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China Can Now Monetize US Debt Directly

Tyler Durden's picture


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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Mon, 05/21/2012 - 15:30 | 2448542 New England Patriot
New England Patriot's picture

I wouldn't give China a direct computer link to anything.

Mon, 05/21/2012 - 15:39 | 2448580 dlmaniac
dlmaniac's picture

The line is already too jammed by HFTs anyway.

Mon, 05/21/2012 - 15:51 | 2448609 The Big Ching-aso
The Big Ching-aso's picture



If the Chinese ever completely take over America they'll just keep our present leaders.

Mon, 05/21/2012 - 15:59 | 2448632 redpill
redpill's picture


Mon, 05/21/2012 - 16:06 | 2448652 New England Patriot
New England Patriot's picture

It's only illegal if the underlying activity is lawful in the first place. 

Mon, 05/21/2012 - 16:39 | 2448764 French Frog
French Frog's picture

"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?

Mon, 05/21/2012 - 20:36 | 2449310 Manthong
Manthong's picture

“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.”

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

Mon, 05/21/2012 - 21:44 | 2449478 Cathartes Aura
Cathartes Aura's picture

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.

Let’s quit being polite and call this maneuver by corporate governments exactly what it is – treason. Nothing more, nothing less. Selling off pieces of America to a foreign government so that government can plant a sovereign city inside our country that is not subject to our laws amounts to treason.

"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. . .

Mon, 05/21/2012 - 23:46 | 2449709 jeff montanye
jeff montanye's picture

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.

Tue, 05/22/2012 - 01:47 | 2449923 Cathartes Aura
Cathartes Aura's picture

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.

Mon, 05/21/2012 - 16:14 | 2448680 Troll Magnet
Troll Magnet's picture

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.  


what a goddamn shame.

Mon, 05/21/2012 - 16:31 | 2448739 Almost Solvent
Almost Solvent's picture

Come ON!!!


Italians still know how the fuck to make espresso the right fucking way

Mon, 05/21/2012 - 16:39 | 2448763 El Oregonian
El Oregonian's picture

Hey, if you would switch to Tea-Bills I can point you in the right direction...

Mon, 05/21/2012 - 19:11 | 2449126 BigJim
Tue, 05/22/2012 - 11:48 | 2451202 Ag Star
Ag Star's picture

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.


Mon, 05/21/2012 - 16:40 | 2448768 Transitory Disi...
Transitory Disinflation's picture

Chang you can beleive in.

Mon, 05/21/2012 - 16:59 | 2448822 Comay Mierda
Comay Mierda's picture

Chang you can BERIEVE in

Mon, 05/21/2012 - 17:04 | 2448837 eaglefalcon
eaglefalcon's picture

Erection year politics

Mon, 05/21/2012 - 18:16 | 2449031 GOSPLAN HERO
GOSPLAN HERO's picture

It's treachery not treason.

Mon, 05/21/2012 - 16:09 | 2448663 pupton
pupton's picture

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?

Mon, 05/21/2012 - 16:48 | 2448794 Doubleguns
Doubleguns's picture

What?! You in doubt of the men behind the curtains. Shadow govt, TPTB aint from round here are you. ZHers........well lets just say they dont have that problem.

Mon, 05/21/2012 - 18:20 | 2449043 vast-dom
vast-dom's picture

it's happened chigurh. 

flip a glot glum back fliday....

Mon, 05/21/2012 - 19:59 | 2449237 BenLightYear
BenLightYear's picture

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.

Mon, 05/21/2012 - 20:55 | 2449355 DosZap
DosZap's picture


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.

Mon, 05/21/2012 - 16:11 | 2448670 krispkritter
krispkritter's picture

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...

Mon, 05/21/2012 - 16:17 | 2448693 shuckster
shuckster's picture

Doubt they would do us just such a favor, but it's a nice thought nonetheless

Mon, 05/21/2012 - 16:40 | 2448709 krispkritter
krispkritter's picture

FED=Fucking Evil Doers...

Mon, 05/21/2012 - 16:59 | 2448820 God Bless The V...
God Bless The Virtuous's picture

Nah, the Chinese would never put up with the ineptitude of a lightweight communist like "O", now Van Jones and Bill Ayers?

Different story...

Mon, 05/21/2012 - 21:37 | 2449466 GOSPLAN HERO
GOSPLAN HERO's picture


Move along, nothing to see here.

