Thursday, March 12, 2009

Overallotment: March 12

  • Gamechanger: China officially wants U.S. to ensure safety of its investments, holds $700 billion of TSYs (Bloomberg)
  • 18% of American wealth vanished (WSJ)
  • Swiss bank action sparks currency war (Reuters)
  • Will banks start to walk their talk (Naked Capitalism)
  • Long-term GE investors fret, fume (Reuters)
  • Geithner shines when offstage (Bloomberg)
  • Citi to name board replacements (WSJ)
  • Hedge funds evaluating TALF participation (or the deja-vuness of levering up on mediocre assets) (WSJ)
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Donald Pretari said...

You've got it about China. See here:

“It turns out that one of China’s main criticism of US policy is simple: the government didn’t stand by institutions that China expected the US to support. Lehman. Wamu. And the Reserve Primary Fund. Dean, Areddy and Ng:

“Leaders in China, the world’s third-largest economy, have been surprised and upset over how much the problems of the U.S. financial sector have hurt China’s holdings. In response, Beijing is re-examining its U.S. investments, say people familiar with the government’s thinking. …

Chinese leaders have felt burned by a series of bad experiences with U.S. investments they had believed were safe, say people familiar with their thinking, including holdings in Morgan Stanley, the collapsed Reserve Primary Fund and mortgage giants Fannie Mae and Freddie Mac.”

….. The Reserve issue “is causing a lot of concern with a lot of financial institutions in China,” said the Chinese official. Some officials expected that the U.S. and its financial institutions would better protect China from loss. “If the U.S. is treating us this way, eventually that will be enough cause for concern in the stability of the [U.S.] system,” the official said.”

Why does this bother me? Because this shifts the focus to Treasuries."

That's from a comment I made about stiffing bondholders today. Consider the focus shifted.

"March 13 (Bloomberg) -- China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said."

Don the libertarian Democrat

Anonymous said...

$1bn in debt is the US' problem. $700bn in debt is China's problem. sorry wen. maybe he shouldn't manipulate his currency. wants to have their cake and eat it too typical CPC.