China Sold Second-Largest Amount Ever Of US Treasurys In December: And Guess Who Comes To The Rescue

Tyler Durden's picture

While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December - the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper - one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! 


This was the second largest dump by China in history with the sole exception of December 2011.


That this happened at a time when Chinese FX reserves soared to all time highs, and when China had gobs of spare cash lying around and not investing in US paper should be quite troubling to anyone who follows the nuanced game theory between the US and its largest external creditor, and the signals China sends to the world when it comes to its confidence in the US.

Yet what was truly surprising is that despite the plunge in Chinese holdings, and Japanese holdings which also dropped by $4 billion in December, is that total foreign holdings of US Treasurys increased in December, from $5716.9 billion to 5794.9 billion.

Why? Because of this country. Guess which one it is without looking at legend.


That's right: at a time when America's two largest foreign creditors, China and Japan, went on a buyers strike, the entity that came to the US rescue was Belgium, which as most know is simply another name for... Europe: the continent that has just a modest amount of its own excess debt to worry about. One wonders what favors were (and are) being exchanged behind the scenes in order to preserve the semblance that "all is well"?

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caShOnlY's picture

questions about past hyperinflations

What will make this one so very different is there will be no pictures of paper dollars piles up.  No photograph of a desperate mother buying a loaf of bread with a wheelbarrow.  No, this time it will be DIGITAL hyperinflation.  For this very reason hyperinflation will come hard and quick as the FED/GOV can load digital cards quickly with no need to wait in line at the bank. 

css1971's picture

Fundamental misunderstanding about money. You assume it exists. It doesn't.

Money is the counterparty to debt. They anhialate each other. ~97% of money is borrowed into existence so, when it gets paid back, it vanishes.

Lots of valuation of the markets is based on borrowed money. It doesn't have to go anywhere. When the margin call comes in, the debts get paid off, and vanish along with the money.

JeffB's picture

or when the debt is defaulted upon, the 'money' vanishes as well.

AllWorkedUp's picture

You get junked because you're like me, you've given up. There are no markets anymore, just computer entries and algorithims.

Gold was the only true monetary instrument that could set the board straight, and thru monetary shell games and derivatives they've defeated real money. Nothing matters anymore. Banks own govt's, courts, legislatures, presidents, King and Queens. We live in a monetary matrix that bleeds every breathing thing.

The only thing left is poverty and war and complete submission or death.

NotApplicable's picture

I'm assuming that Benron found a way to get some money to Belgium, as the idea that Belgium represents true demand is ludicrous.

Which, of course, fits the ZH narrative precisely.

fonzannoon's picture

it would have been the highest recorded UST holdings even if you CANCEL OUT Belgium.

W/ Belgium (who was buying all year): Dec 2013: 5794.9 billion
W/O Belgium (just cancelling it for argument): Dec 2013: 5738.7 billion
2nd highest month ever recorded: Mar 2013: 5725.0 billion

Doesnt quite fit the doom porn narrative though does it...

QE4eva. The fed can never exit. That narrative.


kito's picture

how odd that the truth you put forth elicits red arrows. some people just cant handle the truth. 

RSloane's picture

I was just thinking the same thing, Kito.

kito's picture

this is ruining the "reality" for so many on here. fonz does us a favor by giving us the other "half" of tylers truth, which actually seems to provide a clearer picture of whats going on, and so many mindless doomers are wetting their pants over the thought that the status quo is quite alive and quite "healthy".


dont worrry though, im sure michael synder will be along any minute with 20 new intelligible signs of doom that the below average iq reader will take to heart........

fonzannoon's picture

To add to that...I take very little credit for what I bring to the table here (except fart jokes, they are all mine). Most of what I post on the Fed/UST conversation comes from someone that I speak too offline. Who has been booted from here for having a dissenting opinion, and could seriously back it up. ZH also seems to be warming up to that idea that most of what we are seeing from the world's CB's is being done to combat deflation, which Kito got cursed out for 3 years for pointing out was a significant threat, and still is. So all I have ever been asking for is some self examination instead of using whatever rationalization we can find to fit a narrative that does not seem to be taking place.


fuu's picture

The rise in treasury holdings by foreign cb's also puts a dent in the deflation scenario. Money supply is still expanding...

fonzannoon's picture

I can't even define what we are seeing. I tried to define it as barflation. People are coughing up their assets just trying to hang in there at this point. I just notice that when anyone tries to explore these issues they get shouted down. As Chinit13 eloquently put it on the banker thread..."Such is the analytical skill level and knowledge of the current Zerohedge crowd that they make Dick Bove seem like a combination of Isaac Newton and Hercule Poirot".

silverserfer's picture

well the money printers dont need the 99% anymore, they can print everything they need. defation as amonetary term is DEAD doesnt exist any more in a broken market such as this. Its lower income  poeple not being able to afford anything anymore. Then trickle down isint trickling down. Corportaions make more by  triying to nudge in closer to rub elbows with the money printers.  

