Chinese Treasury Holdings Revised $268 Billion Higher To $1.12 Trillion, Fed Still Top Holder Of US Debt

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Mon, 02/28/2011 - 17:40 | 1005013 gwar5
gwar5's picture

Oopsy. Was somebody sandbagging or just misplace $268 billion? 

Mon, 02/28/2011 - 18:12 | 1005126 Drag Racer
Drag Racer's picture

out of Bernanks mouth was a number around 2 trillion for China's holdings. either he does not know(?) or there is quite a bit of sandbagging

Mon, 02/28/2011 - 19:13 | 1005308 asdasmos
asdasmos's picture

Marc mentions that the bond market is 'rigged by the federal reserve and other institutions' again.


Marc Faber on CNBC 02/28/11

Mon, 02/28/2011 - 19:50 | 1005350 Spalding_Smailes
Spalding_Smailes's picture

HSBC - Multi-asset China research ~ ( 250 pages )

By 2020, China will have six provinces with an annual GDP of more than USD1 trillion, equal to six countries the size of Russia (or Spain or Canada).  With 47% of the population now living in cities, eight Chinese cities have a population of more than 10m, and 93 have more than 5m. By comparison, in the US only New York City has a population of more than 5m. 

Kunshan, one of 2,000 county-level cities, produces more than half of the world’s notebook PCs, or 85m units – and yet IT manufacturing is not even its top-ranked industry.

The danger, however, is that over-investment leads to overcapacity. For example, Kunshan’s strong position in IT is being challenged by the municipality of Chongqing. Together they could soon supply 80 per cent of the world’s notebook PCs – raising concentration risks as well as oversupply concerns. Third, overcapacity may lead to bad credits. For example, a recent report submitted by the China Academy of Science to the State Council raised concerns about unsustainable debt levels and the risk of loss-making activities. It noted that the 1,000km Wuhan to Guangzhou bullet train, which started operating earlier this year, was running at less than half its capacity and would never make enough money to pay off the loans used to finance it.

Mon, 02/28/2011 - 23:34 | 1005919 zaphod
zaphod's picture

The chinese are going to blindly build capacity until there is a huge supply glut, and then they are going to build about 10x more manufacturing sites, etc.


In the end it will be a disaster for them.

Mon, 02/28/2011 - 19:27 | 1005360 asdasmos
asdasmos's picture

Peter Schiff talks Fed + Inflation - CNBC 02/28/11

Mon, 02/28/2011 - 20:34 | 1005477 hambone
hambone's picture

Spectacular - the "Fast Money" traders in full attack of Schiff because he's been saying the same thing for two years and apparently the FM traders cite the low 10yr T (joke) and high stock market refutes Schiff...the closing remark from the CNBC smart guys is "corporate earnings have never been better, you have to dismiss Schiff".

Will make another great clip of Schiff was right - just the Fast Money folks can't think 3 months, 6 months, a year out...that kind of timeframe is whacky for those who trade on the nanosecond.

CNBC is fucking pathetic'er than ever.

BTW - DXY could be slipping tonight out of it's trading range...if that ball starts rolling there may be little stopping it.

Mon, 02/28/2011 - 22:12 | 1005715 RmcAZ
RmcAZ's picture

Wow... "Corporate earnings have never been better, you have to dismiss Schiff".

CNBC just hit another new low... I didn't think it could get any worse... these guys must be living under a rock.

Mon, 02/28/2011 - 17:42 | 1005024 AldoHux_IV
AldoHux_IV's picture

Once again, the best budget solution for our country would be to end the federal reserve and restructure our debt with actual government issued and backed currency.  Reform the treasury and try those sons of bitches: Bernanke and Geithner for their involvement (with financial executives as well) in the biggest economic social class genocide history has seen.

Mon, 02/28/2011 - 18:21 | 1005175 traderjoe
traderjoe's picture


- What does the lettering at the bottom of your avatar say?

Mon, 02/28/2011 - 20:14 | 1005459 RezaAlmaneih
RezaAlmaneih's picture

+ 2

That is the only good way the solve the problem. Hopefully the banksters will understand.


