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Looks like the rain is going to spoil the Keynesian voodoo dance.
china has no such power. By placing all their marbles in the US, they are stuck. They cannot grow very fast without US demand. USD weakness has placed tremendous pressure on the yuan to appreciate to curtail inflation and the credit bubble.
Selling US treasuries would be a disaster-for China and Europe and Asia rather than for the US.
Look, they've already started doing it. Just accept that it's happening and move on. They're restricting credit which will cause import prices to rise considerably and reduce American citizens' standard of living. They will continue to sell US treasuries to fund additional stimulus packages to offset any economic slump incurred by decoupling from our economy.
They don't even need to sell off many treasuries. They can do what they're already doing and just stop buying a lot more. Holdings from China are down since November 2009 and other countries will be unable to pick up the slack for much longer. Also, don't underestimate the Chinese, Russians and Europeans ability to live under very austere conditions.
The last Treasury auction was horrible. The Fed and some "anonymous" offshore buyer (Fed again maybe) were the big buyers but not big enough.
Nope..China is tightening the screws. Don't feel that the US has control over China; it's the other way around. He who has the money gets to make the rules.
China has moved up in the Gx groups.
China ruled at Copenhagen.
China is buying up land/hard commodities all over the world.
China is making deals with countries all over the world.
But that's ok; those who think the US can never fall from it's pedestal of greatness and power just go on about your business.
China is hemmed in by its own domestic problems. The current government is being tolerated pretty much only because it has been able to deliver economically, but they will continue to need that 8% or so annual growth rate to keep all of the new urban middle and upper-middle classes happy. They like their cars and their TV's and their modern apartment blocks. Fail them, and they will be the ones to bring rural unrest into the major cities. Most of the time, China cannot reach its growth targets without using the US as its customer of last resort. In those cases, it will happily take even dollars it will not have any actual use for. It invests the leftovers mostly in US Treasuries, but also in US private debt and equities. That's the best they can do without risking the sorts of problems that they desperately don't want to have. As the article points out, recent news is news mostly because transparency in China is so much worse than it is here. From our point of view, this is not a major step by China, and it will not have major consequences. By the way, the TIC data for the end of December won't come out until next week...
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