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China Posts Biggest Trade Deficit Since 1989 As Crude Imports Surge: Is China Recycling Export Dollars Solely Into Oil?

Tyler Durden's picture


In addition to all the US election year propaganda and delayed after effects of central banks injecting nearly $3 trillion in liquidity to juice up the US stock market, something far more notable yet underreported has happened in 2012: the world stopped exporting. Observe the following sequence of very recent headlines: "Japan trade deficit hits record", "Australia Records First Trade Deficit in 11 Months on 8% Plunge in Exports", "Brazil Posts First Monthly Trade Deficit in 12 Months " then of course this: "[US] Trade deficit hits 3-year record imbalance", and finally, as of late last night, we get the following stunning headline: "China Has Biggest Trade Shortfall Since 1989 on Europe Turmoil." Here we must apologize, but blaming the highest trade deficit in 23 years for a country that needs a trade surplus to exist, on the Chinese Lunar new year, which accidentally happens every year, is more than a little naive. Because as the charts below indicate, while exports did in fact tumble in a seasonal pattern as they do every February although more than expected, February imports of $146 billion not only did not drop, but posted a 19% increase compared to January, and soared 40% compared to a year prior. Why? Perhaps the second consecutive record high in monthly crude imports has something to do with it. Which in turn when considering the huge selloff of US Treasury paper by China in the last few months, indicates that the world's fastest growing economy no longer has an interest in taking its export dollars and using them to fund purchases of US paper, but is in fact converting US fiat into real, hard goods. Such as crude (for all those curious where the marginal demand is coming from that is). And most likely gold. But we will only learn about the gold hoarding well after the fact, when China is prepared to see the price of the metal soar as it did in 2009.

In the meantime, what is truly scary is that for the first time ever, virtually every major economic block in the world is importing (how that is possible in a closed loop system is a different question entirely).

There is hope of course that Europe will be a net exporter (courtesy of the drop in the EURUSD which led an export surge in the only economy in Europe that actually makes things, Germany) when Eurostat announces January numbers in a few days, although if past is prologue and the December EU27 trade balance of a whopping €1.7 billion is any indication, we probably should not get our hopes up too high.

While we wait, without further ado, here are some truly stunning charts showing the epic collapse in the Chinese economy, which while still experiencing intermittent flashes of inflation, will have no choice but to resume easing all over again, in the process sending all commodity prices higher yet again.

China total imports and exports - whoosh:

China trade balance by region - whoosh:

China trade with the US - whoosh:

China trade with the EU - whoooooooooooooooooosh:


However, definitely no whoosh here:

Here's a thought why not:

A tale of two civilizations, one in ascent and one in decline, can probably be best summarized by how they ration for the future in that most important of commodities - energy, in this case vis-a-vis the respective treatment of the strategic oil reserves of China and the US. Because while all the rage in D.C. political gab in recent weeks has been whether the US will allow a release of oil from the SPR, just to appease those Obama voters who actually have a job and have to take a car to get to it, things over at America's nemesis in civilizational conflict are diametrically opposite. As Bloomberg reports, China has "started filling its emergency petroleum reserve at Lanzhou in the nation’s northwest, according to an official at the nation’s largest crude producer." Unlike the US, where everything is now a function of market liquidity, evil speculators, and political ambitions (rest in peace supply and demand), China is completely ignoring all the day to day mundane drivel, and is doing what is right - which is to make sure it is prepared for an "eventuality" in the crude supply. Said eventuality is 100% guaranteed to happen if the Panetta-McCain is given a green light to allow the liberation of Iranian crude to finally proceed following years of foreplay.

Oh, and lets not forget this particular whoosh:


...Is it starting to make sense now?


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Sat, 03/10/2012 - 15:54 | 2243482 krmont22
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So who is experiencing all the trade surplus?


Sat, 03/10/2012 - 15:57 | 2243490 Possible Impact
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Sat, 03/10/2012 - 16:44 | 2243591 spiral_eyes
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stockpiling oil for war.

Sat, 03/10/2012 - 17:05 | 2243634 CompassionateFascist
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Canadian shale glop, with or w/o Keystone, was supposed to go to China; Panama Canal being enlarged for Gulf supertankers...late, late effort to wean Beijing away from ME oil and get the dollars back here. Now too late. IranWar will begin with China still tied to Tehran.

Sat, 03/10/2012 - 18:34 | 2243775 BigJim
BigJim's picture

The 'Revised Treausry Holdings' is in millions, so it's gone from $1.2b to $1.15b? What's the big deal?

Am I missing something here? Or should the '$MM' be $b?

Sat, 03/10/2012 - 20:52 | 2243933 gdogus erectus
gdogus erectus's picture


Sat, 03/10/2012 - 21:12 | 2243997 smiler03
smiler03's picture

But Germany's budget deficit is shrinking!

German Budget Deficit Plunges to 1 Percent of GDP,1518,817363,00.html

Sat, 03/10/2012 - 21:12 | 2244008 smiler03
smiler03's picture

Sorry, I confused budget deficit with trade deficit.

Sat, 03/10/2012 - 21:26 | 2244026 Onohymagin
Onohymagin's picture

Looks to me they are spending small portion of reserves to buy oil.

Smart move, hardly a surprise.

Sun, 03/11/2012 - 12:05 | 2244830 LongBalls
LongBalls's picture

It's a VERY SMART MOVE. This move allows them to stagnate the US economy which puts further pressure on the Dollar. It also increases the probability of continued US deficits that motivate the banksters to smash the price of gold for their purchase. China is positioning itself nicely for the reserve currency. They have all the cards except one. Can they win the war?

Sun, 03/11/2012 - 13:57 | 2245158 Joenobody12
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Like any country, China does what is best for China but to think China aims at destroying the US economy or dollar is just lunatic. China does not have the time to think how to do evil to the US. The US decay on its own without outside help.   

But it sure feels good to blame others for a problem that is you are own making.

Mon, 03/12/2012 - 00:05 | 2246357 matrix2012
matrix2012's picture


Nobody will win any war among the nuke club... only warmonger psychopaths will ever think that they can win the war neglecting the nuke's MAD!  Nonetheless, lately they boast more often that it's possible to achieve a victory in a nuke war scenario!  

Just see what they are trying to accomplish along Russian borders, installing those anti-missile radars encircling Russia. What will Russia do then? Of course they will increase their deterrence power, deploying even more Multiple Independently-targetable Reentry Vehicle (MIRV), including in its Kaliningrad enclave. And for those host countries to such radars (Poland, Romania, Portugal, Spain, Turkey), now they are qualified as the new nuke head targets.

Same thing will happen to China, they have such capability and resources to not let such domination happens.

Eventually those warmonger psychopaths will drive the world to its brink with their falsified doctrines and beliefs!


Mon, 03/12/2012 - 10:37 | 2247108 Element
Element's picture

I concluded some years ago that the US's blundering towards fielding an unnecessary and also totally unworkable (in an actual EMP attack) anti-ballistic missile network is going to drive Russia and China towards enlarging their strategic arsenals, again. And to regenerate higher-yield warheads, in order to deliver assured EMP kill effects, which can punch through whatever defence the US and NATO erects.  Plus another wasteful round of stealth manoeuvring MIRVs on fast-boost high-throw-weight ICBMs will be needed to deliver them.  Plus we'll going to see a new range of directed energy anti-satellite technologies fielded to eliminate existing US space-based recon, GPS, radar, and target-tracking systems.

