Another month of no net China Treasury buying...

[c1ue]

http://www.ustreas.gov/tic/mfh.txt

UK again punches above its weight - buying nearly half of the net $99.4B of foreign purchases.

China pares down holdings more than $9B.

2 months into Q4 2009 - $101B of net foreign purchases out of a projected $350B net Treasury issuance, with the UK responsible for about $30B.

France jumping in with a surprise over $10B Treasury purchase.

	Nov	Oct	Sep	Aug	Jul	Jun	May
Country	2009	2009	2009	2009	2009	2009	2009
China, Mainland	789.6	798.9	798.9	797.1	800.5	776.4	801.5
Japan	757.3	745.9	751	730.6	723.9	711.2	677.2
United Kingdom 2/	277.5	230.1	248.8	226.4	219.4	213.4	163.7
Oil Exporters 3/	187.7	188.4	185.3	189.2	189.3	191.2	192.9
Carib Bnkng Ctrs 4/	179.8	170.6	173	181.3	194.5	191	195.2
Brazil	157.1	156.2	144.9	137.3	138.1	139.8	127.1
Hong Kong	146.2	142	132.2	124.7	115.3	99.8	93.2
Russia	128.1	122.5	121.8	121.6	118	119.9	124.5
France	47.5	36.2	32	35	24.6	26	25.9
Canada	46.6	40.3	37.7	25.7	19.6	18.4	11
All Other	142.3	146.4	146.7	148.5	149.7	147.5	148.6
Grand Total	3597.5	3498.1	3497.4	3453.1	3427.5	3382.1	3292.6
Of which:
For. Official	2404.6	2384.8	2369.4	2360	2346.1	2295.7	2287.5
Treasury Bills	586.6	598	597.7	607.3	606.6	571.9	586.2
T-Bonds & Notes	1818	1786.8	1771.7	1752.7	1739.5	1723.8	1701.3

[Fiat Currency]

Re: Another month of no net China Treasury buying...

UK again punches above its weight - buying nearly half of the net $99.4B of foreign purchases.

Any thoughts as to why that is? It looks like a 70% increase in the last 6 months or so. :confused:

[c1ue]

Re: Another month of no net China Treasury buying...

Any thoughts as to why that is? It looks like a 70% increase in the last 6 months or so. :confused:

Clearly the partnership between the US and the UK extends to beyond Iraq.

Mutually Assured Manipulation? :eek:

[FrankL]

Re: Another month of no net China Treasury buying...

Any thoughts as to why that is? It looks like a 70% increase in the last 6 months or so. :confused:

on Zerohedge it's been speculated that China does covert buying through UK, Hong Kong and other countries, and recently as well as through 'direct bids'.

from what I understand they claim that they need to buy treasuries to keep the Dollar peg, and/or that they prefer to invest the dollar-denominated trade deficit in US treasuries, or at least what is left of it after buying as many natural resources and foreign companies with strategic assets/positions.

If they don't need to recycle USD to keep the peg, would there be other important considerations to do so? Maybe using it as a leverage to the US in global politics?

[c1ue]

Re: Another month of no net China Treasury buying...

on Zerohedge it's been speculated that China does covert buying through UK, Hong Kong and other countries, and recently as well as through 'direct bids'.

I've heard this before, but what I've not heard is WHY China would covertly buy Treasuries.

At the end of the day, China's purchasing of Treasuries represents a direct hand into US financial affairs.

What possible benefit would there be to surreptitiously buying US Treasuries - or in other words supporting a system China is positioning with/against - and thus forgoing any possible benefits adhering to being the majority shareholder?

Or put another way: is it more likely that China is covertly buying US Treasuries - even as it diversifies into other currencies, gold, companies, etc - or is it more likely that some form of glad handing is going on?

Glad handing either via the US/UK supporting each other's massive rise in government debt/monetary easing, or via the Fed or some other US entity disguising operations supporting US paper?

On the former - one excuse is to keep China's currency cheap vs. the dollar. But even assuming all of the UK's purchases are actually China, the amounts in question are too small to 'sterilize' all the US dollars still pouring into China.

The US/China trade deficit is actually growing; the Treasury purchases logically would need to grow as well - and they are not.

[FrankL]

Re: Another month of no net China Treasury buying...

I've heard this before, but what I've not heard is WHY China would covertly buy Treasuries.

