Today's Wall Street Examiner

[don]

"But the first thing to happen is China to dump its foreign assets. From this link we can learn that they hold $376 bln of Fannie and Freddie bonds. Those will go first, braking havoc in our mortgage market and forcing the Treasury to feed into that “unlimited” credit line GSEs are asking for."

from Andy Bebut's article, China may dump its US Treasury holdings, in today's Wall Street Examiner.

http://yellowroad.wallstreetexaminer...ings/#more-165

How much future planning for this China contingency is woven into the bailout bill? Congress can't plan ahead but B of A can.

[tree]

Re: Today's Wall Street Examiner

Is this dude writing on Wall Street Examiner a native English speaker? He doesn't write well.

[phirang]

Re: Today's Wall Street Examiner

*sigh*

China doesn't care about the assets: they do this to prop up the USD.

[jk]

Re: Today's Wall Street Examiner

*sigh*

China doesn't care about the assets: they do this to prop up the USD.

my guess is that they care about the assets, but not as much as they care about their export industries being able to provide a lot of employment. if the u.s. recession makes the consumer stop buying chinese goods, and an eu recession has the same effect for their european export market, the chinese will have a much diminished incentive to support the dollar. they will still have some incentive, but only to maintain their asset values. if those values are deteriorating on a fundamental basis, however,....[insert catastrophic scenario here].

[GRG55]

Re: Today's Wall Street Examiner

"But the first thing to happen is China to dump its foreign assets. From this link we can learn that they hold $376 bln of Fannie and Freddie bonds. Those will go first, braking havoc in our mortgage market and forcing the Treasury to feed into that “unlimited” credit line GSEs are asking for."

from Andy Bebut's article, China may dump its US Treasury holdings, in today's Wall Street Examiner.

http://yellowroad.wallstreetexaminer...ings/#more-165

How much future planning for this China contingency is woven into the bailout bill? Congress can't plan ahead but B of A can.

Must be a slow news day. More wasted ink on recycled newsprint (or bandwidth on the net...)

We've been listening to "China-is-going-to-dump-US-Treasuries-and-that-will-be-the-end-of-civilization-as-we-know-it" stories for years. How many more times does this have to be debunked?

Note the dates on this small sampling:

China threatens 'nuclear option' of dollar sales

By Ambrose Evans-Pritchard

Last Updated: 8:39pm BST 10/08/2007


The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation... [Article]





China to diversify foreign exchange reserves
(China Business Weekly)
Updated: 2004-05-08 09:12


China is looking to diversify its foreign exchange reserves out of US dollars, according to its top foreign exchange manager.
China's chief forex regulator, Guo Shuqing, said in a recent Financial Times interview the make-up of the country's US$440-billion forex cash pile was being altered to include more European and Asian bonds, given concerns over a weaker US dollar.

The mere thought of China offloading some of its vast US Treasury holdings is enough to send shivers down investors' spines, risking a further deterioration in the already-bloated US current account deficit and more dollar weakness... [Article]



China says it will not dump US Treasuries to retaliate
( 2003-11-23 09:28) (AFP)


China will not retaliate in a developing trade spat with the United States by dumping US Treasuries, a Chinese paper reports, citing the agency in charge of the country's ballooning forex reserves...
[Article]

Enough said?

[phirang]

Re: Today's Wall Street Examiner

my guess is that they care about the assets, but not as much as they care about their export industries being able to provide a lot of employment. if the u.s. recession makes the consumer stop buying chinese goods, and an eu recession has the same effect for their european export market, the chinese will have a much diminished incentive to support the dollar. they will still have some incentive, but only to maintain their asset values. if those values are deteriorating on a fundamental basis, however,....[insert catastrophic scenario here].

The Chinese are getting some great incentives for buying our trash: when Pauslon was in China this past spring, the Chinese demanded six-axis manufacturing tech in exchange for more bailouts.

The recent acquisition by Mubadala of GE isn't an accident, either: UAE will buy our junk in exchange for turbines and nuclear tech. I doubt the US would be so keen on this 2 years ago... let's see how truculent the media is the next time Dubai Ports goes for Long beach or something!

[don]

Re: Today's Wall Street Examiner

The point of my query to the readership was the off chance covering China Fanny and Freddy bond dumping was a consideration by our 'representatives' in Washington in the Big Bailout. I've been reading about China's threat to dump treasuries for years too. That's not the point.

And what's with that "braking havoc" anyways.

[EJ]

Re: Today's Wall Street Examiner

The point of my query to the readership was the off chance covering China Fanny and Freddy bond dumping was a consideration by our 'representatives' in Washington in the Big Bailout. I've been reading about China's threat to dump treasuries for years too. That's not the point.

And what's with that "braking havoc" anyways.

Just finished a new interview with Martin Mayer. We're doing it in two parts, will talk to him again Monday and publish later in the week. One key point related to this topic that he related that is worth noting.

The urgency in passing the Fannie and Freddie bailout asap is that $970B in agency debt is on foreign account at the Fed. It is there to allow US trade partners to hold cash earned in trade locally in local currency. (Deal goes back to the days of Arthur Burns.) If Asian and European central banks came to believe that the US was going to allow Fannie and Freddie and fail, they'd sell the bonds and US interest rates would rise. We'd have our first "Poom" due to repatriation of foreign holdings of US paper.

A few other points: We are in the incipient stages of a major global inflation (agrees with our position). Difficult to manage because the US is a net debtor, thus a Volcker cure is impossible (agrees with our position). He has little faith that the Bernanke Fed can strike the delicate policy balance between stimulating demand with dollar depreciation and managing the resulting inflation.

[merry]

Re: Today's Wall Street Examiner

Difficult to manage because the US is a net debtor, thus a Volcker cure is impossible (agrees with our position)

I just want to make sure this isn't a typo. Thanks.

[don]

Re: Today's Wall Street Examiner

Thank you EJ. Very informative... and the wheels begin to turn.

[*T*]

Re: Today's Wall Street Examiner

If you actually read the article, he makes the argument that as the slowdown bites in the east, reduced dollar inflows will slow recycling, and China's buying of treasuries will slow/stop. This will blow out rates at 10-30Y where China is the daddy, maybe inducing them to reverse their accumulation. I think this is a plausible enough argument to merit discussion or at least a reasoned refutation.

[edit: I am referring to the comparisons with the regular 'China to dump treasuries' headlines]