View Full Version : China's holdings of US debt jump 30 percent!!!

03-02-2011, 08:17 AM
Hows that hope and change working out???


<span style="color: #000000">WASHINGTON – China, the biggest buyer of U.S. Treasury securities, owns a lot more than previously estimated.
In an annual revision of the figures, the Treasury Department said Monday that China's holdings totaled $1.16 trillion at the end of December. That was an increase of 30 percent from an estimate the government made two weeks ago.
The government made the change to its monthly report based on more accurate information it obtains in an annual survey. That survey more does a better job of determining the actual owners of Treasury securities.
China was firmly in the top spot as the largest foreign holder of U.S. Treasury debt even before the revisions. But the big increase in Chinese holdings could ease fears that Chinese investors might begin dumping their U.S. holdings. Such a development could send U.S. interest rates rising. That would slow America's economic recovery and increase Washington's costs for financing the $14.3 trillion national debt.
China and Britain were the countries with the biggest revisions in the new report.
The amount of U.S. Treasury securities held by Britain fell to $272.1 billion in the new report. That's a drop of $269.2 billion from the last monthly report which put the Britain's holdings of U.S. debt at $541.3 billion. The holdings of the two countries often show big revisions when the annual report is released.
The reason for the change is that Chinese investors who purchase their Treasury securities in London are often counted as British investors. The more detailed annual report does a better job of tracking the countries in which investors reside as opposed to the location where investors make their purchases.
Even with the revision, Britain remained the third largest holder of U.S. Treasurys.
Japan had the second highest foreign holdings, totaling $882.3 billion at the end of December. The revision was only slightly below the original estimate.
The total foreign holdings of Treasury debt stood at $4.44 trillion at the end of December, according to the new report. That's up 1.5 percent from the estimate made two weeks ago. About two-thirds of U.S. Treasurys owned overseas are held by foreign governments and central banks.
The U.S. government is selling huge amounts of debt to finance record-high budget deficits. The Obama administration in its new budget released on Feb. 14 projected that this year's deficit will reach a record $1.65 trillion. It would be the third consecutive year the federal deficit has exceeded $1 trillion.</span>

03-02-2011, 11:38 AM
This is a technical 'jump' that didn't really happen in reality.

What 'jumped' was the new revised number from a better estimate, up 30% from a prior number from a less accurate estimate.

This is both surprising and probably good news, when you think about it.

The problem with the large deficits was the worry that we couldn't find willing lenders who'd continue to buy so much US Treasury debt issues. This was particularly true when China announced and then began to implement a turning away from holding US Treasury obligations, not buying much new issues at auction, working on selling off the ones they had (which would worsen the oversupply of US debt instruments), etc.

That they apparently have 30% more than we thought means they have not been dumping T-bonds to worsen the oversupply and tank the price (i.e., raise the interest rates demanded).

I don't get your jibe about hope and change, exactly, with regard to this issue, whatsoever. O did not promise to reduce the Chinese holdings of US debt instruments, nor is it a good idea to try to make that happen, given the additional stress it would create in trying to finance our debt at roughly still these low interest rates we have now.

If this means anything other than the technical differences in two estimates, it WOULD be a good thing, and a credit to O, that the Chinese had apparently reversed their stated intentions to get out of holding our debt.

03-02-2011, 05:14 PM
All this proves is the old adage that if you owe the bank enough, you get to run the bank for a while.


03-02-2011, 05:34 PM
Another case of "revised" numbers from the government bringing more bad news.

Economic numbers from this administration have even less credibility than the esteemed forum member from Maryland!


03-02-2011, 05:36 PM
Isn't it odd that when Bush was POTUS the numbers were usually revised up later?


03-03-2011, 05:19 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pooltchr</div><div class="ubbcode-body">Another case of "revised" numbers from the government bringing more bad news.

Economic numbers from this administration have even less credibility than the esteemed forum member from Maryland!

Steve </div></div>

No, that's wrong. We didn't know the Chinese were HIDING their net position in Treasuries by using British banks as fronts for their Treasury purchases. That was a function of dishonesty, or in a more neutral description, a lack of transparency from the Chinese.

This is 'bad news,' how? Given our situation, it is good news.

What it means is that the Chinese are so committed to keeping the value of the yuan where it is in relation to the dollar that they cannot dump US Treasury instruments, and their said dumping of US Treasuries would be the bad news people warned about.

They aren't dumping them, but acquiring still more, and that is at least for now good news. It shows that their own national interests require them to continue to support the dollar's value, and that was in question up until this revelation.

03-03-2011, 06:34 PM
All we have heard from the left is how we owe our soul to China, how China will end up owning the country, and what a terrible thing it was to be "selling out" to China.

Now, at least from your vantage point, it's a good thing?????



03-03-2011, 06:49 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pooltchr</div><div class="ubbcode-body">All we have heard from the left is how we owe our soul to China, how China will end up owning the country, and what a terrible thing it was to be "selling out" to China.

Now, at least from your vantage point, it's a good thing?????


Steve </div></div>

It's wrong to place the complaints and worries about China only on the left. I imagine plenty of TPrs would agree, and frankly, anyone might agree that, all things being equal, it's a bad thing to be overly reliant on foreign rivals to finance us.

But consider that reality here is that we ARE in need of foreign rivals to finance us (more would be better than less), and this analogy:

We might all agree that getting way over your head in credit card debt is a very bad thing, which is best avoided. However, when you find yourself in that situation, maybe barely able to afford rent only by putting food on the credit card, is THAT really the time to bite the bullet and refuse to incur more debt, and thus either starve and/or become homeless in wintertime?

This is a sign that even as America is China's greatest debtor country, since America is also their greatest trading market, THEY are the ones equally trapped in this situation, and they've been forced to continue loaning to us.

Actually, it makes sense, because otherwise they would STILL have hugely growing amounts of retained US dollars (from the imbalance in trade) but no EARNINGS on those dollars (and a great fall in the value of those dollars).

Lemonade out of lemons.

03-03-2011, 09:48 PM
It can't last. A tipping point could be reached when it becomes not economically viable to support the dollar.

You might like this.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><span style='font-size: 14pt'>Sean Hannity Guest Exasperated From Preposterously Pointless Debate</span>

No one suggested debating Sean Hannity would be easy or intellectually stimulating, but it at least seems fun as Hannity guest Imogen Lloyd Webber, political commentator and daughter of famous composer Andrew Lloyd Webber, found out last night. First Hannity read off a litany of generic complaints with the British healthcare system from rationing to waiting periods to deteriorated care, all of which was dismissed pretty convincingly by Webber’s more concrete statistic that “life expectancy is longer in the UK than [in the US].” From there the two could not agree on facts or even on what issue they were going to debate, which in the end led to an exhausted Webber making a visibly disgruntled face to Hannity’s amusement. </div></div> link (http://www.mediaite.com/tv/sean-hannity-guest-exasperated-from-preposterously-pointless-debate/)

Around the 5 min mark, Hannity slips up and reveals the truth,

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> when we have to cut back and raise the retirement age and means test and <span style='font-size: 20pt'>steal people's social security</span>........</div></div>

Now theft is acceptable!


03-04-2011, 06:29 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body">A mere slip, which happens to all in the media. </div></div>