Uh Oh, There Goes the Bid in Treasuries

So they’re gonna spend it, instead of socking it away:

Two things: 

1. Maybe they’ll up the foreign aid budget and put the U.S. on the list of eligible recipients.
2. Great. Their turn to buy their own carp (deliberate typo).

China Announces $586 Billion Stimulus

All over the place Nov. 9 2008

Comments

[David Martin:]

Exactly what I was wondering. Has anyone got any more precise analysis on the size of this impact on US treasuries?
The article is rather gnomic, if indeed a couple of sentences can be called an article.

2008 Nov 10 09:34 AM

[Kenneth J. ...:]

All of us who understand the current financial "problem" realize that the "only way out of it" our leaders can see is to take more of the same poison that got us here in the first place, so that means the US government will go deeper into debt. Other governments will too. As bad as the problem is here, other countries have worse financial problems!

Has mostly dirt-poor China been "socking it away", or are they actually digging a hole while trying to rapidly industrialize? Do they report their national budget and reveal any surplus/deficits? I realize we have an ongoing US/China trade deficit, but that's another issue entirely...

It is my understanding that the sovereign wealth funds of the world that that accumulate US treasuries are in effect buying into the "best of the worst", meaning that ALL world currencies and government bonds are uncertain, ours in the US have just the distinction of being considered the least uncertain. Treasuries yielding such a low percentage (2, 3, or 4%???) are being considered attractive, why? Because even if the investors who buy them in essence get back 90% of their money in the future, it is far better than only getting back 50-60% of their money or less, which is what history showed they'd likely get if they invested in government treasuries in unstable nations that might be paying a significantly higher "yield" on the face of it.

2008 Nov 10 02:17 PM