China to 'liquidate' US Treasuries, not dollars

[Hawkowl]

"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.
To my knowledge, this is the first time that a top adviser to China's central bank has uttered
the word "liquidate". Until now the policy has been to diversify slowly by investing the fresh $200bn accumulated each quarter into other currencies and assets – chiefly AAA euro debt from Germany, France and the hard core....

We don't know how much US debt is held by SAFE (State Administration of Foreign Exchange), the bank's FX arm. The figure is thought to be over $2.2 trillion. The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.....

Fair enough, but let us be clear: the reason China has accumulated the equivalent of 6pc of global GDP in reserves (like the US in the 1920s) is because it has held down its currency to gain market share. As Michael Pettis from Beijing University points out tirelessly, the mercantilist policy hollows out US industries and forces America to choose between debt bubbles or unemployment – or, of course, protectionism, though we are not there yet."

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/china-to-liquidate-us-treasuries-not-dollars/

Protectionism is going to be the only way out. Bring back tariffs baby! We are going to re-do the 1930's in spades!

[MrTriumph]

1. We are already repeating the '30s. This time the Cheating Chinese brought us to this point.

Chinese Cheating is a valid reason for a trade war.

Yes, Wall Street shenanigans assisted in bringing things to a head.

[femrap]

2. The US multi-national

Corporations gladly went to China and took all of our jobs with them. We make very little of anything now. No light bulbs, toothpicks, fans, matches.

I remember during Raygun's administration we were going to be a 'Service Economy.' It made no sense to me then and even less now. All we have now are Service Jobs at $8/hour. Those are the only jobs being created.

If anything, China would put an embargo on us....and watch us suffer. They have a huge amount of money. The rest of the world would buy their crap and China could make do without our trade.

China owns us. We are living the Decline of the American Empire....and I blame the multi-national corporations for it....which includes the defense industries.

Globalization is crap....and some days I hope Mother Nature will end it.

[ironrooster]

3. Oh, it's a sure bet that mother nature will end it/nt