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blogs.cfr.org - 1/21/2009

Should the US worry about the drop in foreign demand for US long-term assets?

— blogs.cfr.org — The latest TIC data provides yet more evidence that financial globalization — the rise in cross-border flows... — has peaked. At least temporarily. Foreigners are buying far fewer long-term US bonds than they used too. Look at a plot of ... (more) Should the US worry about the drop in foreign demand for ...

Stocks

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gregor.us - 1/23/2009

China Knows

— gregor.us — When it comes to public infrastructure spending, China knows exactly what to do: build rail. Lots of... rail. Today’s NY Times has a great piece on China’s next round of public works : A $17.6 billion passenger rail line across the deserts ... (more) China Knows

Government

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Setser: China to Continue Buying Treasuries
naked capitalism — ... We don't give investment advice, and note the Treasury market could go into a downdraft for a host of reasons. However, an economic unwind in China is unlikely to be the cause. Brad Setser explains why in, "Worry about a fall in China’s demand for the world’s goods, not a fall in China’s demand for Treasuries." ...

To twist a Treasury
FT Alphaville — ... . Treasury buying “is unlikely now,” said Brian Fabbri, chief North American economist at BNP Paribas in New York, given the Fed’s current goal of lowering borrowing rates.“The most direct way to accomplish that is to buy mortgage paper and to buy commercial paper,” Mr. Fabbri said, “and then, if that doesn’t work, to buy Treasurys.” That’s something that’s becoming increasingly plausible . The Congressional Budget Office has forecast the 2009 deficit will be something like $1.186 trillion — and that was before the announcement of Obama’s stimulus package. