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China Can Now Monetize US Debt Directly
The Treasury, apparently dissatisfied with the speed of indirect bank and/or Fed-inspired monetization of its exponentially rising debt-load at ever-cheaper costs of funds, decided in June 2011 to allow the Chinese, with their equally large bucket of USDs to bid directly for US Treasuries. As Reuters reports, China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government. The documents, viewed by Reuters, indicate that the US Treasury has given the PBOC a direct computer link to its auction system - which was first used in the 2Y auction of June 2011. Perhaps this helps explain the massive spikes in direct bidders July and August 10Y auctions (around the US downgrade). Interestingly, Primary dealers are not allowed to charge customers money to bid on their behalf at Treasury auctions, so China isn't saving money by cutting out commission fees; instead, China is preserving the value of specific information about its bidding habits. By bidding directly, China prevents Wall Street banks from trying to exploit its huge presence in a given auction by driving up the price. This, after the 2009 discovery (and relaxing of other reporting requirements to cover this) that China was using special deals to hide its bond purchases, seems like more pandering to the large-holder-of-Treasuries as "direct bidder status may be controversial because some government officials are concerned that China has gained too much leverage".
If nothing else, it changes dramatically any empirical interpretation of direct vs indirect bidders once and for all...
Chart: Bloomberg
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I wouldn't give China a direct computer link to anything.
The line is already too jammed by HFTs anyway.
If the Chinese ever completely take over America they'll just keep our present leaders.
Treason.
It's only illegal if the underlying activity is lawful in the first place.
"China is preserving the value of specific information about its bidding habits. By bidding directly, China prevents Wall Street banks from trying to exploit its huge presence in a given auction by driving up the price"
Is there anyone in here who seriously believes that the Treasury will not leak said 'bidding habits' to Wall Street anyway?
“Documents dealing with China's new status as a direct bidder again demonstrate the Treasury's desire for secrecy -- in terms of Wall Street and its new direct bidding customer.”
http://www.reuters.com/article/2012/05/21/us-usa-treasuries-china-idUSBRE84K11720120521
We can all take comfort in knowing that secrecy is now an essential component of “free market capitalism” and that the US Treasury has a huge vested interest in seeing that the interests of its largest customer, China is served.
The American people seem to be an expense now and on the wrong end of the business proposition here.
I am reminded of this:
"The very word 'secrecy' is repugnant in a free and open society; and we are as a people inherently and historically opposed to secret societies, to secret oaths, and to secret proceedings."
-John F. Kennedy
those who pull the many strings do not waste their minds with invisible "national boundaries" but instead work globally - the idea of nationstates is for the peoples to work within, it is not a problem for "them" to work around.
http://farmwars.info/?p=6247
"amrkn" corporations have been using "special economic zones" for decades now, in "other" people's nationstates. . . that they are anticipating China's arrival to set up shop here should be an eye-opener to anyone who still believes amrka is somehow more special than anywhere else in the world. . .
part of me sees what the above writers mean with "treason". but part wonders if owing trillions to the next great power doesn't have its insurance policy aspects.
I'm sure some will defend their beliefs, whatever they may be - history proves this - but from my own perspective, "they" are just moving pieces about on the global "game board" - I'll lie low, watch, work towards preserving what my friends, community have put their efforts into, until I feel drawn to doing otherwise. . .
I don't believe there's much "choice" beyond becoming aware of their game, and have felt this way for a very long time.
a bit off topic here.
i've been shopping for a new espresso machine. with brand names like keurig, nespresso, breville, delonghi, i was hoping to find one that's NOT made in china.
NO LUCK.
what a goddamn shame.
Come ON!!!
http://www.gaggia.com/index_en.html
Italians still know how the fuck to make espresso the right fucking way
Hey, if you would switch to Tea-Bills I can point you in the right direction...
These guys make some nice machines, in Spain:
http://www.ascaso.com/2012/eng/espresso-coffee-machines-grinders/madeinb...
How about I raise your expresso machine, a box of surgical or N-95 masks. None are made here, so when they drop that "contagion" -- Americans will drop like flies and the world will only laugh at us. *If you duck tape your windows per homeland security--I'm sure everything will be fine.
Chang you can beleive in.
Chang you can BERIEVE in
Erection year politics
It's treachery not treason.
That comment was probably made sarcastily, but I find it really thought provoking. Think about it. How better to rule a people than to leave their old familiar rulers in place as puppets while you call the shots from the shadows? Hell, who's to say it hasn't already happened?
What?! You in doubt of the men behind the curtains. Shadow govt, TPTB ect.....you aint from round here are you. ZHers........well lets just say they dont have that problem.
it's happened chigurh.
flip a coin.........no glot glum back fliday....
China calling the shots to the us? You can't be serious. China has nothing to offer the world aside from cheap labor. Which we exploit. I swear the comments here change daily based on the articles written. Yesterday the comments were china wants nothing to do with our bonds and is moving away from the USD to today where china is buying our bonds and directing US policy. I guess if ya throw a bucket of sand in the air and shoot at it your liable to hit some regardless of how poor a shot you are.
BenLightYear
Wake up dude..........................its not HERE that is the issue, its called political chess, and we do not get to play,or make the rules.
We just comment on what we read, and dig up.Dont blame ZH folks for simply reporting the articles, or news.
Were that is was so CUT 'n Dried.
Good. Because my understanding is when you buck the Party line or screwup in China, they walk you out back and put a bullet in your head. Then they harvest your organs and sell them to the highest bidder. With all the f-ups on Wall Street and in DC we might even get back to a surplus...
Doubt they would do us just such a favor, but it's a nice thought nonetheless
FED=Fucking Evil Doers...
Nah, the Chinese would never put up with the ineptitude of a lightweight communist like "O", now Van Jones and Bill Ayers?
Different story...
Call it BLACKMAIL DIRECT ... AND THIS IS NOT A NATIONAL SECURITY ISSUE.
Move along, nothing to see here.
Are concerns over a Greek Euro exit overdone ?
http://www.cnhedge.com/thread-4852-1-1.html
Is the Euro area Credibly on Target?
http://www.cnhedge.com/thread-4838-1-1.html
any chump can buy direct, just go into a Fed branch and fill out the form
Does China have to pay the tax that US citizens do?
Hahah, no
"any chump can buy direct, just go into a Fed branch and fill out the form"
~~~
Emphasis on the... "any chump"
Geithner needs to be tried and hung for treason....hell, ya know what, skip the trial.
Wait...I thought china didn't want anything to do with our crappy bonds anymore? Hmmm...seems when you are blindly guessing with little understanding the tendancy to swing and miss increases.
Hmm, does this allow the Chinese to SELL bonds directly as well?
China fake parts 'used in US military equipment'
http://www.bbc.co.uk/news/world-us-canada-18155293
We are truly and utterly FUBAR.
Queue the Chinese hackers...
Sort of reminds me of lawnmower man. Don't let them find the back door.
... unless you have the back door rigged with claymores.
So, will we continue to hear ad nauseam that the Chinese are dumping US Treasuries?
If they do; it will be directly, as opposed to via the bond markets. Ponzi away!
I'm glad the Chinese don't have to pay the maggot middlemen. It's bad enough having to compete against the fed. LMAO
Maybe the Chinese didn't want to deal with them scoundrels.
right, just americans have to pay the middleman - "Winning".
Fuck paper.
Doesn't sound like it:
"Interestingly, Primary dealers are not allowed to charge customers money to bid on their behalf at Treasury auctions, so China isn't saving money by cutting out commission fees;"
I don't suppose they are allowed to front-run their customers' orders either, but my wild guess is that the Chinese have at last realised that this is happening, and have insisted on being allowed to deal direct in order to cut these maggots out of the game and get the best deals they can
So in that sense, they are saving money.
I think you probably hit the nail on the head there, jez.
Hopefully they don't see it as some entry point for their hackers to work their way into the heart of our financial network.
Fair and unfettered marketplace at work!! Sooooo sick of all this shit....
http://www.businessinsider.com/china-is-drowning-on-excess-commodities-and-canceling-orders-left-and-right-2012-5?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheMoneyGame+(The+Money+Game)
Seems they have OTHER issues..............that will SMACK DOWN the global econ.
Learn Mandarin Bitchez !
Learn the way of the gun. Life free or die, bitches.
George Zimmerman did. Is that bullish?
Dòulèi, z?dàn hé b?ngdài
Translation please?
Mandarin, Cantonesee and at least five other official dialects.
If China doesn't deal with Wall Street why should we?
I'm sure if you had what is it now, $2 Trillion USD cash and $1 Trillion UST, Ben would give you direct access too.
I bet the Chinese are on board with the SDR. they get pummelled with a new atificial gold standard.
I wouldn't be surprised if an arbitrary parity has already been determined & this is a mechanism to move currencies in that direction.
It may be coming sooner than anyone wants to believe.
China has been "open for business" since Kissinger & Nixon unlocked the door in the seventies. . .
http://en.wikipedia.org/wiki/Nixon_administration#China
of course, a "wiki" entry is very tame reading, but it's a start, enabling one to at least consider what is obviously going on.
