This page has been archived and commenting is disabled.

As The China-Japan Conflict Escalates, Whom Will The US Support?

Tyler Durden's picture




 

When the time finally comes for the inevitable discussion of just whom the US will support in the escalating China-Japan conflict: its long-term political ally Japan, where numerous naval bases are located, or its key inflation-exporting recipient and world economic powerhouse (ghost steel receipts notwithstanding) China, there will be much political rhetorical, many promises, even more lies, but in the end only one thing will matter. Money, or more specifically, debt and credit formation. Which brings us to the just released TIC data, which among other things shows that in July, Chinese holdings would have dropped to a 12 month low, if only the June print of $1164.3 billion had not been mysteriously revised to a fresh multi year low of $1147.0 billion, just so the July print of $1149.6 billion can be an uptick. More curious it that Japan, quite mired by its own debt "situation" of Y1 quadrillion in public debt and rising, continue to grab US paper with both arms, and as of July touched on an all time high of $1117 billion (maybe in another all-in gambit to show its "solidarity" with Big Uncle Sam in hopes Big Uncle Sam will support the Senkaku incursion).

The net result is that the spread between Chinese and Japanese US Treasury holdings has declined to a tiny $33 billion, from $430 billion one short year ago (we know that China is now actively buying gold with its current account cash instead of US paper but that is irrelevant for the time being). What is more importantly is which of its top US Treasury holders (the Fed being naturally the largest) will the US end up disappointing: China or Japan, because as much as it wants, it won't be able to support both. What happens if and when the snubbed party decides to dispose of its $1.1 trillion in US securities?

Source: TIC

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 09/18/2012 - 09:55 | 2806730 LULZBank
LULZBank's picture

Samurais Vs Shaolin Monks... Whom will the Cowboys shoot first Bitchezz!!!

Tue, 09/18/2012 - 09:59 | 2806741 GetZeeGold
GetZeeGold's picture

 

 

10 bucks on the Monks.

 

Put your money down boys.

 

Tue, 09/18/2012 - 10:10 | 2806792 LongSoupLine
LongSoupLine's picture

10 bucks on the defense industry...which supports both sides.

Tue, 09/18/2012 - 10:16 | 2806818 TIMBEEER
TIMBEEER's picture

250 bucks on the Chinese and their Made in China weapons!

 

No, wait..

Tue, 09/18/2012 - 10:32 | 2806867 Precious
Precious's picture

In one month no one will even remember this episode.  Fucking island that's smaller than some sports stadiums.

Tue, 09/18/2012 - 10:33 | 2806882 ParkAveFlasher
ParkAveFlasher's picture

I'll plunk $10 on the 800lb yin-yang elephant in the room: Korea.

Things have been awfully quiet in K-Town as of late. 

Why fight directly when the MIC can sell arms and merc services into a proxy battle for the same price?

Tue, 09/18/2012 - 10:38 | 2806902 Precious
Precious's picture

The Koreans are busy voting up the most viral video in the history of YouTube.

Tue, 09/18/2012 - 10:52 | 2806947 ParkAveFlasher
ParkAveFlasher's picture

See?  They really are bad ass.

edit: (\sarc)

Tue, 09/18/2012 - 11:04 | 2807005 Precious
Precious's picture

Ride the pony.

Tue, 09/18/2012 - 11:04 | 2807007 DeadFred
DeadFred's picture

Catchy west coast swing music.

Tue, 09/18/2012 - 10:34 | 2806888 unrulian
unrulian's picture

It's what's under the Island that counts

Tue, 09/18/2012 - 10:36 | 2806893 Precious
Precious's picture

Yah.  Yah.  All the oil everywhere.  Just fucking leaking out of the ocean, there's so much.  Notice all the drilling platforms?  All the oil companies are just climbing over themselves to sign leases.  Sure.  There must be petabarrels of oil under that island. Enough to fill the Cadillacs of every Chinese and Japanese gangster for the next thousand years.

Tue, 09/18/2012 - 10:39 | 2806909 GetZeeGold
GetZeeGold's picture

 

 

Notice all the drilling platforms?

 

All those guys are down in Brazil.

 

Tue, 09/18/2012 - 10:41 | 2806916 Precious
Precious's picture

Yah.  Where there are no typhoons every year to fuck up their rigs.

Tue, 09/18/2012 - 10:40 | 2806910 ParkAveFlasher
ParkAveFlasher's picture

"Go-zira!" [points to the sea, screams]

Tue, 09/18/2012 - 10:44 | 2806926 Precious
Precious's picture

Captain America, what happened to your shield?

Tue, 09/18/2012 - 11:48 | 2807178 ParkAveFlasher
ParkAveFlasher's picture

Well, I ordered a shield, but all I got was a warehouse receipt.  Looked like this:

http://patchstop.com/images/products/large_669_P3119_-_4x3_-_Go_Fuck_You...

Tue, 09/18/2012 - 12:01 | 2807245 Overfed
Overfed's picture

How 'bout the Chinese and their made in Russia weapons?

Tue, 09/18/2012 - 20:45 | 2809168 mjcOH1
mjcOH1's picture

"How 'bout the Chinese and their made in Russia weapons?"

 

Yep.   Now that the bugs have all been worked out by the Iraqis, Afghanis, Libyans, Yemenis, Yugoslavians, and Syrians, "this time it'll be different".