The US is also fielding new generation passive infra-red detection and terminal tracking of missile boosters and RVs, to try and avoid the effects on tracking, or on terminal-seeker radar performance, due to EMP effects. 

i.e. they are trying to deny Russia the ability to effectively use EMP to make missile defences ineffective.  That adds another layer of imperative and alarm within Russia, to quickly create an effective system that is so electronically and thermally disruptive that it can create enough electrical, communication and background-noise, for Russian missiles to get past any US missile defense or passive sensor network. 

The Russians, being Russians, will solve this 'problem' by simply fielding a nuke of such unimaginably stupendous thermonuclear yield that it'll fry anything electrical, and create so much heat and comms interference that even the newer US missile sensors and comms technology still won't be able to operate.   But is there any supporting 'evidence' for this sort of new Russian approach? 

Unfortunately there is;

Russia works on 100-ton monster ballistic missile

19 Dec 2011

Russia works on 100-ton monster ballistic missile. In connection with the plans of the United States to develop the air defense system in Europe, in close vicinity to Russia's borders, and because of the unwillingness of the US side to provide any guarantees, the Russian Federation continues to take measures to preserve parity in the field. In particular, Russia's Strategic Missile Forces (SMF) will be renovated with the help of state-of-the-art Topol-M and Yars complexes during the upcoming ten years.


In addition, Russia will pass into service a new intercontinental missile of enormous power.  "The decision about the creation of the new silo-based missile system with a liquid-fuel heavy missile has been made. The complex will have increased possibilities in overcoming the prospective missile defense system of the United States," Sergei Karakaev, the commander of the missile troops said. The new missile, the mass of which is going to make up 100 tons, is said to replace the world-known "Voevoda" ICBM.



When I first read about this I thought it was completely nuts and was tempted to discount it. For god's sake, what possible need could the Russians have for a 100 ton ICBM?  It's seemed bonkers. But there are two possible reasons for it; (1) what if they want to field a structurally hardened multi-skin booster chassis that can withstand even a concerted ABL laser attack, while (2) still being powerful enough to fling a very large and heavy super-high yield EMP warhead towards the Atlantic basin area, that can create an EMP electron-pulse that's so insanely powerful that it just fries every mother-fucking-thing that's electronic, over most of a hemisphere, and even burns through electrical shielding and common EMP mitigation and isolation attempts.

They're Russians for crying out loud, this is what they do!

The Russians have already put ICBMs and cruise missiles into shipping containers, trucks and rail cars, and then they show videos of these deploying. Meanwhile the western media idiots are left wondering why they did that?  Do the Russians want to export hidden missiles to terrorists?  Of course not! It's because they want western powers to know there's absolutely no chance a Russian EMP or nuclear strike could be prevented, if Russia was ever forced to launch one.  i.e. they would be able to deliver warheads even if ICBMs could be shot down, and a Russian nuclear attack could come from anywhere, anytime, and no one could ever hope to stop it with a missile-shield. 

That is what they're demonstrating and the media may not have seen it for what it was, but you can bet NATO and the Pentagon understood -- it was a direct nuclear warning to back-off.

This is actually serious nuclear sabre rattling, as is every US anti-ballistic missile test, and development, or forward-deployment near to Russian borders.  We're now at a point where Russia does not trust the West at all, to not sneak in some form of armed attack on Russia.  They think an attack is likely and they clearly disbelieve the 'reset-button' diplomacy of Hillary Clinton, and now believe she's a deceiver, a liar and a global provocateur.  Not a diplomat of any sort, just a two-faced warmonger, only pretending to be interested in peace.

Plus in December China had told its military to prepare for anything, including full-scale war.  Russia essentially did the same thing, placed nuclear forces on alert, and actually dispersed mobile TELs with nuclear-tipped ballistic missiles, that were designed to be capable of sustaining an EMP barrage over eastern European radar sites.

In other words, decisions have been made, already, about the near future unfolding, and we're now along for the ride.  Things like China filling up its oil reserve and dumping USD is part of the next step.  The US is still smiling and hiding its teeth, while pretending that it isn't really happening, but the other guys are now fully alerted, and aren't fooled one bit by the Washington soft-soap routine any more.

Sat, 03/10/2012 - 17:14 | 2243653 slewie the pi-rat
slewie the pi-rat's picture

another +$5+/bbl and prez0 will sell them ours! 

obviously, they are gonna build some huge fuking refining capacity for asia

then, we can get ketones in our toothpaste, too!

Sat, 03/10/2012 - 19:32 | 2243706 Normalcy Bias
Normalcy Bias's picture

I've always preferred Chinese LEAD-Flavored toothpaste, but it does make me somewhat moody...

Sat, 03/10/2012 - 17:16 | 2243657 Normalcy Bias
Normalcy Bias's picture

...and China has millions of wifeless 'extra' men they can afford to lose in combat, motivated by promises of the 'spoils' of war.

Sat, 03/10/2012 - 17:34 | 2243689 slewie the pi-rat
slewie the pi-rat's picture

...wait till the market for houseboys recovers and just export them

Sat, 03/10/2012 - 18:26 | 2243765 BigJim
BigJim's picture

...indicates that the world's fastest growing economy no longer has an interest in taking its export dollars and using them to fund purchases of US paper, but is in fact converting US fiat into real, hard goods.

Took them long enough.

Sat, 03/10/2012 - 19:08 | 2243828 slewie the pi-rat
slewie the pi-rat's picture

after decades of discussions at the highest levels, we finally gave them our permission


Sat, 03/10/2012 - 23:13 | 2244147 CrashisOptimistic
CrashisOptimistic's picture

You guys have just got to wake up.

IT'S ALL ABOUT OIL AND IT'S NOT ABOUT ANYTHING ELSE.  Obsession with printing and central planning and who owns how many Treasuries is just insignificant in comparison to the lifeblood of civilization.  It's not gold.  It's not money.  

It's oil.  

China's PER CAPITA consumption of oil is about 10% of the US's.  They have a very very very long way to go ramping up their burn rate to achieve American levels of lifestyle, and make no mistake here, they are entitled to it and they WILL do it and it won't happen from a bigger pie -- it will happen by slicing some from America's present slice.  

There Is Not Going To Be Enough.  There Is Not Enough Now.

Billions are going to die in a manner sudden and ugly.  The contest is to see to it that it's them and not us.

Sun, 03/11/2012 - 05:53 | 2244479 matrix2012
matrix2012's picture


There's one point here that needs further thorough thinking:


"to go ramping up their burn rate to achieve American levels of lifestyle"


I don't think ANY other country or civilization needs to go to the same path as the American in burning the oil at such extravaganza rate in order to achieve a 'GOOD LIFE (style)'! In fact, NO other country should follow the same dead path... our Earth simply doesn't have such stockpile of oil to support such lavish, unjustified consumption. It's a pure decadence.


