Latest Treasuries update: More of the same

[c1ue]

The July numbers for Foreign Holders of US Treasuries is out, and no surprises.

Summary:

Net change in foreign ownership of US Treasuries: $56.6B (vs. average funding needs of approx. $150B)

Major buyers:
Japan - $17.4B, the UK - $12.1B, Canada - $7.3B, Russia - $7.5B, Romania (!) - $4.6B (a near doubling of their Treasury holdings. Wonder if a GS alum is now their Treasury secretary too?)

China net change: +$3B

2010 year to date numbers:
China - (-)$48.1B, Japan $55.3B, the UK $194B, Canada $48.5B, Thailand $21.1B, Egypt $11.4B, Singapore $13.4B, Caribbean Banking Centers $22.2B, Switzerland $15.7B, Luxembourg $10.5B.

This is a total of $344B vs. total foreign purchases of $374B

	Jul	Jun		May	Apr	Mar	Feb	Jan	Dec		Nov
Country	2010	2010		2010	2010	2010	2010	2010	2009		2009
			Change vs. June 2010							2010 change
China, Mainland	846.7	843.7	3	867.7	900.2	895.2	877.5	889	894.8	-48.1	929
Japan	821	803.6	17.4	786.7	795.5	784.9	768.5	765.4	765.7	55.3	754.3
United Kingdom 2/	374.3	362.2	12.1	350	321.2	279	233.5	208.3	180.3	194	155.5
Oil Exporters 3/	223.8	223	0.8	235.1	239.3	229.5	218.8	218.4	207.4	16.4	208.3
Brazil	162.2	158.4	3.8	161.4	164.3	164.4	170.8	169.1	169.3	-7.1	165.8
Carib Bnkng Ctrs 4/	150.7	165.2	-14.5	165.5	153.4	148.4	144.6	143.8	128.5	22.2	123.5
Hong Kong	135.2	141	-5.8	145.7	151.8	150.9	152.4	146.6	148.7	-13.5	142.1
Russia	130.9	123.4	7.5	126.8	113.1	120.1	120.2	124.2	141.8	-10.9	151.4
Taiwan	130.5	128.6	1.9	126.2	126.9	124.8	121.4	119.6	116.5	14	115.4
Switzerland	105.4	100.1	5.3	84.4	80	78.8	81.8	84.4	89.7	15.7	89.6
Canada	101.3	94	7.3	85	82.1	77	67.1	54.7	52.8	48.5	50.7
Luxembourg	98.9	97.5	1.4	76.3	77.6	84.6	77.9	79.1	88.4	10.5	80.2
Germany	56.4	53.5	2.9	55.4	54.3	53.7	49.9	49	47.8	8.6	48.7
Thailand	54.4	49.3	5.1	46.3	46.9	43.5	42.1	33.3	33.3	21.1	29.6
Singapore	52.6	50.5	2.1	40.6	42.4	45.5	42.6	41.3	39.2	13.4	37.5
Ireland	43.6	48.3	-4.7	48	45.7	43.3	38.7	39.2	43.6	0	43.1
India	39.4	36.4	3	29.3	31	32	31.6	32.7	32.5	6.9	34.5
Korea, South	39.3	38.7	0.6	37.8	38.7	40.1	39.8	39.7	40.3	-1	40.2
Mexico	33.3	33	0.3	34.1	33.1	36.1	33.9	34.4	36.8	-3.5	31.9
France	30.5	35.2	-4.7	36.4	38.8	38.7	32.5	35.9	30.5	0	40.4
Egypt	30.3	29.4	0.9	28	21.1	21.4	21.7	19.4	18.9	11.4	19.4
Turkey	26.5	25.5	1	27.6	27.9	28.7	27.3	27.5	28.1	-1.6	29.4
Poland	22.3	23.2	-0.9	23.4	24.6	23.4	22.6	22.3	22.9	-0.6	21.9
Italy	20.5	20.1	0.4	20.8	20.3	20.5	20.9	21.3	21.1	-0.6	21.6
Israel	17.9	18.4	-0.5	20.1	19.9	22	18.9	16.8	13.8	4.1	15.1
Norway	17	16.1	0.9	15.2	15	14.6	13.6	12.3	12.1	4.9	8.5
Colombia	16.9	17	-0.1	15.7	15.7	16.2	16	16	17.3	-0.4	17.2
Netherlands	16.8	17.3	-0.5	17.6	19.6	19.2	20.4	20.7	20.4	-3.6	21
Sweden	16.6	16.5	0.1	13.4	15.3	16.3	16	15.7	15.2	1.4	15.5
Belgium	16.6	17.2	-0.6	17.6	18.5	17.1	17	17.4	17.3	-0.7	17.4
Australia	15.3	14.5	0.8	14.1	17.9	14.4	14.4	15.4	16.3	-1	13.7
Philippines	14.7	14.3	0.4	14.4	15	14.6	12.5	11.3	11.7	3	11.7
Chile	13.3	12.2	1.1	12	12	11.9	12.3	12.5	12.4	0.9	12.1
Denmark	13.2	13	0.2	12.8	9.7	9.6	9.8	8.9	8.5	4.7	7.8
Malaysia	11.7	11.1	0.6	10.5	10.9	11	10.9	11	11.7	0	11.8
Romania	10.8	6.2	4.6	8.7	7.1	6.4	3.9	3.1	3.3	7.5	3.3
All Other	154.8	152	2.8	153	151.3	147.3	148.4	149	152.6	2.2	155.8
Grand Total	4065.8	4009.2	56.6	3963.6	3957.9	3885	3752.3	3708.8	3691.7	374.1	3675
Of which:
For. Official	2726.5	2696.7	29.8	2697.2	2721.6	2709.4	2677.1	2681.1	2706.3	20.2	2734.3
Treasury Bills	481.8	460.7	21.1	473.4	505	507.3	503.4	508.5	534.3	-52.5	586.6
T-Bonds & Notes	2244.7	2235.9	8.8	2223.8	2216.6	2202	2173.8	2172.6	2172	72.7	2147.7