The Limerick King's picture

Holy shit...when did all these status-quo Klepto shills start organizing their asinine posts...complete with green arrows???

fonzannoon's picture

haha thanks. I have been here a lot longer than that. I'm surprised at the limerick king jumping in. I guess Tyler needed some help. You guys really seem to be unable to handle a little introspection.

kito's picture

limerick it must be a conspiracy, replete with the ability to print green arrows.  would it be better if we just go mehhhhhh tyler, mehhhhhh??? i guess fight club has gone the way of america, the loss of spirit to challenge anything anymore, just graze and move on. 

yrbmegr's picture

@fonzannoon:  Posters here are hair-trigger hyper-analysts.  Every microsecond is a new apocalypse.  Shit goes up.  Shit goes down.  What's really happening happens over at least months, if not years/decades.  One data point does not a trend make.  People need to look at the big picture.

kito's picture

@fuu, no it doesnt. it shows that trillions of dollars still cant light wet wood. the cbs are wasting their time trying to build a fire with unseasoned wood. you can stoke and stoke but all you get is some smoke and a fizzzzzzz...

JeffB's picture

What seasoned wood should they be using kito?

Any prescriptions you recommend for getting us out of this economic quagmire?


chubbyjjfong's picture

"Money supply is still expanding..."

I don't believe money supply is expanding at all.  The Fed is printing to replace that which is not lent out by banks to the real economy, and they cannot keep up.  Money supply is contracting along with money velocity. 

JeffB's picture

If the Fed's numbers are accurate, it looks to me as though the money supply is increasing, albeit not as fast as they're printing it, since they're sucking some of it back out of the economy by paying the banks interest to put it on deposit at the Fed, rather than lending it out.

Here are some Fed graphs:

Monetary Base

M1 Money Stock

MZM Money Stock

M2 Money Stock




JeffB's picture

Oops. Duplicate. Sorry 'bout that.

silverserfer's picture

it sounds like you got a fever, and the only cure, is more down arrows. You gota have more down arrows!

silverserfer's picture

I think Fonestar went frothy mouth and is on a serial junk rampage! 


JeffB's picture

fonzannoon: ..."ZH also seems to be warming up to that idea that most of what we are seeing from the world's CB's is being done to combat deflation, which Kito got cursed out for 3 years for pointing out was a significant threat, and still is. ..."

Well ZH itself has been posting articles warning about the possibility of deflation for years.

I did a quick search of their front page using "deflation 2010" to get some of the articles from 3 to 4 years ago, and there were some 5 pages of links to articles that at least included "deflation" in the story. Many of them warned of the danger of same.

From the 1st page of results:

2010: Inflation Or Deflation?

(Brait Capital Management, Reality) With every deep-thinking pundit looking out at 2010 ... of one simple outcome: do we have inflation or deflation. Numerous opinions have been set forth ... [deflation/inflation] will be the dominant theme in the year to come, accompanied by pretty charts and convoluted ...

Story - Tyler Durden - 12/31/2009 - 13:46 - 109 comments - 0 attachments

Nobel Winner Dares To Go There: "No Reason To Fear Deflation... Greece May Benefit From Gold Standard"

"Historically, there is no reason to fear deflation," Nobel Laureate Thomas Sargent explains ... companies cutting prices, "this is not a dangerous deflation, but part of the necessary correction so that ... result, unit labor costs go back, and the company may cut prices. This is not a dangerous deflation, but ...

Story - Tyler Durden - 11/16/2013 - 12:45 - 340 comments - 0 attachments

Japan Pummeled By Soaring Food And Energy Prices, Plunging Wages And Ongoing Core Deflation

the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 percent ... extended the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 ... no longer even afford gfasoline, and oh, we almost forget, core deflation. But, hey, look over ...

