Tag Archives: bonds

Business/Economics, International, U.S.

What Economic Recovery? China tells U.S. to back off trade war, dumps more U.S. government Bonds! More proof that China does not need the U.S. market!

Despite rosy depictions, by the U.S. mainstream media, of the Vice President of China’s visit to the United States, things are not warm and fuzzy!

Vice President Xi Jinping, recently restated demands from China, that the United States end economic restrictions against China: “It is very important when addressing the China-U.S. trade imbalance that the United States adjusts its economic policies and structure, including removing various restrictions on exports to China, in particular, (and) easing controls on civilian high-tech exports to China as soon as possible.”

China’s restatement of such demands comes as reports revealed that China dumped another $3.19 billion in U.S. Treasury bonds, back in December 2011.

In total, for all of 2011 China sold off $59.4 billion in U.S. Treasuries.  But China still holds a lot of U.S. bonds; $1.10 trillion as of December 2011.

This means China has a lot of room to maneuver, when it comes to monetary action.  Some analysts say China is dumping U.S. bonds in order to provide cash to help the European economy, and because the U.S. dollar just isn’t a safe haven anymore: “The overall movement away from the U.S. dollar indicates that people are not looking for a ‘safe haven’ as much as they were in late 2011, when the markets globally fell hard on concerns about the situation in Europe. The Chinese are boosting their purchases of European and other bonds because of the need to help stabilize those economies around the world that are major markets for Chinese goods [this also indicates that the U.S. is no longer a major market for the Chinese].”-David Riedel, Riedel Research Group

Business/Economics, International, U.S.

What Economic Recovery? Foreign banks dumping U.S. Treasury Bonds

Late on December 30, the U.S. Treasury announced that the dumping of U.S. bonds, by foreign banks, continues and is accelerating.

Back in September the Treasury revealed a $56 billion drop in U.S. Treasury holdings by foreign banks, resulting in a 10 year yield of only 1.67%, the lowest yield since 1945!

Now, for December, an even bigger drop, by $69 billion!!! The result is that the 10 year yield on U.S. Treasuries ended 2011 below 1.9%.

Treasury Department officials also admitted that if it wasn’t for Japan buying up U.S. dollars and other Treasury securities (in August and October), the drop in 2011 foreign holdings would be even bigger!

And this despite the Treasury’s attempt to increase sales through their Operation Twist.  Operation Twist basically exchanges long term bonds for shorter term bonds.

Business/Economics, International, Opinion, U.S.

Government & Corporate incompetence: ECB to buy up European bonds but needs cash, EU to loan money…to the IMF, IMF will loan the money back to the ECB! The Elitist spiders are tangling their webs

“Oh what a tangled web we weave,
When first we practise to deceive!”-Walter Scott, Marmion, Canto vi. Stanza 17

I just read several reports.  One said the European Central Bank (ECB) wants to buy up the sovereign debts of European countries that are in financial trouble.  But the ECB says it needs about U.S.$150 billion to do it (notice they don’t have the cash on hand).

In another report the European Union said it will loan about $266 billion…to the U.S. based International Monetary Fund (not to their own ECB).  The purpose of the loan to the IMF is so the IMF can turn around and loan it back to European banks!

You must realize that the IMF is broke, just last week the President of the IMF came away from South America with a huge loan.  It was precedent setting, because for the first time in South America’s history they loaned money to the IMF, instead of the other way ’round.  So what did the IMF do with that money?

And why can’t the European Union loan the $266 billion directly to it’s member banks?  Is this just another accounting shell game?

The 1% elitist spiders have trapped themselves in their own web.  There’s no more flies to catch, the spiders are starving and they’re turning on each other!  It’s called World War 3!

 

Business/Economics, International, U.S.

Global Economic War: Global Sovereign Open Fund dumping European bonds

Not even a week after it was revealed that the biggest insurance companies in Japan were dumping their European bonds, a major Japanese investment firm reveals it is doing the same.

Kokusai Asset Management says it has sold off all Italian, Spanish and Belgian bonds that were part of its Global Sovereign Open Fund!

The Global Sovereign Open Fund is the largest in Japan, with about U.S.$26 billion in assets.  Kokusai Asset Management says the European bonds they sold off had already lost 8% of their value from the previous year.

Business/Economics, International

What Economic Recovery? Japanese life insurance companies dump European bonds

As a sign of how bad things are getting for European countries, it’s just been revealed that eight major Japanese life insurance companies are dumping their sovereign debt (bonds) from Italy, Ireland, Greece, Portugal and Spain.

All together, the Japanese companies sold off 44% of their bonds, by the end of October.  According to Japanese media, two of the eight insurance companies sold off all their Italian bonds!

Business/Economics, Technology, U.S.

What Economic Recovery? Netflix says 2012 will be so bad they will not make any profits. Looking to investors to float them. Blame competition & inflation

Netflix announced on November 21, that they do not expect to make a profit in 2012.  The on demand movie service went from having $366 million in cash, to almost nothing predicted for 2012.

