Is China Secretly Buying U.S. Treasuries Via U.K. Accounts?
Found this (in bold below) buried in a column Friday from Floyd Norris at the NYT. If true, it would explain how China has managed to keep the Yuan from rising versus the dollar over the past 18 months. It has also been rumored that China is accumulating large stakes in public U.S. companies, such as Apple.
---
For eight years after the United States resumed running large budget deficits in 2002, China was the largest lender, buying a fifth of the new Treasury securities sold during that span — an expenditure of more than $900 billion. During 2006, China financed more than half the American deficit. When the financial crisis struck hardest, China spent more than $100 billion on Treasuries over the two-month period of September and October 2008.
But over the last year, China has been a net seller of Treasury securities, according to figures released this week by the American government. If that is true, it would be extraordinary, considering the size of the bilateral trade deficit, and there has been speculation that China has been purchasing Treasuries through accounts in other countries.
The Treasury Department estimated that China reduced its holdings of Treasuries by nearly $11 billion in November alone. For the 12 months through November, as the accompanying charts indicate, China reduced its holdings of Treasuries by more than $36 billion.
For the first 11 months of 2010, American banks, institutions and individuals bought about three-fifths of the $1.5 trillion of additional Treasury debt, while China sold some and other foreign jurisdictions bought the rest.
- It is not easy to see how the Chinese government managed to keep its currency from rising more rapidly against the dollar if it did not continue buying Treasuries in 2010, and there has been speculation that it shifted purchases to accounts managed by British money managers.
- If so, such purchases would show up as British purchases. As it turns out, Britain is estimated to have been the largest purchaser of Treasuries over the 12-month period, adding $356 billion to its holdings. That made it by far the largest buyer, followed by Japan. The only other major seller during the period was Russia, according to the government estimates.
Continue reading at the NYT...
---
Both of these stories are from Mark McHugh and are very detailed...
Jan 24, 2011 at 1:28 PM
Reader Comments (13)
http://globaleconomicanalysis.blogspot.com/2011/01/imagine-theres-no-t-bonds-its-easy-if.html
http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html
MTV’s Naked Calculation Gone Bad
http://www.nytimes.com/2011/01/24/business/media/24carr.html?src=me&ref=business
http://www.nytimes.com/2011/01/23/business/23japan.html?src=me&ref=business
The unemployment rate is higher in this country than in Britain or Russia and much higher than in Germany or Japan, according to a study of worldwide job markets that Gallup will release on Wednesday. The American jobless rate is also higher than China’s, Gallup found. The European countries with worse unemployment than the United States tend to be those still mired in crisis, like Greece, Ireland and Spain.
http://www.nytimes.com/2011/01/19/business/economy/19leonhardt.html
http://www.ritholtz.com/blog/2011/01/china-enormous-tail-risk/
http://dailybail.com/home/wikileaks-china-gdp-numbers-are-man-made.html
the current accepted notion is that china has stopped buying treasuries...but this makes no sense given that the yuan hasn't risen much against the dollar...
i'm not saying china is buying a lot...i'm not saying they are supporting the auctions...i'm just saying they are NET BUYERS and NOT SELLERS...these are small numbers compared to total treasury issuance over the same period...
why the hell do you think i added your stories at the bottom...i understand the fraud of treasury acutions...but that's not what this is about...this is about whether china is a stealth net buyer...and nothing else...
---
And goddamnit i'm not trying to fool anyone...you owe me an apology for that comment...you are completely out of line...and this is not the first time you have thrown a fit on these boards...relax and stop the personal attacks...
Mark,
Remember what you said one time about eating an elephant? I think you've eaten way too much elephant today. Take a breather and then come back tomorrow to have another bite. (That big sumbitch ain't going nowhere.)