U.S. caught China buying more debt than disclosed

U.S. caught China buying more debt than disclosed

www.reuters.com

(Reuters) - The rules of Treasury auctions may not sound like the stuff of high-stakes diplomacy. But a little-noticed 2009 change in how Washington sells its debt sheds new light on America's delicate balancing act with its biggest creditor, China.

(visit the link for the full news article)

The real reason for the change, a Reuters investigation has found, was more serious: The Treasury had concluded that China was buying much more in U.S. government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open - all without ruffling feathers in Beijing.

Makes you wonder where else the funds come from to bury the US in debt... Besides The Federal Reserve. The article does mention the following:

The Treasury has long said that it has a diversified base of investors and isn't overly reliant on any single buyer to digest new U.S. Treasury issuance. Evidence that China was actually buying more than disclosed would cast doubt on those assurances.

Comforting on all accounts it seems.


www.reuters.com
(visit the link for the full news article)

Great! Now we know that China owns the US more than what we know.

Originally posted by Americanist


Makes you wonder where else the funds come from to bury the US in debt..

Not sure what point you are making here? If it is an issue as to who owns the debt, then why put it up for sale in the first place? States was done this way to avoid ruffling chinese feathers, therefore implying that the action itself is fine, simply the amounts being taken up were the problem. I don't understand this though (simple minds, etc) as if the debt is up for sale, what does it matter who owns what percentage? The fact is that amount of debt is still up for sale whether it goes to one bidder or many

Not attempting to trash, simply seeking a bit of clarification.....any input here is greatly accepted as economic markets appear to be simple things (supply and demand) but economists have made it very confusing for the layman!

reply to post by wavemaker


And at the rate China has screwed around with other Financial markets around the globe, most noteably in Europe, they are screwing themselves over.

Eventually the debt they hold on the US is going to be worthless because of the decline of the dollar.

Its almost as if China is going for the economi war situation. Invest heavily in buying up debt, propr up other currencies, make China itself a manufaturing powerhouse and when the bottom falls out we will be forced to once again pull together with Europe and other countries, or go hat in hand and ask China to help.

I do agree with the qestion - What else do we not know.

I also find it insulting that our Government is concerned about ruffeling feathers in Beijing insted of bieng more concerned about the welfare of the US people.

I say when China comes knocking and calls in their chips, we oblige. Every single Government offical who is still alive should be loaded onto a plane and sent to China as payment in full.

When China objects we will inform tham that the people who had the US Citizens Credit Card were not authorized to use it, and put them on notice we will be disputing all of the charges.

When the Treasury Department revamped its rules for participating in government bond auctions two years ago, officials said they were simply modernizing outdated procedures.

When Goldman Sachs took over the treasury....

The real reason for the change, a Reuters investigation has found, was more serious: The Treasury had concluded that China was buying much more in U.S. government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open - all without ruffling feathers in Beijing.

They realized that the world would soon discover what they had been doing via the Fed and the Chinese Central Bank.... even the Chinese politicians didn't know. The 'disclosure' had to be effected in such a manner as to make it a matter of positive inquiry, as opposed to an announcement by either party. Lest their machinations become a self-evident abuse of authority.

Treasury officials then worked to keep the reason for the auction-rule change quiet, ... instructing subordinates to not mention any specific creditor's role in the matter .... Inquiries made at the time ... elicited the explanation ... the change was a "technical modernization," ... There was no mention of China.

Standard policy ... they misdirected, obfuscated, concealed... they lied.

The Treasury has long said that it has a diversified base of investors and isn't overly reliant on any single buyer to digest new U.S. Treasury issuance. Evidence that China was actually buying more than disclosed would cast doubt on those assurances.

The lies conceal the leverage China's central bank has in the US financial market.

'TECHNICAL MODERNIZATION'

The official explanation for eliminating guaranteed bidders did not mention foreign central banks at all. It focused instead on "technical modernization" of auction rules.