Tue, 05/22/2012 - 06:06 | 2450167 cnhedge1
cnhedge1's picture

Are concerns over a Greek Euro exit overdone ?

Is the Euro area Credibly on Target?

Mon, 05/21/2012 - 16:24 | 2448716 Djirk
Djirk's picture

any chump can buy direct, just go into a Fed branch and fill out the form


Mon, 05/21/2012 - 16:29 | 2448729 dizzyfingers
dizzyfingers's picture

Does China have to pay the tax that US citizens do?

Mon, 05/21/2012 - 17:11 | 2448864 laomei
laomei's picture

Hahah, no

Mon, 05/21/2012 - 20:49 | 2449345 francis_sawyer
francis_sawyer's picture

 "any chump can buy direct, just go into a Fed branch and fill out the form"


Emphasis on the... "any chump"

Mon, 05/21/2012 - 16:24 | 2448719 LongSoupLine
LongSoupLine's picture

Geithner needs to be tried and hung for treason....hell, ya know what, skip the trial.

Mon, 05/21/2012 - 19:55 | 2449223 BenLightYear
BenLightYear's picture

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.

Mon, 05/21/2012 - 23:34 | 2449685 StychoKiller
StychoKiller's picture

Hmm, does this allow the Chinese to SELL bonds directly as well?

Tue, 05/22/2012 - 00:32 | 2449809 The_Nihilist
The_Nihilist's picture

China fake parts 'used in US military equipment'

We are truly and utterly FUBAR.

Mon, 05/21/2012 - 15:31 | 2448548 tu-ne-cede-malis
tu-ne-cede-malis's picture

Queue the Chinese hackers...

Mon, 05/21/2012 - 16:28 | 2448728 JPM Hater001
JPM Hater001's picture

Sort of reminds me of lawnmower man. Don't let them find the back door.

Mon, 05/21/2012 - 16:56 | 2448810 navy62802
navy62802's picture

... unless you have the back door rigged with claymores.

Mon, 05/21/2012 - 15:31 | 2448549 Motorhead
Motorhead's picture

So, will we continue to hear ad nauseam that the Chinese are dumping US Treasuries?

Mon, 05/21/2012 - 15:44 | 2448596 malikai
malikai's picture

If they do; it will be directly, as opposed to via the bond markets. Ponzi away!

Mon, 05/21/2012 - 15:32 | 2448551 midgetrannyporn
midgetrannyporn's picture

I'm glad the Chinese don't have to pay the maggot middlemen. It's bad enough having to compete against the fed. LMAO

Mon, 05/21/2012 - 15:32 | 2448554 Motorhead
Motorhead's picture

Maybe the Chinese didn't want to deal with them scoundrels.

Mon, 05/21/2012 - 15:39 | 2448578 LawsofPhysics
LawsofPhysics's picture

right, just americans have to pay the middleman -  "Winning".


Fuck paper.

Mon, 05/21/2012 - 17:06 | 2448842 JeffB
JeffB's picture

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;"

Mon, 05/21/2012 - 22:33 | 2449579 jez
jez's picture

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.

Tue, 05/22/2012 - 10:46 | 2450959 JeffB
JeffB's picture

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.

Mon, 05/21/2012 - 15:32 | 2448555 SheepDog-One
SheepDog-One's picture

Fair and unfettered marketplace at work!! Sooooo sick of all this shit....

Mon, 05/21/2012 - 15:34 | 2448561 Seasmoke
Seasmoke's picture

Learn Mandarin Bitchez !

Mon, 05/21/2012 - 15:35 | 2448565 jus_lite_reading
jus_lite_reading's picture

Learn the way of the gun. Life free or die, bitches. 

Mon, 05/21/2012 - 19:35 | 2449176 kalasend
kalasend's picture

George Zimmerman did. Is that bullish?

Mon, 05/21/2012 - 15:59 | 2448621 CynicLaureate
CynicLaureate's picture

Dòulèi, z?dàn hé b?ngdài

Mon, 05/21/2012 - 17:07 | 2448847 JeffB
JeffB's picture

Translation please?

Tue, 05/22/2012 - 12:01 | 2451250 Ag Star
Ag Star's picture

Mandarin, Cantonesee and at least five other official dialects.

Mon, 05/21/2012 - 15:36 | 2448566 willien1derland
willien1derland's picture

If China doesn't deal with Wall Street why should we?

Mon, 05/21/2012 - 16:15 | 2448682 Matt
Matt's picture

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. 

