Asian Decoupling is here and I told you So

[addressing the topic]

As expected you merely just assert they are wrong.  To be honest though, who knows.  PP has a point, what did they do with the difference.

BTW I am fine with your definition of decoupled, the article posted though (and you like posting articles) suggests it hasn't at all.  There are other articles today suggesting the clamp down on borrowing on munis in China is going to cause havoc with it's infrastructure plans, I assume you have seen some of these.

In short, it has not happened.

One thing of other interest.  JPY is strong, from exports to China denominated in JPY (can't use CNY), you excluded JPY from your previous analysis and yet it looks like it is doing well recently (about time though I guess).

[economist]

I have read this post with both interest and amusement. As a professional economist I follow world developments very closely and have my ear to the ground. My conclusion is the growth in Asia can't be ignored. Indeed, as an Englishman, I now see China snapping at the UK's heels. Obviously the UK is far ahead in areas of education and advanced economic areas and remains a world economic leader and model for the aspiring nations to look up to. But the UK should be willing to cooperate with China and bring it into the fold and sit at the table with the big boys.

[Come on pls]

V, you are amazing! You need to understand that newspaper articles are essentially a glorified blog. Often the opinion of an idiot a person with a biase or simply very little knowledge on the subject. You then copy and paste these blogs, and accompnay them with innuendo that they are facts claiming that "I told you so I am proved correct"

All it is, is one idiot posting another idiot's opinion claiming it to be fact

You are really a very average person

[Actually]

very below average and giving frightening investment advice when he is clueless

[hello wassis]

I was wondering where you'd been.

I have read this post with both interest and amusement. As a professional economist I follow world developments very closely and have my ear to the ground. My conclusion is the growth in Asia can't be ignored. Indeed, as an Englishman, I now see China snapping at the UK's heels. Obviously the UK is far ahead in areas of education and advanced economic areas and remains a world economic leader and model for the aspiring nations to look up to. But the UK should be willing to cooperate with China and bring it into the fold and sit at the table with the big boys.

[gram]

Asia is definitely the world's most promising region by a country mile at the moment but a lot of that promise is not yet translated into reality.

There is a large market within Asia and the technological and manufacturing capacities are a match for anything except for the most advanced countries in the world. Importantly, a lot of that technology is self-developed, which suggests a higher level of engineering mastery. Japan, South Korea and Taiwan developed a lot of their own technologies and did not require as much foreign input as Singapore and China at the moment.

The main thing is that Asia would need to develop a regional mindset and get over nationalist issues, eg. Japan vs. China, South Korea and Japan also. ASEAN would also need to figure out how to become a genuine regional grouping but they're studying the plans at the moment. The key ingredients of manufacturing capacity and knowhow, a large-enough consumer market are all there.

With China, it's a simplistic picture that it only relies on exports. In fact, there are about 60 million people there with annual incomes above USD40,000. In the overall context, China might still be undeveloped but there is a consumer market there which is basically 2 or 3 times the size of that of either the UK's or that of France, for example.

[Vulcanl]

gram,

You always bring a balanced perspective to the proceedings. This is always appreciated. 

Here is my bottom line on the current situation:  The West has imploded and cannot be relied upon to lead the way back to growth this time around.   If indeed China IS a bubble, and it pops - then God help us all, for all bets are off and anarchy will reign.

addressing the topic,

"...If they have let the T-bills mature, that is not selling. It's letting their investment come to it's natural conclusion.  If they then don't buy new T-bills, that is not selling. It's keeping the cash instead..."

The question of what they are doing with the cash is a valid one, of course.  The problem with China is that it is basically a black hole when it comes to good, hard data.  Another datapoint that I would love to see is exactly who they are exporting to right now, and what the change in that mix is relative to pre-GFC 2008.

"...One thing of other interest.  JPY is strong, from exports to China denominated in JPY (can't use CNY), you excluded JPY from your previous analysis and yet it looks like it is doing well recently (about time though I guess)..."

I have mentioned in the past that Japan will not aid the decoupling process.  It is a perennial basket case and basically a Western-style developed economy that just happens to be located in Asia

Actually,

"...giving frightening investment advice when he is clueless..."

Please elaborate as to what is so frightening about the 'advice' I have given?

Come on pls,

"...You need to understand that newspaper articles are essentially a glorified blog. Often the opinion of an idiot a person with a biase or simply very little knowledge on the subject. You then copy and paste these blogs, and accompnay them with innuendo that they are facts claiming that "I told you so I am proved correct..."

These are sources I have used here more than once (not a comprehensive list as I tend to read as many different outlets as I can):

*New York Times
*Bloomberg
*Reuters
*The Economist
*The Financial Times
*The CIA World Factbook
*BBC

Are you trying to tell me that these are all glorified 'blogs'?  That we should not 'trust' them?  If we can't 'trust' them because only 'idiots' are writing there...well, where exactly shall we get our news from??!?!

[not bought = sell?]

addressing the topic,

"...If they have let the T-bills mature, that is not selling. It's letting their investment come to it's natural conclusion.  If they then don't buy new T-bills, that is not selling. It's keeping the cash instead..."

While I can agree they are lessening their overall holdings of Treasuries, they are not necessarily selling.
I am sorry but you mentioned selling..

[Vulcanl]

The below three separate respected media outlets all state that China SOLD:

http://www.ft.com/cms/s/0/49639438-1b21-11df-953f-00144feab49a.html?ftcamp=rss

http://online.wsj.com/article/BT-CO-20100216-711827.html

http://www.reuters.com/article/idUSN1621627420100216

This story is interesting in that it hews more closely to Parrot’s version, however quotes a ‘senior currency strategist’ as China having “sold”

http://www.bloomberg.com/apps/news?pid=20601103&sid=aibL7ZOgfguE

The TIC data reflects a reduction in holdings.