Story - Tyler Durden - 09/27/2013 - 07:22 - 46 comments - 0 attachments

What Wage Inflation? Unit Labor Costs Have Biggest Annual Drop Since 2010

costs plunged by 1.3%, the most since the second quarter of 2010, and prove that not only is the Fed's ... it great that the Fed is protecting us from deflation? Unit labor costs are measured Unit labor costs are measured in burgers flipped per hour, here. Boy, deflation a little Boy, ...

Story - Tyler Durden - 02/06/2014 - 12:32 - 48 comments - 0 attachments

Abenomics Leads To Worst Core Deflation In Three Years

2010 , missing expectations by the most in 10 months! But wasn't Abenomics supposed to be... ... inflation/deflation false dilemma. This binary way of looking at an entire economy will be the ruin of the modern ... central banks, inflation and deflation are very much as binary as life and death. When the system becomes ...

Story - Tyler Durden - 04/25/2013 - 18:48 - 60 comments - 0 attachments

Jackson Hole Presenter Warns: "Bottom Could Fall Out Of The Economy As It Did In The Great Depression"

is back to normal. " And, again, life every economist, he present the catastrophic deflation ... not even Hank Paulson come up with on short notice. The deflation ... early 2009 that rapid deflation might break out and  cause the economy to collapse as in 1929 to 1933 ...

Story - Tyler Durden - 08/23/2013 - 11:49 - 219 comments - 0 attachments

US Resumes Importing Inflation, Exporting Deflation, As Annual Import Prices Increase Highest Since August 2008

side, where prices posted the first drop since July 2010. "The downturn was led by a decline in ... inflation and exporting deflation. What does that mean if you are a chairman of the Fed reserve? Why, that ...

Story - Tyler Durden - 08/16/2011 - 07:45 - 30 comments - 0 attachments

Why It's Going To Be A Whole Lot Worse Than In The 1930s

economies. His - so far - spot on projection that " first the threat of deflation (1), followed by a helicopter drop (2), followed by big reflation (3), followed by a real deflation (4), and then followed by ... Maloney explains in this brief clip, while we have seen great deflations before, in the '30s one-third of ...

Story - Tyler Durden - 12/01/2013 - 17:33 - 219 comments - 0 attachments

How The Middle Class, Or The New Rentiers, Is Stuck Between Deflation And Hyperinflation

(default, Equity Markets, Eurozone, Gross Domestic Product, Hyperinflation, Investment Grade, Sovereigns) "In 2010, the authorities seem to have only two choices: allow defaults, which lead to deflation and tremendous stress to the political system and public order; or inflate so that debts ...

Story - Tyler Durden - 06/24/2010 - 08:25 - 83 comments - 0 attachments

St Louis Fed Explains Why The Fed Has Cornered Itself Between Deflation And (Hyper) Inflation

every debate over hyperinflation/deflation: the money multiplier, and its current reading of well below ... in reserves of over $1 trillion, total commercial bank loans were some $200 billion lower in May 2010 ...

Story - Tyler Durden - 08/24/2010 - 11:20 - 85 comments - 0 attachments

Is This Why Gold Prices Are Rising?

increasing and then decreasing uncertainty since 2010 have coincided with gold prices risisng then falling. ... really match..   are Tyler's kids working the front desk now? Deflation deflation Deflation deflation deflation.  Gold is dead, bitches. It was not stupidity or by It was not stupidity or ...

Story - Tyler Durden - 02/11/2014 - 21:16 - 71 comments - 0 attachments

Morning Gold Fix: July 6, 2010

With regard to Gold appreciating during deflation. Generally speaking, it will sell-off if deflation is ... deflation threatens to unravel into a default. Greece fallout would be a classic example of that. Gold is a ...

Story - Tyler Durden - 07/06/2010 - 07:52 - 64 comments - 0 attachments

As Bitcoin Soars Over $300, A Question Arises: Could It Become A Global Reserve Currency?

Oh, and each new idea built on top of bitcoin will further expand its usage and further deflate the ... who seek Not good for those who seek inflation to deflate away debt. > No there ... an interesting thing to watch though.  Yes, that point was in 2010 Yes, that point was in ...

Story - Tyler Durden - 11/07/2013 - 11:40 - 398 comments - 0 attachments

Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World

February 2010. To say that this data conflicts massively with all the rumors, fairytales and lies about a ... lowest since February 2013, and then, going back all the way to 2010. But at least the Fed is tapering ... bag.......DEFLATION !!!!!!!!! It would be interesting to It would be interesting to see if Deere, Hitachi, ...

