[3D.]

I guess their latest massive bond purchasing move has personalized the U.S. section of their portfolio... or could it have been one woman's very big forehead and extremely large mouth on visit that did the trick. The only positive aspect of an idea like this would be that the world could have a stable currency that some dumb ass government isn't paying someone to print for them. aka Fed

China to Keep Buying Treasuries, Top Official Says (Update1)
Share | Email | Print | A A A

By Dune Lawrence and Kevin Hamlin

March 23 (Bloomberg) -- China’s top foreign-exchange official said the nation will keep buying Treasuries and endorsed the dollar’s global role, supporting the U.S. as the Obama administration increases spending to revive growth.

Treasuries form “an important element of China’s investment strategy for its foreign-currency reserves,” Hu Xiaolian, director of the State Administration of Foreign Exchange, said at a briefing in Beijing today. “We will continue this practice.”

Hu’s remarks came as Treasuries extended the worst start to a year since 1996 and less than two weeks after Premier Wen Jiabao said he was “worried” about the safety of the securities. U.S. President Barack Obama is relying on China to keep buying Treasuries as his administration sells record amounts of debt to fund a $787 billion stimulus package.

“China’s so heavily invested in U.S. Treasuries that to stop buying now would have a negative impact that would see China’s investments fall in value,” said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong. “It’s pretty important for the U.S. that the main buyers keep making purchases.”

The yield on the 10-year note rose two basis points to 2.66 percent as of 9:25 a.m. in London, according to BGCantor Market Data. The 2.75 percent security due in February 2019 fell 6/32, or $1.88 per $1,000 face amount, to 100 25/32.

Expanding Rescue

The Obama administration will announce details of a plan today to expand the $700 billion rescue of the financial system that will rely on enticing private investors to buy the troubled assets clogging banks’ balance sheets.

China, the biggest foreign holder of U.S. debt, increased its Treasury holdings by 46 percent in 2008 and holds about $740 billion of the securities, according to Treasury Department data.

Wen called March 13 for the U.S. “to honor its promises and to guarantee the safety of China’s assets.”

China was “worried” about its holdings of Treasuries, he said at a press conference after the annual meeting of the legislature, the National People’s Congress.

Yu Yongding, a former adviser to the central bank, said Feb. 10 that the nation should seek guarantees that its Treasury holdings won’t be eroded by “reckless policies.”

Today’s briefing in Beijing was ahead of the Group of 20 nations summit due to start April 2.

‘Road Map’

Chinese officials emphasized the importance of combating protectionism and reforming international financial institutions. Vice Foreign Minister He Yafei called for a “clear timetable and road map” for changes to global bodies, including giving developing nations a larger voice.

The international community should focus on the supervision of the global monetary system rather than debating a replacement for the dollar as the reserve currency, regulator Hu said.

That comment came as a Reuters report said a United Nations panel will next week recommend replacing the dollar and Chinese central bank Governor Zhou Xiaochuan said that the International Monetary Fund should aim in the long term to create a non- sovereign reserve currency.

Reuters cited Avinash Persaud, a member of the U.N. panel. Zhou’s comments were in a speech posted on the central bank’s Web site.

Treasuries declined for a third day before a record sale of $98 billion of notes this week and as gains in stocks damped demand for government securities. The 10-year note gained earlier after Hu’s comments.

To contact the reporters on this story: Dune Lawrence in Beijing at dlawrence6@bloomberg.net; Kevin Hamlin in Beijing at khamlin@bloomberg.net

 

[X3pilot]

or could it have been one woman's very big forehead and extremely large mouth on visit that did the trick.

Umm, can you tie that in to that story for me? Seriously, want to know for educational purposes, not to start a flame war.

 

[ohio]

I don't understand the downside here. China is continuing to invest in US treasuries even though we're effectively inflating our way out of debt. They're subsidizing our (and their) recovery. Obviously it would be preferable to not need to borrow so much, but that's not really an option.

edit: I guess I'm looking for the article where China calls for a new reserve currency, because it's not in the one you posted.

 

[Secret Squirrel]

Umm, can you tie that in to that story for me? Seriously, want to know for educational purposes, not to start a flame war.

Hillary went to China and squinted a lot???

