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Japan Ties China As America's Largest Creditor As Foreigners Dump A Record Amount Of Treasurys
One month ago when looking at the December update of foreign holdings of US Treasuries, and specifically the two largest foreign creditors, we said that China "sold another $6 billion in Treasurys in the last month of 2014, which would have made its US treasury holdings equal with those of Japan, if only Tokyo hadn't also sold over $10 billion in the same month."
Moments ago the January update was released, and while China continued selling US paper, liquidating another $5.2 billion in January and bringing its new total to the lowest since January 2013, Japan - yes that Japan whose central bank is now moentizing 100% of its own debt issuance because the country is now effectively insolvent and absent constant monetization of its debt it is finished - bought $8 billion in US debt, in the process trying China as America's largest foreign creditor for the first time in history, with both nations holdings $1.239 trillion in US TSYs.
But where things got truly surprising, is when looking at gross long-term flows of foreign capital, where we find that between private and official buyer and sellers of US assets, in January a record $55 billion in US Treasurys was sold - precisely in the month in which the yield on the 10Y plummeted, indicating once again that a short squeeze in syntehtic exposure via futures and derivatives (because shorting the 10Y was the other most popular hedge fund position entering 2015 alongside being long the USD) has far greater price formation power than what someone does with a measly $55 billion in underlying Treasurys (very relevant for the debate of physical vs paper gold) in any one month.
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It doesn't really matter so much who is doing the QE as long as someone is doing the QE, and this is how it should be viewed....in total. Without it, everything would collapse.
In all truth though, the US treasuries look much better than their own crap so for them it must be a "rush to quality", of sorts...
Or a Seppuku of sorts.
Last one out turn off the lights.
Great posts on debt:
http://debtcrash.report/entry/debt-taken-on-by-fools
http://debtcrash.report/entry/i-bought-what
If you'd like to see how the Chinese view American debt and Bond bubble, you may enjoy this Asia informative video.
http://youtu.be/K2hhck_kmz0
I'm sure you meant that as sarc, Fun Facts. But it will collapse with or without QE. The unknown is 'when'.
Exactly. But that when could be 100 years ,. long after anyone here now gives a F
Look at gold prices over the last 40 years. We won't have to wait another 100. The CB's are now gobbling up capital with ZIRP and NIRP. Gold will go parabolic as folks seek safety.
Ring around the rosie... They all fall down!
my roomate's step-mother makes $79 hourly on the laptop . She has been fired for 10 months but last month her pay was $18694 just working on the laptop for a few hours. see here... www.globe-report.com
Great News! the market will Fucking LOVE it!!!!!
You have to add Hong Kong and China together = 1411.1 to Japans 1238.6.
The DTIC is a US Product and they can decide how they show the data, but we don't have to allow ourselves to get dumber.
Srant eye buy you paper too, ok round eye? No, they difflent Srant eye; you stick with us, ok? American have berry rarge penis; we have Pokemon and a central bank!
This brilliant plan by central bankers is a hedge against there own critical situation. By doing this now they unsure when it collapses everyone goes together.
Just like MAD with nukes. Financial nukes
It's a lot easier to replace one global system with another when everyone fails.
Poison pill ?
Margin call on all the $ shorts
The markets won’t crash.
It’s just that a cup of coffee will cost 200 dollars in a decade from now... and even 600 at starbucks...
No significant rise in wages, no hyperinflation.
yep, that simple
actually, deflation now boarding USS United States ...
Deflation won't last, and it's relative. Your gas is cheaper, but how about your food ? Rent/mortgage ? Health insurance ? School tuition ? License fees ? These are all elements of every day life... Besides, those freshly printed money are already leaking out. That's why you have the increase in "asset" prices. It's a classic inflation sign, too much money chasing too few goods (or perceived as such).
Just don't buy any deflated assets that have legacy cost, between the fed, state and local government gangs bangers they will tax you off that deflated asset lickity split and they got guns and "the law" on their side.
Hyper-anything is not necessary for a nation to experience a currency crisis. In fact, all that holds this rattle-trap together currently is the marriage-of-convenience of doing trade in the $USD. Nothing that series of foreign policy actions couldn't change within a matter of days if the stakes were high enough.
The dollar has already been hyperinflated. The reason we don't see it in the official numbers is because something like 90% of that inflation is exported due to the dollar being the GRC. Kill the petrodollar and all the exported inflation go home. Then you will see it.
In The weimar republic, hperinflation didn’t occur because everybody was making a shitload of moneY.
Farmers just didn’t wanted to sell their goods anymore for marks and international demand for marks was zero.
unemployment was actually skyhigh.
it happened when the state printed all their expenses because there was no income.
sounds familiar?
In The weimar republic, hperinflation didn’t occur because everybody was making a shitload of moneY.
Farmers just didn’t wanted to sell their goods anymore for marks and international demand for marks was zero.
unemployment was actually skyhigh.
it happened when the state printed all their expenses because there was no income.
sounds familiar?
It does sound familiar. I'm sure I just read that word for where a little be earlier... can't recall where tho'.
Real (as opposed to BLS CPI massaged) prices increases combined with stagnant wages are just as bad as hyperinflation, where prices and wages are growing at similar rates.
Japan missed its chance to become a sovereign nation again in 2010. Kan, Noda, Abe all owned by the US.
