Posted on 01/07/2009 6:10:08 PM PST by Golddigger3
No story yet.
And this...
China Losing Taste for Debt From the U.S.
http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?ref=world
China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.
In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.
But now Beijing is seeking to pay for its own $600 billion stimulus — just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.
“All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.
China’s voracious demand for American bonds has helped keep interest rates low for borrowers ranging from the federal government to home buyers. Reduced Chinese enthusiasm for buying American bonds will reduce this dampening effect.
For now, of course, there seems to be no shortage of buyers for Treasury bonds and other debt instruments as investors flee global economic uncertainty for the stability of United States government debt. This is why Treasury yields have plummeted to record lows. (The more investors want notes and bonds, the lower the yield, and short-term rates are close to zero.) The long-term effects of China’s using its money to increase its people’s standard of living, and the United States’ becoming less dependent on one lender, could even be positive. But that rebalancing must happen gradually to not hurt the value of American bonds or of China’s huge holdings.
The first, little-noticed trend is that the monthly pace of foreign direct investment in China has fallen by more than a third since the summer. Multinationals are hoarding their cash and cutting back on construction of new factories.
The second trend is that the combination of a housing bust and a two-thirds fall in the Chinese stock market over the last year has led many overseas investors — and even some Chinese — to begin quietly to move money out of the country, despite stringent currency controls.
So much Chinese money has poured into Hong Kong, which has its own internationally convertible currency, that the territory announced Wednesday that it had issued a record $16.6 billion worth of extra currency last month to meet demand.
A third trend that may further slow the flow of dollars into China is the reduction of its huge trade surpluses. That would give China considerably less to spend abroad than the $50 billion a month that it poured into international financial markets — mainly American bond markets — during the first half of 2008.
China’s leadership is likely to avoid any complete halt to purchases of Treasuries for fear of appearing to be torpedoing American chances for an economic recovery at a vulnerable time, said Paul Tang, the chief economist at the Bank of East Asia here.
“This is a political decision,” he said. “This is not purely an investment decision.”
The sooner they stop buying worthless green stamps, the sooner the world can get off of fiat currencies and the sooner we can have a more rational world where people understand that there really is no free lunch, even if Obama is cooking.
And finally...
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_323157.html
ASIAN nations can work together to get through the global financial crisis ahead of the United States, but Japan and China must take the lead, a leading UN economics adviser said on Wednesday.
Increased consumption and investment within Asia could make up for lower demand from Western countries while spurring economic activity, he added.
Because consumer demand had fallen in the West, ‘we’ll have to rely on public spending,’ particularly on government services and infrastructure, all of which Asia needs ‘desperately,’ he said.
China, with its almost two trillion dollars in reserves and massive current account surplus, should focus on sustaining its internal growth while buying more from the region, he advised.
‘China’s main role should be to keep the Chinese economy growing and keep buying from the rest of the region,’ said Sachs.
‘It’s got to be the main demand centre for the region,’ he said,
If we don’t buy their crap, they won’t fund our debt. Simple as that.
China, you’ll drink it and like it... so you can keep your cheap sh$t good and cheap.
“Obamanation and the Rats in Congress can “nationalize” everyone’s 401k’s, IRAs, etc. like was done recently in Argentina”
That would cause such mass riots and chaos that there’s no way they could do it.
I bet there are hundreds of ships headed to this country at the moment,carrying more wal mart Chinese made junk!!
America’s number one export is T-Bills.
the chinese will not let their currency appreciate. Doing so would roll back 20 yrs of economic growth since the outcome of an appreciating currency is slower growth or inflation or both. hundreds of millions in china have tasted economic opportunity and they will not let it go. the communist party’s survival is contingent upon capitalism being successful and the only vehicle available is a cheap yuan to facilitate their exporting industries thus keeping millions employed and invested. the greenback will weaken up to a point however china will continue to buy up treasuries tus propping up the $ to maintain its BOT surplus continuous. The $ is the only game in town. The fed knows this the ECB knows this and the Chicoms know this crystal clear. The only upside in a depreciating $ is the debt that was issued when the $ was strong will be worth a hell of alot less since the debt is valued in nominal terms. This is one big house of cards if you ask me. Currency not attached to a store of value is a disaster waiting to happen IMHO.
And here
http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?_r=1&partner=rss&emc=rss
If we can make it to the "long run" it would be a gift...
If they want to stimulate home consumption and lower their savings rate, they are quite welcome - but doing so will reduce their trade surplus with us, at the same time.
If you want to transmit present values into the future, you use portfolio investment, real assets, or long dated claims that pay serious interest rates. And those *do* hold their real value, interest included.
If, on the other hand, one refuses to run any credit risks and holds huge deposits in a fiat currency, one is simply giving away the real income on that sum of capital to those who borrow and invest it, taking the risks. Anyone is free to do so, but it isn't going to be profitable for them, in the long run.
And no, that isn't any disaster waiting to happen.
Should be increase the US savings rate for entirely domestic reasons? Sure. Do we need to increase treasury rates to do so? Not at all - rates are already sky high on other credits, ones to businesses that actually add value. All the rate incentive any US saver could require, is already in current asset and bond prices, and to spare.
“That would cause such mass riots and chaos that there’s no way they could do it.” ///”Won’t happen.”
A year ago who would of thought it possible that a superlib worse than the hillary-beast, with a shady past and unclear nationality and with a middle name of “Hussein”, would be elected President of the United States?
Between that and the financial shambles of the nation I wouldn’t put it passed any of this a$$clowns to try and steal everyone’s savings “for the greater good.”
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