Story - Tyler Durden - 12/19/2013 - 09:35 - 47 comments - 0 attachments

End Of QE?

debt deflation but maybe debt deflation is what is needed . QE is nothing but heavy-handed market ... explained QE to the American public in 2010 by announcing that his job was to occasionally manipulate ... bring in super deflation by ending QE so the rich are even richer while the poor get screwed even ...

Story - Tyler Durden - 06/22/2013 - 16:55 - 121 comments - 0 attachments

Bill Ackman's HKD Revaluation Trade As Predicted By Deutsche Bank In 2010... And Why DB Thinks It Is Wrong

as November 2010. To wit: "Public complaints against inflation are already loud, and may ... deflation as low as -6%. The current inflation rate of roughly 3% looks benign in this context. In 2008 when ...

Story - Tyler Durden - 09/16/2011 - 21:46 - 39 comments - 0 attachments

US Import Prices Post Surprising Jump, Rise 0.2% In May Despite First Decline In Fuel Import Prices Since September 2010

the H2, this is just the beginning) making the push for "deflation combating" ... Imports prices, May saw the first Fuel Import price decline since September 2010, dropping -0.2%, with ... September 2010. In May, a 0.4 percent drop in petroleum prices more than offset a 4.1 percent increase in ...

Story - Tyler Durden - 06/10/2011 - 07:41 - 20 comments - 0 attachments

JPM Sees "Most Extreme Ever Excess Liquidity" Bubble After $3 Trillion "Created" In First 9 Months Of 2013

the period between the end of 2010 and the beginning of 2012 when excess money supply was negative. ... residual): 1993-1995, 2001-2006 and Oct 2008-Sep 2010 . These were periods of strong asset price inflation ... relics and other deflated hard assets. Let the mad dash for the last Let the mad dash for ...

Story - Tyler Durden - 10/28/2013 - 14:04 - 138 comments - 0 attachments

An "Austrian" Bill Gross Warns: "The Days Of Getting Rich Quickly Are Over... Getting Rich Slowly May Be As Well"

the IMF and other model-driven forecasters might assume. Perhaps the whisper word of “deflation” at ... one trillion dollars in 2009–2010 equaled a 2% growth rate of credit by itself. But despite that, ... assume. Perhaps the whisper word of “deflation” at Davos these past few weeks was a reflection of ...

Story - Tyler Durden - 02/05/2014 - 13:03 - 64 comments - 0 attachments

Daily Highlights: 10.29.2010

(Chicago PMI, daily highlights, Daimler, Economic Calendar, Egan-Jones, Egan-Jones, Exxon, General Motors, Hong Kong, Japan, Las Vegas, Mexico, Yen) Asian stocks decline as Sharp, Samsung Electronics stoke earnings concern. Japan Factory Output slide, deeper deflation are 'negative surprise' for ...



fonzannoon's picture

Jeff I appreciate the work you put into that rebuttal. Fair enough about ZH, my point was more about Kito getting shouted down and trashed for arguing the deflation apect.

JeffB's picture

I can't really comment on the Kito kicking. I didn't see it or don't remember it. Of course context can be crucial.

Deathrips's picture



I was talking to a friend of mine earlier today about the current situation and how it will unfold.

We think we will see deflation in dollars when it comes to financed assets (ie homes, cars etc) and inflation in real assets that are not financable necessities ( store of wealth Silver and Gold, Food, Water and Energy). I agreed in principal that it could be deflationary and inflationary at the same time....although, I think that the financed markets will seek equilibrium with a free market when the subsidising of the interest rates either goes out of control or corrects to reflect the true risk. I didnt want to argue that position with my friend..hes a meat and potatoes guy...and prefered to call it deflationary environment cause the dollars would buy more. WTF do i care in principal theres agreements. No need to argue symantics.


The logic is that as interest rates go up financed assets will be less affordable and the consumers purchasing power will be diminished and the actual dollar will buy more. ZIRP is what is holding up the value of financed assets. Think 20% interest in the early 80s and what that did to housing. Meanwhile, what happened to silver and gold? They went up cause when real estate isnt viewed as a savings tool..but just a place to live in..people need to put their earnings somewhere to save. Tangible unleveraged assets have less counterparty risk than interest rates and are viewed as a safer store of value (as long as you have your basis covered and arent desperately selling)..bolstering prices for real things.