Netflix officials blame it on several things; a huge subscriber loss, increased competition and a huge jump in licensing fees (inflation).

Like most of Corporate America, Netflix thought it could trick its customers into paying more for less. It backfired, company officials now estimate they will lose one million subscribers as a result.

Netflix says it’s seeing a jump in competition, not just from Hulu and Redbox, but from Amazon and Google.

Now comes the licensing fees.  In 2010 Netflix paid $180 million, now that’s jumped to $2 billion for 2012!!!  Company officials say they can not pay the fee upfront and will have to spread payments out over several years.

Under text book economic rules Netflix should pass on the increased licensing fees to its customers, but they already tried that and lost a huge amount of customers.  Netflix will try to ride out 2012 by issuing a crap load of stocks and bonds.  They hope they can get investors to buy at least $400 million worth of stocks and bonds, even though they admit they’re not going to make any profit for 2012.

 

Business/Economics, International, Opinion, U.S.

Global Economic War: China playing ping pong game with U.S. & European bonds

A report in the Chinese media got me thinking.  There’s a definite pattern to China’s buying and selling of U.S., and European, government bonds (sovereign debt).

In the first three months of 2011 China sold off U.S. bonds.  Then, from April through July bought U.S. bonds.  In August China sold off U.S. bonds big time; $36.5 billion worth! Now they’re back to buying.

The U.S. bond sell offs happen when news of the performance of the U.S. economy is really bad, and Europe is looking better.  In August, the big sell off came when the credit rating for the U.S. got downgraded.  For the past few months the really bad economic news is coming from Europe countries, and China has been buying U.S. bonds big time.

China is playing a sovereign debt investment ping pong game.  The ball is their money, and the paddles are the United States and Europe.

The Chinese media even reports that the Chinese holding of foreign exchange reserves must be flexible and ever adjusting to market conditions.

But I wonder, which is coming first, the chicken or the egg?  I’ve also noticed that Chinese officials tend to lead European and U.S. officials into thinking China is about to make big strides towards bailing out their economies, then the Chinese back off.  So, from here on out it would be wise to watch the timing of offers of economic help, then backing off of those offers, with the buy ups and sells offs of U.S. and European bonds.

Business/Economics, International, U.S.

Global Economic War: Chinese economists continue to push their government to dump U.S. bonds, says the U.S. has passed point of no return, will continue on a downward spiral, Morgan Stanely agrees

“China should move progressively to cut its holdings of U.S. Treasury bonds and use it as leverage to ask Washington [DC] to further open its markets, including the high-technology sector, to Chinese investment.”-Xiang Songzuo, University of China

U.S. Vice President Biden is in China, trying to reassure the Chinese government that the U.S. will “…ensure the safety, liquidity and value of U.S. Treasury obligations for all of its investors.”

Chinese economist say it’s too late, the U.S. economy is too far gone: “But there is very little room left for the U.S. government to revitalize its economy.  Low growth and high unemployment will be regular features of the U.S. economy in the future.”-Wei Liang, China Institutes of Contemporary International Relations

Even officials with Morgan Stanely, an international finance company based in New York City, say the United States has lost all economic legitimacy: “The U.S. debt crisis has taken a serious toll on China’s confidence in Washington’s [DC] economic stewardship.  China is no longer willing to risk financial and economic stability on the basis of Washington’s hollow promises and tarnished economic stewardship.”-Stephen Roach, Morgan Stanley Asia

 

Business/Economics, International, U.S.

Global Economic War: China sells record number of Yuan bonds, pushing to dominate bond market and influence the Yuan as the New World Currency

A record amount of Chinese government bonds have been issued in Hong Kong.  And investors are buying them up.

Several types of yuan based bonds, which mature between 2 and 10 years, were sold, totaling U.S.$3.1 billion, a record.

This was the third Chinese yuan bond issue in Hong Kong.

Demand was so high for this latest issue of yuan bonds that orders had to be stopped.  There were 4.6 times more demands to buy the yuan bonds than there were yuan bonds to sell!

Analysts said China plans to issue more yuan bonds, with the goal to help promote the yuan as the next world currency, replacing the U.S. dollar.

Business/Economics, International

What Economic Recovery? Germany & France pushing for tax on stock market deals, taking steps to turn the EU into a single economic & political entity

August 16, France and Germany decided against creating and selling Euro Bonds, and came up with another way to help raise money for EU governments; a stock market transaction tax.

French President Nicolas Sarkozy said Euro Bonds would come later, when the economic situation was more stable.  Instead he, and German Chancellor Angela Merkel, are pushing for a new tax (as if Europeans didn’t have to deal with enough taxes).

The new financial transaction tax would affect the purchases made on stock markets.

Merkel and Sarkozy are also calling for more economic and political unity for the EU.  They want EU members to modify their constitutions to reflect commitment to building a strong, more united European Union, and, they want to create a new EU council to oversea efforts to create a more unified EU.  That council will meet twice a year, and have a president who serves a two year term.