates the waste and corruption is passed. It seems the Republicans have no plan or capability of using their majority in the House and Senate to pass a budget of any kind, much less a balanced budget.
Blame Obama, blame the Democrats. However the Republicans are worse when it comes to spending. Remember George W. Bush inherited a balanced budget from Bill Clinton in 2001 and then proceeded to double the national debt from $5 trillion to $10 trillion. The debt doubled again under Obama from $10 to $20 trillion but during 6 of the 8 Obama years the GOP controlled the House of Representatives which must approve all spending. In fact for the first 6 years of the Bush administration, Republicans controlled the House and the power of the purse. During that time, while the House was under the leadership of the pedophile Dennis Hastert, the deficit ballooned thanks to out of control earmarks and the unwillingness of Congress and the President wars in Afghanistan and Iraq which exploded the deficit, cost the lives and limbs of thousands of US soldiers, and did nothing to improve the security of the nation. Not to mention the expansion of spending for entitlement social programs caused by the failure of the Republican administration of George W. Bush to secure the border. Declining tax receipts resulting from the offshoring of US manufacturing and lower of tariffs due to Bush’s globalist “free trade” policies also contributed to the exploding deficits.
For years I bought the line that Democrats drive deficit spending and Republicans are fiscally responsible. The reality of the last 18 years has been an unprecedented explosion of the accumulated national debt while the House of Representatives has been primarily under Republican control. It is impossible to correct the problem without assigning and demanding accountability. Continuing to blame Obama and the Democrats, does not assign accountability to those responsible.
Point the finger at Speaker Ryan.
Meanwhile China upgraded Haiti’s credit rating to AAA commenting on the renaissance in shithole economies but
declined investing in any of their debt.
Meanwhile China upgraded Haiti’s credit rating to AAA commenting on the renaissance in shithole economies but
declined investing in any of their debt.
During the Campaign Trump discussed this very Chinese Currency Manipulation scheme
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