China still buying record amounts of U.S. bonds: report

[steven johnson]

There has been some concern that as the stock market has somewhat rebounded, there would be a shift of investments away from the US Treasuries. With Chine, at least, it doesn't seem to have happened.

Mon May 25, 2009 5:38am EDT

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TOKYO (Reuters) - China's official foreign exchange manager is still buying record amounts of U.S. government bonds, in spite of Beijing's increasingly vocal fear of a dollar collapse, the Financial Times reported.

In a story on its website, the FT quoted Chinese and western officials in Beijing as saying China was caught in a "dollar trap."

The newspaper said China had little choice but to keep pouring the bulk of its growing reserves into U.S. Treasuries, which remains the only market big enough and liquid enough to support its huge purchases.

The dollar index, which measures the dollar's value against a basket of six major currencies, hit a five-month low late last week, hurt by concerns that U.S. government debt may lose its AAA rating.


http://www.reuters.com/article/newsOne/idUSTRE54O15P20090525

[madrchsod]

1. they have to buy our bonds...

if we devalued the dollar or stopped selling bonds china would collapse.

[Yupster]

2. IT's a funny thing

When you owe money to someone you become their slave.

But once the amount reaches a certain point the roles almost switch.

The lender has to do what the borrower wants in order to have some hope of getting his money back.

I think we've reached that point with our lender China.

[eridani]

3. Sort of like that old joke

If you owe the bank $5000 and you can't pay it back, you have a problem.
If you owe the bank $50 million and you can't pay it back, the bank has a problem.
If you owe the bank $500 billion and you can't pay it back, the government has a problem.