The Daily Bell might be a better link for ZH'rs,
http://www.thedailybell.com/3355/VIDEO-Evelyn-De-Rothschild-on-Chinas-Gr...
"growth, international currency and climate change" - mmmmm, yes, if anyone's paying attention, those things won't surprise.
because we're americans?
willien1derland
WHAT A GREAT QUESTION!
And I would also ask "why ARE we?"
Because we're the pigeons?
they have the bucks, we don't.
And this does not concern anyone? Wow, just wow. Fuck paper and propaganda, both will get worse if the Chinese have their way.
Indeed. Hole Nutha Level.
http://www.youtube.com/watch?v=ih4AVOnO840&feature=related
I'm trying to wrap my head around the idea that the U.S. government has actually cut Wall Street out of the deal... Really!?
It always takes far more knowledge in these matters than I am currently capable of, but isn't this pretty fucking unprecedented??? How often does the U.S. government side with China in saying "FUCK YOU" to Wall Street? Is the desperation to sell the debt worse that most realize? Could something like this invoke a Wall Street hissy-fit like the initial TARP decline? Too many questions arise.
Agreed. Something just doesn't add up here.
It could just be something simple. For example, perhaps Uncle Scam is planning on stiffing the Chinese, and the direct purchases open a loophole for doing so. This would also be a favor to the primary dealers, since they would have no involvement in the whole process.
In other news, China just bought AMC movie theaters...
Not that I watch that many overpriced movies to begin with but now I will avoid going to AMC at ALL COSTS...
I read that. Damn, isn't there a regulatory body full of worthless bureaucrats willing to make a name for themselves grandstanding against the Chinese takeover of our media?!?! Doesn't this require some form of government approval like every other merger and acquisition on earth?
Interesting how they paralize American business with regulation, but when China steps in, the role out the red carpet
SHUCKSTER:
RED carpet... a pun, I suppose?
Are you seriously claiming there isn't enough competition in the American mindless propaganda market?
YES! 90% of our media is owned by 6 entities! They are already corrupted by their own biases and government influence. Now we will have a huge media outlet owned entirely by the communist party of China. This is bad.
Apollo and JPM musta been thrilled to finally dump the debt plagued AMC chain.
Wanda will keep the current management ( surprise )
http://www.nytimes.com/2012/05/21/business/global/amc-theater-deal-links-china-to-hollywood.html
well, now that the pboc and treasury are cozier than ever, do we expect china to pull out of the treasury market anytime soon?
Use the opportunity to sell any shit equities, if anyone's got any left, to the new bag holder of chioce.
"China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government."
Translation: Debt junkie (USA) cuts out the middleman between itself and one of its suppliers when it needs a quick hit.
globalisation. one world.
Jim Rogers told us. Who listened?
No "protection" huh?
Ah well hopefully they don't catch 'anything'.
Right?
XOXOXO
Transparency? Will they even bother with CUSIPS? Geithner is a complete sellout mess and only superceded by Bernanke.
"Will they even bother with CUSIPS? Geithner is a complete sellout mess and only superceded by Bernanke."
Will this lead to treasury product rehypothecation?
Rehypothecate our government and cartel banks.
Nothing could possibly go wrong with this set-up.
I am pretty sure that conduit is going to work both ways. Infact, the reverse is the only thing that makes sense.
So, The PBOC is now a primary dealer?
And their representitives will be in those smoke filled back rooms cutting late night, crisis-driven deals the next time US financial markets go haywire?
Will/can they eat the take-out pizza?
How long until our brave politicians are trading them our bridges and railroad networks in exchange for Bentlys and high quality caviar.
That game wouldn't be/isn't new.... Sovereign Wealth Funds have been at it for a while now.
Not long.They are building a China City in Michigan,200 acres.And it will move like lighting from here on in.
China city is a very harsh word to use, they like to call it a "free trade zone" sounds nicer.
Free trade zone where the "communist invaders" have a less restrictive tax code and enjoy more freedoms than the people they're displacing.
China was also looking into Idaho last year,
http://endoftheamericandream.com/archives/china-wants-to-construct-a-50-...
but I've read elsewhere that the offer might be temporarily shelved. given the Chinese interest in Canadian properties, etc. it's not surprising they're interested in footholds near the Canadian "border" - y'know, that imaginary line between Harper & a US president.
and they just fixed all of Europe's woes.
Special criteria for the Beijing Whale? Didn't we see that movie already?
