Friday, June 03, 2011

China Bails Out Of Short term US Treasuries

In another sign that foreign appetite for buying up US debt is coming to a halt, China has now divested itself of 97% of its holdings in short term US securities.

The Chinese went from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Short term T-bills are those that mature in one year or less.

The Chinese still hold a lot of long term treasuries, but they've been decreasing their holding incrementally over the past five months from November through March. As of March 2011, overall Chinese holdings of U.S. debt had decreased to 1.1449 trillion.

What does all this mean? First the Obama Administration's Quantitative Easing was always nonsense, and Sarah Palin was right on the money when she said so, well before the mainstream caught up with her.Second, higher interest rates are on the way, because President Obama and the boyz still have to sell our debt to fund all the wonderful spending he's done ..which of course means that debt servicing will cost still more as we attempt to pay down the debt and making fixing the whole mess he and his cohorts have gotten us into much more difficult to fix.

Thanks you, Dear Leader!

please helps me write more gooder!

1 comment:

B.Poster said...

I hope I'm wrong but the only real option here is bankruptcy I think. When an individual or a business does this they can get protection from creditors. I'm not sure how this would work for a nation state.

Throughout history weaker nation states and kingdoms have often sought protection through alliances with stronger nation states and kingdoms. Sometimes that works. Perhaps that can work for us. Unfortunately I don't think so. We are the most hated nation on earth. As such, an alliance of this type seems unlikely for us.

As for national defense, I've already stated here and elswehere many times what the best option is. Withdraw all US forces from every where they are now, redeploy them to our borders where they have a fighting chance to defend our country, and do it IMMEDIATELY!! Then pray for the best.

"....fixing the whole mess..." Actually the "mess" was created by the Bush Administration long before Barack Obama came along. Unfortunately Mr. Obama and his team have made things worse. In truth, it was probably already to late by the time Mr. Obama came into office to "fix" the problem. We may have been able to mitigate the damage but now it may be to late for even that.

One way to have done this would have been to seek alliances with stronger countries and achieve some level of protection and economic development that way. This would require improving our image in the world. Unfortunately Mr. Obama has done nothing serious to address this problem.

Another way to get started on "fixing" this problem would be for Congress to vote no on increasing the debt ceiling. This action might help to restore some degree of confidence in America and the prospects for economic growth and might help our credit rating and might keep interest rates in check. Unfortunately it does not seem likely that Congress will do this right now.

Its hard to be optimistic but I pray somehow the mess can be fixed. What is clear is the leaders of Russia, China, India, and the other major world powers wake up daily thankful that while their nations may face some serious problems none of them face problems any where close to as severe as what America faces.