Mad Hedge Fund Trader

The Impact of a Global Recession on Asia

First, Mr. du Plessis, I have been studying your work and I really admire it. My blast for today: The Chinese government has expressed “concern” about the safety of their $696 billion investment in US Treasury bonds. What they are not telling you is that they are even more “concerned” about the hundreds of billions of Fannie Mae, Freddie Mac, GMAC, and other agency debt, which is either now untradeable or has gone into the toilet. And “concerned” they should be. Not only is some of the paper they own now worthless, there is an impending 50% devaluation of the dollar in the cards which is the guaranteed result of current US government printing press policies. One of the great luxuries of running a dictatorship is that you can skip mark-to-market accounting. The government entities that own all of this garbage are carrying it on their books at par because they intend to hold it to maturity. If China used mark-to-market they would have plunged into another civil war by now. Expert to hear more “concerns” from Japan, Singapore, and the sovereign wealth funds that are in the same boat.