Guess most of
us would know the end result if China decided to dump all of it's U.S. Treasury
holdings en
masse... I guess it
begs the next question is this a form of economic détente for peace before the
next big interruption. Looks like we're not the only ones stalling for
more time?
A
Suddenly Nervous China Tells The US To "Earnestly Take Steps" To Avoid A
Default
Submitted by Tyler Durden on
10/07/2013 10:16 -0400
While the
world's largest hedge fund, the Fed, may not care about the performance of its
"bad bank" assets, and thus is largely ambivalent if the US Treasury defaults on
the $2 trillion in US paper held by Ben Bernanke, others don't have the luxury
of merely printing away any incurred MTM losses. Such as America's largest
foreign creditor China, which at last check held at
least $1.277 trillion in US Treasurys, which after realizing with a substantial
delay that the US Congress is not precisely a "rational actor" and its bonds may
be materially impaired in the case of a technical default, is starting to panic.
In an oped in the largest media publication, China Daily, vice finance minister
Zhu Guangyao, warned that the "clock is ticking" to avoid a US default that
could hurt China's interests and the global economy. Somehow we doubt
Boehner or Obama are particularly concerned about what happens to "Chinese
interests." Of course, if China so wishes, it can pen an Op-Ed in the NYT
and tell the US just what will happen if $1.3 trillion in US Treasurys were
suddenly to be dumped in a liquidation fire sale.
China,
the US's largest creditor, is "naturally concerned about developments in the US
fiscal cliff", vice finance minister Zhu Guangyao
said.
He
asked that "the US earnestly take steps to resolve" the
issue.
Mr Zhu
said that China and the US are "inseparable". Beijing is a huge investor in US
Treasury bonds.
"The
executive branch of the US government has to take decisive and credible steps to
avoid a default on its Treasury bonds," he said.
"It is
important for the US economy as well as the global
economy."
Zhu's
parting words:
"We
hope the United States fully understands the lessons of history," Mr Zhu
said, referring to a similar deadlock in 2011 that led to a downgrade of the US
"AAA" credit rating.
Well that,
or perhaps some other history lessons, particularly those derived from Germany
in the 1920s.
~ Sitting Bull
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