Mon, 02/28/2011 - 20:36 | 1005504 narnia
narnia's picture
the best solution is to let the system collapse & start over again.  these people bought fiat, they don't deserve a security instrument in return.  when we start over, we don't have a federal reserve & have a backed currency.  
Mon, 02/28/2011 - 20:57 | 1005546 Nobody special
Nobody special's picture

China is busy racing the guy with the USD print button.  Who will win, the productive Chinese who supply their goods for fiat, or those who create unlimited fiat at the push of a button.  Oh the suspense. /sarc

I count my blessings that the Chinese are still collecting virtual wealth.  They know it's worthless; they realize it cannot be redeemed.  Their choice is a gift, and it buys time for the awakened.  A reset, as you suggested, will happen.  But better the masses get a chance to prepare.  Every day, more sheeple awake from their slumber.  Every day, more people are gifted a fighting chance.  One must realize China's choice to buy UST is a gift of clean air and a delay to US civil war.  Enjoy the freedom and leverage the gift.

Mon, 02/28/2011 - 17:46 | 1005038 topcallingtroll
topcallingtroll's picture


And people thought I was crazy for saying it was mostly china and others wanting to hide their intentions.

When china's bluff didnt accomplish squidly squat, then it became a sign of weakness to pretend to hide their purchases any longer.

China cant hurt us in any way without their government and economy collapsing. If china really tried a financial war they are in such a weak position it would result in the end of a one party dictatorship.

Mon, 02/28/2011 - 17:51 | 1005049 SDRII
SDRII's picture

If the BLS isnt to be believed and all other data is suspect why so certain this data is clean? Not making a judgement one way or other just saying selective application is dangerious. It is probably a safe assumption that the global capital flows data is hgih up on the list of things to monitor - see comment below on Sester moving to national Economic Council

Mon, 02/28/2011 - 18:03 | 1005094 disabledvet
disabledvet's picture

careful what you ask for--you could get a two party dictatorship in response.

Mon, 02/28/2011 - 18:36 | 1005220 spartan117
spartan117's picture


In order for China to buy USTs, they need to have dollars.  In order to get dollars, they need to sell RMBs.  Who is buying all those RMBs?  If Chiina crashes, what happens to the value of the RMB?  So tell me again, who's problem is it really?

Mon, 02/28/2011 - 18:45 | 1005234 DonutBoy
DonutBoy's picture

They don't need to sell RMB's to get dollars.  They have a trade surplus.  They get more dollars than they know what to do with. 

Mon, 02/28/2011 - 18:50 | 1005252 topcallingtroll
topcallingtroll's picture

China gets dollars when they sell stuff to us. Since they cheat us with a pegged currency they get more dollars than they know what to do with from us. The first thing to do is end these trade imbalances by making china play fair and float their currency. If they wont do that our only other option is to push more pain and inflation their way.

Mon, 02/28/2011 - 18:52 | 1005256 spartan117
spartan117's picture

A net surplus from selling stuff to us?  So, if the dollar tanks, how is it China's problem again?  Yes, the value of that surplus goes down the drain, but the USD won't be able to buy shit in the global economy, and you say this is China's problem?  How so?

Mon, 02/28/2011 - 22:10 | 1005707 chinaguy
chinaguy's picture

"When china's bluff didnt accomplish squidly squat, then it became a sign of weakness to pretend to hide their purchases any longer."

Exactly +1

Mon, 02/28/2011 - 17:48 | 1005041 SDRII
SDRII's picture

Sester, now working on National Economic Council, made this point repeatedly.

Wonders what role he is playing coordinating the imbalances


Mon, 02/28/2011 - 17:50 | 1005047 smlbizman
smlbizman's picture

i know this is out there ,but what if the fed is supplying chinia the paper to buy the paper

Mon, 02/28/2011 - 18:16 | 1005143 Drag Racer
Drag Racer's picture

I think it's more like the fed and China both get it from the same player.

Mon, 02/28/2011 - 19:47 | 1005408 Spalding_Smailes
Spalding_Smailes's picture

Bad Paper ???

Brazil may be heading for a subprime crisis

Brazil has been on a credit binge – over the past 5 years credit growth has run at 2.4 times nominal gross domestic product. This compares with 2, 1.6 and 1.2 times for Russia, India and China respectively. Normally this isn’t a problem, as leverage is rising from a low level and the ratio of loans to GDP is “only” 46 per cent; this compares with private sector debt in the US at 165 per cent of GDP.