At the end of the day, China's purchasing of Treasuries represents a direct hand into US financial affairs.

What possible benefit would there be to surreptitiously buying US Treasuries - or in other words supporting a system China is positioning with/against - and thus forgoing any possible benefits adhering to being the majority shareholder?

Or put another way: is it more likely that China is covertly buying US Treasuries - even as it diversifies into other currencies, gold, companies, etc - or is it more likely that some form of glad handing is going on?

Glad handing either via the US/UK supporting each other's massive rise in government debt/monetary easing, or via the Fed or some other US entity disguising operations supporting US paper?

On the former - one excuse is to keep China's currency cheap vs. the dollar. But even assuming all of the UK's purchases are actually China, the amounts in question are too small to 'sterilize' all the US dollars still pouring into China.

The US/China trade deficit is actually growing; the Treasury purchases logically would need to grow as well - and they are not.

So what are the reasons for covert buying of treasuries? Without any knowledge on this subject, I came up with the following if you consider that covert buying would logically first be identified by the US government by just asking foreign central banks if they were responsible for the TIC numbers reported:
- putting pressure on US government to improve their fiscal deficit by (trying to) giving the impression to other countries that they lost faith in current US fiscal policies. Lots of eyes are focussed on China worldwide, as main financier of US debt. Counter-argument question to this: Would the US government lose face to point out that China is covertly buying, implicitly agreeing that there's a reason why they're not happy about current fiscal policy?
- putting presure on the US government by at least temporarily giving the impression that they'd cut off financing of debt (until the US government figured out they were doing covert buying of treasuries), as leverage in who knows what kind of international disputes. Counter-argument question to this: would it realisticly take much time for the US goverment to figure out that covert buying is taking place? Isn't that a matter of tracing money stream which comes down to a time allotment of X hours/days/weeks?

Same reason they laughed at Geithner, or are openly skeptical about US fiscal policies.

And what about the whole Google affair? Might that coincide with the US calling Chinese bluff on not financing their deficit, and creating a position of leverage? Stealing of intellectual property through the internet or by chinese interns, students and workforce has been widely reported for the past 10 years at least; the timing of Google's declaration is rather remarkable in that aspect.

[c1ue]

Re: Another month of no net China Treasury buying...

So what are the reasons for covert buying of treasuries? Without any knowledge on this subject, I came up with the following if you consider that covert buying would logically first be identified by the US government by just asking foreign central banks if they were responsible for the TIC numbers reported:
- putting pressure on US government to improve their fiscal deficit by (trying to) giving the impression to other countries that they lost faith in current US fiscal policies. Lots of eyes are focussed on China worldwide, as main financier of US debt. Counter-argument question to this: Would the US government lose face to point out that China is covertly buying, implicitly agreeing that there's a reason why they're not happy about current fiscal policy?

This is an original idea, but I fail to see how persuading other countries that China is no longer buying Treasuries is at all relevant. It is not the other countries that are deficit spending the dollar to oblivion.

Secondly covert buying of Treasuries vs. actual not buying are fundamentally different; the covert buying still nets the US Treasury (and hence the US government) its foreign purchasing power. No actual pressure is then applied.

Not buying, on the other hand, really does mean something.

- putting presure on the US government by at least temporarily giving the impression that they'd cut off financing of debt (until the US government figured out they were doing covert buying of treasuries), as leverage in who knows what kind of international disputes. Counter-argument question to this: would it realisticly take much time for the US goverment to figure out that covert buying is taking place? Isn't that a matter of tracing money stream which comes down to a time allotment of X hours/days/weeks?

Same reason they laughed at Geithner, or are openly skeptical about US fiscal policies.

Again, if the goal is to put pressure on the US government, providing the foreign purchasing power it desires is hardly the path.

If you cut off your son's allowance but let his other parent replace it with the same money, is any lesson learned?

As for the government's ability to trace - the capability absolutely already exists. Most of these securities are basically electronic. Between that and the fact that coupon payments must go somewhere - and the US already has the monitoring capability in place to track money payments - it seems improbable that large scale covert buying can occur.

Occam's Razor in this case points towards the one entity that benefits from covert Treasury purchases: the US government.

And what about the whole Google affair? Might that coincide with the US calling Chinese bluff on not financing their deficit, and creating a position of leverage? Stealing of intellectual property through the internet or by chinese interns, students and workforce has been widely reported for the past 10 years at least; the timing of Google's declaration is rather remarkable in that aspect.