Treasury = IMF. The name Treasury Dept, is name sake only.
Little Timmah is Ben Bernanks Boss also.
treeson?
edit: somebody is going around the US govt and people to literally sell the country into debt to a foreign country.
The invisible wars with China in both financial (collapse of Euro) and militray fronts (the South China Sea and Africa) have worked and brought the Chinese back to their assigned roles, at least for now.
I'm sure the primary dealers aren't happy to see their commissions cut off. When will China start asking for gold instead of electronic digits to settle the trade imbalance?
The Great Wal Mart of China, can't buy sell or trade without the mark of the Commie Fed Beast, Chairsatan and the all time market high of the prophetic strong delusion. http://www.youtube.com/watch?v=g1Sf52fqsSI
...uh, can't remember, is this America or just ''short term'' memory and loss?
Saw this randomly popping up this weekend.
China's secret -- it owes Americans nearly $1 trillionhttp://savannahnow.com/opinion/2012-05-21/analysis-chinas-secret-it-owes-americans-nearly-1-trillion
delete
As if the Curve couldn't get any more opaque with the Fed-sponsored bank subsidy... Gary Shilling must be busting out the bubbly. However, it may also make sense to remember China's record for top ticking asset prices. Gary's party may not last that long.
Can they also sell there?
from the reuter link above:
China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.
This is the first step.
begs the question, if the PBOC can monetize US debt, why do we need the Fed? of course the US banking system is sitting on reserves, and this might be one way to put the money out where it will be loaned. begs the question, if the Chinese are funding the US deficit, is there any need for domestic fiscal policy? also begs the question, should the tea party, and or Ron Paul finally succeed in cutting back the Fed, or firewalling the Feds assets from implied UST guarantees, how can the US government (POTUS) keep running spending money. sounds ILLEGAL AS HELL, which means Congress won't have a thing to say (they only care about social issues)
was thinking something similar
"officials are concerned that China has gained too much leverage"
NO SHIT?
Is China this stupid? I want to see which country owes what to which country. Any idea where to locate a chart like that?
Confucius say, "US Treasury need more quarity corrateral to re-hypothicate to keep Ponzi arive."
Confucius say, buy out the rest of America on the cheap.
Confucius say, "Currency manipurator's onry friend is other currency manipurator."
Don't want anyone to see that turning into a trickle just yet. No sirreeee.
http://www.youtube.com/watch?v=hPLAuCDMvXQ
Why would anti-Semitic Chinese mandarins want to grease the House of Rothschild again and again and again?
"It's a big club, and you ain't in it"
~ George Carlin
Does this also make it easier to hide their selling of bonds?
This entire story reeks of desperation....and does not sit right with me.
There is more to this than the Chinese wanting a good deal on US Debt.....this is a trojan horse of some type.
Have we all forgotton so qucikly....that not but 20 - 25 years ago...China was our mortal enemy...and that they are, still in essence a "communist" nation (a communist nation who is smart enough to know how to beat the capitalists at their own game I might add - as Marx said, the capitalist will sell the rope by which he will hang himself" (I paraphrase here)
Anyway...the whole things stinks in my opinio
The US and USSR were supposedly mortal enemies too, but there was always quite a lot of secret cooperation.
There is no change here, China and US have been colluding for some time.
This is bullshit, just like everything else coming out of Washington.
There are other reasons behind this sidestepping of the primary dealers.
Why is it bad?
When you put a very bad product on the market and you find a customer who wants to get it before everybody else, it's a smart move to give that customer direct access to your factory. It's actually a brilliand move. You can even keep the transaction off the book.
Look at what the market did to FB. Wasn't it a much nicer company before it went public?
The US government needs that cash. China is stupid enough to loan money that will never be paid back. The Chinese people ought to be upset but they can't afford to care just yet.
This isn't to hide how much they are buying. It hides how much they are NOT buying.
YAY!!!
they finally got it right!