Tue, 09/18/2012 - 10:19 | 2806803 Frozen IcQb
Frozen IcQb's picture

My neg vote above represents a bet that the Samurai gets shot

However, this is a no-win scenario. The US will persuade the Samurais to let it ( the islands) go for some diplomatic (economic) concessions

Tue, 09/18/2012 - 11:09 | 2807033 DeadFred
DeadFred's picture

This could just be economic warfare. The Shanghai index is very close to dropping below its last support. The Japanese (and Americans?) may be adding a new page to the Beggar Thy Neighbor playbook.

Tue, 09/18/2012 - 10:17 | 2806827 YuropeanImbecille
YuropeanImbecille's picture

Hahahaha that was seriously fugging funny =) whom will the cowboys shoot first :D

 

Thanks for cheering me up on this miserable day

Tue, 09/18/2012 - 10:20 | 2806839 DeadFred
DeadFred's picture

Are there any samarais around the aapl plant? Thought not. Nasdaq would drop overnight below the endofworld levels if 'rioters' surrounded Foxconn. 20 bucks on the monks. Exciting times.

Tue, 09/18/2012 - 10:21 | 2806842 BandGap
BandGap's picture

We need an over/under here AND a spread.

My money would be on the Japanese, at least initially and in a defensive posture.  The Chinese have the numbers but lack discipline. That is, unless they commit their top level troops to any engagement, which would leave them vulnerable in other geographical areas.

In a 1 on 1 conflict the Chinese win. But if the conflict is to just have the Japanese hold out till John Wayne arrives I give them the edge.

Tue, 09/18/2012 - 10:59 | 2806863 Frozen IcQb
Frozen IcQb's picture

"I fear all we have done is to awaken a sleeping"...Dragon

Tue, 09/18/2012 - 09:55 | 2806735 cossack55
cossack55's picture

Support Iceland and screw the rest.

Tue, 09/18/2012 - 10:14 | 2806810 prains
prains's picture

Icelandic Fundamentalists will be pissed or was that Islamist always get them mixed up

Tue, 09/18/2012 - 11:53 | 2807198 malikai
malikai's picture

10/10 Icelandic Fundamentalists are free.

Tue, 09/18/2012 - 09:56 | 2806738 Ljoot
Ljoot's picture

With two, you get eggrolled.

 

Tue, 09/18/2012 - 09:57 | 2806746 LULZBank
LULZBank's picture

Talkin about your avatar?

Tue, 09/18/2012 - 10:12 | 2806799 1100-TACTICAL-12
1100-TACTICAL-12's picture

Currency WAR's check, Trade WAR's check, World War ????????

Celente

Tue, 09/18/2012 - 09:56 | 2806739 the 300000000th...
the 300000000th percent's picture

Looks like the fed will have to secretly buy a whole bunch of paper to add to the "unofficial list" if they are even keeping a list anymore

Tue, 09/18/2012 - 09:56 | 2806740 LawsofPhysics
LawsofPhysics's picture

If there is profit to be made, we will support both.

The truth is what it is, some things never change.

Tue, 09/18/2012 - 10:16 | 2806817 prains
prains's picture

Sell The Japs military hardware and sell the Chinks the countermeasures there's a movie about that

Tue, 09/18/2012 - 10:25 | 2806855 DeadFred
DeadFred's picture

The Chinese built the components of the hardware we would sell. They already have the countermeasures installed.

Tue, 09/18/2012 - 10:16 | 2806820 CrimsonAvenger
CrimsonAvenger's picture

we are good little ferengi, aren't we?

Sorry in advance for the noise of a thousand geek detectors going off.

Tue, 09/18/2012 - 10:19 | 2806833 bigkahuna
bigkahuna's picture

I have a feeling that supporting both sides in this conflict will not work. Who knows though. Logically, if we support both sides, both sides hate us, Japan loses, and we end up having an Asia Pacific/trade poop storm to deal with.

Logic of any kind has not got me too far lately though.

Tue, 09/18/2012 - 09:57 | 2806742 falak pema
falak pema's picture

US has military treaty with Japan; not with China. Japan is Western surrogate, not China, only economic partner. 

Tue, 09/18/2012 - 09:59 | 2806751 LULZBank
LULZBank's picture

US has never been known to turn a blind eye to treaties... or anyother imperialist for that matter.

Tue, 09/18/2012 - 10:11 | 2806794 exi1ed0ne
exi1ed0ne's picture

Simple.  War with China means all Chinese assets are siezed by the US Gov. including monies on deposit at the Fed.  Instant vaporization of a lot of debt.

What's not to love?  Well besides the cost in iron, blood and gold.

Tue, 09/18/2012 - 10:13 | 2806805 post turtle saver
post turtle saver's picture

Ding ding ding, we have a winner... +1

Tue, 09/18/2012 - 10:34 | 2806878 falak pema
falak pema's picture

yes the corruption of US money line and outsourcing strategy pains point to China being "reigned in" by Pax Americana before its too late; from the US perspective. 

Although ME oil stays vital nerve to energy and to oil petrodollar hegemony; all recycled to west. That oil/monetary pump is #1 asset of Pax Americana. If China goes militarist, then USA has a problem as its loses its big stick monopoly; something which is now old history, impossbile, as far as Japan is concerned.