I think Google's threatening of the Chinese government is pure hyperbole.

China doesn't need Google; Baidu will happily take up the slack as it already is the #1 search leader anyway.

For that matter no one in the world needs Google. Were a magical virus appear that only destroyed Google's computers/software, nothing would significantly change.

And for the record Google's complaint is about hackers accessing the emails of human rights activists.

Nowhere do I see a complaint about the Chinese government being complicit in this though I agree it seems likely.

This Google/China thing is all about Google trying to show it can get by without playing the game dictated by a sovereign nation.

Time will show how valid this belief is - though my opinion is that Google is making a big mistake though one with little financial consequences.

China has invested enormous money and effort to Internet monitoring; forcing an outright conflict just means all that money and effort will get turned towards locking out Google as opposed to locking down the dissidents.

[Diarmuid]

Re: Another month of no net China Treasury buying...

I've heard this before, but what I've not heard is WHY China would covertly buy Treasuries.

At the end of the day, China's purchasing of Treasuries represents a direct hand into US financial affairs.

What possible benefit would there be to surreptitiously buying US Treasuries - or in other words supporting a system China is positioning with/against - and thus forgoing any possible benefits adhering to being the majority shareholder?

Or put another way: is it more likely that China is covertly buying US Treasuries - even as it diversifies into other currencies, gold, companies, etc - or is it more likely that some form of glad handing is going on?

Glad handing either via the US/UK supporting each other's massive rise in government debt/monetary easing, or via the Fed or some other US entity disguising operations supporting US paper?

On the former - one excuse is to keep China's currency cheap vs. the dollar. But even assuming all of the UK's purchases are actually China, the amounts in question are too small to 'sterilize' all the US dollars still pouring into China.

The US/China trade deficit is actually growing; the Treasury purchases logically would need to grow as well - and they are not.

Some wild speculation - I seem to remember some of the biggest counter parties to the AIG bailout were European banks and wondering why the US was bailing out large European Banks at the time, I also remember Grayson asking Bernanke where the 1/2 trillion went on the FED balance sheet, to which was answered over seas Central banks but no specifics could or would? be given, and wondering at the time was this money going to large European Banks and possibly the FED was acting as a lifeline for them also, especially considering their exposure to property markets in Eastern Europe, of which very little write downs have occurred . I am quite sure there is an inter dependence that goes far beyond what is on the surface and this is just another ripple in the water of a vast under current. However maybe much of what I mentioned has nothing to do with the purchases just speculating out loud.

[touchring]

Re: Another month of no net China Treasury buying...

Time will show how valid this belief is - though my opinion is that Google is making a big mistake though one with little financial consequences.

China has invested enormous money and effort to Internet monitoring; forcing an outright conflict just means all that money and effort will get turned towards locking out Google as opposed to locking down the dissidents.

Have you considered the possibility of a trade and possibly even cyberwar conflict between the US and China within the next few years?

In such a case, Google will have a hard time in China even if they try as hard to satisfy the regime. Larry and Sergey are smart people and they might have already foreseen this happening.

The CCP is extremely paranoid, do you know they have withdrawn Avatar from the cinemas perhaps because some senior member of the CCP saw that movie, and felt that scenes of alien natives fighting against the human capitalist intruders may incite the Chinese masses?

[c1ue]

Re: Another month of no net China Treasury buying...

Have you considered the possibility of a trade and possibly even cyberwar conflict between the US and China within the next few years?

A trade war is possible - or more correctly a unilateral trade embargo on incoming Chinese goods in the name of US domestic protectionism.

I don't see any possibility of China cutting off the spigot from their end.

As for a cyberwar conflict - you would have to define what this means.

So far as I see, a bunch of hackers/Ministry of Public Security/whatever going after emails of activist/dissidents is hardly in the category of cyberwarfare - rather more in the line of internal security.

As for Avatar - while I have heard it was more for the purpose of freeing up theaters for a Chinese production - either way I fail to see how Avatar's restriction is anything but a corporate matter for Fox and James Cameron. Or are you saying that Avatar is indeed an avatar for US business?

[Slimprofits]

Re: Another month of no net China Treasury buying...

Ever heard of the "special relationship"?

Ever heard of Echelon?

The U.S. is the largest source of FDI to the British economy.

What are the countries that traditionally have the had the largest IMF quotas and voting power?

