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The Dumping Begins: Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested

Tyler Durden's picture


It appears that this time China's posturing is for real. Following up on our earlier post that Chinese military officials want to "punish" America by selling Treasuries, Asia Times Online is reporting that an explicit directive by the Chinese government has notified reserve managers to sell all risky US assets, including asset backed and corporates, and just hold on to explicitly guaranteed Treasuries and Agency debt. And from following TIC data we know that China's enthusiasm for MBS/Agencies over the past year has been matched solely by that of one Bill Gross.

From Asia Times:

Dollar-denominated risk assets, including asset-backed securities
and corporates, are no longer wanted at the State Administration of
Foreign Exchange (SAFE), nor at China’s large commercial banks.
Chinese government has ordered its reserve managers to divest itself of
riskier securities and hold only Treasuries and US agency debt with an
implicit or explicit government guarantee. This already has been
communicated to American securities dealers, according to market
participants with direct knowledge of the events.

It is not clear whether China’s motive is simple risk aversion in
the wake of a sharp widening of corporate and mortgage spreads during
the past two weeks, or whether there also is a political dimension.
With the expected termination of the Federal Reserve’s special facility
to purchase mortgage-backed securities next month, some asset-backed
spreads already have blown out, and the Chinese institutions may simply
be trying to get out of the way of a widening. There is some
speculation that China’s action has to do with the recent deterioration
of US-Chinese relations over arm sales to Taiwan and other issues. That
would be an unusual action for the Chinese to take–Beijing does not mix
investment and strategic policy–and would be hard to substantiate in
any event.

Furthermore, demonstrating just how seriously China is approaching a populist-driven adversarial stance with the US, was earlier speculation that instead of unpegging its currency (a move much desired by the US administration in its goal to further weaken the dollar and make China less competitive in the export market), China would reduce its trade balance not by the traditional way of currency inflation, but by the economic textbook footnote approach of raising salaries.

Higher labor costs would cut Chinese export competitiveness
while boosting domestic spending power and sustaining economic
growth, according to the bank. Premier Wen Jiabao’s government
has been pressed by U.S. and European officials to end a 19-
month yuan peg to the dollar to help diminish trade and
investment imbalances that contributed to the credit crisis.

“Wage increases are a better option because they largely
benefit Chinese workers,” Tao Dong, a Credit Suisse economist
in Hong Kong who has covered the Chinese and Asian economies for
more than 15 years, said in an interview yesterday. “Currency
appreciation will only result in Chinese exporters losing out to
competitors in countries such as Malaysia and Mexico.”

The strategy may limit gains in the yuan to 3 percent this
year, according to Tao. This month’s 13 percent increase in
minimum wage in eastern China’s Jiangsu province indicates that
higher pay will play an important role in officials’ efforts to
rebalance growth in the fastest-growing major economy, Tao said.

The wage decision “argues against a large one-off yuan
revaluation,” Ben Simpfendorfer, an economist with Royal Bank
of Scotland in Hong Kong, wrote in a note this week.

One thing is certain - China will now focus on doing precisely the opposite of what America would urge Chinese authorities to do, in order to establish itself as the focal point of negotiating leverage and increasingly humiliate the Obama regime. If this involves selling USTs or corporates (both fixed income and equities) so be it. This is further confirmed by carefully worded disclosure in today's copy of China Securities Journal:

The China Securities Journal, a government-backed daily, accused the U.S. in a tough-worded front page editorial of playing the "exchange rate card."

It said that, just as China didn't interfere with Federal Reserve purchases of U.S. Treasuries, "the U.S. has no right to interfere in China's exchange rate policy."

"Whether or not to appreciate is our own business," the newspaper said.

"Whether it will appreciate, when and by how much is an integral part of China's monetary policy."

It is not clear when the asset divestiture directive takes place or if it is already being enforced. Juding by the afterhours action in futures and the currency markets, some dumping may already be taking place. Alternatively, we now know just who it is that sell into every rally (yes, even in this market, every buyer is matched with a seller).


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Tue, 02/09/2010 - 23:05 | 224410 Scooby Dooby Doo
Scooby Dooby Doo's picture

Must be the big sell-off.

Tue, 02/09/2010 - 23:06 | 224413 Stu
Stu's picture

And so it begins.

Tue, 02/09/2010 - 23:42 | 224443 Stevm30
Stevm30's picture

Historians writing about this in the future HAVE to include the two feet of snow on the ground in Washington DC.  It makes for a perfect setting for a world crisis.

Wed, 02/10/2010 - 00:29 | 224515 Anonymous
Anonymous's picture

I'm skeptical about the news article. Had the Chinese actually notified US securities dealers to this effect as it claims, S&P E-Mini would be tanking as the price of borrowing money by corporations would be expected to rise a lot. It has drifted a little lower in the last seven hours.

Mon, 02/15/2010 - 02:00 | 231191 Anonymous
Anonymous's picture

That's a solid point. There has been no major fluctuation in the market to indicate the reality of a Chinese divestment of U.S. assests. Although, if ever they do decide to enforce harsh polices like the one cited in the article there would obviously be a significant hemorrhaging of the financial system here at home.

Tue, 02/09/2010 - 23:09 | 224414 Number 156
Number 156's picture

We may now witnessing the opening salvos of economic warefare.

This can only end in tears.

Wed, 02/10/2010 - 00:06 | 224482 Gold...Bitches
Gold...Bitches's picture

This can only end in tears.

thats why gold is attractive.

Wed, 02/10/2010 - 17:47 | 225612 Anonymous
Anonymous's picture

Yeah, gold is fabulously awesome... when you're hungry and cold. Because it's so good at providing you shelter and it tastes great with some butter and salt.