[Starving Steve]

Re: Latest Treasuries update: More of the same

So does this mean that the U.S. is in good shape and can continue to find a long list of suckers for its bonds? Or is the list what the Federal Reserve wants me to see, i.e, did the Fed "paint the tape" by allowing buyers to sell immediately to the Fed? What is going on?

In other words, if the news is really so wonderful when it really should stink, what is it that I am not being shown? Why would the entire world flock to buy U.S. debt when interest rates are zero and inflation is accelerating in the US?

I think the tape is painted, but what do I know? Yes, not all U.S. sovereign debt is earning zero, but long-term sovereign debt is at record lows for interest. Why would any nation have confidence in the U.S. govn't when spending is out of control--- like in the trillions-of-dollars, the economy is dead, and inflation is accelerating? Explain this to me. ( I'll stay after class. )

[c1ue]

Re: Latest Treasuries update: More of the same

In other words, if the news is really so wonderful when it really should stink, what is it that I am not being shown? Why would the entire world flock to buy U.S. debt when interest rates are zero and inflation is accelerating in the US?

That's the point about the actual numbers.

The total Treasury purchases by foreigners this year is almost entirely from less than 12 nations.

Of those 12 - 1 is a tax haven EU member.

Of the UN security council, only the UK and the US itself is represented in the 'dirty dozen'.

It would seem quite obvious that the EU, Russia, China, Brazil, India, and so forth simply are no longer 'doing their share'.

[Fiat Currency]

Re: Latest Treasuries update: More of the same

Canada 101.3 94 7.3 85 82.1 77 67.1 54.7 52.8 48.5 50.7

Nice to see Marc Carney doing his GS duties and buying US Debt ... as Canada doubles its position. Wouldn't want the CAD$ to be worth more now would we. ZIRP be with you

[Starving Steve]

Re: Latest Treasuries update: More of the same

Speaking of Canada, I saw on Friday on Bloomberg the news flash that Canada's Finance Minister, Jim Flahrety (sp?), announced that Canada has a $50 billion dollar budget deficit for 2010.

As I re-call, Canada went out of its way to run a huge deficit to satisfy Bernanke; it was called, "Canada doing its part to prevent a worldwide down-turn through stimulus-spending." So, I am wondering, where this $50B went to? Into which pockets? Which bankers got the fat bonuses?