Folks, the list goes on and on.

The relationship has come along way since they sacked and burned Washington D.C.

[D-Mack]

Re: Another month of no net China Treasury buying...

as Martenson said in 09

As an aside, one reason that I suspect the Federal Reserve is reticent to be audited concerns the UK purchases of Treasury bonds. One might wonder how an island nation that is mired in a deep and profound fiscal crisis finds itself in a position to buy so many Treasury bonds. Where did the money come from?
While part of the answer lies with the fact that the UK banking center often operates as a pass-through for other entities (like Saudi Arabia, for example), it could also be operating on the behalf of other official parties. Like the Federal Reserve, perhaps? While that is rank speculation, it would certainly be nice to have a simple audit put such nagging worries completely to rest.
http://www.chrismartenson.com/blog/d...btedness/26572

[ThePythonicCow]

Re: Another month of no net China Treasury buying...

I don't see any possibility of China cutting off the spigot from their end.

I could see them cutting off the money spigot from their end. We could buy less; they could lend less.

[don]

Re: Another month of no net China Treasury buying...

No answers here...nice chart

January 23, 2010
Off the Charts
Debt Burden Now Rests More on U.S. Shoulders

By FLOYD NORRIS

THE United States government borrowed more money than ever before in 2009, but its largest lender — China — sharply reduced the amount it was willing to lend.

The United States Treasury estimated this week that during the first 11 months of last year China raised its holdings of Treasury securities by just $62 billion. That was less than 5 percent of the money the Treasury had to raise.

That raised its holdings to $790 billion, leaving it the largest foreign holder of Treasury securities — Japan is second at $757 billion and Britain a distant third at $278 billion. But China’s holdings at the end of November were lower than they were at the end of July.

Not since 2001, when China was still a relatively minor investor in Treasury securities, had the country shown a decline in holdings over a six-month period.

During the full year of 2009, the volume of outstanding Treasury securities owned by the public — as opposed to United States government agencies like the Federal Reserve or the Social Security Administration — rose by $1.4 trillion, a 23 percent gain, to $7.8 trillion. In dollar terms, that was the largest annual increase ever, but as a percentage increase it slightly trailed 2008.

With this week’s release of the November estimate of foreign holdings, China is on course to lend just 4.6 percent of the money the government raised during the year. That compared with 20.2 percent in 2008 and a peak of 47.4 percent in 2006.

The falloff in Chinese purchases did not necessarily cost the American government a lot of money, as interest rates did not soar during the year. Short-term rates actually fell. The yield on 10-year Treasuries rose to 3.6 percent, from 2.2 percent, a substantial increase but still a low rate by historical standards.

Some economists have feared what could happen if China ever decided to unload the Treasury securities it owns, but the reduction of Chinese purchases probably did not result from any decision to do that, said Robert Barbera, the chief economist of ITG, an investment advisory firm.

Instead, he said, China’s main determination now was to prevent the rise of its currency against the dollar, and the country needed to buy fewer dollar-denominated securities to accomplish that goal, as the Chinese trade surplus with the United States declined.

The figures on foreign holdings estimated by the Treasury Department include both official and private holdings. In China, that is mostly official, but in some other countries many of the holdings are owned by investors or money managers who could be managing portfolios on behalf of people from yet another country. It is possible that some Chinese purchases appear to be from other countries.

Other countries took up part of the slack left by the reduction in China’s purchases. Hong Kong, which is counted separately, took up more than 5 percent of the increased borrowing by the American government, and Japan provided nearly 10 percent.

But total foreign purchases in the 11 months financed only 39 percent of the borrowing, leaving American investors to purchase the remainder. As recently as 2007, foreigners were buying more Treasuries than the government was issuing, enabling Americans to reduce their Treasury holdings even as the government borrowed hundreds of billions of dollars.

http://www.nytimes.com/2010/01/23/bu...%20More&st=cse

[MulaMan]

Re: Another month of no net China Treasury buying...

btw, China is a communist country.

btw, a trade war would crush China and help the America middle class with new jobs.

btw, if you are stupid enough to do business in China, remember that in a communist country you are owned by the...

...The People's Republic Of China

I hate China. Because I believe in Freedom. Even more than I hate the fascist wing of the Republican party.

Extreme left and extreme right are equally dangerous to freedom.

The American GOP fascists and The People's Republic Of China have to goal of destroying freedom in common and hence the joint partnership.