I think you fail to understand the dynamic nature of all of these variables. For example, the minute the dollar collapses as you imply, the same minute Chinese exports to us stop. But the Chinese economy depends on their export regime. As well, a devaluation of Chinese' dollar denominated reserves essentially eliminates their buying power. In the end it all boils down to political policy, govt stability, etc. Look at Russia right now for example. Because the value of their exports collapsed, to defend the ruble, they had to sell probably 200B of treasuries and the yields barely moved. The power of foreign money is a lot less than I think everyone expects. Perhaps simply because local assets trump them by many degrees.
This is a site for Elite Traders. The language used by riskfreetrading has no place here. Look at riskfreetrading's 3000+ posts here in one year, nothing valuable. riskfreetrading, stop riskfreetalking. You either start trading or you go there to sink an island yourself. Just get of here.
I am referring to the individuals who supposedly are requesting guarantees who it is mentioned are chinese. Those individuals show that they do not understand markets. If they want guarantees it would mean that they should pay for it in form of lower yields when compared to market prices, or pay in another form. It is the nature of the market. One cannot get for free something higher than what the market is pricing. The facts that they come out and make statements like they did shows as if they think they were lending to an isolated guy in the street with no market pricing the paper, and making demands. So their intellectual understanding of markets is inferior to what it should be. Do not you agree? The market is there. If they do not like the outlook, why do they not sell. If I have to bet, I would say that they will buy. If a guy makes a demand/threat he has to do it while showing an understanding of market. Otherwise he will not be credible, particularly when he exhibits an inferior intellectual understading of markets. He wants a gurantee, and do not pay for it. So he wants a lunch and not pay for it. Do you think that it is a trait of intellectual command of markets and to what degree?
No response is needed for such stupidity. The hypocrisy of a $680 billion equivalent stimulus is quite intriguing. There aren't any safer investments besides treasuries, but even now, their yields are about in synch with inflation providing no real return.
Why do you think investors buy treasuries? A lot of reasons can enter the equation for any sovereign debt, including political stability, the rule of law, military might, economic outlook including inflation/etc. So plolitical stability, rule of law, military might are assets to a nation, which contributes to lower yieds. Money likes safety, and to be close to its owners.
If you are chinese I am only referring referring to the particular guys who made the statement about bonds they are already holding. They want to change the terms of a contract that they already agreed when they bought the bonds. So those guys show that they have a lack of understanding of markets and honor of contracts. Imagine your lender starting to make threats and demands when he lended you money to buy a house for a fixed rate, but is now demanding more guarantees well after the contract and transaction has been signed and done. What would you think of your lender in terms of his understanding of lending transactions/etc: inferior, superior, non-existent?
only reason china holds that much gov't debt is they have lots of USD reserves that they need for imports and protecting the the value of their currency. QUOTE]Quote from ETFDeskDotCom: Scary: China should seek guarantees that its $682 billion holdings of U.S. government debt wonât be eroded by âreckless policies,â said Yu Yongding, a former adviser to the central bank. Could be a good play on TBT [/QUOTE]