Mon, 05/21/2012 - 16:25 | 2448721 narnia
narnia's picture

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.

Mon, 05/21/2012 - 22:04 | 2449515 Cathartes Aura
Cathartes Aura's picture

China has been "open for business" since Kissinger & Nixon unlocked the door in the seventies. . .

Nixon laid the groundwork for his overture to China even before he became president, writing in Foreign Affairs a year before his election: "There is no place on this small planet for a billion of its potentially most able people to live in angry isolation."[116] Assisting him in this venture was his National Security Advisor and future Secretary of State, Henry Kissinger, with whom the President worked closely, bypassing Cabinet officials

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,

VIDEO: Evelyn De Rothschild on China's Growth, International Currency and Climate Change

"growth, international currency and climate change" - mmmmm, yes, if anyone's paying attention, those things won't surprise.

Mon, 05/21/2012 - 16:16 | 2448685 Troll Magnet
Troll Magnet's picture

because we're americans?

Mon, 05/21/2012 - 16:24 | 2448718 dizzyfingers
dizzyfingers's picture



And I would also ask "why ARE we?"

Mon, 05/21/2012 - 17:50 | 2448970 Frankie Carbone
Frankie Carbone's picture

Because we're the pigeons?

Tue, 05/22/2012 - 01:19 | 2449889 e-recep
e-recep's picture

they have the bucks, we don't.

Mon, 05/21/2012 - 15:37 | 2448571 LawsofPhysics
LawsofPhysics's picture

And this does not concern anyone?  Wow, just wow.  Fuck paper and propaganda, both will get worse if the Chinese have their way.

Mon, 05/21/2012 - 16:19 | 2448696 Bay of Pigs
Mon, 05/21/2012 - 17:16 | 2448886 Floordawg
Floordawg's picture

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.

Mon, 05/21/2012 - 17:41 | 2448948 Screwball
Screwball's picture

Agreed.  Something just doesn't add up here.

Mon, 05/21/2012 - 21:56 | 2449506 TheFourthStooge-ing
TheFourthStooge-ing's picture

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.


Mon, 05/21/2012 - 15:38 | 2448574 jus_lite_reading
jus_lite_reading's picture

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...

Mon, 05/21/2012 - 16:12 | 2448673 pupton
pupton's picture

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?

Mon, 05/21/2012 - 16:20 | 2448701 shuckster
shuckster's picture

Interesting how they paralize American business with regulation, but when China steps in, the role out the red carpet 

Mon, 05/21/2012 - 16:22 | 2448711 dizzyfingers
dizzyfingers's picture


RED carpet... a pun, I suppose?

Mon, 05/21/2012 - 16:32 | 2448744 GMadScientist
GMadScientist's picture

Are you seriously claiming there isn't enough competition in the American mindless propaganda market?

Mon, 05/21/2012 - 16:37 | 2448758 pupton
pupton's picture

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.

Mon, 05/21/2012 - 16:34 | 2448747 Rainman
Rainman's picture

Apollo and JPM musta been thrilled to finally dump the debt plagued AMC chain.

Wanda will keep the current management ( surprise )

Mon, 05/21/2012 - 15:38 | 2448575 kito
kito's picture

well, now that the pboc and treasury are cozier than ever, do we expect china to pull out of the treasury market anytime soon?

Mon, 05/21/2012 - 16:12 | 2448672 Stoploss
Stoploss's picture

Use the opportunity to sell any shit equities, if anyone's got any left, to the new bag holder of chioce.

Mon, 05/21/2012 - 15:40 | 2448579 John Law Lives
John Law Lives's picture

"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.

Mon, 05/21/2012 - 22:07 | 2449528 Cathartes Aura
Cathartes Aura's picture

globalisation.  one world.

Mon, 05/21/2012 - 15:41 | 2448586 Chippewa Partners
Chippewa Partners's picture

Jim Rogers told us.  Who listened?

Mon, 05/21/2012 - 15:43 | 2448591 ISEEIT
ISEEIT's picture

No "protection" huh?

Ah well hopefully they don't catch 'anything'.



Mon, 05/21/2012 - 15:44 | 2448592 Everybodys All ...
Everybodys All American's picture

Transparency? Will they even bother with CUSIPS? Geithner is a complete sellout mess and only superceded by Bernanke.

Mon, 05/21/2012 - 16:27 | 2448725 dizzyfingers
dizzyfingers's picture

"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.

Mon, 05/21/2012 - 15:49 | 2448601 icanhasbailout
icanhasbailout's picture

Nothing could possibly go wrong with this set-up.

