NMA budget deal impasse cartoon

China dumps US Debt for 5th straight month

In addition to officially beginning to loot US pensions today, The US Tresaury released its Treasury International Capital (TIC) data for March 2011, and it's not the best of news.
Foreign holdings of dollar-denominated short-term U.S. securities, including U.S. Treasury bills and other custody liabilities, decreased $18.3 billion, and Foreign holdings of U.S. Treasury bills decreased $21.9 billion.

The key trend in US paper holdings continues to be China, whose total US debt holdings dropped for the 5th consecutive month in a row at $1144.9 billion, and the largest one month decline since November 2010.
-Zero Hedge

China dumping US Treasury Securities

In February, the largest holder of US debt dumped $600 million worth of US Treasuries, continuing a now 4 month streak of reductions in US bond holdings.
China still owns about $1.15 trillion in US debt, and the dumping was only a small fraction, but considering that US debt-holders have been abandoning the dollar for four straight months, the move should be viewed with concern.

"We hope that the U.S. government will take practical measures under a responsible policy to protect the interests of investors," China's foreign ministry spokesman Hong Lei said in a statement on the ministry's website, adding that China has noted the S&P warning.
-The Hill

Yeah, good luck with that China.

Clearly, they know better though. Earlier this week, China announced that it needs to return to "reasonable" foreign currency reserve levels.

In politician speak, this is a clear, “we are sick of the US Dollar and will be taking steps to lower our holdings.” Remember, the US Dollar is China’s largest single holding. And China has already begun dumping Treasuries (US Debt).
This comes on the heels of China deciding (along with Russia) to trade in their own currencies, NOT the US Dollar. Not to mention the numerous warnings Chinese politicians have been issuing to the US over the last 24 months.
In simple terms, China is done playing nice and is now actively moving out of US Dollar denominated assets. This is the beginning of the US Dollar’s end as world reserve currency.
The dimwits in Washington don’t understand this because their advisors are all Wall Street stooges who don’t think debt or deficits matter. After all, why would they? Their entire business model is now based on endless cheap debt from the US Fed. So it’s only logically (in their minds) that the US as a sovereign state engage in the same strategies.
-Phoenix Capital Research

Japan is the second-largest holder of US Debt at $890 billion, and they upped their ownership in February by $4.4 billion.
Obviously though, with Japan in need of its own liquidity for reconstruction, the earthquake-damaged nation might also be looking to continue the trend of dumping US Debt despite public announcements that they still have faith in the dollar.

The Con of the Millenium

So the basic outline of the Con is that private losses from the financialization of the U.S. economy were shifted to the public. Now to keep the Status Quo and Financial Plutocracy from imploding, the public is on the hook for $1.6 trillion in additional borrowing every year until Doomsday (around 2021 or so).
Having secured the backing of the Central Bank and Central State, the Plutocracy's only problem now is that it needs a risk-free source of high-yield income.
-Charles Hugh Smith

The US Teasury market is primarily dependent on one buyer: The Federal Reserve. If the Fed were to stop buying treasuries, rates would theoretically go up to try to induce anyone to buy them.
Well, then the Oligarchs would start buying up those suddenly higher-yield Teasuries...with all the money that they have been looting from the American people.
As rates increase, so will the demand for "austerity," (Would you care for some tea?) which should result in fewer bonds being issued, which should also result in a decline in rates, thereby boosting the value of the high-yield debt already purchased by the Oligarchs....with your tax money.


i.e. They're buying our country with our money, and we're getting nothing out of it but more and more debt.

This is the ultimate endgame of the financialization of the U.S. economy and the concentration of wealth and thus political power in the hands of those who skimmed the immense gains from that financialization.
-Charles Hugh Smith