That's better than Spain helping to bail out Greece!
Or Greece bailing out Ukraine!!
Time to start mandating all 401's. Company pensions and IRAs get moved into Myra's
Of course you will lose access to the equity.
Interest rates will be well below the real inflation rate.
You'll be taxed on any interest paid
There will be "means testing" before you can access your own funds.
It cannot be willed to your decendants.
It will revert back to the government upon your and spouses death.
There ... shortfall fixed
Oh ... and you will assured by a smiling liberal that this is all in your best interest and 47% of the public will buy that explanation
The Rep's made student loans a superior, lifelong debt. So, I'm sure, they will raid pensions when they get desperate.
with both nations holdings $1,239 trillion in US TSYs.
I think you mean billions, OR we are in deeper than I ever realized.
Who's holding the other 15.6 Trillion in worthless US paper..?? Maybe they should donate it to Venezuela to help alleviate their TP crisis...
The majority of debt is held by US persons or companies.
you want to try again???
Domestic Public (all US institutions, banks, insurers, pensions, banks, plus retail Treasury buyers) owns $4.4 trillion of $18.1 trillion.
Foreign holders own $6.2 trillion, Fed $2.5 trillion, intragov (trust fund "surplus") $5.1 trillion.
http://econimica.blogspot.com/2015/03/treasury-buying-pyramid-ponzi-or-gdp.html
Hello, pink elephant in the room! By far the largest holder of US debt is the Fed, purchased with printed money. And remember net debt is $13 trillion. The other $5 trillion is money the government pretends it owes to social security and a bunch of other government "trust funds".
The FED also put around $5T in the GSE's.
So instead of Handing out food stamps, the Government can hand the poor people in America treasury Bills. they can use those Securities to get other loans, to buy groceries beer and cigarettes everybody would be rich.. I know i am missing some thing here.. but hey it's all good
Great article, bravo!!
Government bonds are slavery.
Let's see...
China -5
Japan +8
Does this mean that China is now holding a lot more yen than it did last month? Or is this merely a sign that the smart money is getting packed into suitcases and taken overseas?
You might say "Japan is a Radient Beacon" for all the Central banks.
Japan will cease to be a viable country within 5 years. All it's peoples will die Broke/Insolvent of Radiation poisening. Weird.
Maybe China can make more money in its own currency and through their different trade agreements in direct currency transactions.They're also going to be financing some pretty big projects around the globe including ones in England.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11473983...
Most likely in the near future,since Russia and China have competing systems to SWIFT being finished soon.These are outside the U.S. Dollar system.
It's sad to see japan so fu*ked over. Industrious people, safe streets, clean and great food. If it weren't for Fuki-radiation-causing-leukemia and thyroid, brain and other cancers, it would be a great place to move to [if you could afford it].
Greed and corruption brings down some of the best nations.
http://fukushimaupdate.com/
Yeh fortunately for the US they allowed in all the illegal Mexicans... that stopped the rot.
Isn't the Fed the largest creditor?
According to Natixis:
http://www.ge.tt/5osnEOC2/v/0?c
March 13, 2015
What are the differences in economies where debt ratios are very high?
Debt ratios (public, private and total) are at present extremely high in a vast majority of OECD countries. How does this change the functioning of these countries' economies?
• Fiscal policy becomes more restrictive and can hardly become very counter-cyclical due to high public debt ratios;
• The private sector deleverages, and monetary policy can no longer use the credit channel;
• Central banks have an incentive to conduct expansionary monetary policies to facilitate deleveraging.
In countries where debt ratios are very high, we can therefore expect to see:
• Weaker growth (a restrictive fiscal policy, private-sector deleveraging);
• Deeper recessions (lack of counter-cyclical capacity of fiscal and monetary policies);
• And yet a sharp rise in asset prices (equities, real estate), due to expansionary monetary policies and long-term interest rates that are lower than growth rates.
Paradoxically, excessive debt ratios can be positive for equities and real estate.
So Japan is effectively printing yen to loan the US money so it can pay the interest on its debt?
I'm sure that will have a happy ending.
How bizzare would it be to have Japan go on a hyperinflationary death spiral funding the US debt?
Japan is the new Belgium. China wants out of UST's, the problem is/was doing it without crashing the bond market with over-supply. Conveniently, along comes "3 arrow Abe" with impeccable timing and Beijing takes full advantage, shovelling its "shit" to Tokyo, at a profit.
History will surely look back on Japan, shorting gold at the same time as it is buying up all the debt it can get its hands on, as the biggest bunch of dipshits ever!
don't forget luxemburg/caymen Islands and Ireland, those locales have also entered the UST buyer list with Belgium
Ham-bone's link upthread, down middle of page, chart "notable UST foreign owners" shows it pretty clearly
Sooo... now what?? They (the world) sells their US treasury holdings back to the USA, at pretty ugly exchange rates, and then use the sovereign proceeds for more domestic QE there in thier country, what??? to pay debt? sovereign or bank debt, where???? Isn't this the epotome of buying high and selling low? If I am right, one might think it smacks a little of desperation. Just rambling thoughts, not my area of expertise by any means. There are more here, much more qualified.
So all that matters is derivatives....? Or will the true "market" affect derivatives at one point...? As we're seeing outflows?