I have no idea...


On-topic: I really don't see what the big hub bub is about, bub....It's China...buying US sh*t...*shrug*...nothing to see here...move along...

 

[stevew]

Hillary went to China and squinted a lot???

did she talk funny?

 

[Secret Squirrel]

did she talk funny?

prawrawry...

 

[ire]

doesn't bother me...then when we default on our debt China is the one that gets screwed

 

[Secret Squirrel]

doesn't bother me...then when we default on our debt China is the one that gets screwed

Red Dawn II, b*tchez...

 

[3D.]

I don't understand the downside here. China is continuing to invest in US treasuries even though we're effectively inflating our way out of debt. They're subsidizing our (and their) recovery. Obviously it would be preferable to not need to borrow so much, but that's not really an option.

edit: I guess I'm looking for the article where China calls for a new reserve currency, because it's not in the one you posted.

my bad, I had too much china on my screen at the time I posted...

China calls for new reserve currency

By Jamil Anderlini in Beijing

Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.


Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.

“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.

China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.

To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.

Today, the value of SDRs is based on a basket of four currencies – the US dollar, yen, euro and sterling – and they are used largely as a unit of account by the IMF and some other international organisations.

China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.

Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.

Mr Zhou said the proposal would require “extraordinary political vision and courage” and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.

Copyright The Financial Times Limited 2009

after hearing obama touch on it last night, you don't need to hear it from me.

 

[3D.]

another angle

China weighs paper gold against dollar as reserve currency
The world outgrew the gold standard decades ago. But a “paper gold” standard might be one way out of the global financial crisis. Zhou Xiaochuan, governor of China’s central bank, has proposed shifting the world from its dependence on the US dollar to a new reserve currency managed by the International Monetary Fund. The idea is good – if only China meant it.


By John Foley, breakingviews.com
Last Updated: 2:56PM GMT 24 Mar 2009

The greenback has been the world’s dominant reserve currency – equivalent to a financial lingua franca – since the end of the Second World War. Countries hold it in spades to back their own currency. The IMF reckons that two-thirds of the $7 trillion of foreign currency holdings worldwide are in US dollars. The euro, the second most-held currency, makes up just a quarter.

Were international trade switched instead to an IMF-managed currency – Zhou suggests a little-used device called a “special drawing right” or SDR – Uncle Sam would have a real headache. America’s borrowing and trading costs would spike. After all, the US saves by rarely needing to convert its own money – a perk known as “seigniorage”.


But in the long term, the US would benefit. Being the currency of choice has made it unnaturally cheap for the US to borrow and fund its consumers’ profligate habits. Besides, as Zhou points out in a scholarly flourish, there’s the Triffin Paradox to consider. This says that so long as the US agrees to feed the world with dollars, it can’t successfully control its own currency.

Having a central currency – let’s call it the Zhou-Triffin Doubloon (ZTD) – managed by a supra-national organisation would make it more difficult for any one country to get into too much debt to another. If the supply of ZTD in issue were controlled properly – say by expanding it in line with global GDP – it would serve as a steady store of value, with little risk of devaluation.

Moreover, a credible ZTD would have many of the advantages of the now-defunct gold standard. It would be strictly limited in supply and ready acceptability everywhere. Indeed, it would be even better than the yellow metal, which is after all too cumbersome for a modern economy and too scarce to serve as a measure for international trade.

In sum, the ZTD would add much needed ballast to international finance. And China would not be alone in promoting this single currency. Russian authorities have been thinking along similar lines.

So why not get cracking? There are many obstacles: most notably getting the IMF up to the task. Nor is China in any position to move quickly. A truly global reserve currency would have to be based on a basket of world currencies, which would include the renminbi. China would have to make its tightly controlled currency freely convertible – which it shows no desire to do.

Indeed, China probably has other things in mind than financial stability, such as augmenting its global financial sway. Right now, the Middle Kingdom has only a 3pc vote in the IMF, no more than Belgium, because votes are linked to each country’s contribution to the fund. Were China able to claim credit for its prodigious foreign reserves, it could replace the US at the top of the table.

