Massive run up in UK holdings of US debt

[dcarrigg]

What's going on with the massive run-up in UK holdings of US debt? It has been ramping up very fast. Mish posted an article about China buying the debt through the UK, but I can't see why they would bother with that. It's too complicated and they don't have to. Canada's holdings have been ramping up even more quickly (although they're a smaller piece of the pie). Is there an Anglo borrowing circle going on here to write off the bad loans socialized through government reactions to the financial crisis?

Here's the article Mish posted (from NYT): http://www.nytimes.com/2011/01/22/bu...2&ref=business.

[BigBagel]

Re: Massive run up in UK holdings of US debt

"If China has been buying through money managers, it may be easier at some point for it to begin selling Treasuries through the British channel without others understanding where the selling pressure is coming from."

I think the above sentence from the article tells us why the Chinese would go through the bother of buying through indirect channels.

[c1ue]

Re: Massive run up in UK holdings of US debt

What's going on with the massive run-up in UK holdings of US debt? It has been ramping up very fast. Mish posted an article about China buying the debt through the UK, but I can't see why they would bother with that. It's too complicated and they don't have to. Canada's holdings have been ramping up even more quickly (although they're a smaller piece of the pie). Is there an Anglo borrowing circle going on here to write off the bad loans socialized through government reactions to the financial crisis?

This theory has been bruited about for a long time, but it is still completely unclear why China would bother.

China has no incentive to sell off all its US Treasuries; that pile is how China counterbalances US military power.

Furthermore what proof exists, is that China has been using its US Treasuries to create 'dollar neutral' regions for China trade.

My own view: the UK is simply a repository where US TBTF banks deposit their Fed carry trade purchases in order to keep up the appearance that foreigners are still buying US Treasuries. That, plus some 'buying down' of the pound (similar to Canadian 'buying down' of the CAD).

The Goldman minister is just a coincidence...not.