Sun, 03/11/2012 - 10:51 | 2244748 CrashisOptimistic
CrashisOptimistic's picture

So go ahead and explain that to Chinese peasants.  

"You don't need to experience extravaganza.  You can if you want, but you don't need to.  You can have the GOOD LIFE as a peasant on a farm here and you don't need to have a pickup truck that gets 15 miles/gallon to haul stuff around your farm.  And you certainly don't need a John Deere tractor to help with your plowing.  Be content with oxen."

And explain this to the non farm rural folks buying apartments in the suburbs.

"You don't need to experience extravaganza.  You can if you want, but you don't need to.  You can have a GOOD LIFE without a car to take you to work.  You don't need a car that has never existed here before consuming oil just so you can choose from places of work outside a 1 mile walking radius.  Be content walking."

They are planning to buy over 20 million cars this year.  You should go stop them by persuading them not to.


Mon, 03/12/2012 - 01:37 | 2246482 matrix2012
matrix2012's picture


i don't close my eyes that among the consumption, some are quite legitimate and inevitable; however, some others may not be quite necessary either (i call it 'extravaganza'). Among all the nations in the world, sorry to say, in general sense American people are known as notorius for their EXCESSIVE consumption in all aspects, most of them may not really understand the meaning of THRIFT!

Any country with big population should rely on public transportation to move around its people, and railway is the #1 mass transport, complemented by bus and other smaller vehicles as the feeders. Relying on personal car to move around the people is a luxury and a waste in many occasions (imagine drving around a big SUV carrying 1-2 persons with a low mileage gas ratio).

For some in society who aspire to own cars, state/govt must encourage them to go with compact city car with more efficient fuel consumption i/o the monster SUV etc through various means.

And people must learn and adapt to be contented with 1 or 2 mile walking radius. Such walking excercise is also very good for health, among others it does prevent obesity! Hint, it's hard to see fat guys or ladies in Spore/HK/China/Japan/Korea...they just walk a lot. Or like current uptrend, go on bike.

And DEFINITELY govt/state must RESTRICT the number of car ownerships (Spore has set good example with the COE - car's ownership entitlement). If oil is not the problem, then road traffic will be the obvious horror with the mass flood of cars moving around! State/govt can't and shouldn't prop the self-interests of automotive industry on the costs of the whole society!!

Possibly in reality farmers must combine the tractor with oxen as necessary :) work more dilligently and intelligently to avoid the chemical fertilizers from Monsanto, Dow Chemicals and the gang for quick and instant yields but harmful to the land eventually, use more organic fertilizers to preserve the quality of land and better harvest at lower cost in the long run.


Sun, 03/11/2012 - 15:55 | 2245378 Marco
Marco's picture

They don't have to follow it to the letter, but no matter to which extent the creditor nations increase their standards of living ... they have enough population that every little bit of it will have a large impact on the standards of living in the debtor nations.

That said, China's diet is being taken over by billionaires who don't want to let China's wages rise ... of course they don't want to continue funding American consumption either ... and they probably close their eyes to the fact that the only alternative is a global depression.

Sat, 03/10/2012 - 20:08 | 2243912 surf0766
surf0766's picture

Is there an official SPR for China?

Sat, 03/10/2012 - 21:40 | 2244047 non_anon
non_anon's picture

pass the Charmin

Sat, 03/10/2012 - 16:00 | 2243497 Ahmeexnal
Ahmeexnal's picture

OPEC members



Sat, 03/10/2012 - 16:22 | 2243542 SHEEPFUKKER

Yeah, let's see, export all of your natural resources overseas in exchange for worthless fiat or just keep the resources for yourselves.  Hmm, seems like a no brainer. 

Sat, 03/10/2012 - 18:14 | 2243745 q99x2
q99x2's picture

The US will be self sufficient as soon as it throws the politicians and elite into FEMA camps and then closes its borders and redistributes wealth. The reason we are not self sufficient is as Merkel says, "the centers of power have changed." Time for the ones that changed the center of power to be sent to prison.

In other words US resources will be used by US citizens sometime after the revolution or never. Inflation is at least 8% for basic necessities. Within 2 years the current revolution will be forced to spark to the general population. 

Sat, 03/10/2012 - 19:24 | 2243850 sun tzu
sun tzu's picture

You had me until redistribute. How did that work out in the USSR or Zimbabwe? Give a fucking crackhead $1 million and he'll be broke or dead by next year.

Sat, 03/10/2012 - 20:56 | 2243986 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...dead-by-dawn is more like it.

Sun, 03/11/2012 - 15:08 | 2245281 Kobe Beef
Kobe Beef's picture

And then you can scavenge the corpse! Mmm..dead crackhead, it's what's for dinner. Welcome to Ameribabwe!

Sat, 03/10/2012 - 20:10 | 2243918 surf0766
surf0766's picture

You give us your wealth first. We will return the favor.. I promise.

Sat, 03/10/2012 - 19:23 | 2243846 sun tzu
sun tzu's picture

Except most OPEC nations produce nothing else but oil. So they can sell the oil to buy food, cars, technology etc or sit on the oil and starve.

Sat, 03/10/2012 - 17:04 | 2243628 ConfederateH
ConfederateH's picture

OPEC, who are obligated by membership in PAX Americana to accept dollars for barrels of oil.  It is like the gold window before Nixon took the US off of the gold standard, the rest of the world is cashing in dollars for under priced (in dollars) oil.  OPEC will be forced to leave the $IMFS soon when all those derivatives and CDS's turn to ashes.

Sat, 03/10/2012 - 18:27 | 2243767 BigJim
BigJim's picture

  It is like the gold window before Nixon took the US off of the gold standard, the rest of the world is cashing in dollars for under priced (in dollars) oil. 

Nice simile.

Sat, 03/10/2012 - 16:50 | 2243605 Sudden Debt
Sudden Debt's picture

I admit.... I did buy a new blender last month.... So that does account for about 50$...

Sat, 03/10/2012 - 16:58 | 2243620 Flakmeister
Flakmeister's picture

You overpaid...

Sat, 03/10/2012 - 17:04 | 2243633 Stuck on Zero
Stuck on Zero's picture

Made in China no doubt.  unlikely to last more than a few months.

Sat, 03/10/2012 - 17:01 | 2243625 Silver Bug
Silver Bug's picture

China isn't stupid. They have a long term plan. They are getting rid of their fiat and acquiring wealth in the ground.

Sat, 03/10/2012 - 18:04 | 2243729 johngaltfla
johngaltfla's picture

krmont, that would be the banksters.

Sat, 03/10/2012 - 23:02 | 2244135 CrashisOptimistic
CrashisOptimistic's picture

Anyone who exports oil.

Sat, 03/10/2012 - 15:56 | 2243489 oogs66
oogs66's picture

Who has the surpluses?

Sat, 03/10/2012 - 17:22 | 2243666 ZFiNX
ZFiNX's picture

Canada has a nice chunk for itself.

Sat, 03/10/2012 - 18:17 | 2243751 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Tar sands are worthless so please do not include them in your math.

Sat, 03/10/2012 - 18:53 | 2243804 Printfaster
Printfaster's picture

Canadians call them "oilsands".

Only worthless, craven, campaign donation driven American politicians call them "tarsands".

