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

The end of "The Age of America"

It appears that many of you are interested in this whole subject of Chinese investment in US treasuries, so I thought I'd throw you another post-easter, sugar-free bone

The International Monetary Fund has just dropped a bombshell, and nobody noticed.
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, whomever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
-MarketWatch

In case you don't believe what you just read, try this on for size: China is mulling cutting their US Holdings by TWO THIRDS from $3 tillion down to $1 trillion. In case you aren't quick in the mathematics department, that's $2 trillion in US Debt that China is looking to divest itself from.

BEIJING, April 23 (Xinhua) -- China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.
China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

For those of you keeping score of such things, yes, $2 trillion is about how much the Fed recently printed up out of thin air.

So why is the Fed carpet-bombing the global economy? To protect the domestic economy? That makes no sense, for the Fed's policies are pushing oil up to the point where there is no way to keep the U.S. economy from tipping into recession. It isn't acting on behalf of the domestic economy, of course; it's acting on behalf of domestic banking and Wall Street.
The Fed is busily destroying the village, suposedly to save it--only it's the global village. But the Fed isn't the only player with a stake in its game, and the other players, notably China, are tipping their hand that they will have to act, and soon, to protect their own domestic economies from the Fed's destructive policies.
-Charles Hugh Smith

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.