However, the problem lies with the burden this debt is imposing on borrowers. In spite of a fall in inflation to a manageable rate of 6 per cent, the banks in Brazil charge an average lending rate of approximately 25 per cent and, in case of consumer lending, the rates are well in excess of 30 per cent. This means the Brazilian borrower base is paying “real” interest of circa 20-25 per cent against a norm of 1-3 per cent in most countries – borrowing in Brazil is punitively expensive.

For consumers specifically, the ramifications are serious as the debt service burden has risen to 24 per cent of disposable income and is set to rise further as rates push higher. We expect the burden to rise to an exorbitant 30 per cent by 2012. To put this into context, the US consumer “blew up” when the debt service burden hit 14 per cent (with a current read of approximately 12 per cent). In other words, the Brazilian consumer has twice the debt load from a cash flow perspective relative to a US consumer who is still widely regarded as being over leveraged.

The situation in Brazil is worryingly similar to the sub-prime crisis in the US. A lot of credit is being pushed by the banks at high rates to consumers who ultimately won’t be able to service the debt.

Mon, 02/28/2011 - 20:39 | 1005512 Harmonious_Diss...
Harmonious_Dissonance's picture

Good points on the overheating there Smailes. I'm thinking very slow dominos...

Mon, 02/28/2011 - 23:38 | 1005929 johny2
johny2's picture

I stay in Brazil every year. The reason why the sub prime is not going to happen there is becouse there are no 125 % mortages offered in Brazil at low interest rates, at least as far as I know. The economy of Brazil may follow if the rest of the world crashes before it, but analysis mentioned from Mr Spalding above, are misinformation.

Mon, 02/28/2011 - 17:51 | 1005051 smlbizman
smlbizman's picture

chinia..yeah thats the ticket

Mon, 02/28/2011 - 17:56 | 1005073 km4
km4's picture

For a minute I was worried that Banana Ben would lose his #1 postion to the Chinese ;)

Mon, 02/28/2011 - 18:04 | 1005098 disabledvet
disabledvet's picture

so was he!  Remember REHAB'S FOR QUITERS!

Mon, 02/28/2011 - 17:56 | 1005076 10kby2k
10kby2k's picture

O'Bommy's birth certificate is in Bejing?

Mon, 02/28/2011 - 17:58 | 1005078 overmedicatedun...
overmedicatedundersexed's picture

268 billion in bonds just another suitcase across the Italian border carried by Chinese/korean ..businessmen.

Mon, 02/28/2011 - 19:29 | 1005369 tired1
tired1's picture

# Max Keiser thinks the bonds were being transfered to allow banks to show sufficient capitalization for audits. These bonds could be used over and over at different banks (if they were authentic) to show that the bank had the required capitalization ratio. The regulators never check whether the same bonds are used at different banks. # All of us here know the Fed has been involved in shenanigans of epic proportions, so it is not hard to believe they slipped up this once and got caught in their shell game of debt.

Mon, 02/28/2011 - 18:00 | 1005086 user2011
user2011's picture

I don't get it... US dollar is dropping in value. Why Chinese want to buy more ? in 2010, Japan has lost 80 billion dollar worth as US dollar devalue. Chinese lost even more as they have more treasury and dollar reserve.

Mon, 02/28/2011 - 18:43 | 1005232 topcallingtroll
topcallingtroll's picture

The chinese do it to keep their people employed and their bubble going longer. Ben is now making it hurt by devaluing the dollar.

Mon, 02/28/2011 - 18:57 | 1005274 zaknick
zaknick's picture

My guess is that the chinese politicos over there need export markets to maintain social order via low unemployment. I've read a couple of times that there are lots of public protests in China every year we never hear about. If there is a failed auction/economic collapse, serious bad juju follows tor all. Besides, to them it's just monopoly money to keep the peasants distracted while they and fellow SCO member countries continue acumulating real wealth (silver, gold etc).

So, they prop up the euro and the dollar...... their export markets and our lost jobs!

