Yikes...is this for real? Not a financial person, so no clue

[magical thyme]

Last edited Fri Jun 8, 2012, 09:52 AM - Edit history (1)

Not a financial person, so no clue how to analyze or interpret potential fallout.

http://cluborlov.blogspot.co.uk/2012/06/fragility-and-collapse-slowly-at-first.html#more


Why such a powerful smokescreen? What were they hiding? Well, a couple of items of interest. First, it turns out that China can now monetize US debt directly. That’s right, the ability to print US currency is now distributed between the US and China. There is a special private line between Beijing and the US Treasury, and China can buy US Treasuries without going through any market mechanisms or making the price public. Secondly, China can now directly buy US banks. Back in the good old days attempts by foreign powers to use US Treasuries to buy equity in enterprises in the US was considered as akin to an act of war; nowadays—not so much. Basically, Hillary and Timmy went to China and said: “Take our financial system, please!”

[CrispyQ]

1. I think it's pretty significant, but like you, I'm not versed in finance.

My husband read this a week or so ago. Not a word in the media, however. No surprise, there.

Bookmarking to come back & see what others have to say.

~kick

[geckosfeet]

2. "a special private line between Beijing and the US Treasury" - technospeak

for I have no effing clue what I am talking about but I'll say it anyway.

This is fear mongering. And I think it will get much worse before the elections are over.

[dmallind]

4. Which is merely the equivalent of letting a big (NOT biggest) customer buy mill-direct

if you are a steel producer. The Chinese don't get to invent debt or decide when the US issues debt. They just get to buy it, when offered, without going through a middleman.

[ret5hd]

5. exactly. nt.

[snot]

6. However, it DOES mean that no one knows how much they're buying, or not.

And people who understand more than I seem very disturbed about that.

[geckosfeet]

8. Probably because they are not getting the same deal. Or

they think China is getting a better deal than they are.

I suspect that the people doing the selling know how much China is buying. But they are not saying.

[dixiegrrrrl]

9. It means no one knows how much Treasuries are being sold (printed)

because direct sales are not recorded, therefore not reported on.
How much debt is being bought by China is now secret.
Put another way, how much debt we are running up by sale of Treasuries is being hidden.
Only when China sells Treasuries will it be officially recorded.

see here:
"This story helps explain a lot in regards to some of the official outflows shown seen in the chart below since 2011. If Chinese officials are able to completely bypass the primary dealers when purchasing Treasuries, then a large chunk of these transactions will never be recorded in the TIC data.

While it is impossible to say how large an effect this rule change has had on the official purchases shown below, it is probably no coincidence that the two largest monthly outflows ever came within a month or two of the June 2011 change. As the story states, while China can bypass the dealers for purchases, it must still sell through them. This could put a downward bias on the way in which the Treasury reports these purchases going forward."

http://www.ritholtz.com/blog/2012/05/chinese-purchases-of-u-s-treasuries/

[Egalitarian Thug]

10. Except we're not talking about the purchase of product and that is an important

distinction. OTOH, it's not nearly as bad as other things we have let them get away with for decades.

[Vincent89]

3. Spam deleted by Violet_Crumble (MIR Team)

[libodem]

7. Very Strange

World we are living in these days. Peculiar, weird, odd, fucked up world. Hmmmmm?

[Demeter]

11. You can get this kind of info in real time on the Stock Market Watch thread

posted daily in the Economy forum. Not only the facts, but the analysis and the scoffing...and local opinion, too!