« Temptations Torment US Leaders And Regulators | Main | OECD Predicts US Recession...Well, Duh! »




David Powell
Wednesday, September 05, 2007

China could have started to dump US Treasuries, says David Powell, currency analyst at IDEAglobal.

He says the latest report from the Federal Reserve shows central banks' holdings of US Treasuries fell by $7bn in the week to August 30, after a drop of $25.2bn in the previous week.

「While we cannot say with any degree of certainty which central bank is making a marked shift out of US Treasuries, the first suspect is China,」 he says.

「The country's new sovereign wealth fund . . . will officially start operations later this year, but has already been busy laying the groundwork.」

He says China's Ministry of Finance issued $79bn of bonds last week, its biggest bond sale, to begin funding the sovereign wealth fund.

「The finance ministry said the proceeds would be used to buy from the People's Bank of China some of its $1,330bn of FX reserves for the China Investment Corporation, which is expected ultimately to have assets of about $300bn.

「The Chinese government had also made some high-profile purchases earlier in the year such as the $3bn investment in Blackstone. This has all been in preparation for a move out of US Treasuries with the goal of producing higher returns.

「We won't know for sure who was behind the large shifts out of Treasuries until the August TICS data is released on November 16. To be forewarned is to be forearmed.」


The Dragon is watching closely at the recent developments of anti-China activity in the US. The first wave of baby boomers will retire in Jan. 2008. They will be eligible for the medicare in 2011. The medicare program costs 2 to 3 trillion dollars to run per year. The US is currently 8 trillion short in the medicare program. The US also needs to borrow more to pay for the SS. the US also needs to pay for the cost of wars fighting in Iraq and Afghanistan. It's not wise for the US government to create an anti-China atmosphere or sentiment in the US. If the US is willing to work with the Dragon, the Dragon will work with the US. Dragon demands mutual respect. If the US wants to make an enemy out of China. I am sure the US will not win any war with China. China has determination to win any war against its opponents. Just look at the past wars it fought against its adversaries. Lets work together instead of creating enemies out of each other. I'll close my remarks but leaving a quotation. A true prediction by Herbert W. Armstrong that has proved it validity and stood the test of time.

Herbert W. Armstrong’s declaration in 1961 that, unless the U.S. as a whole repents, “the United States of America has won its last war”

Blunt Force Trauma

Japan’s Economy May Soon Pass U.S.(?)

I guess the above headline goes against Insecure.com's philosophy that the Yen will be weaker/fall as well.

I am curious about Japan being more affluent in the way of personal savings, etc. It's interesting that Economy in Crisis's website claims that the average Japanese family has a savings equal to $117,000. But the source they quote is close to 7 years old. I wonder if this still holds any truth today? One thing this article misses is actual productivity levels - meaning how many people actually show up at their jobs and work a full day without "doggin'" it. You always hear about companies locking out certain websites (or internet access altogether) so that employees are not cruising the 'net on company time.


Mr Monk

CURRENCY: Few have talked about it, but China
has again taken a step toward a free floating currency.
Late last month, Beijing ended many of the rules that had
previously required the companies (and individuals) there
to convert most of their current account foreign exchange
into the Yuan. Previously, Chinese companies were
allowed to keep 80% of the revenues they'd received from
abroad + 50% of their expenditures abroad for business
purposes in foreign currencies; the rest had to be
converted into the Renminbi. It was not that long ago that
Beijing mandated that all of that foreign exchange had to
be converted to the Renminbi. Then it was 50%; then
20% and now those rules have been scrapped entirely.
The SAFE (the State Administration of Foreign Exchange)
said that the decision to end these last few mandates will
make it far easier for Chinese companies to manage their
foreign exchange "and will contribute to a more balanced
international payments situation." Obviously this is true,
and just as obviously, Beijing is to be applauded for this
decision. It is simply one more step along the well
established path that Beijing has been treading toward a
fully freely floating currency. What is interesting is that
neither Senator Schumer nor Senator Graham, who've led
the Congressional attacks upon China's foreign currency
policies, has said word one about what Beijing has just

Elaine Meinel Supkis

I still have no proof that China is selling but I suspect it because of what the Chinese said all summer long and the fact that the international bankers all joined the G7 nations in yelling, 'let the Japanese have their way so we can continue the carry trade status quo!' Ergo: China must sell dollars and BUY YEN. Note how the yen instanly began to strengthen despite all Bank of Japan attempts at crushing it.


This "Teddy Bernanke" picture is hilarious!

The eyes effectively capture the look of a deer in the headlights. The short arms, without hands, convey a sense of impotence. The bear metaphor is confusing at first, for this bear does not represent strength nor financial pessimism; ah, but upon further reflection we the viewers of this piece see that there is no bear at all, just an old liar in a costume.

Bravo! Bravo!

Jeff Hampsten

I am in agreement with the majority of your statements. You do however need a small geography lesson, Jackson Hole is in Wyoming, Big Dick Cheney's state, not Idaho. In spite of having a senator that is stupid enough to let himself get set up to take a fall there are a great number of people in Idaho that are consitutional patriots. In the past our senators and congressmen have been staunch supporters of gun rights and the NRA unlike the turncoat Benidict McCain who just told his constituantes what they wanted to hear then promply joined the dark side where the big money and power lives. I'm not too sure that his support of the NRA isn't what set Craig up for execution by the rest of the power elite demopublicans. An armed person is a citizen and a disarmed one is a serf and the power elite just can't stand a bunch of citizens. Write in Ron Paul even if he's not allowed on the ballot, let's give the dark side something to think about by putting 75 million votes for RON PAUL in ink. Your vote is a waste to freedom no matter which way you go with the demopublicans.


Since most cash advance loans require no credit check, the funds can often be transferred within 24 hours of the applicant submitting a simple online form. Now, this ease of use and speed, comes with a price of course. These types of loans will cost more than loans available from your typical bank. The advantage of course, is that you don't have to leave your home, drive across town, and wait in line to speak with a bank manager. http://advancemagnumcash.pixieinfo.com/articles.html

teddy bear

Thanks for your analysis. Its really usefull for me and also the article is very interesting to read.

red sole

so pretty.You are a good teacher. Lucky student!

The comments to this entry are closed.

Blog powered by Typepad