Sat, 03/10/2012 - 22:47 | 2244120 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Let me be more specific then:  after the oilsands are heated with Natural Gas, the EROEI is worthless.

Sat, 03/10/2012 - 23:15 | 2244154 oddjob
oddjob's picture

The energy expended by goverments to source,secure and transport cheap foreign crude dwarfs the energy used in the Oil Sands reclamation. Its not even close.

Sat, 03/10/2012 - 19:28 | 2243855 sun tzu
sun tzu's picture

Don't be so ignorant. Oil companies are making billions up there. You think Exxon, Shell, Texaco, PetroCanada, and Suncor have been investing billions on worthless oilsands? Look at their balance sheets and income statements. 

Sat, 03/10/2012 - 19:52 | 2243891 Hulk
Hulk's picture

Those profits though are offset by the high cost of new paint jobs. Ever drive behind a car running on oilsands ???

Sat, 03/10/2012 - 21:54 | 2244060 oddjob
oddjob's picture

Upgraded synthetic crude is 30 api low sulfur and is a breeze to crack.

Sat, 03/10/2012 - 15:58 | 2243493 Seasmoke
Seasmoke's picture

would be a very smart move if they are

Sat, 03/10/2012 - 15:59 | 2243494 Tipster
Tipster's picture

Compared to Fiat Trash Oil's exchange properties may be limited but at least it is a currency whose supply is relatively predictable. The Gold for Oil Swap between Iran and India was a pseudo-bilateral-currency swap.

Don't believe the hype. Money does grow on trees.

Sat, 03/10/2012 - 18:18 | 2243755 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You started off with "fiat [is] trash" and ended with money growing on trees.  How did you get there?

Sat, 03/10/2012 - 16:00 | 2243496 resurger
resurger's picture

 i thought that was OFF-SETTED with the S&P gains! O_0

Sat, 03/10/2012 - 16:00 | 2243498 GeneMarchbanks
GeneMarchbanks's picture

'...Is it starting to make sense now?'

Long term trends like this deviate very little and only mouthbreathers are confused by this. Either that or frightened like Trav who tries to be a contrarian but only ends up Marijuana Thinking himself into some full retard distortion of reality.


Sat, 03/10/2012 - 16:02 | 2243504 Jason T
Jason T's picture

We're running out of gas folks.  A few more years at best and we see gas lines again I believe.

Sat, 03/10/2012 - 19:28 | 2243856 sun tzu
sun tzu's picture

They said the same thing 100 years ago

Sat, 03/10/2012 - 21:30 | 2244030 grgy
grgy's picture

It may take a little more time but fossil fuel energy is finite and the world is using it up at an unsustainable rate. This is one fukked up world we live in!

Sat, 03/10/2012 - 16:09 | 2243521 Atomizer
Atomizer's picture

A few days ago, saw the CNBS ticker flow by my early morning sleepy eyes.


Before Statement:

In His Own Words: Tim Geithner on Chinese Currency Manipulation

Recent Statement:

Geithner told an event at the Dallas Regional Chamber that ”What you’re seeing China do is gradually dismantle what were a comprehensive set of very, very tight controls on the ability of countries to use their (the Chinese) currency”. He added that ”Over time that will mean – and this is a good thing for the United States – more use of that currency and it will mean the currency will have to reflect market forces. So, I see no risk to the dollar in those reforms”. 

Turbo Timmy: We need to jack wagon new war to offset our policy failures. LOL

Too Many Puppies

Sat, 03/10/2012 - 16:32 | 2243568 ekm
ekm's picture

Hate against "wars" is what makes people miss the big picture. I hate wars, you hate wars, most of people do. 

If one looks at wars with a "passionless eye", just an analytic eye, things make sense.

Sat, 03/10/2012 - 20:25 | 2243944 Manthong
Manthong's picture

He doesn't manage to see much nowadays.. he saw no chance in losing his AAA credit rating a few months back, remember?

Sat, 03/10/2012 - 22:04 | 2244075 ekm
ekm's picture

Well, even Meredith Whitney fell for what I call "prophetic rapture".

Sat, 03/10/2012 - 16:20 | 2243531 ekm
ekm's picture


Finally everybody is looking at the reality in the eye, not the ass.

However, since China has to export in order to function, I think they are colluding with USA and Europe to release all that crude oil into the market to harm the OPEC cartel.

Remembering that the whole world civilization right now is based on crude oil, anything higher than Brent $75 creates a temporary state of IMPORTERS only where OPEC is the Exporter.. The weakest link will collapse soon and the weakest link is OPEC.

Sat, 03/10/2012 - 16:21 | 2243541 DavidC
DavidC's picture

Yup, and the largest holder of Treasuries in the World is...

The Fed.


Sat, 03/10/2012 - 18:15 | 2243748 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And here I thought is was the Easter Bunny.

Sat, 03/10/2012 - 18:50 | 2243802 Schmuck Raker
Schmuck Raker's picture

You are both wrong.

A: Social Security Administration

Sat, 03/10/2012 - 23:48 | 2244209 Charles Wilson
Charles Wilson's picture

Wrong again!

SSA holds paper worth even less than what you have in the Necessary Room.

The Supremes have already ruled that there are no "Bonds" here and any and all promises could be repudiated by a vote of the Congress.


SSA has squat.



Sun, 03/11/2012 - 06:44 | 2244514 matrix2012
matrix2012's picture

DavidC, it's a great BLESSiNG to be able to have the in-house counterpart in Buy-Sell of UST... Fed is supposed to be the last resort of buying now comes out as the most faithful, the most important repeating client.

Why ever need other buyer if in-house is just fine??? :)

Sat, 03/10/2012 - 16:27 | 2243556 Pairadimes
Pairadimes's picture

Funny how this works. You actually have to consume energy in order to build an economy.


Oh, and the end of the U.S. Dollar as the world's reserve currency? It's here. Now. Stand back.

Sat, 03/10/2012 - 17:25 | 2243673 lolmao500
lolmao500's picture

Funny how this works. You actually have to consume energy in order to build an economy.

That's why China is building a shitload of nuclear power plants... China will be one hell of a stinking radioactive mess one of these days.

Sat, 03/10/2012 - 23:26 | 2244170 laomei
laomei's picture

The nuclear plants China is building are top of the line and very modern.  The plants that have issues are ones that are 40-50 years old and have never been replaced the way they should have been.  China is also one of the few nations seriously investing into thorium research and fusion technologies.  Guess who has the record for longest sustained fusion?

China actually needs to upgrade the power grid in quite a few areas as windfarms are maxing out current load capacity.

China is also in the process of building up massive HSR lines connecting many countries.  There will be lines throughout SEA, lines through Iran and into Africa, lines into Germany and the rest of Europe.  Many of these are simply following the "plans" that the west dreamed up and failed to ever get off the ground.  Not just high sped passenger, but high speed frieght as well.  

These are not projects that have been forced on the local governments.  These are not projects designed to rip off the locals at every stage.  Many of these lines are being put in place as parts of trade deals.  Chinese finance it, Chinese build it, Chinese initally operate it and then transfer it over to local control once they are up to speed.  China understands that not every single action needs to be about direct profit and that over times, infrastructure pays for itself indirectly.

