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49 billion dollars is 3.6% of 1316.7 billion dollars. This is hardly a sell off or liquidatiuon. People who try to trigger panic over a routine Chinese government action need to really learn a little elementary school arithmetic. The Bank of China probably had to raise a little cash to finance the hundreds of billions of dollars that China is spending to become an advanced first world country. 50,000 miles of high speed rail roads, several hundred electrical power plants and the world's best telecommunications don't come cheap.
China would only hurt themselves if they dumped too much.
Look at the trend, not the individual trade.
China is moving out of the USD.
China doesn't rush with anything. Their moves are planned and they move an inch at a time.
Don't underestimate the Sleeping Tiger my friend.
Makes you wonder what dog Belgium has in this fight.
Miserable fat Belgian bastards are opportunists.
I'm not ragging on you...it's a good question, it's just that Belgium buys short term bills like a lot of other States.
Any entity that had faith in the US economy would be buying 30 year bonds.
Entities that had some confidence, or...who wanted flexibility would buy notes.
Everyone else buys bills.
Belgium picked up at least $56 Billion....they would bid on the discount rate....and get a decent rate for that chunk of money.
Quote:
Originally Posted by middle-aged mom
China began purchasing U.S. public debt in meaningful sums in the 1980s and now owns about 8% of publicly held U.S. debt.
It's actually 10.3%
Quote:
Originally Posted by middle-aged mom
Owning U.S. Treasury notes helps grow the China economy by keeping its currency weaker than the USD.
No, that's not how currency values work.
Quote:
Originally Posted by middle-aged mom
This keeps exports from China cheaper than U.S. products. The U.S. consumer benefit from lower priced goods.
That's absurd.
No matter what the situation, Chinese exports will always be cheaper than US products, for the exact same reason that Romanian exports will always be cheaper than US products, for the same reason that Indian exports will always be cheaper than US products.
As development shifts to Southwest Asia, Indian, Pakistani and Bangladeshi exports will always be cheaper than US exports.
When development shifts to Central Asia, exports from Tajikistan, Uzbekistan, Kyrgyzstan, Turkmenistan and Kazakhstan will always be cheaper than US exports.
And when development finally shifts to sub-Saharan Africa, then exports from all of those States will be cheaper than US exports.
Quote:
Originally Posted by middle-aged mom
If China sold off all their holdings, their own currency would gain value and they would no longer be the lowest cost producer.
What?
Uh, this is the real world, not fantasy world.
Quote:
Originally Posted by greywar
OH NOES!
Sigh. seriously?
1. China cant afford to sell the debt, it could do bad things to their economy ( I know this sounds weird but yes really)
China can dump the debt anytime they so choose....and they will profit from it.
Quote:
Originally Posted by JohnnyMack
Okay lets repeat .... 8% A VERY small percentage.
It's actually 10.3% but who's counting?
Quote:
Originally Posted by EmeraldCityWanderer
Some people aren't smart enough to retort,...
We knew you would eventually admit your own personal flaws....so why waste the band-width?
Aren't you supposed to be concerned about Global Warming?
Quote:
Originally Posted by MrWillys
China is smart enough to know that they undermine their own interests in a mass sell off that would devalue their own holdings. This myth has been spread far and wide, but is a myth.
It's not a myth, it's math and economics. Do try to understand.
Given that the this is the 6000th time that idiotic blog has made this claim and it was completely untrue garbage the first 5999 times... Well, I just have to say linking to trash blogs tells us more about the poster's limited mental abilities than anything else.
It's not a myth, it's math and economics. Do try to understand.
Amused...
Mircea
Please expound on how China will profit from a fire sale of us bonds by all means? Most intelligent (as was the answer to this stupid question by a Fidelity rep in my seminar last week) people know that China could only benefit by selling a little at a time, and because there holdings are a total of 8% only a fool would think it will take down the US economy.
Please expound on how China will profit from a fire sale of us bonds by all means? Most intelligent (as was the answer to this stupid question by a Fidelity rep in my seminar last week) people know that China could only benefit by selling a little at a time, and because there holdings are a total of 8% only a fool would think it will take down the US economy.