In the absence of any additional concrete information indicating otherwise, I will continue to go by the assumption that China was a NET SELLER.

Full stop.  If you have any credible source to indicate otherwise, please present that.

Bottom line: China is reducing its exposure to US Treasuries.  Like I said they would.

[not bought = sell?]

Full stop.  If you have any credible source to indicate otherwise, please present that.

Bottom line: China is reducing its exposure to US Treasuries.  Like I said they would.

You stated they are selling.
The burden of proof is where? The person making the claim or the person questioning it?

But as you don't seem to understand that principle...... here you go...

NEW YORK (Dow Jones)--As China, a major creditor to the U.S., slowed its pace of Treasury securities purchases last year, other countries stepped up to the plate, helping to keep U.S. borrowing costs in check across the economy.

Don't you think this action would decrease their treasury holdings? Not buying more? Existing ones will mature hence overall levels held drops?

And before you get all self righteous , I'm not in disagreement with your overall opinion..... but you brought up the issue of selling, which may or may not be correct. Burden of proof is on you.

I guess they sold a lot last year and the first part of this year by not buying anymore (sorry, not my logic)

[Parrot22]

China are obviously very astute investors. Did anyone take a look what the bond market did in Dec? It went down hard. In Jan. it rallied sharply. These guys aren't stupid. Would you invest 54 billion dollars in a market you thought was going lower? Its called being opportunistic..Another point..Duration..T-bills have a MUCH shorter duration than notes and bonds..So if they where doing duration management they would buy less of the longer dated securities..They did BUY over 5billion worth of longer dated paper..You cant jump to conclusions based on one months data

[Parrot22]

One more point..Even if they have slowed down purchases..Big deal..Japan has picked up the pace..The global and domestic bank appetite for U.S paper is still very strong.  The doomsday scenerio of Treasuries crashing and dollar going into a freefall is utter nonsense. Sure when the fed starts raising rates or we see inflation bonds will go down..But there too much bad Sh*t going on in Europe and the U.S for that to happen now..Short them at your own risk

[utter idiot]

Pp, you don't have a clue.

Short dollar, yeah a gamble.

Dollar hedged but short bonds, guaranteed win, which direction do you think yields can go?

[Parrot22]

AFP - China, a top owner of US government debt, appears to be secretly buying bonds via third locations to hide its importance as a major creditor to Washington, experts told a congressional forum.

They said China-linked entities may be scooping up US bonds in London, Hong Kong or other locations, pointing out that official data almost certainly understates Beijing's US government debt holdings.

Some say the massive holdings by China have implications for US national security, making it harder for Washington to carry out policies in conflict with Beijing.

The latest figures by the Treasury Department this month showed a drop in China's Treasury bond holdings by 34.2 billion dollars or 4.3 percent to 755.4 billion dollars in December, the biggest decline in about a decade.

Simon Johnson, a former IMF chief economist, suggested that China could be behind the big jump in Britain's holdings of US debt to 300 billion dollars in 2009 from 130.9 billion dollars a year earlier.

He said he was baffled by the figure as Britain had run a substantial current account deficit last year.

"A great deal of this increase may be due to China placing offshore dollars in London-based banks -- Chinese, UK, or even US -- which then buy US securities," Johnson told a hearing of the US-China Economic and Security Review Commission, which monitors for Congress the security implications of US-China trade and economic relations.

China may also be purchasing US securities through routes other than Britain, said Johnson, who is now a professor of economics at the Massachusetts Institute of Technology.

"The US Treasury data almost certainly understate Chinese holdings of our government debt because they do not reveal the ultimate country of ownership when instruments are held through an intermediary in another jurisdiction," he said.

Johnson said "a reasonable working assumption" showed that China owns close to one trillion dollars of US Treasury securities -- nearly half of the stock of treasuries in the hands of "foreign official" owners, which was 2.374 trillion dollars at the end of 2009.

"It is all but certain that some purchases made by agents in Britain and Hong Kong were on behalf of SAFE" or the State Administration of Foreign Exchange, the secretive Chinese state agency that buys foreign bonds, said Derek Scissors, an Asia economic policy expert at the Washington-based Heritage Foundation.

He said the more than doubling of Treasury bond purchases by Britain and Hong Kong "makes sense" for China as it had to park its huge chest of foreign exchange reserves.

"These cannot be spent at home and are too large to put anywhere other than the United States. No other country has financial markets capable of absorbing them," Scissors said.

"To hide the unavoidable extent of China's exposure to low-yield American bonds and try to avoid domestic flak, SAFE is routing money through third countries," he said.

China accumulated 453 billion dollars in additional foreign exchange reserves in 2009, bringing the total reserves to a record 2.399 trillion dollars at the end of December, latest Chinese government figures showed.

Many analysts argue that any threat by China to shift a large portion of its reserves out of US government paper is just bluster as such a move would impose huge costs on China itself.

But Eswar Prasad, who once headed the IMF's China division, said it was a "reasonably credible threat as the short-term costs to the Chinese of such an action are not likely to be large."

Any dumping of Treasury bonds could lead to a sharp fall in bond prices and the value of the greenback, incurring massive capital losses on the Asian giant owning the large bond holdings.

"But the US leaves itself vulnerable as China might well view these costs as worth bearing in order to preserve its national sovereignty or if trade and other economic disputes with the US came to a head," said Prasad, a professor of trade policy at Cornell University.

Republican congressman Frank Wolf told the panel that the situation is bad for US security.

"China is among our biggest 'bankers,'" he said.

"The implications of US debt to China are many and wide-ranging, encompassing everything from our national security to our ability to advocate for repressed and persecuted people."

 

[Parrot22]

Know guys that lost there jobs shorting JGBs for 10years..fool