If one billion dollars of stimulus spending represents approximately one new skyscraper in an urban skyline, where are the 50 new skyscrapers in Canada? As usual, I'm lost, so I will stay after class to have this kind of upside-down economics explained to me. What did we get for the $50 billion in deficit-spending in Canada, and that is $50B in new deficit on top of all of the revenue generated from Canada's taxation???????????????????????????

I'm really getting fed-up with the econ-frauds in Ottawa and Washington. This economic insanity is a crime. Where did the new spending go? Who got rich?

[Fiat Currency]

Re: Latest Treasuries update: More of the same

... So, I am wondering, where this $50B went to? Into which pockets? Which bankers got the fat bonuses?

Well, just look above. Canada increased its holdings of US Debt by $50.6 Billion.

Unbelievable - when you think about it. That's why it never pays to hide the truth. Most people are too stupid to see reality anyways.

[Starving Steve]

Re: Latest Treasuries update: More of the same

Well, just look above. Canada increased its holdings of US Debt by $50.6 Billion.

Unbelievable - when you think about it. That's why it never pays to hide the truth. Most people are too stupid to see reality anyways.

I see, so Canada borrowed (or printed) $50-billion in stimulus-spending to buy U.S. Treasury debt that earns zero. This made Bernanke and Goldman Sachs Bank happy. And this is what they teach kids in school at Princeton University? So, with all this new debt paid-for by new debt, at sovereign debt auctions as in America, how do we get out of this debt mess? I mean: suppose the economy in America doesn't grow, but the debt keeps growing with each new debt auction? Then what? And suppose in Canada, the economy stalls too? Then we might end-up with an even deeper worldwide depression caused by growing debt--- paid-for by new debt, and confidence eroding with each new debt auction........... LOVELY!

Back to the snow-drift analogy on the Great Plains: We would press-down on the accelerator in order to spin the rear wheels faster, to let the car sink deeper into the hole, in order to try to somehow sink down to gravel and catch traction and drive-out of the snow-drift...... LAUGH! Great in theory, but it rarely worked.... Your speedometre would show 100 MPH, and you would go no-where and sink deeper. Then if the rear-wheel did get traction, the hole would be too deep to let the car drive-out--- which was the same problem as before, but compounded.

[Fiat Currency]

Re: Latest Treasuries update: More of the same

... suppose the economy in America doesn't grow, but the debt keeps growing with each new debt auction? Then what? And suppose in Canada, the economy stalls too? Then we might end-up with an even deeper worldwide depression caused by growing debt--- paid-for by new debt, and confidence eroding with each new debt auction........... LOVELY!

Currencies behaving badly: Why conventional practices can fail

The Bank of Canada hasn’t intervened in the currency market since 1998, even when the Canadian dollar reached past parity with the U.S. dollar in recent years. But Bank of Canada Governor Mark Carney acknowledged this week that Canada keeps currency intervention as a weapon in its monetary arsenal, under certain well-defined circumstances.

“Our intervention policy – which is shared with the government, it’s a joint decision – is there are two possible scenarios in which we would intervene: the first is a breakdown in the functioning of the market, a rare occurrence, the second is if persistent strength of the currency, relative to fundamentals, threatened seriously the economic outlook here in Canada,” Mr. Carney told The Globe and Mail’s editorial board Thursday.

Indeed, most countries would like a weaker currency, at least some of the time. That’s because a lower exchange rate allows countries to sell more of what they produce to the rest of the world, repatriating profits, productivity, and ultimately, wealth.

Some economists argue that Canada, whose export-oriented economy has suffered as the loonie flirted with parity against the U.S. dollar, could benefit from limited and strategic intervention.

The next phases of this mess, IMHO, moves into Currency Differentiation & Currency Wars next. Manipulation, Depreciation, Intervention, Unholy Alliances and possibly even a few devaluations along the way.

The drums are a beating ...

Back to the snow-drift analogy on the Great Plains: We would press-down on the accelerator in order to spin the rear wheels faster, to let the car sink deeper into the hole, in order to try to somehow sink down to gravel and catch traction and drive-out of the snow-drift...... LAUGH! Great in theory, but it rarely worked.... Your speedometre would show 100 MPH, and you would go no-where and sink deeper. Then if the rear-wheel did get traction, the hole would be too deep to let the car drive-out--- which was the same problem as before, but compounded.

Most people do not understand the power of compounding, especially as it pertains to debt.
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