Mon, 05/21/2012 - 15:49 | 2448603 Quinvarius
Quinvarius's picture

I am pretty sure that conduit is going to work both ways.  Infact, the reverse is the only thing that makes sense.

Mon, 05/21/2012 - 16:02 | 2448613 Mercury
Mercury's picture

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?

Mon, 05/21/2012 - 16:17 | 2448690 ffart
ffart's picture

How long until our brave politicians are trading them our bridges and railroad networks in exchange for Bentlys and high quality caviar. 

Mon, 05/21/2012 - 16:22 | 2448708 AccreditedEYE
AccreditedEYE's picture

That game wouldn't be/isn't new.... Sovereign Wealth Funds have been at it for a while now.

Mon, 05/21/2012 - 17:13 | 2448869 10mm
10mm's picture

Not long.They are building a China City in Michigan,200 acres.And it will move like lighting from here on in.

Mon, 05/21/2012 - 18:23 | 2449051 Money 4 Nothing
Money 4 Nothing's picture

China city is a very harsh word to use, they like to call it a "free trade zone" sounds nicer.

Mon, 05/21/2012 - 18:44 | 2449081 ffart
ffart's picture

Free trade zone where the "communist invaders" have a less restrictive tax code and enjoy more freedoms than the people they're displacing.

Mon, 05/21/2012 - 22:19 | 2449543 Cathartes Aura
Cathartes Aura's picture

China was also looking into Idaho last year,

The following quote originally appeared in the Idaho Statesman, but has since apparently been taken down....


"The Chinese are looking for a beachhead in the United States," said Idaho Commerce Secretary Don Dietrich. "Idaho is ready to give them one."


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.

Mon, 05/21/2012 - 15:54 | 2448617 firstdivision
firstdivision's picture

and they just fixed all of Europe's woes.

Mon, 05/21/2012 - 15:56 | 2448623 DeficitAlchemist
DeficitAlchemist's picture

Special criteria for the Beijing Whale? Didn't we see that movie already?

Mon, 05/21/2012 - 15:56 | 2448624 Money 4 Nothing
Money 4 Nothing's picture

Treasury = IMF. The name Treasury Dept, is name sake only.

Little Timmah is Ben Bernanks Boss also.

Mon, 05/21/2012 - 16:32 | 2448637 Global Hunter
Global Hunter's picture


edit: somebody is going around the US govt and people to literally sell the country into debt to a foreign country. 

Mon, 05/21/2012 - 16:04 | 2448644 reader2010
reader2010's picture

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. 

Mon, 05/21/2012 - 16:05 | 2448648 MrBoompi
MrBoompi's picture

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?



Mon, 05/21/2012 - 16:09 | 2448662 BlackholeDivestment
BlackholeDivestment's picture

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.

...uh, can't remember, is this America or just ''short term'' memory and loss?

Mon, 05/21/2012 - 16:10 | 2448665 riphowardkatz
riphowardkatz's picture

Saw this randomly popping up this weekend. 

China's secret -- it owes Americans nearly $1 trillion  

Mon, 05/21/2012 - 16:12 | 2448671 hawks5999
hawks5999's picture


Mon, 05/21/2012 - 16:25 | 2448678 AccreditedEYE
AccreditedEYE's picture

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.

Mon, 05/21/2012 - 16:16 | 2448683 zilverreiger
zilverreiger's picture

Can they also sell there?

Mon, 05/21/2012 - 16:40 | 2448770 sockratte
sockratte's picture

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.

Mon, 05/21/2012 - 18:39 | 2449075 malikai
malikai's picture

This is the first step.

Mon, 05/21/2012 - 16:20 | 2448700 the grateful un...
the grateful unemployed's picture

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)

Mon, 05/21/2012 - 16:29 | 2448732 Global Hunter
Global Hunter's picture

was thinking something similar

Mon, 05/21/2012 - 16:22 | 2448707 dizzyfingers
dizzyfingers's picture

"officials are concerned that China has gained too much leverage"


Mon, 05/21/2012 - 16:22 | 2448712 mademesmile
mademesmile's picture

Is China this stupid? I want to see which country owes what to which country. Any idea where to locate a chart like that?

Mon, 05/21/2012 - 16:23 | 2448715 chdwlch1
chdwlch1's picture

Confucius say, "US Treasury need more quarity corrateral to re-hypothicate to keep Ponzi arive."