At best, China’s proposal is self-serving. At worst, it could be merely another manifestation of growing hostility towards the US – to be filed alongside recent protectionism, naval skirmishes and Chinese criticism of US spending habits. That political undercurrent is a shame. Paper gold looks like one of the best ideas to come out of the financial crisis.

http://www.telegraph.co.uk/finance/breakingviewscom/5042739/Paper-gold-nice-idea-shame-about-the-politics.html

 

[3D.]

Umm, can you tie that in to that story for me? Seriously, want to know for educational purposes, not to start a flame war.

large mouth at work

Obama Sells US
To China Inc
By Cliff Kincaid
AIM Column
2-23-9


With Hillary Clinton having signaled to the Chinese dictators that we will beg for their money and ignore unfair trade practices and even human rights violations, it will be left up to President Obama to seal the deal.

The truth is starting to seep out. Because of the need for more money to finance the latest bailout-the Obama economic stimulus plan-America is going further in debt to the Chinese Communists. Our country is officially being sold to the highest bidder. And we have striking confirmation of this fact from Secretary of State Hillary Clinton.

The good news is that a correspondent for the mainstream media-Wyatt Andrews of CBS News-has figured this out and has managed to get on the air with his terrifying findings. Andrews' report on the Friday CBS Evening News with Katie Couric was direct and to the point. Clinton is in China to beg for a handout.

"The truth is the Administration needs China's help. America's stimulus is very expensive and the U.S. wants China to help finance it," Andrews reported. This is what America has become-a country that sends its Secretary of State abroad to beg for money from foreigners. In this case, it's a communist dictatorship that forces women to have abortions, tortures Christians, and threatens the freedom and democratic government of Taiwan.

So the cost of the "stimulus" is more sacrifice of American independence and sovereignty, as well as our own values, ideals, and commitment to human freedom. It is a sad day both for America and China.

Clinton was shown saying, "We are relying on the Chinese government to continue to buy our debt." The almighty dollar takes precedence over everything else, even as it falls in value and the dangers of hyperinflation and national bankruptcy loom. The tragedy is compounded by the fact that pandering to the Chinese will not solve anything. This policy, set in motion by big banks and corporations and pursued by Democratic and Republican Administrations, is what got us into this predicament in the first place.

Clinton's comments, which concern the overall economic policy of the new administration, are far more significant than the Obama mortgage plan. Clinton is getting to the heart of the issue-how the mortgage plan and the stimulus are being financed.

White House spokesman Robert Gibbs expressed irritation last week that CNBC commentator Rick Santelli went into a rant over the prospect of forcing American taxpayers to underwrite the bad mortgages of deadbeats and others who are unable to pay their mortgages. But Santelli only touched on one small part of the problem.

Where's the outrage over the pro-China policy that spans several administrations, and which has benefited his corporate bosses at General Electric, of permitting the communist dictatorship in Beijing to have the upper hand in global trade relations? All that Santelli has to do to understand this problem is attend a GE annual meeting and listen to the complaints of the GE workers losing their jobs to China. But don't expect to see anything about that on CNBC, NBC, or MSNBC.

If you want more information on this travesty, please go to the website <http://www.screwthatbulb.org>www.screwthatbulb.org and learn how GE is going "green," which has the effect of shipping American jobs to China. If Santelli did a rant about that, you can bet he wouldn't be on the air again.

We were already in terrible shape under the Bush Administration because of a mysterious financial collapse apparently caused by illegal manipulation of our markets, but now the communists have us completely over a barrel because the Obama Administration, with the acquiescence of Congress, recklessly decided to spend even more money that we don't have. Under the circumstances, this is criminal negligence.

Mrs. Clinton is officially stating what everyone should know is the truth. She deserves credit for being brutally honest. America has become a subsidiary of China Inc. In order for the U.S. to stay afloat, we have to depend on Beijing to finance a bailout. But the other major problem, of course, is that the stimulus is not a bailout in any real sense of the word. It depends on more government debt and borrowing at a huge cost of being more indebted to the Chinese. So the bailout is really digging our nation's grave deeper.

To make matters even worse, as the Andrews report made clear, the cost will include the jobs that the Obama Administration says will be created by the stimulus. He interviewed an American manufacturer about the loss of American jobs caused by China's trade practices, who said that the "cheating" in global trade has cost millions of American manufacturing jobs.

