AI
China is Re-Thinking the Wisdom
Of Holding So Much U.S. Debt
Chinese Premier Wen Jiabao is worried about the stability of China's huge portfolio of U.S. government bonds.
Chinese Premier Wen Jiabao, speaking at the closing press conference of China's National People's Congress — China's annual legislative session — dropped this verbal bomb on the Obama administration last week:
"To be honest, I am definitely a little worried. We have loaned huge amounts of money to the United States, so of course, we have to be concerned. We hope the United States honors its word and ensures the safety of Chinese assets."
I highly doubt that those remarks were impromptu. They are a clear message to the Obama administration that it needs to stop spending like a drunken sailor if it expects the rest of the world to buy U.S. government bonds.
The line of Chinese policymakers, economists, and scholars voicing concerns about investing too much of their country's $2 trillion surplus in U.S. debt is growing longer and longer. Many are urging diversifying out of U.S. bonds and into more tangible assets such as natural resources and gold.
The reason is simple:
There is an expectation that U.S. bonds are headed for a big drop in value because we are simply printing too much money to fund our stimulus spending spree.
In fact, the Chinese are already starting to move out of U.S. bonds ...
Last summer, China's big state-owned banks — such as the Bank of China and the Bank of Communications — began dramatically reducing their holdings in Fannie Mae and Freddie Mac debt.
It turns out the Chinese made a pretty savvy move ... Fannie Mae and Freddie Mac bonds have gotten annihilated since then.
Now, the Chinese are concerned that U.S. Treasury debt could suffer as well.
So what can you do if you think the Chinese and Premier Wen Jiaboa are right?
Four Safe Hiding Spots
To Consider:
Safe Hiding Spot #1 —
Shorten-up on maturities ...
in case you want to read further
http://www.stockhouse.com/Blogs/ViewDetailedPost.aspx?p=89937
Of Holding So Much U.S. Debt
Chinese Premier Wen Jiabao is worried about the stability of China's huge portfolio of U.S. government bonds.
Chinese Premier Wen Jiabao, speaking at the closing press conference of China's National People's Congress — China's annual legislative session — dropped this verbal bomb on the Obama administration last week:
"To be honest, I am definitely a little worried. We have loaned huge amounts of money to the United States, so of course, we have to be concerned. We hope the United States honors its word and ensures the safety of Chinese assets."
I highly doubt that those remarks were impromptu. They are a clear message to the Obama administration that it needs to stop spending like a drunken sailor if it expects the rest of the world to buy U.S. government bonds.
The line of Chinese policymakers, economists, and scholars voicing concerns about investing too much of their country's $2 trillion surplus in U.S. debt is growing longer and longer. Many are urging diversifying out of U.S. bonds and into more tangible assets such as natural resources and gold.
The reason is simple:
There is an expectation that U.S. bonds are headed for a big drop in value because we are simply printing too much money to fund our stimulus spending spree.
In fact, the Chinese are already starting to move out of U.S. bonds ...
Last summer, China's big state-owned banks — such as the Bank of China and the Bank of Communications — began dramatically reducing their holdings in Fannie Mae and Freddie Mac debt.
It turns out the Chinese made a pretty savvy move ... Fannie Mae and Freddie Mac bonds have gotten annihilated since then.
Now, the Chinese are concerned that U.S. Treasury debt could suffer as well.
So what can you do if you think the Chinese and Premier Wen Jiaboa are right?
Four Safe Hiding Spots
To Consider:
Safe Hiding Spot #1 —
Shorten-up on maturities ...
in case you want to read further
http://www.stockhouse.com/Blogs/ViewDetailedPost.aspx?p=89937