Oh right. Gold is only worth something if there are people who have the disposable income to buy it or the resources to use it for something. But good luck feeding yourself with your stockpile of it when everything tanks.

Want to know what's REALLY worth something in a real crisis? Food, drinking water, shelter, guns and bullets, and knowledge. That's it.

Wed, 02/10/2010 - 20:09 | 225867 Anonymous
Anonymous's picture

I am in agreement with your security in Gun's & Butter {so to speak} can you tell me how this will effect me in real terms, rather than the eco-gobblety-gook that mean little or nothing , unless in laymens terms. Regards, Donald

Wed, 02/10/2010 - 02:08 | 224598 Anonymous
Anonymous's picture

And I hope it includes India, because they've been way too far under the radar considering how many jobs they received from us.

Thu, 02/11/2010 - 13:46 | 226915 Anonymous
Anonymous's picture

Who sent the jobs there....of course the cannot be taken forcefully. You do not seem to be very well informed.
Why Did You not keep your jobs? Ask your Corporations.

Thu, 02/11/2010 - 13:49 | 226927 Anonymous
Anonymous's picture

Who sent the jobs there....of course the cannot be taken forcefully. You do not seem to be very well informed.
Why Did You not keep your jobs? Ask your Corporations.

Wed, 02/10/2010 - 12:55 | 225056 Anonymous
Anonymous's picture

Delicious golden tears, for those well prepared.

Golden shower for those not prepared.

Tue, 02/09/2010 - 23:08 | 224415 JackES
JackES's picture

Glad to see they act finally

Wed, 02/10/2010 - 05:11 | 224663 Problem Is
Problem Is's picture

On the edge of oblivion

A ship of fools sailing on

Rip it up... move down

Rip it up... move it down to the ground

Across the nation, around the world


Tue, 02/09/2010 - 23:16 | 224420 Scooby Dooby Doo
Scooby Dooby Doo's picture

Is Goldilox/Cramer going to redefine BRIC out of spite?

I mean de-acronymize or whatever.

Tue, 02/09/2010 - 23:16 | 224423 docj
docj's picture

So, how much cashola are we talking about here?  Eh?

Tue, 02/09/2010 - 23:18 | 224428 docj
docj's picture

BTW, looks like insiders are back to selling as fast as they can.

Tue, 02/09/2010 - 23:19 | 224431 Scooby Dooby Doo
Scooby Dooby Doo's picture

They are up to their eyeballs in Freddie/Fannie/Farmer-ie.

Tue, 02/09/2010 - 23:22 | 224433 docj
docj's picture


Hey, doesn't Da Fed have a metric crapton of that on their balance sheet too?

What could possibly go wrong?

Tue, 02/09/2010 - 23:25 | 224436 Number 156
Number 156's picture

We will start finding out tomorrow morning. when the markets open.

They're going to start a stampede in asset backed securities.

Tue, 02/09/2010 - 23:16 | 224424 putbuyer
putbuyer's picture

It's funny. I still often try to educate the drones on yahoo message boards that not all shit goes up, even with good cooked books. They never listen.

The movie "The Road" was interesting. I suspect these same idiots will be killing humans for food.

Tue, 02/09/2010 - 23:22 | 224434 Missing_Link
Missing_Link's picture

Why even bother posting there?  They can't be educated.

Wed, 02/10/2010 - 10:31 | 224813 Anonymous
Anonymous's picture

Right, with a name like 'Putbuyer' you should be posting here anyway - where the prevailing belief is that all markets HAVE to go down all the time, and when they don't actually go down it is solely due to "stupidity"/"book-cooking"/"PPT"/"Federal Reserve". ANYTHING but ACTUAL MARKET ACTIVITY which would just be way too confusing.

Don't bother putting any contrarian/optimistic info on here either - ask Leo about how immature these boards can be with contrarian information.

Wed, 02/10/2010 - 12:19 | 225001 Ripped Chunk
Ripped Chunk's picture

Whaaaaaa!  I want to go back in time to 1997!

Wed, 02/10/2010 - 13:58 | 225134 faustian bargain
faustian bargain's picture



Tue, 02/09/2010 - 23:17 | 224426 ozziindaus
ozziindaus's picture

Easy fix. Offset dump by an FR monetization pump followed by sales of F18's to the Dalai Lama.

Tue, 02/09/2010 - 23:26 | 224437 Scooby Dooby Doo
Scooby Dooby Doo's picture

I'm sure the Lama is getting his F-18's from the Chinese. It's 14% off all flying objects for Valentines day week.

Tue, 02/09/2010 - 23:26 | 224438 Number 156
Number 156's picture


Wed, 02/10/2010 - 01:21 | 224567 Anonymous
Anonymous's picture

ROTFL! I love it.

Wed, 02/10/2010 - 11:37 | 224918 Trifecta Man
Trifecta Man's picture

The Dalai Lama.  I never saw that painting.

Tue, 02/09/2010 - 23:18 | 224429 Tahoe
Tahoe's picture

bounced at 1063.00 @21:41EST.

Tue, 02/09/2010 - 23:19 | 224430 Anonymous
Anonymous's picture

hory sheet

Tue, 02/09/2010 - 23:28 | 224439 Anonymous
Anonymous's picture

Well, when you're the last man standing with cash, as Buffett says. Are they devious enough to destroy US and Europe financially? Hell, why not, they'd just buy commodities on the pennies for the future versus paying on the dollars. The sad thing is they could do it, heck, they got enough real estate for 15 years.

Wed, 02/10/2010 - 00:08 | 224485 Anonymous
Anonymous's picture

The middle kingdom was always very self-sure, self-centered, and self-sufficient. It was always the barbarians that brought tribute to them. Their culture reigned supreme. Western trade wanted their porcelains, their lacquerware, teas, spices, silks, ornate hand carvings, jade. They wanted gold and silver. Early western fortunes were made on the Chinese exports. Like selling beads to Indians. Except the grubby uncivilized group was the Europeans.