In the end, the only "jobs" that will be created or "saved," as Obama likes to say, will likely be those benefiting from spending the federal money that the federal government doesn't have. Most of them work for government at all levels.

Productive private sector manufacturing jobs will not be created-and cannot be-because despite their campaign promises, neither Obama nor Hillary will do anything about those unfair Chinese trade practices, such as the currency manipulation, that make Chinese goods artificially cheap and American goods more expensive.

The Andrews report, which caught me completely by surprise on a newscast that tends to portray the new Administration in completely flattering tones, was absolutely blistering in contrasting what Obama and Clinton had said during the campaign and what they are doing now.

"Both the man who became the President and his future Secretary of State told the voters they would make the [trade] cheating go away," Andrews reported. He showed candidate Obama saying that he would do everything in his power to stop China from manipulating its currency and Hillary saying that she would "aggressively crack down on China's unfair trade practices." These claims were shown to be empty and abandoned campaign promises. We should have assumed that would be the case.

Andrews asked Secretary of State Clinton about this and "she explained that times have changed." Clinton said, "That was at a different time when we weren't facing the kind of difficult situations we face today." Translation: we need their money and we are in no position to demand or criticize anything. These Clinton comments preceded Andrews' remarks about the cost of the stimulus and the perceived need to get China to help finance it.

As we had noted in a previous column about the Administration's so-called economic program, Clinton was going to China for the purpose of getting Chinese money to finance the stimulus. Now we have it all on the record. Her trip was designed to reinforce Treasury Secretary Timothy Geithner's private conversations on this topic with Chinese officials.

The land of the free and the home of the brave has now become the land of the quivering milquetoast, in awe of an emerging Communist giant that our big banks and corporations, as well as our government, have built into an economic superpower.

President Obama apparently sees nothing wrong with this. Indeed, during the campaign he praised China's staging of the Olympic Games, saying their infrastructure was impressive and was something the U.S. might consider emulating.

Now, with Hillary Clinton having signaled to the Chinese dictators that we will beg for their money and ignore unfair trade practices and even human rights violations, it will be left up to President Obama to seal the deal. When he gives his State of the Union-like speech to Congress and the American people on Tuesday night, he will in reality be auditioning for a front-row seat on the board of directors of China Inc. Don't expect to hear anything critical of the butchers in Beijing.

Cliff Kincaid is the Editor of the AIM Report and can be reached at cliff.kincaid@aim.org


© 2007 Accuracy in Media. All Rights Reserved

 

[X3pilot]

large mouth at work

Oh, OK. Thanks.



Seriously.

 

[ohio]

Seriously dude? That's not Hillary having a big mouth. That's economic reality. For ideological blowhards blowhards that think they can wish away problems with a bible in one hand and a mt rushmore snowglobe in the other, this may seem like selling our country to the highest bidder, but this is simply the way debt financing works, and if THEIR president hadn't spend 8 years squandering a surplus and adding to that debt at record rates, we might not be in this position.

I don't like Hillary either, and it was stupid to put someone with zero inter-personal skills in the highest position of diplomacy in the world, but this has absolutely nothing to do with her personality or even her own personal decisions.

 

[1453]

tough talk from the people who pegged their currency to the dollar for half a century so we would buy cheap stuff from them.

 

[thcrob]

I don't understand the downside here. China is continuing to invest in US treasuries even though we're effectively inflating our way out of debt. They're subsidizing our (and their) recovery. Obviously it would be preferable to not need to borrow so much, but that's not really an option.

edit: I guess I'm looking for the article where China calls for a new reserve currency, because it's not in the one you posted.

Knew this would be on here and that's why I checked it out. If you all read yesterday's Wall Street Journal you will find an article breaking down EVERY bad aspect of changing the currency(the last change took around 20 years?).
They then went on and described other attempted changes, showing how each failed, and comparing any new attempt would be like the attempted "esperanto" language...

Some more information in it, and I would link it but I think the website has it locked for non members.


Also surprised noone has brought up brazil's leader blaming the "global economic crisis" on "blue-eyed white people." Fits this forum's niche quite nicely.... White guilt and anti- corporation.