Dumping

This is not good:

A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it’s held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

China dumped some $34.2 billion – other foreign investors following China’s lead raise that total to $53 billion.

Interest rates will be going up, probably soon.

There are signs that US Treasuries are not finding the usual demand from buyers.

Longer dated bills were under more pressure Tuesday morning and afternoon as concern grew that the Treasury market is no longer able to support continued weeks of record debt auctions.

The worries were sparked last Thursday, when the government sold $16 billion worth of 30-year bonds. The bid-to-cover ratio, a measure of demand, was 2.36. That was down from 2.68 at the previous auction in January.

You should be troubled by this. If the United States can’t sell enough bonds to cover the skyrocketing Obama debt, we are all in real trouble. The right answer is to cut spending and hence the amount of debt we are trying to sell, but that will not happen with this administration and Congressional leadership.

Pray we can hold on until November.

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6 Responses to Dumping

  1. Tom says:

    Government reduces spending? When Hell (not Michigan) freezes over.

  2. Andrew X says:

    What I know about economics could not fill this box I am writing in, but there is this dark part of me that wants it to happen, possibly the way a heroin addict might secretly want the terrible to happen because he knows that is the bottom he must hit to begin recovery.

    When does Hell (not Michigan) freeze over?

    Maybe when the interventionist says “It is by God over — and you are out on the street, cut off, and will starve to death…. or you turn the corner right now. Your choice, make it now, today, immediately, because we are wasting no more time on you.”

    That is when Hell freezes over.

  3. Tully says:

    Andrew X? We’re there. The time to stop is BEFORE you poke that massive overdose into your arm.

  4. Andrew X says:

    Tully –

    I we were there, there would be torches, pitchforks, and buckets of tar on Pennsylvania Avenue this afternoon.

    Talk to me on November 3rd, then we’ll know if at least we are ready to finally get on that plane and go to rehab.

  5. Sam says:

    Maybe the Chinese are buying bonds from Greece and Spain instead. I hear they are paying good rates if you are willing to cross your fingers and hope they don’t default.

  6. ropelight says:

    Looks like the Chinese made a smart business decision.

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