One government official warned others in a written message "not to include the words 'China' or 'SAFE' in email subjects."

Can anyone say.... "House of cards?"

To these people it is a con game. And those being conned are the people from whom the wealth is 'extracted' so they can play. They want us to never question their actions, which are ritualistically hidden in policy vehicles which we are not allowed to see, or are deemed to stupid to be able to comprehend without a degree in macroeconomics.

Corporate government..... are we learning yet?

reply to post by Xcathdra


They are not wasting their investments, the vast holdings of USDA that China have is been invested to buy US land and resources one piece at a time, thanks to Obama opportunity to open the door with Utah to host first U.S.-China Governors Forum .

This will allowe states to start doing business in order to save their state budgets, China can buy resources from individual states.

Using US dollars something that they have in large quantities this days.

Utah is the second biggest trade partner of china after UK

www.sltrib.com...

reply to post by Xcathdra

And at the rate China has screwed around with other Financial markets around the globe, most noteably in Europe, they are screwing themselves over.

Yes we know the Israeli government is scared #less by the Chinese. So you have to make these arguments that it's not that bad and that China will end up screwing themselves. Trust me, I get this all the time from pro-Israelis. They just can't accept the fact(because they are such supremacists) that China is going to overtake the US and Europe. And time and time again they are proven wrong. I bet you can't even hold a proper discussion in real life about China and its future geopolitical development but ah well.

What you lot who still hold romanticized ideas about the "Western world" and the all powerful "USA" fail to realize is that we find ourselves in WW3 already. And in WW3, China is by default victorious.

Originally posted by Xcathdra
reply to post by wavemaker

 

And at the rate China has screwed around with other Financial markets around the globe, most noteably in Europe, they are screwing themselves over.

Eventually the debt they hold on the US is going to be worthless because of the decline of the dollar.

Its almost as if China is going for the economi war situation. Invest heavily in buying up debt, propr up other currencies, make China itself a manufaturing powerhouse and when the bottom falls out we will be forced to once again pull together with Europe and other countries, or go hat in hand and ask China to help.

I do agree with the qestion - What else do we not know.

I also find it insulting that our Government is concerned about ruffeling feathers in Beijing insted of bieng more concerned about the welfare of the US people.

I say when China comes knocking and calls in their chips, we oblige. Every single Government offical who is still alive should be loaded onto a plane and sent to China as payment in full.

When China objects we will inform tham that the people who had the US Citizens Credit Card were not authorized to use it, and put them on notice we will be disputing all of the charges.

edit on 30-6-2011 by Xcathdra because: (no reason given)

Sadly these people ARE authorized to use it.

Your American way of life (western lifestyle in general), is paid for by running massive deficits so cuts to programs and raises in taxes are not needed.

A lobby group needs to be formed that presses the government hard for debt reduction and balanced budgets. Anything less will mean an eventual default on the debt and a collapse of the US dollar.

But of course if balanced budgets were posted, there would be rioting in the streets similar to Greece. No one wants to cut back on their lifestyle. After all, isnt massive consumption, purchases above and beyond what is needed and an entitlement mindset what the american dream is all about?

reply to post by nightbringr


That is why the fed will not buy anymore debt this will force the government to stop printing money and banlance their sheets, or that is what is suppose to do, but we know that the government will find another way to force more money printing.

Bailouts are not over they are just been put on hold because elections.

Still don't get the US objections to China buying up chunks of land in America. It appears to smack of blatant hypocrisy - western nations have been buying assets and land all over the world for centuries. We live in a capitalist global free market (allegedly) therefore they have just as much right to buy in the US and elsewhere as western nations and companies have to buy in the US or elsewhere. We have pushed for free markets (rightly in my opinion) therefore we have to play the game the same as everyone else

reply to post by Flavian


It is a hypocrisy and a slap on the face of those that fought wars in the name of fighting communism, see the hypocrisy comes because of that fact, China is after all a communist country, something that we scorn at. Now the government and private corrupted interest wants us to smile and embrace as our economic partners because it suit the corporate interest needs.

