China to continue buying US Bonds

China to continue buying US Bonds

www.ft.com

Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.

“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”

Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”

(visit the link for the full news article)

Interesting development. This has been the big shoe to fall that many have stated. China is in a bit of a predicament though. If they stop buying dollars, they hurt their holdings and further hurt their biggest consumer. Also then impacted Europe and Russia and the rest of Asia. Hence meaning less revenue and growth for them.

Thoughts?

www.ft.com
(visit the link for the full news article)

thoughts?

questioningall said they were going to dump bonds and invest in gold.

who to believe. who to believe ...

reply to post by ll__raine__ll


Hmm, I would guess that they would still increase their gold purchases. Is he some sort of expert or something?

Of course they are going to keep buying US bonds. They need to sell us cheap products as much, if not more, than we need to buy their cheap products.

reply to post by stevegmu


Yup, and they are basically turning our dollars right around and lending them back to us. Which we then spend with them, and the cycle continues.....

I wonder if there is some angle that China could be playing by stating this and doing something else. I doubt it but just am wondering aloud.

Originally posted by johnny2127
I wonder if there is some angle that China could be playing by stating this and doing something else. I doubt it but just am wondering aloud.

Well, basically, the angle is that they need us and don't want to piss us off. We are the only superpower and most stable large republic. Seems there's a riot in Europe every other week, or so. How many in the US?

China won't need us forever. There are 6 billion people in the world who can buy there stuff.

I can see them switching to gold. Why wouldn't they?

Why risk it all on the US absolutely moronic monetary policies?

The only safe thing for them to do is invest in gold. They won't go 100 percent into it, but they will do it for some type of protection until there is somehow a fix (yeah right).

The united states is like the lazy guy at work. He shows up but he doesn't produce anything. He expects to get paid even though he's not pulling his weight. Soon the co-workers will get angry at him because they won't think it's fair that they are having to work harder because of a slacker who has it just as good as they do.

Once the rest of the world realizes that THEY can be the ones with the wealth instead of the US, that's when it will all change.

I think it's changing now to be honest.

Originally posted by ll__raine__ll
thoughts?

questioningall said they were going to dump bonds and invest in gold.

who to believe. who to believe ...

No I did not say it, but an "Article" said it!

www.reuters.com...

Market talk of China taking an interest in gold as an alternative to U.S. Treasuries, and of a European fund buying bullion, also helped boost prices

I linked the article in my thread, so do NOT say I said it.

But China's leadership is likely to avoid any complete halt to purchases of Treasuries for fear of looking like it is torpedoing the chances for a U.S. economic recovery at a vulnerable time, said Paul Tang, the chief economist at the Bank of East Asia here.

"This is a political decision," he said. "This is not purely an investment decision."

They are making a political decision..... so we have dodged a bullet for the time being,... but for how much longer?

reply to post by questioningall


true enough but you did seem to promote the article as accurate and credible and there was definitely a sense of urgency to your posts.

since then i've been looking into and wondering if gold might be a good investment. i still am actually.

this latest development though contradicts what you were posting hence my, 'who to believe' statement.

They can buy all the bonds they want. They're only sealing the death certificate of their economy in doing so. They could stop buying now and maybe make it out without too much pain...But if they stay in they expose themselves to federal defaults which are likely to happen because printing our way out of this would kill us, but then again, so would default..So we have a choice between two evils here. ALL the bailouts will pass regardless of party affiliations and posturing shenanigans by Congress. That should kill any savings left in this country, and when it starts getting apparent the Chinese will start sweating bullets and hope for a miracle because they will lose all of their investment in US Treasuries.

The Bond market will collapse anyway when it becomes apparent that the US government isn't good for it. The old argument of "Treasuries are safe" is going away really fast.

Originally posted by johnny2127


Interesting development. This has been the big shoe to fall that many have stated. China is in a bit of a predicament though. If they stop buying dollars, they hurt their holdings and further hurt their biggest consumer. Also then impacted Europe and Russia and the rest of Asia. Hence meaning less revenue and growth for them.

Thoughts?

www.ft.com
(visit the link for the full news article)

And this is exactly why...we have them by the balls. Probably the only good thing the US has going for them. We are holding China from truly expanding and becoming what we are...because of this... They drop all these bonds what happens to their assets? Who is going to purchases their goods? Where is a good amount of their trade going to go? ...All of that stuff.

reply to post by projectvxn


That's about what I was thinking!

The Chinese government doesn't REALLY have that big of a choice with the share of their GNP that the USA supplies to them!

Their just HOPING that the USA will get out of this crisis fine, with some help from them, and then they will too!

[edit on 2/11/2009 by Keyhole]

What exactly is China going to be buying these Treasuries with? They bought them in the past with the profits from our purchases. Maybe no one's noticed, but our purchasing power is gone. Therefore, there will be no profits to sink back into Treasuries.

This is grousing and lip service. They're trying to switch their Treasuries into gold without sparking a run on Treasuries in the process.

Originally posted by stevegmu
Of course they are going to keep buying US bonds. They need to sell us cheap products as much, if not more, than we need to buy their cheap products.

Hey, our business leaders aren't much better from what I've seen lately. We have bankers making million dollar bonuses at a time when the middle class is losing jobs left and right. We have the head of a major peanut distributorship pleading the fifth after he was caught in emails authorizing the shipment of tainted peanuts that have now killed 9 and sickened over 600 with salmonella. And to top it all off, we have the cigarette industry, headed here in the U.S. - making money hand over fist knowing full well it's products do nothing but kill the majority of it's customers.

Are we any better than they are?

If I were them I would invest some in gold and pump the rest into my own economy in the form of tax cuts and construction or research projects that would potentially reap long term benefits. They would lose money but sometimes you just have to cut your losses and take a new path.

Originally posted by HimWhoHathAnEar
What exactly is China going to be buying these Treasuries with? They bought them in the past with the profits from our purchases. Maybe no one's noticed, but our purchasing power is gone. Therefore, there will be no profits to sink back into Treasuries.

They still have a bit of credit to burn through but if the US continues to burn through trillions of dollar this is a real possibility. You have to remember they are paying for their own 586 billion dollar stimulus and the sole responsibility of their government isn't to fund the US governments spending. They have expenses of their own and their budget is only going to get harder to balance as demand for consumer goods decreases.

[edit on 11-2-2009 by Jacob08]

United States of America brought to you by China.


That is the sad part that China is financing the USA. They have billions, if not trillion of US Dollars worth of holdings. Whether it be in bond, trade deficit or just plain cash. With out them, who else though would be able to buy that much of our debt. Russia, UK, Saudi Arabia. I am not sure they would be able to. But the high light is that they still have belief that our dollar is the best investment going, or they would be buy Euros or Rubles. We need to make the dollar stronger and start making it worth something.

reply to post by Jacob08


The only credit they have to burn through is the 680 billion of treasuries they already have. They're markets have taken an even worse beating than ours. They will spend the treasuries they have to try and stimulate their economy. So again, there will be no extra to buy more of our debt. Especially the Trillions necessary!