Wondering where all that UST is going? Into things like this, used as backing on projects.  Buying access to resources sure as hell ain't being done in local currency or RMB, it's all USD.  Shift off that unmanageable risk to the rest of the world even more, so when the house of cards comes tumbling down, it'll be the US that the world hates and wants to see suffer for its crimes.  Fairly solid strategy really.

Sat, 03/10/2012 - 23:46 | 2244205 ekm
ekm's picture

"These are not projects that have been forced on the local governments.  These are not projects designed to rip off the locals at every stage."

How do you know that? It's quite a statement that to me, being born and raised in former communist country in eastern europe sound too much like brainwashing.

Sun, 03/11/2012 - 00:18 | 2244244 laomei
laomei's picture

Because China builds up beneficial infrastruture that local government needs and wants in exchange for market access, while at the same time building up infrastructure beneficial to both parties.  Debts that are incurred in the process are frequently forgiven as well.

China also has a very established policy of non-interference and a hands-off approach to international relations.  China is perfectly cool doing business with any government regardless of their own domestic policies as long as the situation is stable and there are rarely, if ever, any strings attached to it politically.  Don't care about XXX rights, don't care about how corrupt a government is, want to use your trade balance to buy weapons? Here ya go.  Ooops, you're a shithead and got overthrown? Well, we're perfectly cool with the new government as well as long as we can do business together.  Not cool for some reason? Fine, we'll just do more business with your neighbors then and you'll probably come crawling back after getting sick and fed up with demands from the west for even the most basic of things.

The only complaints I have seen that come from local populations regarding China, is that the Chinese who start setting up shop are better at doing what they were doing and they don't like the competition.

Sun, 03/11/2012 - 00:50 | 2244268 ekm
ekm's picture

"Debts that are incurred in the process are frequently forgiven as well."

Sir, it's what I thought. You've been brainwashed. IF DEBTS ARE FORGIVEN THEN WHO TAKES THE LOSS? If they will be forgiven then why have a debt based system at all? Somebody will have to lose. We were brainwashed in communism in eastern europe, where actually debt did not exist in the current form.

A lot of people that haven't lived in that system my be fooled by what you're saying, but not me. When it's too good to be true, it's too good to be true. It defies mathematics.

Sun, 03/11/2012 - 15:54 | 2245383 CTG_Sweden
CTG_Sweden's picture






"China also has a very established policy of non-interference and a hands-off approach to international relations."




My comments:


That´s probably true if you make an historical comparison between China on one hand and Britain, the US and some banks on the other hand. My impression is however that China has got big influence in Burma. And uses that influence (for business purposes).


I assume that China can secure supply of raw material from various countries around the world by preventing regime change. Doing that in Africa is probably not dangerous for China. South America is perhaps somewhat more dangerous. Trying to influence politics in Europe and North America like others have done in the past may prove to be dangerous.


Sun, 03/11/2012 - 15:35 | 2245338 CTG_Sweden
CTG_Sweden's picture







"China actually needs to upgrade the power grid in quite a few areas as windfarms are maxing out current load capacity."




My comments:


That´s probably true. But I wonder why China did not build electric grids in all those new residential areas that were capable of recharging batteries of electric vehicles fast and at the same time (this is not possible with the current electric grids in Europe and the US, the cables would burn in the ground). That would have been an easy way to improve the balance of payments and get less dependent on exporting cheap junk (and slave labour wages) in order to pay for the oil bill. With a sufficient electric grid that enables ultra-fast recharging, electric vehicles become a realistic alternative to internal combustion engines. You will probably never be able to recharge an electric vehicle as fast as a gasoline, diesel, methanol or ethanol vehicle. But you can probably reach the point when most consumers find electric vehicles convenient enough in this respect. And I think that this takes drastically higher voltages and stronger currents, like 1500 volts combined with 150 A.


Sat, 03/10/2012 - 16:32 | 2243567 ebailey5
ebailey5's picture

Yes But,


When the FED holds the Treasuries it's not important because we owe it to ourselves!  Just ask Paul Krugman--he knows 'cause he's got a Nobel Prize on his mantel and you don't.

Sat, 03/10/2012 - 22:43 | 2244117 DaveyJones
DaveyJones's picture

the only thing we owe to ourselves is an apology

Sat, 03/10/2012 - 16:40 | 2243579 Youri Carma
Youri Carma's picture

OPEC says Asian growth offsets weak OECD demand

China also boosted its demand in January by adding 800,000 barrels a day of crude oil and refined products to its commercial and strategic storage, OPEC estimated.

Sat, 03/10/2012 - 16:44 | 2243590 Sudden Debt
Sudden Debt's picture

They just bought a bit more oil, gold and silver. So what?

Sat, 03/10/2012 - 16:53 | 2243607 Kali
Kali's picture

They are following Mogambo's advice?  He was in China during his hiatus?  : )

Sat, 03/10/2012 - 16:54 | 2243611 WoodMizer
WoodMizer's picture

Tinfoil top hats off to you Tyler the first scene of act 1 is nail-biting.  Peak oil just came to town, and Uncle sam is Roundn' up a nato Possie to seize the well.  Let's see if China stabs us in the back and arms 1billion hard working open minded folks. 

Sat, 03/10/2012 - 16:56 | 2243615 beenburnedtwice
beenburnedtwice's picture

A prescient quote from Tyler on 2/29/12, "Best advice: keep a track of that Chinese trade surplus. If it becomes a deficit (just like Japan did recently), that is the first signal that things are changing dramatically from an international flow of funds perspective. It also means that unless the US finds subtitute demand, most likely from within, the only remaining buyer will be the entity that already has the largest holding of US paper - the Federal Reserve."

Well, we're there now.  But when does the world collapse if the FED is the exclusive buyer?  There's no downside risk, at least in the minds of the Krugmanbots and lemming-like Cramerclones driving this unfathomable levitation.

Sat, 03/10/2012 - 17:03 | 2243627 Son of Loki
Son of Loki's picture


"Which in turn when considering the huge selloff of US Treasury paper by China in the last few months, indicates that the world's fastest growing economy no longer has an interest in taking its export dollars and using them to fund purchases of US paper, but is in fact converting US fiat into real, hard goods. Such as crude.... And most likely gold."

....but you can't drink oil...

Sat, 03/10/2012 - 17:23 | 2243668 lolmao500
lolmao500's picture

Well yeah, but the vast majority of people need oil to eat.

Sat, 03/10/2012 - 17:03 | 2243630 madmax1965
madmax1965's picture

In other news, The USS Enterprise is heading out for ME tomorrow.


Buckle up Bitchez!

Sat, 03/10/2012 - 17:23 | 2243667 lolmao500
lolmao500's picture

Indeed. Get ready for the false-flag between April and September...

Sat, 03/10/2012 - 17:08 | 2243645 Atomizer
Atomizer's picture



Everyone on this site should be aware of how the Roman Empire ended. If not, they looted the treasuries to collaspe the empire. Math no longer exists, just circus illustions. The foundation of any society has been based on MATH.