A temporary downturn of China,  loss of momentum in the Oligarchy game, better not entrain a policy change knee jerk, like reverse  Pearl Harbour tactics to quelch USA's JApanese ally; as that would be crossing a Rubicon with the US at a moment when China is not ready military wise. (We know little on this capability). Lets hope and pray they are not tempted by populist pressure and in-house dissensions that upset their oligarchy mindset and whole national apple cart.

We will get through this spiralling crisis, which will stay regional thorn for years to come if the oil potential therein is significant, a feel for inhouse political maturity of their ruling class. Tipping times, as China will bid for hegemony in Asia further down the road; thats a given. 

Tue, 09/18/2012 - 10:58 | 2806987 exi1ed0ne
exi1ed0ne's picture

China has one problem, and that is force projection.  Sure they have ICBMs and other long range ballistics, but they have no way to put boots on the ground in any real size.  So how do you goad them into conflict in a location where they CAN force project if that is the goal?  Rub a lot of salt in their nationalist pride with a proxy who happens to be a neighbor.  Remember, there is at least 1.1 trillion dollars in debt that can be zeroed out, in addition to any other Chinese national assets residing in the US.  That is a lot of motivation.  Since they stopped playing along and buying treasuries, and the bulk of the hardship is borne by mainland Japan, there is little reason not to.

I don't agree with it, but it is very easy to see the motivations in the fog.

Tue, 09/18/2012 - 11:33 | 2807120 sushi
sushi's picture

China has a significant asset in the treaties signed at the Postsdam conference post WWII.

These returned to China those territories seixed by Japan in the war of 1895. These territories include Formosa (Taiwan) and the disputed islands. This was agreed by all the great powers on the Allied side

Circa 1951 the US, which occupied and administered Okinawa, unilaterally extended its administrative jurisdiction to include the disputed islands which were then used as a bombing range.

When Okinawa was returned to Japanese jurisdiction the US also transferred the islands over which they had no true legal right of ownership and jurisdiction.

As for the debt, I am sure that should the US seize Chinese assets the Chinese will reciprocate. You need to total up the full investment of the Fortune 500 in China in plant and equipment. The Fortune 500 will never permit the US government to destroy their assets. Most Japanese firms also locate production facilities in China. So no more cheap $10 toaster ovens. And no relocation of production faciilties elsewhere in aisia pacific as this turns into a war zone. Good luck building toaster ovens in Af-Pak.

 

Tue, 09/18/2012 - 11:37 | 2807135 falak pema
falak pema's picture

wow, intricate politics about these rocks in the sea.

Tue, 09/18/2012 - 11:57 | 2807217 exi1ed0ne
exi1ed0ne's picture

True dat.  Better than any who dunnit book I ever read.

Tue, 09/18/2012 - 14:54 | 2808057 easterner
easterner's picture

In 1889, after the first sino-japanese war, China was defeated and signed the Treaty of Shimonoseki - China ceded DiaoYu island, group of small islands considered part of Taiwan:

"Articles 2 & 3: China cedes to Japan in perpetuity and full sovereignty of the Penghu group, Taiwan and the eastern portion of the bay of Liaodong Peninsula together with all fortifications, arsenals and public property."

http://en.wikipedia.org/wiki/Treaty_of_Shimonoseki

In 1943, as part of the allies during WWII, China, US, UK, made the Cairo Declaration:

"...

All territories Japan had won from China, such as Manchuria (Dongbei), Formosa (Taiwan), and the Pescadores (Penghu), shall be restored to the Republic of China.

..."

http://en.wikipedia.org/wiki/Cairo_Declaration

In 1945, Potsdam Declaration:

"...

Japanese sovereignty shall be limited to the islands of Honshu, Hokkaido, Kyushu, Shikoku and such minor islands as we determine." As had been announced in the Cairo Declaration in 1943.

..."

http://en.wikipedia.org/wiki/Potsdam_Declaration

So, after WWII, Japan has no sovereign claim over anywhere except its four major islands. Before 1972, DiaYu Island was under US administration, and served as some sort of weapon testing ground. In 1972, US transferred the "administration right" to Japan, intentionally leaving a hot zone of conflicts in the East Asian area.

Since then, there was a gentlemen's agreement between China and Japan, that the issue be put aside, so the two countries could cooperation in a broader economic and political range. However, as yuo already know, the Japanese government attempted to "nationalize" the island and change the "administration right" into ownership, that is the reason of the recent flare up in the region(could this be the price Hilary Clinton stated that China would pay after China and Russia veto the UN Syria resolution for the third time?).

Make no mistake, this is a serious strategic miscalculation on the part of Japan and US. This action of Japan is not only act of aggression towards China's sovereignty, but also an act of challenging the post WWII world order. By encouraging Japan's reckless action, US is putting the current world order in danger, and ultimately will hurt its own interests. They assume China would just take it in their ass. But China actually has been preparing for this kind of war for the last decade (DF 21D ballistic missile, aka "air carrier killer", land base anti-satellite missile, aka "satellite killer", and formidable submarine power, etc.), which would deter US intervention.

At this very moment, China has sent 12 more patrol ships to the waters of Diayu Island, and I don't see any possibilities of compromise. Either Japan back down and leave the island, or a major war.

P.S, in 1949, China splitted into P.R. of China and R. of China(Taiwan), so both have claim over DiaoYu Island. It is a great news that both sides are co-operating against Japan during the current conflict.

