Sunday, September 6, 2009

China is now a net SELLER of U.S. Treasury notes and bonds!

by Mike Larson 09-06-09

We told you this was coming. Heck: A blind man could have seen it a mile away.

For many months now, we’ve predicted that Washington’s wild spending and borrowing spree would make the global investors who buy our longer-term Treasuries — notes and bonds — as nervous as long-tailed cats in a room full of rocking chairs.

We’ve cautioned you that our sky-high deficits, record shattering borrowing by the U.S. Treasury and runaway money printing by the Federal Reserve would cause them to lose sleep, worrying about the real return on their money — not to mention, the return OF their money.

We forecast that as these concerns deepened, they would reduce the amount of money they were willing to loan Washington … or stop loaning us money altogether … or even begin selling the longer-term Treasuries they already own.

Now, those forecasts have begun to come true — in spades!

Just a few days ago, the U.S. Treasury Department revealed that China actually REDUCED its note and bond holdings by $25 billion in June. Although China did NOT sell shorter-term Treasury bills — and isn’t expected to — it’s still the largest amount of Treasuries China has ever sold in a single month. FULL STORY

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