Y = C + I + E + G 


C = Consumer Spending

I = Investment made by industry

E = Excess of Exports over Imports

G = Government Spending

Sat, 03/10/2012 - 17:18 | 2243647 Flakmeister
Flakmeister's picture

Lets see   24 million metric tonnes is ~168 million barrels or ~ 20.1  billion dollars for the month...

Or about 20% of the most recent change in treasury holdings..... 

Nope, that cannot explain it...

Umm China is now importing about 5.5 mmpd and increasing this at a rate of ~500,000 bbpd p.a....

China will become the largest importer of crude within no more than 5 years if current trends continue....

To put 500,000 bbpd in perspective, the US through an all but unprecedented drilling boom has increased production by about 100,000 bbpd p.a. over the past 3 years....

Sat, 03/10/2012 - 18:40 | 2243781 alex_g
alex_g's picture

'08 was the trough, w/ 4.95 mbpd domestic production, 2011 averaged north of 5.6 mbpd and 2012, at current run rate, will average north of 6 mbpd.  A bit more than 100k barrel per day increase over the last 3 years.

If expected increases out of ND, TX, AK continue, and Utica shale estimates are correct, domestic production should top 7mbpd by 2015.

Better than a sharp stick in the eye...

Sat, 03/10/2012 - 18:49 | 2243799 Flakmeister
Flakmeister's picture

I'll split the difference....

Like to chat... but I gotta run...

Sat, 03/10/2012 - 17:20 | 2243655 lolmao500
lolmao500's picture

(how that is possible in a closed loop system is a different question entirely).

They import from Mars... duh.

As Bloomberg reports, China has "started filling its emergency petroleum reserve at Lanzhou in the nation’s northwest, according to an official at the nation’s largest crude producer."

Meh. Lanzhou has only a reserve of 19 million barrels. There's another reserve that was finished in 2011 in Beihai, Guangxi, with a reserve of 20.1 million barrels. Total reserve to fill : 39 million barrels...Should take a few weeks...

Sat, 03/10/2012 - 18:20 | 2243756 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

The Chinese don't want a Sunburn to interfere with their day in the sun before the SHTF.

A billion Chinese each driving their own Escalade. Now that's a dream.

Shah shah a go go.

Sat, 03/10/2012 - 23:35 | 2244190 laomei
laomei's picture

There are many reserves either built or being built.  It's just that the reserves themselves are distributed and not highly centralized.  On;y an idiot would put all their eggs in a single basket when it comes to national security.

Sat, 03/10/2012 - 23:42 | 2244195 ekm
ekm's picture


China stocking up has increased the price of food. When food prices go very high, Tien An Men comes to mind. I was 17 yrs young in 1989 but I've read a lot about it.

Question: Why would China contribut to higher oil prices? It defies logic.

I would welcome your reply.

Sat, 03/10/2012 - 17:33 | 2243687 bugs_
bugs_'s picture

perhaps the delay of "the attack" is to give China the time to top off.

Sat, 03/10/2012 - 18:00 | 2243711 earleflorida
earleflorida's picture

China's, 'New World Order Energy Dominance'?

#1)  China to begin building thorium fuel nuclear reactors throughout country 

#2)   China to mass produce e-v's and infrastructure. *note: china has a monopoly on the world's 'rare-earth-elements' critical in producing battery technology and engines [90%]

#3)    China to mass produce nat-gas vehicles currently being manufactured by GM **note: Blue-Gold will come via IPI [Iran/ Pakistan/ India] ; alternative fuel from gasification of coal

Ps. Pakistan has good relations with china. Iran now has good relations with Russia, and China. India has good relations with Russia, and as with Pakistan and India both fed-up with U.S. bullshit regarding their separatist countries sovereignty!

Ps2.  Please note that fossil-fuel is a valuable commodity for a litany of manufacturing uses, but its current use of transportation has entered the prehistoric age from whence it came


thankyou tyler

Sat, 03/10/2012 - 20:39 | 2243968 besnook
besnook's picture

kinda ironic that china is creating the economies of scale for all alt energy.  damned centrally planned, inscrutable, cheating, pimko commy, yellow periling, ant kingdom.

Sat, 03/10/2012 - 17:59 | 2243719 Fix It Again Timmy
Fix It Again Timmy's picture

The question is: WHAT will take out more 'merikins - WW3 or the Chevy Volt?

Sat, 03/10/2012 - 18:10 | 2243737 earleflorida
earleflorida's picture

gm's, ev's,... worked fine in the 80's, but they were only [cars weren't allowed to be sold outright by manufacturer/ never any fires?] leases. the cars were pulled off the market for no apparent reason, other than they had a superb niche market. gm, rounded/herded-up every last vehicle and had them crushed and sold as scrap metal to the japanese.


Ps.  Today's lithium batteries are very volatile and its taken years to master the technology. My guess, it's corporate sabotage?


Sat, 03/10/2012 - 18:37 | 2243777 Flakmeister
Flakmeister's picture

My guess is that it is a exceeding difficult technology that is being pushed to the max....

Dealing with Peak oil is going to show the techno-cornucopians for what they are, a bunch of dreamers...

Sat, 03/10/2012 - 18:53 | 2243806 earleflorida
earleflorida's picture

true that :-))

Sat, 03/10/2012 - 19:32 | 2243859 tmosley
tmosley's picture

Because we all know that technology doesn't advance.

Sun, 03/11/2012 - 00:57 | 2244274 Flakmeister
Flakmeister's picture

So if they are trying to do something very difficult and we both know that it will improve, why do you play the smart ass pissing on their efforts???

GM may indeed fail, but at least they are trying, which is a fuck of lot more than I can say about most people/companies....

Your hypocrisy knows no bounds.... 

Sun, 03/11/2012 - 02:17 | 2244360 tmosley
tmosley's picture

"Hurr durr you use sarcasm to make fun of the fact that I deny the very possibility of technological progress, therefore you are a hypocrite hurr durr."

You see, you are the one belittling the efforts of those developing new technologies by calling them "techno-cornucopians".

Did you forget what you said just a few hours ago?

Christ, your religious zealotry knows no logic or boundaries, does it?

Sun, 03/11/2012 - 08:40 | 2244608 Flakmeister
Flakmeister's picture

No, you are a techno-cornucopian....If you can dream it up, it will be, and everything will be ok....

I call the people developing Li ion batteries scientists and engineers, they live in the real world....

Cliffy... just give it break....

Sun, 03/11/2012 - 10:09 | 2244705 DaveyJones
DaveyJones's picture

it's not so much technology, it's honesty and commitment. Neither of which mankind has ever been very good at. We already have "technologies" that could work as poor "substitutes" but we are way behind schedule and we need a lot of it, a helluva lot. Don't you think these freedom wars give you a tiny taste of how serious this issue is? A tiny taste of the future? A look into the choice and path your fearless leaders have chosen? The don't worry be happy mantra will do very little as I watch my country strip away the Bill of Rights and much of the buying power of its own citizens. Another clue to the gravity of our problems. What again is the first stage in overcoming an addiction? Technology is not the only factor in this game, it never has been.

Mon, 03/12/2012 - 02:58 | 2246527 matrix2012
matrix2012's picture

my guess is that EV would be hitting very hard to the pockets of the rockerfella's controlled oil interests, it would also reduce the strategic importance of the hella fluid aka. black gold with all of its unintended consequences... reminiscent of the earlier story of Nikola Tesla vs JP Morgan and Tesla vs Edison.