Wed, 09/19/2012 - 09:44 | 2810716 exi1ed0ne
exi1ed0ne's picture

Excellent historical summary of the region!  It is important to note that there is no such thing as international law - it's all a gentleman's agreement that lasts only as long as the disadvantage of maintaining the status quo outweighs the disadvantage of upsetting it.   The real wild cards are Russia and N. Korea, and what their reactions would be in another sino-japanese war.  My bet is they sit on their hands and pick up the pieces afterwards, but I'm in the cheap seats.  The US benefits massively on several fronts.  Debt seizure, end to Chinese buying Africa with US dollars, more blood tears and treasure for the war machine.  China ALSO benefits from a conflict - citizen anger focus outward, ready made population control, and seriously enhanced status on the world stage for taking on the top dog.  The US has blunted the military with all the foreign wars, and having China and Iran go hot at the same time would be an unmitigated disaster due to the Navy stretched thin already.  I'm not sure that China is in such a good position either to be the clear victor in a conflict of the region.  They also have India on the other side that would love to take some territory off of China's hands that they have been quarreling over for forever.

Grab the popcorn.  The Archduke is about to have a bad day.

Tue, 09/18/2012 - 10:19 | 2806835 Rylie
Rylie's picture

Can they just write off the Chinese debt like that? what would other countries do with their USD if they think that their US bonds can just be written off?

 

I would think that would constitute a default on the debt owed to China.

Either way I would never lend another RED CENT to the US, and I think that others would feel the same way.

Tue, 09/18/2012 - 10:46 | 2806935 exi1ed0ne
exi1ed0ne's picture

Congress has the power to seize the US assets of countries (and their citizens) we are at war with.  It would not be a default, but a legal (lol) and normal operation in the time of war - denying resources to the enemy.  For a historical example, please see Bayer and their aspirin patent in WWII.

Tue, 09/18/2012 - 10:53 | 2806968 Rylie
Rylie's picture

So then I ask if this is possible why owe anything in USD at all. If this were to happen every other country in the world would dump the USD. my guess is banks and companies would do this as well.

 

All confidence would be lost and we all know that this is nothing but a confidence game.

Tue, 09/18/2012 - 11:01 | 2806997 exi1ed0ne
exi1ed0ne's picture

There are a ton of military bases sitting on ME oil that tell me dumping USD would be a bad move.

Tue, 09/18/2012 - 10:20 | 2806840 Sudden Debt
Sudden Debt's picture

The end of Take Away Chinese Food...

just imagine...

talk about a catastrophic escalation...

  

Tue, 09/18/2012 - 10:38 | 2806905 ParkAveFlasher
ParkAveFlasher's picture

Every half-lit town in the nation has Chinese takeout staffed by actual Chinese.  Young men with knives in the back, young girl out front at the counter.  simply recipe.

Now if China is an aggressor, you would have to round up 10 Chinese in every town.

That could take lots of dums dums.  You would also need a staging point the size of that airport in Denver.

hmmmmmm.....

Tue, 09/18/2012 - 20:48 | 2809185 mjcOH1
mjcOH1's picture

Worse yet, this could mean an iShit shortage.

Tue, 09/18/2012 - 10:20 | 2806838 bank guy in Brussels
bank guy in Brussels's picture

Indeed as you say « Japan is Western surrogate »

The Japanese elites accept constant humiliation at the hands of Americans (rape of Japanese by US military personnel, bases in Japan which Japanese hate)

Obviously the Japanese elites started this stupid arrogance over islands near to China, because the US told them to do it ... they wouldn't have dared without US backing

Japan's elites rolled over in the 1985 Plaza Accord extortion by America, which directly led to currency distortions and their economy's crash four years later, and the 'lost decades' since then

Now Japan's elites are rolling over in 2012 in another American game ...

- sabotaging the Japan - South Korea - China alliance which had been getting nicely started

- inducing China to become aggressive, leading much of the rest of East Asia to pull closer to America

- perhaps to help the US destabilise the whole region, something America usually likes to do

- perhaps to set up one flank of World War III

- but at least setting up Japan's humiliation as a regional power to go along with their decline in global economic status, Japan's leaders playing the American game against the interests of their own people and industry

Tue, 09/18/2012 - 10:39 | 2806906 suteibu
suteibu's picture

You were wrong on the Koo article comment but you are spot on on this one.  Imagine a nation invaded in 1853 and defeated in 1945 by the same force celebrating the first invasion every year.  Imagine a nation as the only victim of nuclear war allowing the American nuclear power industry to build nuclear reactors less than a decade after the a-bombs were dropped and while scarred civilians still walked the streets of Japan.  The American propaganda is strong in Japan and could only happen with compliant co-cospirator Japanese leaders.  The enemy of the Japanese people is their own government and has been for decades.

The US is only concerned with American interests including the corporate America's investments in China which will likely trump Japanese sovereignty concerns.

Tue, 09/18/2012 - 12:10 | 2807298 Overfed
Overfed's picture

The enemy of all people is their government.   Fixed that for ya'.

Tue, 09/18/2012 - 12:19 | 2807349 suteibu
suteibu's picture

Indeed.  The Japanese are cursed with two.

Tue, 09/18/2012 - 09:57 | 2806743 gojam
gojam's picture

If it ever came down to supporting one side or the other, then it would likely mean war and the US would have an excellent opportunity to renege on it's debt to China thus making it's role as a "key inflation-exporting recipient" meaningless.

