Big Trouble In Big China
Courtesy of Karl Denninger at The Market Ticker
“Capital losses — let alone obtaining decent returns — seem inevitable,” said Yu, a member of the Chinese Academy of Social Sciences. “There is no question whatsoever that the U.S. dollar will go south, which started in April 2002 and, after a short interval, restarted in March 2009.”
Yep. How big a loss?
A 10 percent slide in the greenback would cut the value of China’s dollar-denominated assets by about 1.5 trillion yuan ($220 billion), exceeding Chinese central government spending under the nation’s $586 billion stimulus plan, Yu said Oct. 28 at a forum in Beijing.
Eek. That’s not going to be tolerated.
Uh Ben? Oh Mr. Bernanke! You know those zero interest rates?
Yeah, those.
Gee, you think that – and provoking Treasury into issuing oodles of debt into them – might have anything to do with this?
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"I like to be kissed before you do sex to me!"
Anyone care to guess what China’s willingness to continue to buy US Treasury Debt might look like?
That’s what I thought.