China only opened to global trade upon force, and then by desperation to rebuild. Now that they have sufficiently mastered the engineering techniques and scientific method of the west (and now that the West is totally broke), they will shut the borders and concentrate on a renewed kingdom.

Funny thing that. We NEED them. They really don't need the West. They have goods, production, a surfeit of savings. Time to dump the presumptuous round-eyes. China's the future. The west will be internecine warfare and bickering about the rapidly dwindling remainders of a once-great set of nations.

Wed, 02/10/2010 - 12:35 | 225030 Anonymous
Anonymous's picture

Thank you!

It is good to see someone who actually knows what is going on with China. 9 times out of 10 people will say "China needs the U.S. to buy its stuff" but that frame of logic is based off of lack of knowledge.

Since when did a population of 1 billion need a population of 330 million to buy its goods when the smaller population doesn't have any money? Thinking in smaller terms, could you imagine 3 people building goods all to sell to 1 person and that 1 person has nothing to offer in return for those goods?

Unfortunately there is only a small list of possible outcomes from this scenario.
1- The U.S. goes into protectionism mode (which it is already starting to do by imposing tariffs on imported goods)- Worst possible idea as it is too late to do so.
2- The U.S. pays off its debts by selling away resources (land, oil access rights, fisheries rights etc)- Possible but not probable. I don't see the citizens of the U.S. going for this, but who knows, I've heard toll roads/bridges are already being sold to foreign companies to manage.
3- The U.S. imposes inflation to be competitive on a global scale in terms of manufacturing and real goods production. - This would anger anyone who currently holds American debt as it would lose its value tremendously. Also it would anger U.S. citizens who would not want to work for pennies a day to be competitive with china's manufacturing.

Tue, 02/09/2010 - 23:34 | 224444 Cursive
Cursive's picture

A lot of ZH regulars think the dollar is shit.  Well, gold sinks and shit floats.  That's life.

Wed, 02/10/2010 - 01:37 | 224574 KevinB
KevinB's picture

I often hear this, but whenever I'm done and I look, it's at the bottom of the bowl. It never floats.

I must have some heavy shit, man.

Wed, 02/10/2010 - 01:48 | 224582 Quantum Noise
Quantum Noise's picture

I'm sure the Chinese had something to do with it... who knows how much Pb is in the Chinese version of Yellow No.5....

Wed, 02/10/2010 - 01:59 | 224588 Anonymous
Anonymous's picture

I know this is off topic but, I as a nutritionist I will tell you that a healthy fesses will float not sink. Most likely too much meat in your diet needs more fiber from fruits and vegetables.

Wed, 02/10/2010 - 12:21 | 225009 Ripped Chunk
Ripped Chunk's picture

Better get on that puffed wheat diet..........................................or sink

Wed, 02/10/2010 - 02:37 | 224621 Anonymous
Anonymous's picture

I think it means you are a healthy eater. If you eat junk food, greasey food, your poop will float. At least, that's my understanding, but I'm not a poop expert, although I've been told I'm full of it more frequently than I would like.

Wed, 02/10/2010 - 06:45 | 224692 Anonymous
Anonymous's picture

Shit only floats if you eat enough roughage

Wed, 02/10/2010 - 06:48 | 224693 Anonymous
Anonymous's picture

Shit only floats if you eat enough roughage.

Wed, 02/10/2010 - 08:02 | 224711 Anonymous
Anonymous's picture

Ducks and witches float- must mean they weigh the same and are both made of wood. Burn the witch!

Wed, 02/10/2010 - 12:15 | 224994 Anonymous
Anonymous's picture


Tue, 02/09/2010 - 23:34 | 224445 Gilgamesh
Gilgamesh's picture

China trade balance +$14.2B vs fcast +19,2

let's see about that bounce...

Tue, 02/09/2010 - 23:35 | 224446 Going Down
Going Down's picture

'Nuf Said

To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.

--Sun Tsu

Tue, 02/09/2010 - 23:35 | 224447 Gubbmint Cheese
Gubbmint Cheese's picture

meanwhile S&P futures say, "Pthh.. whatever.. China doesn't have the balls.. " they are off 7..



Wed, 02/10/2010 - 05:10 | 224662 1984
1984's picture

The Chinese don't bluff - hard to save face...

Tue, 02/09/2010 - 23:35 | 224448 Anonymous
Anonymous's picture

Vulcan's never bluff

Tue, 02/09/2010 - 23:36 | 224449 buzzsaw99
buzzsaw99's picture

I hope they stick it to the usa banks good with a boycott of crap securities.

Tue, 02/09/2010 - 23:36 | 224450 Anonymous
Anonymous's picture

Got TBT?

Tue, 02/09/2010 - 23:37 | 224451 Anonymous
Anonymous's picture

this interesting.....on the one hand fuck communist china....the decision to sell arms to the taiwanese was the correct decision.....

yet i am not sure that this selling of assets is not but a clever way to allow obama to abandon the taiwanese because the communists made him do it....indeed usa financial considerations are grave matters of state and security thus we must dump the taiwanese for state security....

on the other hand, if fake president obama has made a principled decision to support the taiwanese it could expose usa financial and state weakness and demonstrates once again the follies of becoming dependent upon adversarial foreign states....selling your jewels and soul for a quick economic fix is not brilliant statecraft to put it mildly....

but obama has put himself in the position of being humiliated especially if he caves in and cancels the arms sales....

i don't know what the desired outcome here is: 1. dump taiwan 2. stand up to communist china....

usually the usa bends to communist countries because the plutocrats have established the communist and totalitarian governments....and a lot of the times the tension is just a game behind the scenes - fake war - like the fake permawar on terror.....

if obama stays the course (quite doubtful) it should serve as a wakeup call for the usa to puts house in order....

not sure how harmful this selling would be. something to much does china really have of the types of securities it wants to sell?

taiwan should remain free.