Tue, 09/18/2012 - 09:57 | 2806744 Jim in MN
Jim in MN's picture

Rule 1 of Fight Club:  You don't talk about Fight Club.

Rule 1 of America: Avoid unnecessary foreign entanglements.

We are in the beginning stages of the USA getting kicked out of Eurasia.  I say good riddance.

Line the oceans with remotely piloted death and just give it a rest for a century or two.

Tue, 09/18/2012 - 10:18 | 2806821 Sudden Debt
Sudden Debt's picture

Rule 1 of America: Avoid unnecessary foreign entanglements...

HAHAHAHAHAHAHAHAHAHA!!!! Good one :) snif... :)

 

Rule 1 of America: If a foreign war started and America had nothing to do with it, you didn't pay much of attention.

Tue, 09/18/2012 - 10:56 | 2806978 Colonial Intent
Colonial Intent's picture

The European Union cannot escape the fact that it has problems at its outer perimeters, in Belarus, Ukraine, Turkey, civil wars in Syria and Libya.

It’s also going to have to learn the lesson of Libya: that in the future the U.S. is not automatically going to assume leadership when it comes to defending the interests of the West.

Tue, 09/18/2012 - 09:57 | 2806747 Madcow
Madcow's picture

Both China and Japan have accumulated $Trillions of savings in UST that they can now spend to fight each other - 

Should be a great stimulus to the global economy - 

Tue, 09/18/2012 - 10:00 | 2806757 LULZBank
LULZBank's picture

It can be closer to the truth than you might think.

Tue, 09/18/2012 - 11:40 | 2807149 sushi
sushi's picture

But both sides of this war are then selling US assets to pay for their conflict. Makes for a very cheap dollar. Twenty years out Chinese firms will be building Foxconn plants in Texas to build cheap toaster ovens to supply the demand of the Chinese Walmarts.

Tue, 09/18/2012 - 20:53 | 2809211 mjcOH1
mjcOH1's picture

Or 20 years out US charities are soliciting donations for the 500 million survivors of the Chinese civil war and political/economic collapse.

No less likely than the foxcon sweatshops  in Texas story.

Tue, 09/18/2012 - 09:57 | 2806748 Shizzmoney
Shizzmoney's picture

This is another downside of money printing: as we export more inflation, it rises the prices of "real" assets, like real estate.

This means, the probability of war rises and the use of propaganda, especially naionalistic propaganda, rises as each countries' core group of leaders try to grab what they can get. 

China views the islands as a market opportunity for both confiscating land AND getting a tired-and-underpaid workforce a boost in morale (It is much better for the anger of those to be pointed outward, not inward, for China's "elites").  Japan is the whipping boy right now b/c they are beginning a phase the US will experience in 2-8 years. 

The US picks China, b/c in the end, w/o CHina, there is no corporate profit that the govt can tax and pay off the military with (who also fears China over Japan).

Tue, 09/18/2012 - 10:18 | 2806830 post turtle saver
post turtle saver's picture

You're forgetting that the US for all intents and purposes owns Japan. That won't be given up lightly.

Tue, 09/18/2012 - 09:57 | 2806749 Cognitive Dissonance
Cognitive Dissonance's picture

"What happens if and when the snubbed party decides to dispose of its $1.1 trillion in US securities?"

Ummmm......the Fed buys them through a proxy?

What did I win Tyler?

Tue, 09/18/2012 - 10:03 | 2806768 101 years and c...
101 years and counting's picture

Ben creams his pants every night at the tought of printing 1.1 trillion to buy those holdings.  Of course, the US would support Japan and all that printing would destroy China via inflation.

Tue, 09/18/2012 - 10:24 | 2806853 Rylie
Rylie's picture

Or China dumps its treasuries and causes massive inflation in the US.

I think that either side is a lose lose for the USA

Tue, 09/18/2012 - 13:28 | 2807622 laomei
laomei's picture

It could effectively be done overnight to be honest.  Dump the dollar and agree to direct currency exchange with everyone else.  Bye bye dollar.  Sell at a slight discount and you wipe out all demand for US debt, which effectively means that everything the us issues becomes monetized.

Tue, 09/18/2012 - 10:09 | 2806786 lesterbegood
lesterbegood's picture

That proxy being the Social Security Trust Fund, perhaps?

Tue, 09/18/2012 - 10:20 | 2806836 Cognitive Dissonance
Cognitive Dissonance's picture

Not unless they change the law (or the Fed just breaks it). The SS "trust" fund gets "special issue" (greater fool) Treasuries.

"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds."

http://www.ssa.gov/oact/progdata/fundFAQ.html

Tue, 09/18/2012 - 09:59 | 2806752 edifice
edifice's picture

As The China-Japan Conflict Escalates, Whom Will The US Support?

The banks, of course. They'll fund both sides.

Tue, 09/18/2012 - 09:59 | 2806753 Debtonation
Debtonation's picture

All your debt are belong to us! Wait.....

Tue, 09/18/2012 - 10:01 | 2806760 phat ho
phat ho's picture

I say it should come down to an Iron Chef cook-off; China vs. Japan; Panda Express vs. (enter your fav Japanese restaurant here...)

Tue, 09/18/2012 - 10:03 | 2806767 edifice
edifice's picture

I wouldn't call Panda Express cooking...

