China Wants To Liquidate U.S. Treasuries, Buy Stakes In Apple, Intel & Boeing
Interesting speech given Friday from an advisor to China's central bank picked up by Ambrose Evans of the UK Telegraph.
---
Excerpt
The debt markets have been warned.
A key rate setter-for China's central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.
"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian – former Port Arthur from Russian colonial days.
"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."
"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.
To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate". Until now the policy has been to diversify slowly by investing the fresh $200bn accumulated each quarter into other currencies and assets – chiefly AAA euro debt from Germany, France and the hard core.
We don't know how much US debt is held by SAFE (State Administration of Foreign Exchange), the bank's FX arm. The figure is thought to be over $2.2 trillion.
The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.
Mr Li, one of three outside academics on China's MPC, described the debt deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.
So what Li Daokui said is not bad for the dollar as such. He said there is "$10 trillion" waiting to be invested in the US, if America will open its doors.
Sep 19, 2011 at 1:19 PM
Reader Comments (7)
http://finance.yahoo.com/news/EU-to-urge-US-Japan-to-act-on-rb-763041802.html?x=0&.v=1
Now it's Europe's turn to tell us what to do.
http://www.zerohedge.com/news/andy-lees-kills-argument-endless-debt-funded-stimulus
The message did not come directly from the Chicago Tribune, but from a distinguished member of its editorial board, veteran columnist Steve Chapman.
http://www.newsmax.com/InsideCover/hillary-clinton-obama-chapman/2011/09/19/id/411502?s=al&promo_code=9898-1
After that has happened, it will be so much easier to move what is left of our industry to China lock, stock and barrel.
Isn't that exactly what Karl Marx ordered the proletariat to do ?
as in "obtaining the means of production"
Our mistake was to assume this would be accomplished through Class warfare and Bolshevik revolutions.
Who would have thought they would just buy it ?
Next time I see anyone in a $ 5000 Armani suit exclaiming that Karl Marx was wrong,
I hope to be able to refrain from performing acute brain surgery on him, with a baseball bat, mind you.
Welcome to the post industrial age,
where nobody is allowed to produce but everybody still needs to eat.