Wed, 02/10/2010 - 00:37 | 224521 moneymutt
moneymutt's picture

the thing that really irritates me is the Dalai Lama thing...Taiwan should be free, but I can see any country having concerns about someone selling arms to a nearby neighbor that is a concern to them..but Dalai Lama simply advocates that Tibet be treated in accordance to Chinese constitution, DL has not fomented violent rebellion. That like us retaliating if Chinese visited with someone advocating not for Hawaii independence but Hawaii to be treated as more independent than a state per some such pre-existing status in our we would cut off China if they met with peaceful radical advocating a legal method of changing our relationship with Hawaii...what evah, I'm tired of US, everyone being scared of China in this regard.

And wasn't Reagan credited with taking out USSR by talking tough to them? 

Wed, 02/10/2010 - 04:12 | 224645 Anonymous
Anonymous's picture

Are you kidding me? Go and tour the US to tell that the Indians should be able to contract whatever alliance they want as they are sovereign people. You wont last long.

Even Haitians have tasted for more than 200 hundreds years the issue of living on a strategical platform off the US coasts.

Painting the US as they are not does not help.

Wed, 02/10/2010 - 15:55 | 225364 moneymutt
moneymutt's picture

Seriously, if China or Venezuela invited an indigenous US leader that was advocating for more mineral rights, more independence via legal, constitutional methods for his tribe, say he/she had a case winding its way to SCOTUS, do you think US would start making big economic threats about someone else meeting with said leader..say Hawaiin leader was asking Hawaii have a more independent status like psuedo sovereign nation status of Indian reservations but was doing it in legal, civil political manner, making a constitutional argument, or if it was a Puerto Rican leader or Guam leader, really you see US going China/DL on this?...While a US admin might talk against this movement, resist the change in status, I have a hard time seeing how even more hardline US admins like Reagan or W's starting financial trade wars over the China meeting with such a person.

Don't get me wrong, I have huge critiques about bad things US does, and no doubt we politically and economically mess with people who have done small things...shoot look at the horrors of our actions in Nicaragua, Guatemala, and what, are there even 5 million people in either those countries? What real threat were they to us other than diminishing profits for some multi-national?

But just as US is wrong in many things, just as we are oversensitive, too protective about many things, (see Israel), so is China...

tyranny and imperialism abound...

not trying to say or even figure out which is country/regimes are worse, but DL is no where near as radical as, say, Arafat was, as he was willing to be violent, call for Israel to be wiped out...not quite DL talking points, and yet China bristles...get over it...

Wed, 02/10/2010 - 16:45 | 225507 velobabe
velobabe's picture

the utter chaos created in developing the panama canal.

Wed, 02/10/2010 - 09:45 | 224749 Anonymous
Anonymous's picture

So I jump ship in Hong Kong and make my way over to Tibet, and I get on as a looper at a course over in the Himalayas. A looper, you know, a caddy, a looper, a jock. So, I tell them I'm a pro jock, and who do you think they give me? The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald... striking. So, I'm on the first tee with him. I give him the driver. He hauls off and whacks one - big hitter, the Lama - long, into a ten-thousand foot crevasse, right at the base of this glacier. Do you know what the Lama says? Gunga galunga... gunga, gunga-galunga. So we finish the 18th and he's gonna stiff me. And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice."

Wed, 02/10/2010 - 17:05 | 225533 velobabe
velobabe's picture

man i would love to play golf with his holiness. i even have a pre 1990 ping eye 2 wedge.

Thu, 02/11/2010 - 03:17 | 226359 faustian bargain
faustian bargain's picture

Zero Hedge theme night...I'll take "Bill Murray movies" for 200, Alex.


You're a lot of woman, you know that? Yeah, wanna make 14 dollars the hard way?

Wed, 02/10/2010 - 00:46 | 224530 Double down
Double down's picture

Sounds like the Chinese are administrating the medicine the Greeks could use a mouthful of.

This is good news in disguise

Wed, 02/10/2010 - 05:35 | 224667 Ned Zeppelin
Ned Zeppelin's picture

Without researching it, there has been chatter here and elsewhere that the "arms sales" to the Taiwanese are no surprise to the Chinese, and that they were already well underway in the prior (what was that guy's name) Administration. Meaning, not sure you can cast stones on Obama for this one, and the Chinese are simply being the Chinese.  Why hang on to these soon to be underwater Fannies etc.? They are reacting to the end of the QE road, as announced, and agree with Bill Gross, apparently. Sure, implementing this now helps them vent some steam from some anti-US factions but it is the right move anyway. Why take a bigger loss? Time to get out of everything but dollars and USTs.

Wed, 02/10/2010 - 15:51 | 225365 ThreeTrees
ThreeTrees's picture

My thoughts exactly.  Arms sales is an excuse.  There's no way the Chinese would telegraph a move like this if it hinted that they actually see the growing cracks in this growth facade.  They're gonna get out while the getting's good and they're gonna save all the face they can doing it.

Tue, 02/09/2010 - 23:38 | 224452 Tahoe
Tahoe's picture

and bounced again at 1062.75 @ 22:30EST

Tue, 02/09/2010 - 23:40 | 224453 Anonymous
Anonymous's picture

Time to dump Chinese assets.

Also time to boycott Chinese products.

They want financial war? We give them financial war.

Tue, 02/09/2010 - 23:45 | 224461 Scooby Dooby Doo
Scooby Dooby Doo's picture

Brilliant! So then what will become of the ZeroHedge 'Store'?