Another factor is that the government is subsidizing up and down the price of commodities. They keep food prices low by replacing whole foods with ever diluting food for the past 30 years. If they dilute anymore..people will die from the food..and some food out there right now will kill you in its present form. When monies are taken away from them TPTB/FED, they cannot continue to subsidise food... so it goes up. Likewise, they subsidise Energy to keep the costs down- petrodollar. When they have to focus the money at UST or the stock takes away their ability to subsidise energy and if they print more money they loose international credibility. Although I think that they are all in cahoots in a bigger game of western bankers vs the BRICS. So in that thinking they cant loose credibility of anyone but the BRICS.

They subsidise metals by allowing their partners JPM et al to dilute the market by selling unbacked paper (like diluting food).


SO my question is. What should we call a market where financed commodities go down and unfinanced neccesities go up?


Sorry to cut it short at the end...dinner time.



Groin's picture

Interest is an interesting thing, it is cumulative as a portion of the money supply. Thus interest rates can't go up in any meaningful way, so forget that happening. If you see them going up then the end of that money supply is close at hand.

Oldwood's picture

Just because we be below average, don't mean we don't have nothing to contribute! Besides his posts help me with my countin lessons.

JeffB's picture

But the idea that it is somehow prudent management by Belgium to be borrowing money they don't have, while running untenable deficits themselves so that they can buy in excess of an additional $50 billion in treasuries last month, more than 10% of their GDP, seems suspect at best.

Why buy a bunch of U.S. IOUs when they're under fire from the EU for their own deficit?

and they're paying 11,780,502,218€ in interest on their own debt, and have a debt to GDP ratio of 105.60%.

It's gambling pure and simple, if they're paying 4%+ on some of their own debt to purchase U.S. bonds at less than that... unless of course they're being given that money by the Fed or the Treasury to make those purchases on the sly... not unlike the primary dealers who can make a quick profit by buying bonds and then turning around and selling them to the Fed within days on a cost + basis.

Everybodys All American's picture

Your time frame is more than a little small. Lets' just see how long they can keep interest rates and inflation down as they exit stage left with 4 trillion on their known public balance sheet. I'd be willing to bet they hold more "off" their balance sheet at this point through various proxies The ponzi must continue as long as possible. How this continues to play out in major disruptions are through the foreign currency markets where major major leverage exists. This will end in an epic storm as you know if history is any indication.

mickeyman's picture

"There is one word still, which is beyond the pale--one word, whose mention will send adults shrieking in horror and disgust, and its usage has been banned on every planet in the galaxy except for one, where they don't know what it means. That word -- is Belgium."

EscapeKey's picture

Two things:

- Total increase over the past year: $220bn. Ie, a fraction of the deficit.

- GDP of Belgium: $486bn. So, in one month, Belgium SUPPOSEDLY spent over 10% of annual GDP on US debt, and over $118bn (24%) over the past year. Yeah - fucking - right.


fonzannoon's picture

the bottom line is this month had the highest foreign CB Treasury data ever recorded at just under $5.8tril, up from $5.57 in Dec. '12, so much for that "buyer's strike", if anyone is going on strike, its the Fed, with its voluntary tapering because it has already reached 33% and anymore absorption will make it tough for foreign CBs to buy even moar from here, unless they manage to get it out of foreign retail and institutional hands, which has been going fine so far.

EscapeKey's picture

That depends on whether it's a statistical anomaly, or an event you can expect to annualize.

Given that 10 of the previous 12 months have been largely static, I think it's a little early to celebrate just yet.

fonzannoon's picture

I think the statistical anomaly is China/Japan.  You can find several instances of Chinas holdings trending down month-month slightly though the upward trajectory is undisturbed (see July-Aug).

Thanks for opening this up for actual conversation. 

EscapeKey's picture

Chinese holdings as of Dec 2013: 1268.9, and Jan 2012: 1166.2

That's a growth of (1268.9-1166.2)/23 = $4.5bn/month.

As for Japan, the numbers are (1182.5-1080.8)/23 = $4.42bn/month.

So, combined we're talking $9bn/month, or $100bn/year.