Mon, 05/21/2012 - 18:15 | 2449028 Money 4 Nothing
Money 4 Nothing's picture

Confucius say, buy out the rest of America on the cheap.

Mon, 05/21/2012 - 16:29 | 2448731 chdwlch1
chdwlch1's picture

Confucius say, "Currency manipurator's onry friend is other currency manipurator."

Mon, 05/21/2012 - 16:35 | 2448756 GMadScientist
GMadScientist's picture

Don't want anyone to see that turning into a trickle just yet. No sirreeee.


Mon, 05/21/2012 - 16:41 | 2448774 XtraBullish
XtraBullish's picture

Why would anti-Semitic Chinese mandarins want to grease the House of Rothschild again and again and again?

Mon, 05/21/2012 - 22:26 | 2449560 Cathartes Aura
Cathartes Aura's picture

"It's a big club, and you ain't in it"

              ~ George Carlin

Mon, 05/21/2012 - 16:42 | 2448775 Shock and Aweful
Shock and Aweful's picture

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

Mon, 05/21/2012 - 21:29 | 2449437 MrPoopypants
MrPoopypants's picture

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.

Mon, 05/21/2012 - 16:44 | 2448784 Divine Wind
Divine Wind's picture

This is bullshit, just like everything else coming out of Washington.


There are other reasons behind this sidestepping of the primary dealers.

Mon, 05/21/2012 - 16:56 | 2448787 Bastiat009
Bastiat009's picture

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.

Mon, 05/21/2012 - 16:51 | 2448804 Wood
Wood's picture

This isn't to hide how much they are buying. It hides how much they are NOT buying.

Mon, 05/21/2012 - 16:57 | 2448811 slewie the pi-rat
slewie the pi-rat's picture


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...

Mon, 05/21/2012 - 17:14 | 2448876 Winston Smith 2009
Winston Smith 2009's picture

All your bucks are belong to us.

Mon, 05/21/2012 - 17:17 | 2448880 Arnold Ziffel
Arnold Ziffel's picture

How do you say "Muppet" in Mandarin?


Oink, oink, oink.......

Mon, 05/21/2012 - 17:18 | 2448891 digalert
digalert's picture

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.

Mon, 05/21/2012 - 18:42 | 2449079 the grateful un...
the grateful unemployed's picture

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

Mon, 05/21/2012 - 18:21 | 2449044 Money 4 Nothing
Money 4 Nothing's picture

So.. Again I ask, "What's the difference between the US and China?"

Mon, 05/21/2012 - 18:37 | 2449071 world_debt_slave
world_debt_slave's picture

insider trading, timmahs way

Mon, 05/21/2012 - 18:56 | 2449101 ArrestBobRubin
ArrestBobRubin's picture

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.

Mon, 05/21/2012 - 18:58 | 2449107 diesheepledie
diesheepledie's picture

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!

Mon, 05/21/2012 - 19:36 | 2449180 Oldrepublic
Oldrepublic's picture

How do you sayTreasury Direct in Chinese?

Fri, 05/25/2012 - 07:39 | 2449508 Money 4 Nothing
Money 4 Nothing's picture


Tue, 05/22/2012 - 03:10 | 2450062 NoClueSneaker
NoClueSneaker's picture


Mon, 05/21/2012 - 21:15 | 2449404 MrPoopypants
MrPoopypants's picture

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.

Mon, 05/21/2012 - 21:36 | 2449449 Everybodys All ...
Everybodys All American's picture

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.

Mon, 05/21/2012 - 21:55 | 2449501 chinaboy
chinaboy's picture

That's how China gets closer to an economic  hard landing.

Mon, 05/21/2012 - 22:14 | 2449537 dolph9
dolph9's picture

Congratulations American hicks, your Jewish overlords have sold your country to Red China.

Mon, 05/21/2012 - 23:56 | 2449728 earleflorida
earleflorida's picture

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


Tue, 05/22/2012 - 00:20 | 2449788 diesheepledie
diesheepledie's picture

"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!!


Tue, 05/22/2012 - 17:18 | 2452849 earleflorida
earleflorida's picture

a modest proposal by swift ___

"A Civalized Society so Imbred that the Unborn are as known to few a Proper Food Fare?"


Tue, 05/22/2012 - 22:29 | 2453750 diesheepledie
diesheepledie's picture

valde speculatio

Tue, 05/22/2012 - 01:58 | 2449933 NoClueSneaker
NoClueSneaker's picture

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.

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