No more cups and stuff?

Wed, 02/10/2010 - 00:12 | 224496 Anonymous
Anonymous's picture

As long as the thongs are still made in the USA...

Wed, 02/10/2010 - 00:36 | 224520 Anonymous
Anonymous's picture


Wed, 02/10/2010 - 00:48 | 224536 David449420
David449420's picture

Oh, they'll still be available. You'll have to pay for them in Gold, though.

Wed, 02/10/2010 - 10:24 | 224801 Anonymous
Anonymous's picture

We can live without the junk...
(sorry zh)

Tue, 02/09/2010 - 23:40 | 224455 Miramanee
Miramanee's picture

Resistance is futile. We are the Borg.

Tue, 02/09/2010 - 23:43 | 224458 Yossarian
Yossarian's picture

hahaha, China is so powerless yet they masquerade is being so powerful.  As Chanos said, they send us stuff and we send them paper- the situation is clearly not ideal for either party but if they want to stop buying our paper assets we will stop buying their stuff.  We can easily cut back 20% on their stuff but they can't take a 20% reduction in demand for their exports.  Such a situation would mean a painful but manageable recession/depression for us and probably a revolution for them as their urban centers will be full of angry, unemployed former rural farmworkers.     

Wed, 02/10/2010 - 00:53 | 224544 strike for retu...
strike for return to reality's picture

>they send us stuff and we send them paper<

If it were that simple, the Chinese govt could simply have one half of China dig a hole and the other half fill it in.  (Which would have the added benefit of making the Keynesians here happy.  At least the ones making Goldman Sachs type wages who can afford stuff not made in China.)



Wed, 02/10/2010 - 01:13 | 224558 Anonymous
Anonymous's picture

Yeah I'm on that the end, in a game of stamina, the US would win out.

Wed, 02/10/2010 - 01:38 | 224575 Cyan Lite
Cyan Lite's picture

Cutting back on buying their stuff would probably be good for the USA.  That means (gasp) we'd actually have to produce something here in the States...

Wed, 02/10/2010 - 06:35 | 224688 Anonymous
Anonymous's picture

In terms of producing things...
1:) Do you think that will happen? No.
2:) Who are we going to borrow money from to
make all sorts of new industry/factories? Ooops.
3:) Do you think Asia will let us get
our industry back? Hahaha.

Wed, 02/10/2010 - 08:44 | 224723 MarkD
MarkD's picture

Not sure if Americans are ready to fill their shopping cart only part way, or buy something they actually need and not due to their wants. Workers over here complain if they don't get 5 weeks paid vacation, sick days, health care, dental, club memberships.....etc. All that combined with gov intervention in our business operations, how can we make stuff over here and keep costs at a level where American's will be able to "Save Money.....Live Better". Unless a company is defense related or is deeply in debt, I don't see how they will survive by producing products for our QVC shoppers. I am a small busness owner and am amazed how many sick days, vacation days and holidays friends have off that work at regular jobs. We are fat and lazy and don't want to give up our shopping desires.

Wed, 02/10/2010 - 09:16 | 224736 Anonymous
Anonymous's picture

Ever stop to think that while your friends aren't at the office during their sick days, vacation days & holidays, that maybe, just maybe, they're out doing their own thing making money -- *not* via their main source of income?

Well, maybe not your friends. But I assure you, there are people out there who use their free time to produce some side income.

To be honest, you sound a bit jealous of your friends, and using that jealousy to justify casting a wide net and erroneously stereotyping Americans.

Wed, 02/10/2010 - 02:05 | 224594 Anonymous
Anonymous's picture

Exactly correct, Yossarian. If push comes to shove and the US simply shuts down trade with China we will get a little poorer, if that is possible. But China collapses without the U.S. export market. At the end of the day China will be sitting there with a bunch of empty factories. We'll build new ones in Vietnam, Thailand, or maybe ever here!

Sell, China, sell.

Wed, 02/10/2010 - 04:16 | 224648 Anonymous
Anonymous's picture

Another one. Funny. On black Fridays, people die to buy those chinese junk goods. Can China do without USD? It will be difficult as they will need to convert Huan on a world stage. Can the US live without chinese made goods? Even more difficult. Chinese low cost goods are what holds the US society together. Already, there is a growing frustration over the matter of jobs. Now if people are cut from being able to afford to buy stuff, prepare the ammo.

Wed, 02/10/2010 - 06:30 | 224682 Anonymous
Anonymous's picture

Do you think the largest USA company, Wal-Mart,
wants to see that happen? Probably not.
Yeah, yeah, but if it did, it would be better
for our economy. Well, tell that to the Wal-Mart

Wed, 02/10/2010 - 06:30 | 224683 Anonymous
Anonymous's picture

Do you think the largest USA company, Wal-Mart,
wants to see that happen? Probably not.
Yeah, yeah, but if it did, it would be better
for our economy. Well, tell that to the Wal-Mart

Wed, 02/10/2010 - 06:33 | 224686 Anonymous
Anonymous's picture

Do you think the largest USA company, Wal-Mart,
wants to see that happen? Probably not.
Yeah, yeah, but if it did, it would be better
for our economy. Well, tell that to the Wal-Mart

Wed, 02/10/2010 - 06:33 | 224687 Anonymous
Anonymous's picture

Do you think the largest USA company, Wal-Mart,
wants to see that happen? Probably not.
Yeah, yeah, but if it did, it would be better
for our economy. Well, tell that to the Wal-Mart

Wed, 02/10/2010 - 12:31 | 225025 Ripped Chunk
Ripped Chunk's picture

I repeat myself when under stress

Sat, 02/13/2010 - 06:22 | 229680 Anonymous
Anonymous's picture

Really? Look around you. Practically EVERYTHING we buy comes from China now. If they turn off the consumer goods spigot then what the hell are we going to do? We barely have a domestic manufacturing base anymore. It took decades to dismantle our manufacturing capacity and it will take a hell of a long time to build it back up again. In the meantime, can we really go without clothes, electronics, toothpaste, and millions of other mundane consumer items we take for granted every day? As for the Chinese, having a surplus of consumer goods on their hands due to reduced American demand hardly seems like a problem. They'll find ways consume any surplus themselves - the proposed increase in Chinese wages is a perfect example of how this would come about. Don't kid yourself: we need their stuff a lot more than they need the U.S as an export market.