Read further rockerfella controls here.

Sat, 03/10/2012 - 18:03 | 2243725 Terra-Firma
Terra-Firma's picture

Can someone explain what this article,  post is getting good at please?

Sun, 03/11/2012 - 12:19 | 2244861 max2205
max2205's picture

China told Obummer they want Ben to buy back their Treasury's till they only hold $500 billion...... Or they dump 'em on the market. Ben is quietly buying and flipping back to the suckers

Scene 2.......

Sat, 03/10/2012 - 18:07 | 2243735 digalert
digalert's picture

liberation of Iranian crude

Damn right, oil has been held captive by evil mini dictators for too long. Only NWO banksters can rescue the oil. This is a call to NATO bombs for peace,

save the hostage oil!

Sat, 03/10/2012 - 18:11 | 2243742 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Did you say re-cycle or bi-cycle ?

I crack myself up sometimes.

Yes, I should get out more ...

Sat, 03/10/2012 - 23:26 | 2244169 UP Forester
UP Forester's picture

I can say "Producer Gas"....

Sat, 03/10/2012 - 18:24 | 2243762 Nottingham
Nottingham's picture

China may get rid of some USD, but it simply means that somebody else wanted them and now has them.   This idea that China is "getting rid" od dollars, doesn't make them disappear.   It's like the "cash on the sidelines" fallacy.   For any cash that buys AAPL or whatever, someone else gets that cash and that cash is now on the sidelines.   the same amount of cash is on the sidelines.

Sat, 03/10/2012 - 18:24 | 2243763 Nottingham
Nottingham's picture

China may get rid of some USD, but it simply means that somebody else wanted them and now has them.   This idea that China is "getting rid" od dollars, doesn't make them disappear.   It's like the "cash on the sidelines" fallacy.   For any cash that buys AAPL or whatever, someone else gets that cash and that cash is now on the sidelines.   the same amount of cash is on the sidelines.

Sun, 03/11/2012 - 14:45 | 2245242 Kayman
Kayman's picture


Assuming no inflation, your argument is valid.  With crude more than doubling in the past few years, it takes double the dollars to purchase oil, so China is exchanging depreciating paper for appreciating oil.

Dollars don't disappear, but they certainly fade away.

Sat, 03/10/2012 - 18:38 | 2243779 steve from virginia
steve from virginia's picture


China is using its dollars to buy crude. That's why China is selling Treasuries, that is why there is a dollar shortage around the world, why China has 'privatized' its internal foreign exchange (to the loan sharks).

That's why there is hyperinflation in China. It is why the dollar price of crude keeps rising. Look for crude/mindless Chinese motorists to shoulder aside smart Chinese gold buyers. There are only so many cash dollars to go around.

Here's something new to chew on: the Aussie decline underway is that country pricing in China's inability to afford Aussie coal (dollar/AUD carry trade breakdown).

China depends on external financing for its 'growth' (inflation). China is just a larger version of Greece.


Sat, 03/10/2012 - 18:42 | 2243787 Mamzer Ben Zonah
Mamzer Ben Zonah's picture

Could those wily gooks just be ramping up imports to create the appearance of a trade deficit, and so reduce the risk of being branded currency manipulators by the US Government?

We should be told!

Sat, 03/10/2012 - 18:46 | 2243793 mendigo
mendigo's picture

Way to go Tyler so now Pelosi will know the real evil doer that dares to act counter to her desires. Perhaps they will send her to set them straight.

Are they
Preparing for supply irregularities
Preparing for dollar collapse
Trying to piss off Pelosi
Preparing for new reserve currency
Preparing for trade war

None of that would explain the drop in exports - that could only be the world economy in spasm

As long as it does not jeapordize the flow of nikes and ipads

Sat, 03/10/2012 - 20:11 | 2243920 ekm
ekm's picture

Don't worry about oil supply. It guaranteed to come from here, Canada.

As to drop in export explanation, when crude oil price is too, too high (above $75) most of cash goes to buying oil, hence OPEC+Russia  = Exporter and Rest of World = Importers.

It is this simple.

Sat, 03/10/2012 - 21:07 | 2243999 bbq on whitehou...
bbq on whitehouse lawn's picture

Never forget America has talent.

Its more then many countries have.


Sat, 03/10/2012 - 21:47 | 2244053 nathan1234
nathan1234's picture

Yes, talent for killing and murdering across the globe.

Americans are too stupid to understand and prevent what their elected crooks in charge of their government is really doing.


Sat, 03/10/2012 - 20:17 | 2243930 besnook
besnook's picture

game on. the key was india's move to the home team in asia. things will begin to accelerate now. war with iran becomes critical for usa/euro hegemony. the usa/euro is desperate financially and politically. the oil patch from africa to pakistan must be seized to contain the aspirations of 5 billion brown people from mucking up what has been a good thing for the white barbarians in the last several hundred years.

that story in the bible about 200 million soldiers marching from the east is beginning to look believable. i hope popcorn isn't rationed and i pray for my kids.

Sat, 03/10/2012 - 20:21 | 2243936 bahaar
bahaar's picture

China exchanges US dollar for oil.  So some oil producing country has those dollars now.  Most probably ME.  And what does ME need most (Hint: there's no water and therefore no food in the ME).  So they'll exchange those dollars for food.  And which is the country with most water and land inthis world?  The Americas.  So why should this be construed as dumping of US dollars?  Basically countries in Asia and ME don't have enough land/water (read food).  In addition Asia does not  have enough fuel either (Asian countries already have regular brown-outs and cannot afford more coal burning)

Sat, 03/10/2012 - 20:33 | 2243955 besnook
besnook's picture

the question is where are those oil producers gonna spend their new cache of dollars. ...buying junk paper and equities.

Sat, 03/10/2012 - 20:27 | 2243945 lesterbegood
lesterbegood's picture

In my opinion, the real money has shifted east, and also the power. The FRN is dead as a reserve currency, the yuan will be the new reserve currency of the world. All currencies are about to revalue, and when that happens, the FED will be dead.

By the way, 236 banksters have now resigned or been removed to date.

Sat, 03/10/2012 - 21:50 | 2244057 smiler03
smiler03's picture

Breaking news: 236 New Bankers appointed. All received a pay rise compared to their previous post.

Sat, 03/10/2012 - 20:39 | 2243967 MoneyMagician
MoneyMagician's picture

Very good article. Much better than the argument Bill O'Reilly used that gassoline companies are colluding which each other. He based it off the fact he claims that all gas stations in his hometown had the same exact prices, which is a sign of collusion. John Stossel looked up the prices of O'Reilly's hometown, and found that Billy Boy lied. Unfortunately, these type of morons are on primetime, so Americans are not given the real situation in the world these days. It makes sense that a depreciating dollar is not desired, not so much to keep increasing, or maintaining reinvestments into it, instead of purchasing real goods that have actually real world value based on scarcity.

Sat, 03/10/2012 - 21:18 | 2244016 Van Halen
Van Halen's picture

Then: Drill, Baby, Drill!

Now: Algae, grow, algae!