Originally posted by Zamini
I bet you can't even hold a proper discussion in real life about China and its future geopolitical development but ah well.

I am pretty sure I can.. can you?

I always find the interpretation of what the US is and where we are going funny, especially by people who dont understand us.

Go back and take a look at Chinese actions towards the US, Europe and Africa. While your browsing that info take special note of what they are buying or selling in each area. When you put all of their actions together you get a comepltely different answer than if you view them seperately.

China has manipulated their currency for so long, and they still are even though they are in violation of the WTO agreements when they entered. China has gone to great lengths to force their way into national markets while still continuing to restrict theirs to outside investors.

Those companies who do make it into the Chinese market are defacto Chinese businesses since foriegn companies are required to have a partnership with a Chinese company. Couple that with Chinese Government oversight and control leaves you with pretty much no foreign business what so ever in China.

For a long time China has:
manipulated their currency
manipulated foreign currencies
refused to comply with WTO regulations
interferes with other economies by flooding those markets with massive amounts of substandard products
continually violates international agreements on copyright enforcement
continually violates international agreements on patents / intellectual property

I can keep going but there is no need unless you are completly blind to these facts.

Any attempt to engage China in these areas is met with the typical response - Its an internal Chinese issue and because of that, is no one elese concern but theirs. Now China has gone on a spending spree in Europe buying up a large chunk of debt while at the same time taking measures to artifically inflate the value of the Euro.

While we agree on the part about WW3, we disagree on the outcome. Reason being while China may be turning into a powerhouse, without foreign markets to sell their items, they will be left with a massive amount of their population that will be out of work, which will result in The Government of China being replaced. They are already having a lot of internal dissent, however only bits and pieces trickle out of the regions and make it to foriegn media.

China has refused to play by the rules and for the longest time the rest of the wrold just quietly went along with it. Do you actually think there will not be some type of backlash against China in the long term?

I am still waiting for Congress to push for trade sanctions against certain Chinese products coming into the US. The topic of conversation has been discussed, and several members are waiting for a Chinese answer before going forward with the legislation.

The house China has built is not as strong as it appears, and the loss of market share in Europe or the US will bear that out. Even more so when China's trade surplus gleaned from those markets goes away / balances.

But hey.. If you feel more comfortable with the Chinese leading, go for it. When, or if, you get out of the internment camp for posting on a website like this, let us know if you change your mind.

While we agree on the part about WW3, we disagree on the outcome. Reason being while China may be turning into a powerhouse, without foreign markets to sell their items, they will be left with a massive amount of their population that will be out of work, which will result in The Government of China being replaced.

If you had not realized yet, they are working hard creating markets within China. They are well underway to transform neighboring countries or even countries half the globe away into markets. Remember, once the Chinese reach a certain level of wealth marketing can create entire markets for them.

The government of China replaced. Lol. Now that's an impossibility if ever. China will have to take its role as world leader, spend some years as world leader, then experience the blow back from their economic, war like, decisions they took over a hundred years ago and then yes, the government has a chance of being replaced. But by then, both you and I will be long gone!

reply to post by marg6043


Ok, i totally understand the anger issue but that doesn't change the fact that it still appears hypocritical to the rest of the world. Im British, have american relatives and family and friends all over the world. Multi national corporations go back to the Dutch East Indies Company, about a century before the (British) East India Company. Since this point, western states have been buying assets left right and centre. This has benefited our way of life massively over the centuries and has resulted in demands for greater standards of living globally - the more you have, the more you want, etc.

Now i am worried by the future for our western states but accept that the same rules applies to other companies and states that apply to the rest of the world. Obviously, this story is about china bending those rules (naughty, tsk tsk, slapped hand, etc) but people seem to be getting upset about the fact that china is even allowed to buy any debt in the first place.