Tue, 09/18/2012 - 10:06 | 2806775 Jim in MN
Jim in MN's picture

Iron Chef secret ingredients:

 

 

1.  Oil

2.  T-bills

3.  Radioactive debris

 

Now....FIGHT!

Tue, 09/18/2012 - 10:14 | 2806809 Sweet Chicken
Sweet Chicken's picture

Fucking awesome man! +1

Today has had some really funny posts on ZH and it's only 9am!

Tue, 09/18/2012 - 10:06 | 2806776 A Lunatic
A Lunatic's picture

Funny you should say that, as I was thinking along similar lines just last night in regards to our Presidential election. I thought perhaps the whole thing could be decided through a fight to the death using only machetes while trapped in a large cage with a few wild hyenas.........

Tue, 09/18/2012 - 10:07 | 2806783 phat ho
phat ho's picture

that's original, and yet random

Tue, 09/18/2012 - 10:10 | 2806789 edifice
edifice's picture

And Tina Turner with big hair? Shall we call it "Mad Max Beyond Thunderdome?" Oh, wait...

Tue, 09/18/2012 - 11:50 | 2807057 aheady
aheady's picture

2 men entahhh. 1 man reave.

Tue, 09/18/2012 - 11:43 | 2807156 KickIce
KickIce's picture

+1 on having a hyena for president.

Tue, 09/18/2012 - 10:01 | 2806762 roadhazard
roadhazard's picture

America does not have the money to support itself let alone anyone else. That Big Stick is now owned by a pauper.

 

Tue, 09/18/2012 - 10:01 | 2806763 ZeroAvatar
ZeroAvatar's picture

They must be planning on re-starting the Draft right after elections.

 

I met a young man Saturday night, probably in his early twenties.  He wanted to fight me.  Since I RECENTLY watched Fight Club, I obliged the guy

and we headed outside, only to be cut off by the bar manager and disengaged.

 

I've been thinking a lot about that night.  This young man has the spunk, at least, to fight.  He's angry (at boomers, at being unemployed, at his parents, at everything).

 

I reckon he'll make a good Marine.  Pretty much anyone with a pulse is going to be forced into WWIII.  Instead of fighting each other, we should be joining forces against TPTB, the Free Shit Army, The Muzzies, I dunno.  Just anything but each other.

Tue, 09/18/2012 - 10:02 | 2806764 A Lunatic
A Lunatic's picture

I sure as Hell don't see 'made in Japan' on everything in stores.................

Tue, 09/18/2012 - 10:03 | 2806766 kaa1016
kaa1016's picture

I think this is a smokescreen to change the conversation about the succession process in China. This is China, nothing is ever as it seems. The real tinderbox is still the middle east.

Tue, 09/18/2012 - 11:58 | 2807228 malikai
malikai's picture

Quite possible.

Tue, 09/18/2012 - 10:05 | 2806773 Dr. Engali
Dr. Engali's picture

The U.S will support Japan as they continue the efforts to contain China. TPTB will find some other third world country to export the inflation to.

Tue, 09/18/2012 - 10:09 | 2806784 Cognitive Dissonance
Cognitive Dissonance's picture

South America and Africa are ripe for the picking.

Tue, 09/18/2012 - 10:10 | 2806790 Dr. Engali
Dr. Engali's picture

My thoughts exactly.

Tue, 09/18/2012 - 10:25 | 2806856 tip e. canoe
tip e. canoe's picture

got to keep our eyes on the prize

Tue, 09/18/2012 - 10:06 | 2806774 phat ho
phat ho's picture

mind your own business round-eye, we deal with you later

Tue, 09/18/2012 - 10:10 | 2806788 Cole Younger
Cole Younger's picture

Of course the U.S. will support Japan...Then China will support its currency with gold and create a global gold standard..U.S. loses before one shot is fired...

Tue, 09/18/2012 - 10:23 | 2806849 post turtle saver
post turtle saver's picture

Yeah, and maybe China will build a navy with all that steel they have sitting in warehouses... oh wait.

Tue, 09/18/2012 - 11:45 | 2807165 sushi
sushi's picture

Ghost steel builds ghost ships which are very hard to see on radar. Big Chinese advantage. They could be anchored in Ne Orleans right now and no one even notices.

Tue, 09/18/2012 - 10:10 | 2806791 phat ho
phat ho's picture

this will all blow over, and I have faith in humanity (huge eye-roll)

Tue, 09/18/2012 - 10:11 | 2806797 Sweet Chicken
Sweet Chicken's picture

Don't you mean "eggroll"? ;)

Tue, 09/18/2012 - 10:11 | 2806793 Sweet Chicken
Sweet Chicken's picture

This is epic! I wonder if South Park will do an episode making fun of this nonsense!?

Shitty Wok VS. Shitty Sushi

Tue, 09/18/2012 - 10:12 | 2806798 phat ho
phat ho's picture

damn mongolians!

Tue, 09/18/2012 - 10:13 | 2806800 Sudden Debt
Sudden Debt's picture

the Chinese do build our iPads.... just saying...

And the Japanese still dispise western people as inferior people and the Chinese are hard working people.

I GO FOR THE CHINESE!!

GO CHINA!!! LET JAPAN GO UNDER THE SEA!!

I'M UP FOR 20 EURO'S!!!!

Tue, 09/18/2012 - 10:19 | 2806834 BigInJapan
BigInJapan's picture

Japanese women don't despise western men as 'inferior'

No sireeee.