LOL. Even a little at a time only does them so much good, after a while it begins to hurt them a lot. Most people even passably familiar with economics understands why China has these massive reserves. Its basically how they've catapulted themselves out of poverty as a nation. Amazingly effective. And something we've gotten upset about as its obvious currancy manipulation on their part, but none of our governments have been willing to actually address it. Its one of the things I DO give Romney credit for, is that he was sounding like he was willing to address this.
LOL. Even a little at a time only does them so much good, after a while it begins to hurt them a lot. Most people even passably familiar with economics understands why China has these massive reserves. Its basically how they've catapulted themselves out of poverty as a nation. Amazingly effective. And something we've gotten upset about as its obvious currancy manipulation on their part, but none of our governments have been willing to actually address it. Its one of the things I DO give Romney credit for, is that he was sounding like he was willing to address this.
In a global economy you can't alienate who can and cannot buy the bonds, or you've gone against the basic premise of capitalism. Protectionism can only harm America, and bringing up the remainder of the world to a single standard has been a bitter pill, and cost for America to swallow. I don't think Romney could have changed this, and was nothing different than Obama's promise of change. The change we've seen was as predicted, and it is a shrinking of the middle class which hurts the US economy. It has been said that by 2016 we will start to come out of this if the melting pot continues to be the innovator it has proven to be.
Please expound on how China will profit from a fire sale of us bonds by all means? Most intelligent (as was the answer to this stupid question by a Fidelity rep in my seminar last week) people know that China could only benefit by selling a little at a time, and because there holdings are a total of 8% only a fool would think it will take down the US economy.
Fire sale? Did I miss that. Somebody uses the word plunge and others completely try to overplay such a highly subjective term. They want gradual. The entire Gs for the most part. This IS happening NOW.
The IMF has made the announcement of where SDRs are going just this year. They are working with the Treasury to make it happen and they are a hair away. This continued trend will give more control to transition. When it come to the debt most people hear "China" and they don't go look at all the govt accounting that is heavily invested in those Chinese corps. The US govt offshored it.
Nobody wants to lose their holdings so they are trying to work together to transition. Unfortunately, there are serious problems going on in the background and corporations, including government will do what they need to do to save their massive investments.
LOL. Even a little at a time only does them so much good, after a while it begins to hurt them a lot. Most people even passably familiar with economics understands why China has these massive reserves. Its basically how they've catapulted themselves out of poverty as a nation. Amazingly effective. And something we've gotten upset about as its obvious currancy manipulation on their part, but none of our governments have been willing to actually address it. Its one of the things I DO give Romney credit for, is that he was sounding like he was willing to address this.
This is where people need to pay attention to how those reserves can be used and converted. Go take a look at giant funds, like the SWFs, foreign exchange markets and SDRs. The number one concern is being able to continue acquiring wealth. The issue really isn't about countries taking one another over (i.e currency domination). It is about economic realities and corporations doing what they do.
In a global economy you can't alienate who can and cannot buy the bonds, or you've gone against the basic premise of capitalism. Protectionism can only harm America, and bringing up the remainder of the world to a single standard has been a bitter pill, and cost for America to swallow. I don't think Romney could have changed this, and was nothing different than Obama's promise of change. The change we've seen was as predicted, and it is a shrinking of the middle class which hurts the US economy. It has been said that by 2016 we will start to come out of this if the melting pot continues to be the innovator it has proven to be.
You're right-protectionism is bad...but not if only one country does it, then its pretty awesome for that country. And we've LET China do that.
Want to do business there? Sell your technology to them, and have a local own 50% of the company.
Seriously the Chines fund their local companies, allow them to dump product below cost in order to gain market share...and we say nothing.
The manipulation of the exchange rate? Another great example. And we LET them. Failed to protect ourselves while they abused everything they could. Protectionism is great...when only one country does it, and its only great for that country.
You're right-protectionism is bad...but not if only one country does it, then its pretty awesome for that country. And we've LET China do that.
Want to do business there? Sell your technology to them, and have a local own 50% of the company.
Seriously the Chines fund their local companies, allow them to dump product below cost in order to gain market share...and we say nothing.
The manipulation of the exchange rate? Another great example. And we LET them. Failed to protect ourselves while they abused everything they could. Protectionism is great...when only one country does it, and its only great for that country.
Yes, the reason "we", assuming you mean US, let them is what I mentioned. The US govt and friends can make plenty of money from those investments, which is why they off-shored in the first place.
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