Posted on 06/05/2013 11:08:46 AM PDT by whitedog57
US Treasury is considering letting China cut in front of other investors and buy Treasury debt direct from … Treasury. That is, bypass Primary Dealers. The relationship means the People’s Bank of China can buy United States debt using a different method from any other central bank.
(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.
Its not the first time Treasury has schmoozed China. In 2009, when Treasury officials found China was using special deals with primary dealers to conceal its U.S. debt purchases, the Treasury changed a rule to outlaw those deals, Reuters reported last June. But at the same time it relaxed a reporting requirement to make the Chinese more comfortable with the amended rule.
China, of course, is the number 2 owner of US government debt. I guess it pays to keep your number 2 customer happy!
The Fed, the biggest owner of US Treasury debt (not to mention Agency MBS) is continuing its prodigious purchases.
Here is the US Treasury and China Fixed Rate Sovereign curves since May 2nd. While the US yield curve has risen since May 2nd, the Chinese sovereign curve is unchanged (except on the short end of the curve).
Say, I wonder if China will get permission from The Administration to build Chinese ghost cities in America? Or toppling apartment buildings?
And here is my favorite video of Chinese “nail houses.”
?????
Ok except for the “by Obama” part. The basic issue is that the politicians (including Obama) get the money from China. They give out the money to buy reelection. The people who get the money spend it on Chinese-made crap. And that’s about it.
Overturn the Caesar. I am so sick of this dysfunctional system the liberals have turned our country into.
Bwahahahaha!!! Breaking in line. What line? Bwahahahaha!!!!
I thought the Chinese quit lending us money years ago...
The financial oligarchy giving up their commission reflects a level of their desperation to push Treasuries.
nooo
they don’t make any commissions selling these things.
But wasn’t a favored Wall Street company selling them to China to make a huge profit? Sounds like this company (Goldman Sachs ??) is being punished for some reason.
Ask yourself, what other central bank wants these bonds? The Chinese are buying bonds that will either:
1) Just be rolled over for another bond down the road
2) Be paid off, if at all, in inflated dollars
3) Might not be paid off at 100 cents on the dollar.
Tell me again why the Chinese want them so badly.
Example: J P Morgan makes about $1 billion per year through various aspects of their Treasury Services business, according to their annual report.
It’s just icing on the cake to the financial oligarchy, though, because of the other aspects of their monopoly on making the arrangements for sovereign debt worldwide.
That monopoly dovetails nicely with their capital markets monopoly; we can see the sheer power of their influence in how Jamie Dimon handled his Congressional testimony in the past few years. Analyze it frame by frame, word by word, comparing the Congressmen’s expressions and body language with that of Mr. Dimon.
Governments must always come to international banking hat in hand, and international banking has had it’s fingers throughout the upper echelons of various societal institutions - including government - for more than a century.
It’s no accident, for example, that globalist folks mostly come out of the top Ivy League universities.
that “treasury services” line item has NOTHING to do with primary market sales of US Treasury bonds. I agree with you about excessive Wall Street power. It starts with deposit insurance, but letting the Chinese buy their bonds directly does not hurt JPM or any other primary dealer. We should simply be happy they still buy them at all, regardless of the mechanism.
barking up the wrong tree. There is no profit in selling these things.
And yet when Republicans try to reform Medicare or Social Security everyone on FR loses control of their bowels.
I’m fine w/ reforming most anything USG does, as long as it is towards USConstitution. SS and Medicare; although I understand good people are dependent upon them, should never have happened! They are part of the supposed justification USG is now required to borrow money or implement 0-care (kinds) of legislation, to _save_ the agencies which shouldn’t exist. All illegal and immoral in our fathers eyes.
No surprise....Obama is a huge Free Trade Communist....so he will bend America over to the Communist Chinese. Ni Hao Chairman Mao
You’re right, I’m wrong, that’s corporate treasury services.
Primary dealers do, however, buy Treasury debt direct and then presumably resell at a profit, though, that appears to be waning, as it looks like there are numerous central banks and other institutions that have been bidding direct for a while.
What I’m reading is that the primary dealers are losing their advantage of knowing what the demand will be coming up to an auction (since direct bidders don’t have to inform anyone of their future bidding intentions).
They buy and sell these securities as well, and they can be used as collateral, so T’s are a part of their overall business and profit picture, though apparently trading volumes have declined.
It’s hard to get the globalist banker’s perspective - the bonds are traded like any other asset and the market price goes up and down, as you know. So... as the major banks of the world, in the aggregate, own trillions worth of these... and if there is fear in the world, the market price of those T’s goes up, the market price of some other assets will go down - it’s not what most people typically think about !
Of course, major banks are quite leveraged, i.e., using OPM, so the return on equity they produce on their overall operations is good. JPM looks to be over 10%.
Interestingly, as a publicly-held corporation... risks that JPM bears are really risks directly borne by their shareholders (representing a broad cross section of the public), and indirectly borne, arguably, by the whole general public. Those who have the highest returns from JPMs efforts, on the other hand, would probably be their private clients.
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