Tue, 09/18/2012 - 10:46 | 2806939 unrulian
unrulian's picture

they prefer unusually small yet ghostly white members, barely able to free themselves from a basket weave of raven black coarse hair 

Tue, 09/18/2012 - 11:13 | 2807047 aheady
aheady's picture

Gross.

Tue, 09/18/2012 - 10:41 | 2806918 the tower
the tower's picture

Chinese word for foreigner is "dog"..

 

I say build American market iPads in USA, European market iPads in Europe and let Apple make less profit.

Tue, 09/18/2012 - 10:13 | 2806802 chindit13
chindit13's picture

In the office of disgraced Corruptocrat Bo Xilai, he hung a map of "Greater China".  Obviously the map included that renegade province of Taiwan, the "liberated" province of Tibet, and the Diaoyu Islands.  Canadians might be relieved to know it did not contain Vancouver, though it may not have been updated.  Burma, on the other hand, might take exception to the fact that Bo's map included Myanmar/Burma/Pyu/Greater Amarapura....call it what you will as part of the Middle Kingdom.  There is no historical record whatsoever that any Chinese ever ruled that land, though it is likely there are some as yet undiscovered "ancient" documents being created at this very moment.  It may well be no coincidence that China's stock has tumbled in Burma and that the new government has reached out to the West and India to offset the creeping annexation.

Tue, 09/18/2012 - 10:57 | 2806970 falak pema
falak pema's picture

Chinese ships were sailing to Myanmar and even India in 1270, when Marco Polo's father envisaged taking the sea route to China. Their expedition even went to Hormuz in 1271 to take boat on advice of Abaqa Khan, ilkhanate chief, to junction with the Mongol navy in Burma waters. 

They gave up and doubled back when they realised that the Arab Dhows were unreliable to get them to Myanmar where the Mongol navy was. They took the land route via Badakshan pass, Afghanistan. Mongol navy sailed to Arab lands in 1400s, after their land silk routes had collapsed to Tamerlane's army, before the Portuguese navy arrived in that region. 

Tue, 09/18/2012 - 10:14 | 2806806 ebworthen
ebworthen's picture

We support Japan and put China down; does anyone really want to pay them back all those Treasury $$$'s?

Tue, 09/18/2012 - 10:14 | 2806807 dick cheneys ghost
dick cheneys ghost's picture

Will Apple move their factories from China to Zimbabwei?.........the labour is cheaper

Tue, 09/18/2012 - 10:15 | 2806812 phat ho
phat ho's picture

it's obvious no one is 'ever' going to get their money back. Perhaps a flanking maneuver is in order

Tue, 09/18/2012 - 10:16 | 2806814 Stuck on Zero
Stuck on Zero's picture

 

What happens if and when the snubbed party decides to dispose of its $1.1 trillion in US securities?

Don't worry.  Benny will buy them. 


Tue, 09/18/2012 - 10:26 | 2806859 post turtle saver
post turtle saver's picture

Yep, since Benny already owns more securities than China does, what's another trillion.

How many times do I have to break this down for people? The vast majority of US treasuries is owned by... the US!

Tue, 09/18/2012 - 10:18 | 2806828 Right-on Left-off
Right-on Left-off's picture

What if both China and Japan sell all their Treasuries ...... Holy Shit Batman.

Tue, 09/18/2012 - 10:28 | 2806866 post turtle saver
post turtle saver's picture

Their respective economies will grind to a screeching halt instantaneously, that's what will happen.

Tue, 09/18/2012 - 21:04 | 2809255 mjcOH1
mjcOH1's picture

Then Japan, China, and the last remaining saver in America discover that the only difference in value between a piece of paper with 1 zero on it and another piece of paper with 4 zeros on it is the promise of the US treasury not to add 3 zeroes.

Tue, 09/18/2012 - 10:21 | 2806841 phat ho
phat ho's picture

I smell opportunity

Tue, 09/18/2012 - 10:41 | 2806913 helping_friendl...
helping_friendly_book's picture

I wouldn't go against the Chinese. We tried that once and got a good ass whooping or, should I say, the greatest strategic retreat from the Yalu river to the 38th parallel.

Don't kid yourself.

China IS the greatest economy in the WORLD.

 

http://www.youtube.com/watch?v=zzP5qr-ZxHY&feature=related

http://www.youtube.com/watch?v=sDzVVEa1eKg

Tue, 09/18/2012 - 10:46 | 2806938 Sandmann
Sandmann's picture

China supplied the brawn but the USSR supplied the technology and the pilots. Don't count on Russia backing Chinese expansion - they want Japan and the US to contain China in the Pacific so they can protect Siberia from Chinese incursions. China is loathed throughout the world, probably much more than Japan ....and India wants China contained.  I don't think this decrepit Communist dictatorship could survive trade sanctions - it would implode

Tue, 09/18/2012 - 11:05 | 2807011 helping_friendl...
helping_friendly_book's picture

You forget, or maybe you never knew, that the million Chinese that went South across the Yalu river were all Volunteers. 

They are not playing.

The Chinese will not overtly attack but, will undermine USA interest in the region if we play their game and back the Japanese.