no more bullshit with the PD's and fuking "auction rules enforcement" charging them a vig for financing our dentistry, japanese imports, andBIC lighters
now, with ZIRP, wtf, letting them in on the ground floor is only "fair"
besides, it is all bullshit
china has been supporting the dollar for YEARS by pegging it, virtually, when not deFact-0-ally
and, with china now part of the bullionBankster london-crimex-hKong, they are gonna just clear w/ theFED and they will not be at a disadvantage in the dollarWars
of course, many have been decrying the US's loss of "hegemony" and china's rise as a NW0 "challenge to the status quo" or something; and the "newBRICSbanque"
but, if the tide IS turning here, (and i don't mean "against the US", but against china) the FED is now in place to "support the ren/Yuan" if needed and the PB0C's historical importance to the fiat ponzi scheme is recognized for what it is, finally
this isCabalixtry101
since rockefeller sent nixon & henryTheK to china in the early 70's as part of the deal to end our parts in theIndo-ChinaWars, china has has "western" banking, as has vietNam (chase-mahattanBank,Saigon)
part of theNuttyProfessorTM's (antalFekete's) tirades about the banksters is precisely wtf they have done to china, intellectually
the chinese have learned all they know from kissinger and rocky and the jpMorgue and theTreasury and theFED&PDs
their banksters think our guys are the michaelsJackson andJordan of bankstering; they worship them, imo
so, there's that, too...
All your bucks are belong to us.
How do you say "Muppet" in Mandarin?
Oink, oink, oink.......
Fantastic, now China has speed dial to the FED/Treasury, all newly approved Chinese banks in America. The USD fails and the criminal bankster occupiers call for a 'Red Dawn' on the American citizens. The Chinese troops move in and use the new Bank of China of America (BCA) as a clearinghouse for all the looted spoils of war exchanged for YUAN, and at the end of the day go to Chinese owned AMC theaters across the land.
unless the PBOC has a charter with the Fed they're technically not monetizing US debt. Tyler's implying that the PBOC has the same rights as Fed charter banks. what anyone can imagine is a Fed/UST printing press, rolling off new issue bonds, which disappear into the black hole of China's economy (never to be seen again)
far from the scrutiny of Congress these bonds are probably exchanged for hard USD, and retired. it's a little like the pachenko parlor i visited in Japan. you play for little steel balls, and you win prizes, across the street there is a vendor who buys the prized back for money. the worst part of this kind of deal is what sort of vigorish are they charging? perhaps a premium to spot on those worthless bonds. just when you think the bastards are out of crooked ideas to screw you over they come up with another one
So.. Again I ask, "What's the difference between the US and China?"
insider trading, timmahs way
Oh please. Don't you think there's going to be a few direct links into China's "direct link"? Let us count the backdoors...
The Fed as "honest broker"? Of China's secret bidding strategies??? Riiiiiiight.
Who owns the Fed? Just checking.
Nicely played Geithner! Sell these useless cattle to the Chinese. I would have done it sooner. Maybe we can pay back the debt later with harvested sheeple organs.
Ben - you did't tell us they would be Chinese helicopters you tricky trickster you! :)
I love both of you.
D1! $heeple!
How do you sayTreasury Direct in Chinese?
deleted
iOwnTimmay
The Chinese are facing a dollar shortage since foreign trade is declining. They need to swap their Treasuries for fresh cash from the Fed, in order to maintain the RMB-dollar peg and export advantage.
http://ftalphaville.ft.com/blog/2012/05/21/1008161/chinas-mega-dash-for-the-dollar/
I think Congress needs to get involved on this action by the Treasury. Full disclosure is needed on this deal because this is a matter of national security. I want to know how the deal is structured. Is their a gold backing such as what the EU is doing to Greece?
BTW I don't think Geithner can be trusted.
That's how China gets closer to an economic hard landing.
Congratulations American hicks, your Jewish overlords have sold your country to Red China.
we're all aware that china is a communist country [i hope?] and zedong [china's hero!] was responsible for at least 50-100 million deaths of his own people?
china's one child policy has thousands of dying-room facilities throughout the provinces to abort a second child! the dead fetuses are dried and pulverized into a powder and sold to various asian markets as a new type of pill for enhance youthfulness, etc., etc..
china sucks,... and when they can match our military might, it's all over for these fucking cowardly u.s. lifetime politicians that will be the first to go to their death camps
jmo
"the dead fetuses are dried and pulverized into a powder and sold to various asian markets as a new type of pill for enhance youthfulness, etc., etc.. "
You can gold plate them too!! Very high dollar on the Asian market. GOLD BITCHEZ!!
http://www.allvoices.com/contributed-news/12195951-british-national-arrested-in-thailand-after-having-an-embalmed-fetuses-and-babies-covered-with-a-gold-leaf
a modest proposal by swift ___ http://en.wikipedia.org/wiki/A_Modest_Proposal
"A Civalized Society so Imbred that the Unborn are as known to few a Proper Food Fare?"
indeed
valde speculatio
Hmmmm, seems to me that the Timmay-Jerk just gave PBoC an ultimative tool to frontrun everyone and everything, even the HFT.
Bullish, indeed. ( For Chinas aquisitions, worldwide ).
Me dumb, but this one is a hammer.