Tue, 02/09/2010 - 23:45 | 224459 plocequ1
plocequ1's picture

Do you blame them? Who the fuck would want to hold on to these cheezy, Foul, Shit smelling, Stanky, Corrupt, low grade timebombs anyway? These are time bombs ready to go BOOM!!

Tue, 02/09/2010 - 23:45 | 224460 ShankyS
ShankyS's picture

When do we get to stop being the bitch in this relationship?

Tue, 02/09/2010 - 23:52 | 224467 Anonymous
Anonymous's picture


Buy China, Sell America, Euro, Etc. One the "relief" of whatever keeps Greece afloat for a few more years is.. If that..

Wed, 02/10/2010 - 00:31 | 224518 Anonymous
Anonymous's picture

Soon--we're reaching a jobs calamity of our own!

Wed, 02/10/2010 - 00:10 | 224488 Gold...Bitches
Gold...Bitches's picture

depends on what you mean.  so long as were the reserve currency we get to send paper to countries for commodities and finished goods.  those holding ever more worthless bits of paper that the US 'guaranteed' to pay, but not its value, are the ones who are the bitch.

Tue, 02/09/2010 - 23:46 | 224463 Anonymous
Anonymous's picture

So why is gold still going sideways?

Tue, 02/09/2010 - 23:49 | 224464 SayTabserb
SayTabserb's picture

It seems to me the Obamanauts were talking to their Commie financiers about this very thing for some time before this announcement. Doesn't the explanation for the sudden "explicit guarantee" of all things Fan&Fred on Xmas Eve suddenly snap into place? And the commission to reduce the deficit, by Exec Order if necessary? A whole new kind of bipartisanship.

Wed, 02/10/2010 - 03:13 | 224632 scaleindependent
scaleindependent's picture



 1 +

Wed, 02/10/2010 - 08:29 | 224717 CONners
CONners's picture

We have probably already seen the implementation of this policy for some time. Why show your cards until you must?

Wed, 02/10/2010 - 08:45 | 224724 perchprism
perchprism's picture


And yet Fannie and Freddie remain off-balance sheet, despite the xmas eve pronouncement. 

Wed, 02/10/2010 - 12:04 | 224978 Anonymous
Anonymous's picture

Let's not go bringing the farcical deficit commission into any serious discussion here. That was a Republican idea, and as soon as Congress actually put it up for action, they turned it down (because if Democrats support it, they're against it).

Tue, 02/09/2010 - 23:51 | 224465 Greenbacks
Greenbacks's picture

The Chinese advantage in a trade war; their population is much more able to withstand the turmoil. America is a nation of soft, spoiled whiners.

Tue, 02/09/2010 - 23:56 | 224471 SayTabserb
SayTabserb's picture

No doubt they're tough. But as far as population is concerned, our very softness probably means that in terms of total mass, we're probably pretty close, even if they have 4 times as many (normal sized) people. Thus, we can get through it through liposuction, using the blubber to light the street lamps.

Wed, 02/10/2010 - 00:02 | 224476 Anonymous
Anonymous's picture

That's the entrepreneurial spirit!

Wed, 02/10/2010 - 00:03 | 224478 buzzsaw99
buzzsaw99's picture

screw them. screw the usa maggots too.

Wed, 02/10/2010 - 00:14 | 224498 Anonymous
Anonymous's picture

Yeah. A hard American is one who goes three full hours without a happy meal. Americans really are pathetic when called upon for real sacrifice.

Wed, 02/10/2010 - 12:36 | 225034 Ripped Chunk
Ripped Chunk's picture

And your nationality (oh mighty hard one) would be???

Wed, 02/10/2010 - 20:23 | 225892 Anonymous
Anonymous's picture

you must be French

Tue, 02/09/2010 - 23:54 | 224469 Anonymous
Anonymous's picture

This does not end nicely for the United States.

They can destroy us via our currency.

Wed, 02/10/2010 - 02:00 | 224590 Quantum Noise
Quantum Noise's picture

WTF are you talking about? How much do they have... $2T? Pffft! Ben can print these in an afternoon...not to mention that the rich guys in the middle east will be pretty pissed off if their USD denominated assets go down just because some Chinese general felt insecure about his underinflated undies.

Wed, 02/10/2010 - 13:43 | 225115 Anton LaVey
Anton LaVey's picture

US$2 trillion printed in an afternoon? More like 45 seconds. You need to update a lot of databases, but these computer thingie are pretty freaking fast these days.

Tue, 02/09/2010 - 23:56 | 224470 VegasBD
VegasBD's picture

I was guessing it would be 2011, looks like 2010 is gonna be the beginning of the end now. =\  Im ready, bring it on. Much thanx to ZH and originally Chris Martenson for the wakeup call.

Wed, 02/10/2010 - 00:01 | 224475 buzzsaw99
buzzsaw99's picture

zh gets the scoop, again.

Wed, 02/10/2010 - 00:02 | 224477 Great Depressio...
Great Depression Trader's picture

Interesting how things could unravel just because of a arms sale. Obviously there are other factors involved that have created tension between the two nations. This could be the spark that begins to deteriorate relations between the two nations.