Sat, 03/10/2012 - 21:44 | 2244051 nathan1234
nathan1234's picture

My take on this.

Imports of precious metals are also covered by this.

It makes sense to do so.

And to reduce those fiat worthless dollars at the same time.

Reducing through selling treasuries is only one of the ways.

Sat, 03/10/2012 - 22:32 | 2244103 WhoMe
WhoMe's picture
‘Peak oil’ debate dead amid U.S. boom: BMO’s Sherry Cooper




Sat, 03/10/2012 - 23:12 | 2244150 wee-weed up
wee-weed up's picture

China could destroy Obama in an instant if they so desired. But, having a wussy in the White House is greatly to their advantage!

Sat, 03/10/2012 - 23:57 | 2244224 poydras
poydras's picture

"how that is possible in a closed loop system is a different question entirely"

It seems that this question requires an answer.  The three largest economies all running trade deficits?

Sun, 03/11/2012 - 08:55 | 2244623 boooyaaaah
boooyaaaah's picture

Adam Smith on trade deficits

"In the foregoing part of this chapter I have endeavoured to show, even upon the principles of the commercial system, how unnecessary it is to lay extraordinary restraints upon the importation of goods from those countries with which the balance of trade is supposed to be disadvantageous.

Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded.

When two places trade with one another, this [absurd] doctrine supposes that, if the balance be even, neither of them either loses or gains;

but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium." (Smith, 1776, book IV, ch. iii, part ii) [23]

Sun, 03/11/2012 - 09:10 | 2244637 boooyaaaah
boooyaaaah's picture

Milton Friedman on trade deficits ---- Its currency, bitches

In the 1980s, Milton Friedman, the Nobel Prize-winning economist and father of Monetarism, contended that some of the concerns of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to exporting industries.

Prof. Friedman argued that trade deficits are not necessarily important as high exports raise the value of the currency, reducing aforementioned exports, and vice versa for imports, thus naturally removing trade deficits not due to investment.

 Since 1971, when the Nixon administration decided to abolish fixed exchange rates, America's Current Account accumulated trade deficits have totaled $7.75 Trillion as of 2010. This deficit exists as it is matched by investment coming in to the United States- purely by the definition of the balance of payments, any current account deficit that exists is matched by an inflow of foreign investment.

Milton Friedman's son, David D. Friedman, shares his father's view and cites the comparative advantage concepts of David Ricardo.[32]

In the late 1970s and early 1980s, the U.S. had experienced high inflation and Friedman's policy positions tended to defend the stronger dollar at that time. He stated his belief that these trade deficits were not necessarily harmful to the economy at the time since the currency comes back to the country (country A sells to country B, country B sells to country C who buys from country A, but the trade deficit only includes A and B).

However, it may be in one form or another including the possible tradeoff of foreign control of assets. In his view, the "worst case scenario" of the currency never returning to the country of origin was actually the best possible outcome: the country actually purchased its goods by exchanging them for pieces of cheaply-made paper.

As Friedman put it, this would be the same result as if the exporting country burned the dollars it earned, never returning it to market circulation.[33] This position is a more refined version of the theorem first discovered by David Hume.[34] Hume argued that England could not permanently gain from exports, because hoarding gold (i.e., currency) would make gold more plentiful in England; therefore, the prices of English goods would rise, making them less attractive exports and making foreign goods more attractive imports. In this way, countries' trade balances would balance out.[35]

Friedman believed that deficits would be corrected by free markets as floating currency rates rise or fall with time to encourage or discourage imports in favor of the exports, reversing again in favor of imports as the currency gains strength.

 In the real world, a potential difficulty is that currency markets are far from a free market, with government and central banks being major players, and this is unlikely to change within the foreseeable future.

 Nevertheless, recent developments have shown that the global economy is undergoing a fundamental shift. For many years, the U.S. has borrowed and bought while in general, the rest of the world has lent and sold.

However, as Friedman predicted, this paradigm appears to be changing.

As of October 2007, the U.S. dollar weakened against the euro, British pound, and many other currencies. For instance, the euro hit $1.42 in October 2007,[36] the strongest it has been since its birth in 1999.

Against this backdrop, American exporters are finding quite favorable overseas markets for their products and U.S. consumers are responding to their general housing slowdown by slowing their spending.

Furthermore, China, the Middle East, central Europe and Africa are absorbing more of the world's imports which in the end may result in a world economy that is more evenly balanced. All of this could well add up to a major readjustment of the U.S. trade deficit, which as a percentage of GDP, began in 1991.[37]

Friedman contended that the structure of the balance of payments was misleading. In an interview with Charlie Rose, he stated that "on the books" the US is a net borrower of funds, using those funds to pay for goods and services. He essentially claimed that the foreign assets were not carried on the books at their higher, truer value.[citation needed]

Friedman presented his analysis of the balance of trade in Free to Choose, widely considered his most significant popular work.

Sun, 03/11/2012 - 14:58 | 2245260 Kayman
Kayman's picture


There's textbook trade and then there's real world trade. Goods are rarely perfectly fungible; especially manufactured goods.  And currencies rarely trade freely.

Trade, ultimately, is a function of politics and individual profits trumping a country's interests.

However, one positive side effect is it does employ a few economists.

Sun, 03/11/2012 - 12:46 | 2244932 nasdaq99
nasdaq99's picture

i've looke at these charts a couple of time adn still don't see evidence of "an epic collapse" in the chinese economy.  trade balance, ok, but "epic collapse of the chinese economy" is a huge sack of BS.


from the bloomberg article:

February exports totaled $114.5 billion, while imports were $146 billion. China’s shipments to the U.S. climbed 22.6 percent from a year earlier to $19.4 billion after a 5.4 percent gain the previous month, the data show. Imports from the U.S. jumped 43.4 percent to $11 billion.

Overseas sales to the European Union, China’s biggest market last year, rose 2.2 percent to $19.4 billion, after a 3.2 percent drop in January.



careful before zerohedge becomes borderline chickenlittle reading

you guys have been way wrong on the market for way too long now..... time for some confession.

Sun, 03/11/2012 - 15:06 | 2245274 Kayman
Kayman's picture


After 10's of Trillions in deficits and money printing, if this is a booming economy, I am a Mad Hatter.

You had best stick with Cramer. "some people like the taste of smokey whiskey, other's think their tea's too strong."

Tyler's brew is burning your tender "there really is a Santa Claus" sensibilities.

Sun, 03/11/2012 - 16:55 | 2245530 nasdaq99
nasdaq99's picture


I din't say anything about the US economy and i think cramer should go to jail for reckless disregard but reread the "epic collapse" comment one more time and see if you can square it with reality, bub.

Sun, 03/11/2012 - 23:42 | 2246334 Bear
Bear's picture

Cramer he's my man ... watch and laugh

Sun, 03/11/2012 - 23:39 | 2246326 Bear
Bear's picture

I confess that I have only been wrong since March 9, 2009 ... But, the Bear still lives and breathes … it’s only hibernation time

Sun, 03/25/2012 - 17:41 | 2289094 FluffyCone
FluffyCone's picture

How much does the US owe China?

How much is China worth?

What is China's Wealth?

I'm also looking for sources to reference.


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