Mon, 02/28/2011 - 18:02 | 1005095 narnia
narnia's picture

china is choking on $ with the balance of trade & the carry trade. they've been burned in the US stock market, in the US real estate bubble...  they have to do something with these things, so they figured they might as well get some food stockpiles up (  i hope that's the reason, not preparation for war or some other factor.  the chinese realized this action (in addition to the worldwide supply issues & the easing of monetary policy worldwide- which was pushing speculation into commodities) was exacerbating the demand for food worldwide, so they stopped.  they have decided the best place to put these $, the only place that doesn't cause disruption, is toxic US public debt.   

Mon, 02/28/2011 - 18:06 | 1005110 disabledvet
disabledvet's picture

the word "Jasmine" comes to mind.  A spice?

Mon, 02/28/2011 - 18:13 | 1005131 Drag Racer
Drag Racer's picture

What just happened to the US bond market??

Mon, 02/28/2011 - 18:13 | 1005135 rookie
rookie's picture

so why can't we only default on the red column?  break up the tbtf, shut down derivatives casino, enact simpson/bowles budget plan.

come on ZHers, let's make a plan. . . i need a plan. . .have children

Mon, 02/28/2011 - 19:14 | 1005300 Threeggg
Threeggg's picture

The plan ?

Buy Plastic Rice Futures !

Mon, 02/28/2011 - 19:44 | 1005402 rookie
rookie's picture

riiight . . . you masters of the universe just keep on fighting posting collateral for derivatives, fight simpson/bowles to keep your mortgage interest deduction on your place in Greenwich and East Hampton, and of course, …must keep your carried interest.  Good luck enjoying all of your profits from plastic rice futures when the currency crashes.  You all are the ones who are smart enough to help figure a way out of this mess, yet you refuse to for short term gain . . . could be very short term.

Mon, 02/28/2011 - 18:21 | 1005167 InconvenientCou...
InconvenientCounterParty's picture

Huge props for ZH are due. More truth reverse-engineered from the smoke and mirrors.

Financial information people can use, early enough to be relevant. G.O.A.T is in play here.

Mon, 02/28/2011 - 22:12 | 1005712 chinaguy
chinaguy's picture

-268 billion

(from the UK-hee -hee)

Mon, 02/28/2011 - 18:29 | 1005191 bob_dabolina
bob_dabolina's picture

I'm sure the folks at ZH have noticed this but how the fuck is Japan, a country with 200% of GDP, Americas 3rd largest creditor to the worlds number 1 most indebted nation?

Isn't that kinda' like a homeless man lending money to a sub-prime borrower? Like what the fuck? There has got to be something going on behind the scenes that allows this to happen. Maybe someone in a privilaged position and a bit of forensic journalism can figure this out...ahem...ahem. Or is there something simple I am missing?

Mon, 02/28/2011 - 18:51 | 1005213 hambone
hambone's picture

Japan has one of the largest trade surpluses in the world along w/ China and Germany.  They still spend far more than they take in in tax revenue and probably have more unfunded liabilities (per capita) than anybody. 

So, in debt they are but still more dollars coming in than yen going out (my Yoda moment).

However, all that money is pretty much owed internally.  Japan's gotta do something w/ that trade of the many reasons looking to Japan to guide America through it's debt debacle isn't overly realistic.

To me, the really strange one is the UK???  Anybody have the skinny on that???  You scratch my back, I'll make sure again that the Germans don't take you over in next WW???

Mon, 02/28/2011 - 19:00 | 1005278 narnia
narnia's picture

the japanese people have such a culture of saving & pride in government that they are willing to lend their government money at whatever interest the government states. they self-finance deficits within their own borders.  savings into government debt- as opposed to the private market- a lot of which was used to purchase toxic US debt- may not only explain the lost decades of no economic growth, but sets them up for a double whammy of wealth destruction when the music stops. 

Tue, 03/01/2011 - 05:56 | 1006364 Quaderratic Probing
Quaderratic Probing's picture

Japans cars and tv's sold in USD are recycled back to America in bonds... as does China's products profits also end up in US bonds. If they convert the USD to home currency they lose the cheap product advantage.

Mon, 02/28/2011 - 18:33 | 1005207 kaiten
kaiten's picture

Ben is better than Wen ;)

Mon, 02/28/2011 - 18:34 | 1005214 AUD
AUD's picture

I didn't think it was the Fed propping up the UST market, they are merely distorting it.

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