Tue, 09/18/2012 - 12:22 | 2807363 Sandmann
Sandmann's picture

The Chinese undermined the USA the day they moved manufacturing plants from US soil to Chinese provinces. The day that Boeing has to check for fake Chinese parts in its planes and even the latest US jet fighter has fake Chinese parts. The US lives up to Lenin's adage that The Capitalists would sell them the rope with which to hang them.

http://www.military.com/video/logistics-and-supplies/military-equipment/...

Tue, 09/18/2012 - 10:42 | 2806920 grid-b-gone
grid-b-gone's picture

The greater lesson is that if you allow your debt-to-GDP to surpass 200%, you'd better already have a strong military in place because someone will test your weakened financial state.

If your strongest ally is 50% funded by your aggressor, you may not have the protection you thought you had.

Tue, 09/18/2012 - 10:42 | 2806922 gwar5
gwar5's picture

US is comitting suicide so will throw Japan under the bus. That's why China is now expansionist, and on the move, along with everybody else. Blood is in the water and the frenzy is underway.

Tue, 09/18/2012 - 10:44 | 2806925 Getting Old Sucks
Getting Old Sucks's picture

The Fukushima reactor meltdowns are still spewing radiation into the ocean and atmosphere.  Japan is well underway to becoming a nuclear wasteland.

Tue, 09/18/2012 - 10:44 | 2806928 backhandtopspin...
backhandtopspinslicer's picture

will master obama become china's biatch? o'bama-o'biatch no more master blaster

Tue, 09/18/2012 - 10:46 | 2806936 yogibear
yogibear's picture

Just hilarious, the fed would be the only buyer of US debt. Taking it from one pocket and putting into another. The US dollar should be much lower. Same with the Euro, 

Tue, 09/18/2012 - 10:48 | 2806949 Inthemix96
Inthemix96's picture

Chinese Japanese,

Don't forget to wash your knees.

Its all fucking Greek to me anyways???

Tue, 09/18/2012 - 14:09 | 2807830 Vlad Tepid
Vlad Tepid's picture

Is that a question?

Tue, 09/18/2012 - 10:49 | 2806953 Budd aka Sidewinder
Budd aka Sidewinder's picture

Where does Israel stand on the issue?

Tue, 09/18/2012 - 10:59 | 2806989 Cognitive Dissonance
Cognitive Dissonance's picture

Downwind from the fallout?

Tue, 09/18/2012 - 11:05 | 2807010 bankruptcylawyer
bankruptcylawyer's picture

Dumping 1 trillion dollar over 1000 days into gold ( cash left over from selling 1.1 trill of treasuries over 3 years plus operational costs)

Leaves 1 billion of gold prchses a day. At an average 3 year price of 2000 an oz-----32k per pound ----64,millton.....15 tons per day for 1000days.
Q
150000 tons. Of course if peopleknew this was the plan the average price would be double. Making the price yield in a purchase of somewhere near 8000 tons of gold.

Of course if you buy all this gold your going to need more weapons to protect it. Thats where the chinese will invest their surplus.

Tue, 09/18/2012 - 12:02 | 2807254 ozziindaus
ozziindaus's picture

All that gold concentrated in one place makes it easier to raid ala Iraq, Libya, Syria, Iran.....

Tue, 09/18/2012 - 11:13 | 2807045 Colonial Intent
Colonial Intent's picture

Chinese territorial waters now extend as far as their Su-30MKK's strike range.

Tue, 09/18/2012 - 11:28 | 2807101 Jack Burton
Jack Burton's picture

I heard a young Chinese guy interviewed at a protest against Japan. He was asked what he did. He says "I am studying auto manufacturing so that I can go to work at a PLA tank plant and build new tanks to kill the Japanese".

At least he was honest. And YES, the Chinese have not forgotten what Japan did to them way back in the 1930-40s. Or what the west did to them for over a century. We American's remember Pearl Harbor and remember 9/11 and our kids will too. So don't blame the Chinamen if they too have an axe to grind.

Tue, 09/18/2012 - 12:00 | 2807239 ozziindaus
ozziindaus's picture

The Japs did 9/11?

Tue, 09/18/2012 - 14:03 | 2807784 hidingfromhelis
hidingfromhelis's picture

Yup, and the Germans bombed Pearl Harbor.

http://www.youtube.com/watch?v=V8lT1o0sDwI

Tue, 09/18/2012 - 12:02 | 2807251 KickIce
KickIce's picture

The Chinese hate us and only tolerate us as long as the parasite/host relationship exists.  This is quickly coming to an end as customer demand wanes.

If we snub Japan I'm sure they could see the poetic justice of a nuclear strike.

Another war drives up the deficit and expands the feds balance sheet if nations sell their bonds.  Inflation and shortages would drive food prices through the roof.

Tue, 09/18/2012 - 12:14 | 2807321 Stuck on Zero
Stuck on Zero's picture

If China and Japan go to war they will both buy weapons from the U.S.  A win for us.

 

Tue, 09/18/2012 - 12:24 | 2807378 Eric L. Prentis
Eric L. Prentis's picture

Citizen demonstrations against another country’s actions (e.g., the Diaoyu or Senkaku Islands dispute between China and Japan) and workplace sabotage (e.g., Chinese factory workers installing malware on new computers sold in the US) are the vulnerable downsides to efficient globalization.

Supply-chain-management disruption of the just-in-time inventory system will be the world economy’s undoing. Result, a systemic global depression is coming.

Do NOT follow this link or you will be banned from the site!