Still doesn't change the fact that Belgium supposedly investing the equivalent of 24% of their GDP within a year frankly ought to raise a few eyebrows. But then again, they do have a leveraged-to-the-hilt banking system.


Sorry about attempting to engage in actual debate. Perhaps I should question your sexuality, and insult your mom for good measure, to sort of fit in more with the ZH crowd?

Karl von Bahnhof's picture

Belgium isnt foreign country, its US colony, something like Canada or Puerto Rico.

LMAOLORI's picture


kito lol hard for some to handle but ....

China Is Dependent On Our Fiscal Health


–What would happen if China, to damage us, decided to dump its trove of Treasurys? Prices might wobble, but not for long. There are trillions of dollars’ worth of financial securities scattered around the world, and smart asset buyers would gobble up Treasurys if they thought they were underpriced. Moreover, the Fed, which already has a bloated balance sheet of $4 trillion, could easily absorb what China owns in Treasurys–$1.3 trillion.

–If China did sell Treasurys, it would be paid in dollars. Then what? Would it dump the dollars for, say, yen or euros? The European Central Bank and the Bank of Japan, not to mention the Fed, could take countermeasures if they so desired, to make sure currency ratios didn’t get out of line.

The idea that a government gains strength by piling up dollars or other foreign currencies is a mercantilist holdover from the 16th to 18th centuries, when France, Spain and others thought amassing gold and silver was how a country became wealthy. Trade, not hoarding, makes for a powerful economy–an insight Adam Smith understood but one that too many people today don’t.


Rich Chinese line up to leave China


Coincidently, at a Chinese New Year lunch last week, one of the diners said he had this very discussion in Shanghai with colleagues the previous week, and all 10 of them said they would shift their savings to U.S. dollars if they were they free to do so.


Aside from that without the power of the printing press most of the other governments would also have trouble paying their debt.

g speed's picture

if the China drop was a mature/end of rollover--and there is a line you stand in to buy then maybe Belgium was ahead of China in the line??   or put another way maybe its better for the US if Europe holds our debt. Asia seems a little shaky lately. Maybe the FX rate says its a fine time to buy US debt with marks/ euros----just a lot of questions on this --- we're not done with extracting our debt from China IMHO---just saying. China may be in the tank with shoring up their banks and the shadow banking thing. A lot of % of GDP is going to be needed for that --Its more likely China is broke than they don't want to hold our debt. 

LMAOLORI's picture



Look below where I posted some articles about China's debt they have massive problems (lol I got junked when I posted that link in 2012).  They were able to hide it in the past and only now many are waking up to how bad it really is.  The BBC just did a couple of reports on it. The Chinese leaders have also offshored their wealth and you can bet its not being held in the Yuan. Developed countries would never trust China to hold the world's reserve currency IMO and for good reason you can't believe them and their figures aren't open to review.

yrbmegr's picture

Add up GDP from the provinces and compare to national GDP.  The difference is bigger than Indonesia, lol.

goldinpenguin's picture

Russia needs Ukrain for geo-political heft just like France needed Belgium and you better believe Vlad is working on it. There is a basic divide between the Russian leaning (and speaking east) and the western leaning "real" Ukrainians in the west . Vlad will foment discord in Ukrain and then either set up an Ulster-type rump Russian state in East Ukrain or go for the whole thing with a puppet in Kiev. (As a bonus a rump Russian state in the east could leave Ukrain landlocked!).

Vlad has an interesting set of political mischief tools in his tool box and I'm sure he'll put them all to use. The west is preoccupied with their own set of financial challenges (including high level name calling by low class state dept bitches) and probably won't offer effective counterbalance to Vlad's manifest destiny.

youngman's picture

When everyone has Tulips....its time to get out

RSloane's picture

I would actually cheer if the world reserve currency was a basket of currencies instead of the USD. In terms of global economic stability and trade negotiations it would make far more sense. I don't think the loss of the USD as the reserve currency would cause a market meltdown in the US or bring about catastrophic economic changes. It would merely give legitimacy to that which global firms are doing already.

Nels's picture

Basket of currencies?  You just exchange a local set of Banker Overlords for a global set of Banker Overlords.   Read Taleb's Anti-fragile book for a view of how larger systems have larger crashes, and how  it's way beyond a linear growth in crash impact. 

RSloane's picture

Hi Nels, my post above yours was in response to a post by Kito. My point is global businesses are trading with a basket of currencies already. That is business as usual for most countries South of the US.