Wed, 02/10/2010 - 00:07 | 224483 johngaltfla
johngaltfla's picture

They're just a bunch of retarded backasswards rice farmers. Denninger said so.

No big deal.

Wed, 02/10/2010 - 00:11 | 224493 Anonymous
Anonymous's picture

Ah! Ignorant prejudice the bastion of self-delusion. The chinese will be telling their children to eat because starving miscegenated and blundering westerners can't.

Although they may be eating each other.

Wed, 02/10/2010 - 00:08 | 224484 Bear
Bear's picture

Wow ... leave it to the unscrewable Chinese to be the first one out

Wed, 02/10/2010 - 00:12 | 224495 Anonymous
Anonymous's picture

Why can they wait after Chinese New Year?

Wed, 02/10/2010 - 00:17 | 224500 Anonymous
Anonymous's picture

Weekly Geopolitical News and Analysis100208: Simultaneous military, G7 and BIS summits point to something big
Major world changes are clearly close on the horizon. This past weekend saw a G7 Finance Minister’s summit near the North pole, a BIS central bank governor’s summit in Australia and a gathering of the world’s military leaders in Germany.

Wed, 02/10/2010 - 00:21 | 224504 economessed
economessed's picture

I demand a new 10 minute youtube video from walstreetpro2!!!!


Wed, 02/10/2010 - 00:24 | 224507 moneymutt
moneymutt's picture

where's Leo, there has to be somethign bullish about this...

and where's combustible assets, that burning bag head always seem so appropriate for posts like this

Wed, 02/10/2010 - 00:27 | 224512 Anonymous
Anonymous's picture

Following up on our earlier post that Chinese military officials want to "punish" America by selling Treasuries

Uh, this explicitly states they're continuing to hold Treasuries.

Wed, 02/10/2010 - 00:29 | 224514 Double down
Double down's picture

Did they not just confess to owning a crapload of US equities, something like $9 billion?  It seems ALL Chinese economic decisions are political.


Wed, 02/10/2010 - 12:14 | 224992 Anonymous
Anonymous's picture

And politics is war by 'other means'....

Wed, 02/10/2010 - 00:31 | 224517 Anonymous
Anonymous's picture

The House always wins.

Wed, 02/10/2010 - 00:35 | 224519 Going Down
Going Down's picture


Asia Times Online may not be correct in its reporting. Why would the Chinese--or any seller--let its intent be known? And if ATol "knows" that these sales are on the horizon, why aren't investors in Shanghai or in Hong Kong bailing out of dollars right now?


There's a wonderful expression in Shanghainese which basically translates into "stir the pot." It's used just in such circumstances to confuse your negotiating party. China may sell but not today.





Wed, 02/10/2010 - 00:57 | 224546 Double down
Double down's picture

Shit is always-already-fully valued.  Who is going to buy this stuff, thought it was toxic?  No buyer no sale only huff and puff. 

Wed, 02/10/2010 - 01:14 | 224559 Bear
Bear's picture

Why now ... GS will surely take it up another 10 SPY pts

Wed, 02/10/2010 - 01:31 | 224570 Anonymous
Anonymous's picture

yes the source seems questionable

Wed, 02/10/2010 - 02:20 | 224607 Anonymous
Anonymous's picture

They let it be known because it gets their political position across without ambiguity and because they are hedged against the drop.

Wed, 02/10/2010 - 00:38 | 224523 Anonymous
Anonymous's picture

Just personally speaking if I wanted to sell something I don't want at its best price, I wouldn't run around saying I think its crap and intend to sell boat loads of it. These Chinese must be damn clever.

Wed, 02/10/2010 - 00:39 | 224526 Anonymous
Anonymous's picture

RK had it right. "Here lies the man that tried to hustle the East."

Wed, 02/10/2010 - 00:48 | 224531 jmc8888
jmc8888's picture

You mean raising wages can work? Who knew?


Obama sure got some bad advice, like just about everything since at least june 2008. 


These are interesting times my friends, watch and learn, I know I will. 


Well the Chinese hoped in Obama as much as we did.  You could say the left is hating him, the right obviously does, the independents have abandoned him, the Chinese have lost hope, along with most of the rest of the world, and the bankers ran circles around him. Gee I wonder if any of those are linked? Effects meet the cause.

Yeah Obama, to the Chinese you were our last hope (I suspect).  Once you re-started the Bush tactics of American Bullschmidt all over again, that hope faded (I suspect).  Now they will protect their interests the best way they can as they now know a real solution will not appear from Obama, and I suspect the Chinese reaction to that fact will be very bad for us. 

It seems soon will be the time to choose, the right way of placing the blame where it lies, the system, and those who run it and change to something better.......or......blame each other, the poor, the sick and lazy who had nothing to do with causing this crisis.

Because that my dear friends was the difference between the American Revolution, and the French Revolution.

In our version, cooler heads prevailed

In theirs, heads were cooler because they rolled detached from bodies

I'm optimistic to how we turn out, but we must admit to ourselves we're far closer due to ignorance to the latter (french revolution) than to our more desirable American Revolution. 

Imperialist Monetarism MUST end

Good luck


Wed, 02/10/2010 - 08:52 | 224726 Anonymous
Anonymous's picture

I agree with much of what you say but the honest answer to the blame game is look in a mirror. ALMOST EVERY mther fker alive in Western World , especially the US and UK , has a share of blame in this cluster fk. We allowed corrupt and inept politicians to stay in office. We bought into the media subliminal bombardments of greed. We all wanted more. We all got more. At the expense of our grandkids.
To blame this economic meltdown on just men in suits on Wall St is too convenient. The poor and lazy have their share of the blame in this , oh yes.

