China Needs U.S. Guarantees for Treasuries

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DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
China Needs U.S. Guarantees for Treasuries

Well folks, while we have been wondering about the insanity of the most recent stimulus package, or more accurately, the big heist, the markets and creditors have been acting in response - and it's getting scary.

Feb. 11 (Bloomberg) -- China should seek guarantees that
its $682 billion holdings of U.S. government debt won’t be
eroded by “reckless policies" said Yu Yongding, a former
adviser to the central bank.

The U.S. “should make the Chinese feel confident that the
value of the assets at least will not be eroded in a significant
way,” Yu, who now heads the World Economics and Politics
Institute at the Chinese Academy of Social Sciences, said in
response to e-mailed questions yesterday from Beijing. He
declined to elaborate on the assurances needed by China, the
biggest foreign holder of U.S. government debt.

“These comments are some sort of a threat but of course
China can never get such a guarantee,” said Thomas Harr, a
currency strategist at Standard Chartered Plc in Singapore. The
U.S. may assure China that it will clean up the financial system
and that it “won’t push for a weaker dollar but they can’t
promise not to increase the fiscal deficit,” he said.

U.S. government bonds returned 14 percent last year
including price gains and reinvested interest, the most since
rallying 18.5 percent in 1995, according to indexes compiled by
Merrill Lynch & Co. Concern that the flood of bonds would
overwhelm demand caused Treasuries to lose 3.08 percent in
January, the steepest drop in almost five years, Merrill data
show.

The full article may be found here 

There are a number of events that would quickly end our economy - one would be if foreign countries stop or greatly reduced the amount of new debt that are willing to extend.  If China decided to stop buying our bonds and funding our debt, we would sink within a few days.  It is an outrageous fiduciary failure for our government to lose it's financial sovereignty to foreign, perhaps unfriendly interests.  What will China demand, and will "we the people" ever know what back-room deals are being consummated?

Market Watch - Gold has jumped a staggering $31/ounce ($945/ounce) - and the day is just over over!

Now, there is no way gold can jump that much in value in such a short time - what we are seeing is the dollar dropping, at least by perception.  I think we will see a correction in the price of gold but the fact remains that rising gold is a good indication that the dollar may be dropping.  Is hyper inflation coming?

Is this the beginning of a ruinous wave that was started the instant they passed stimulus II (the greatest heist in history)?

Larry

 

 

 

cat233's picture
cat233
Status: Platinum Member (Offline)
Joined: Aug 20 2008
Posts: 575
Re: China Needs U.S. Guarantees for Treasuries

Excellent post Larry... Thank you!

bearing01's picture
bearing01
Status: Silver Member (Offline)
Joined: Sep 7 2008
Posts: 153
Re: China Needs U.S. Guarantees for Treasuries

 

I guess China doesn't want the Federal Reserve to just print money to pay the Chinese back.  If we borrow their money (their wealth) then we should be forced to pay back the same. 

Maybe the Chinese should lend the US money in the form of their Yuan.  The Fed can't print that.  Or, Lend us their gold or lend us Euro.  None of these can be printed.  If the USA doesn't agree to such terms then it's an admittance of planned default on debt.  By default, I mean the US gov't has no means or desire to earn back those dollars by generating wealth to repay the debt.  They plan to inflate it away by printing the money to pay it back.

I really hope the Europeans, Japanese and Saudi's take their money and instead of throwing it into the US bottomless pit they spend it to build their own infrastructures and stimulate their own economies.  They're better off without us.  It's time for them to force us to sober up.  Not provide more alcohol.

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