My biggest head ache with the entire current financial situation is why we can't simply hit the reset switch? After all, none of this cash actually exists, it is all invented and inputted into the computer systems. Can we therefore not simply restart the systems based on current holdings and scratch off the debt? Or just input huge amounts that also don't exist? Surely there are ways around this? Like i said on my first post, i am a layman that struggles with some of these issues

reply to post by Xcathdra


I thought China had recently passed laws encouraging greater foreign investment within China? Indeed, one of the chinese soft drinks companies was bought by a UK firm this week, thereby allowing inroads into the chinese market?

All right, i will admit that the new laws were needed as foreign firms did appear to be restricted in gaining a foothold into china (prior 2011) but all their more recent policies have been about opening up chinese trade, not protectionism

reply to post by Xcathdra


China as a communist government is at a great advantage when it comes to long term planning.

While Western governments are short-sighted and blinded by trying to win their next elections, China is free of any such restraints. So, while Western governments rack up massive deficits to maintain the status quo so the current administrations might win the next election, the Chinese are free to sit back and allow their long term plans come to fruition.

I have no doubt whatsoever in my mind that in the next decade or so China will become the dominant political and then military force on the planet. While i despise communism, in terms of long term financial planning, they can be leaps and bounds ahead of the West.

Here, we look no further than 5 years ahead, till the next election.

reply to post by Flavian


The globalist are too corrupted and dirty to stop the tsunami that they help build for profits at the expenses of the working class and common citizen, the problems is that all that empire is not working the way it was suppose too and is now in danger, w ethe populace as pieces of the puzzle can only sit and let greed topple what they have build.

The signs of everything coming to an end are very clear. Nations can only survive on so much debt before they collapse even the mighty EU and US.

As an example look what happen globally when the US market crashed that happen because unrestricted greed, we may look like we have recovered but we are far from that to be truth, the domino effect that affected so many nations in the world has not stopped yet and only with indebtedness of nations the greedy globalist can keep the scam alive. But I bet that was all planned just the outcome was not.

reply to post by Flavian


Yes they are very much restricted and if China see a danger to their nation they will just kick you out of their country with not regrets, as they do not actually follow treaties and international laws they interpret them as they see fit.

They have grown big enough to be able to by pass anybodies laws and still thrive, that ensure their supremacy.

reply to post by Zamini


The Chinese Government is continually coming under increased pressure from her citizens because of inflation, jobs and the taste of free market in some of their econmic zones.

Yes, China is allowing access to their markets, yet they arent. As I said, they encourage and want foreign investment, but those investments are not independant. The stings attached to that foreign investment is the foreign company is required to have a chinese business partner.

As an example take a gander at Google and that little blowup over there. Did China seem all that concered about google leaving the country? Nope, because a chinese firm was in place to take over the gap. Where did that business come from? You guessd it.

China is working to create new or expanding markets, but as Ive said, when foreign invenstment comes into the country, and are forced to pair with a Chinese business partner, exactly what is occuring? The market is created / expanded, foreign investment comes into that market with their chinese counterpart, and ocne established you see technological / intellectual / patent infringments that completely undermine that foreign investment.

Because of that, you see foriegn investment leave since they are being screwed, leaving that new market, as well as the infrastructure outside investment created, and China just steps in and continues.

China can deny this pratice all they want, however the facts show something completely different than what they are saying.

Proof of that also lies within their obligations when they entered the WTO, and the number of complaints that have been filed against them for ignoring those agreements, with the excuse being its an internal chinese matter. Just as China did when they had uprising that aught the attention of the UN. Chinese response to the UN was to stay out of it, its none of their business.

As far as chinese investment in other countries, I would not categorize that as invetment, but more of a shopping spree on the small to medium size country level. China has contracted with some governments in Africa to supply food for China, and only China (check Madagascar).

Instead of engaging in trade, which is give and take, they want people to give to them, while they take from others.

win win for China.