Wed, 02/10/2010 - 10:20 | 224788 SWRichmond
SWRichmond's picture

There was nothing subliminal about the consumerist media bombardment.  The lumpen were a necessary part of the bubble.  Lifestyles of the Rich and Shameless and all.

As for "we all wanted more", be careful about the "we".  Some small percentage of us never believed it was real in the first place.  Maybe it's my background in math.

Wed, 02/10/2010 - 16:10 | 225403 moneymutt
moneymutt's picture

I think our biggest sin was staying conveniently ignorant of what horrors weere being done in our name, with our tax dollars, we didn't mind while we were fat and happy..and of course, we messed up by not minding our own store, now getting less fat, and less happy and have enemies galore...

Wed, 02/10/2010 - 00:47 | 224533 Double down
Double down's picture

Here is your mark to market

Wed, 02/10/2010 - 00:48 | 224535 monopoly
monopoly's picture

moneymutt, wheres Leo. LMAO


And let the Races begin.

Just the timing all.

Wed, 02/10/2010 - 00:50 | 224540 Get_to_the_choppa
Get_to_the_choppa's picture

So where can I get my Cold War 2.0 hat?

Wed, 02/10/2010 - 01:08 | 224553 Double down
Double down's picture


Wed, 02/10/2010 - 10:08 | 224770 John McCloy
John McCloy's picture

We are still waiting for China to make them for us. 30 million hats is a tall order. You did not think an apparel company here would actually hire Americans to do the job? How else would the three people at the top of the company save money while everyone else is underpaid. Send all the jobs to China I say..great plan. 

Great for stocks..Right Cramer?

Wed, 02/10/2010 - 00:50 | 224541 Anonymous
Anonymous's picture

Ben and tim save the world because the concern is social unrest............and what do we get, a boiling pot leading to social unrest.

IMHO, it just seems a matter of time before it is every country for themselves. Not that countries will become protectionist, more of a....f u, i don't care if I do biz with you, here's the price no cod's, pay up front in full.

Wed, 02/10/2010 - 00:52 | 224543 Anonymous
Anonymous's picture

I wonder how many shares of Wal-Mart are held by China?

Wed, 02/10/2010 - 01:41 | 224576 fedusw (not verified)
Wed, 02/10/2010 - 03:25 | 224635 Anonymous
Anonymous's picture


Wed, 02/10/2010 - 08:53 | 224727 colorfulbliss
colorfulbliss's picture

SPAM alert

Wed, 02/10/2010 - 01:45 | 224578 Anonymous
Anonymous's picture

Arm sales... UP

Buy any kind of DEFENSE contractor and see it go BOOM.

The game is older than China's lame aspirations to become a super power.

Gong Hai Fat Chink.

WE are the masters of the game. Now chop chop buy some UST or we're blocking the Suez Canal, the Panama Canal and the Northwest Passage.

China needs to export. China needs to import.

One billion people need to eat, work, shit and sleep.

.. oh and they need fuel to power their People's army and their People's power plants and their People's cars.

US rules. US controls reserve currency and most importantly resources. End of story.

Wed, 02/10/2010 - 01:57 | 224585 BlackBeard
BlackBeard's picture

Bring it on bitches.  Let's crush their exports.

Wed, 02/10/2010 - 01:58 | 224587 Anonymous
Anonymous's picture

Typically, when there is a generalized selling of 'riskier' foreign assets, that often equates with domestic concerns of either liquidity or, more grievously, solvency. I merely suggest that this being linked to a Taiwan arms deal may be an attribution error, and that the issue may lie, not in foreign policy, but rather within the Chinese banking system. Just a thought.

Let's ask Mr. Chanos what he makes of all this muckedy-muck.

Wed, 02/10/2010 - 02:01 | 224591 chindit13
chindit13's picture

Here's one of the few instances where taking a conspiratorial bent might be prudent.  I read this as an indication that China's domestic problems are more serious than we suspect.  China traditionally puts up some bogeyman against which popular frustration can be directed (rather than at the Party).  Usually they use Japan, but the "white devil" works better at a time when China has illusions of being Papa Asia, and a new and weak Japanese PM is making nice to them.  To do this right before Lunar New Year (Kung Hei Fat Choy to all) is highly unusual, as happy happy is the preferred societal mood.

There is no way China can consume its own production in any near term time frame, so at this time they need the US (and Western markets) more than the West needs them (the US can always default by CUSIP number on UST's as a last resort).  China also needs the technology which they have been absent in producing for nigh on 2500 years.  At present they get this technology from either joint ventures (a bit) or theft (most). Cut off the tech flow and China's economy stagnates at closer to the t-shirt and carnival prize stage of development than high margin computer chips and cutting edge bio-science.

If Obama doesn't send Timmy or Hillary over there this afternoon, then the US feels pretty secure with the hand it holds.


Wed, 02/10/2010 - 02:21 | 224609 Altan311
Altan311's picture

they are sitting on a huge basket of technology, including workable nuclear fusion assuming they can find the fusionable material to run some reactors. Lots of it on the moon, not so much here, but that explains their space programs goals nicely doesn't it? They have jumped the shark so to say and are perfectly capable of innovating. Don't let backward ass American opinions cloud your judgment. I am Mongolian, and my people beat the Chinese by starving them out, and then stealing their siege engineers. Wouldn't surprise me to see some weather warfare in the near future...

Wed, 02/10/2010 - 02:30 | 224616 chindit13
chindit13's picture

Appreciate your comments, but I don't have too much access to "backward ass American opinions", as I have resided in various Asian countries for the last 30 years, speak a number of the languages, and have had a front row seat to the various and sundry "miracles".  Not saying I am right, just that I have "informed ignorance".

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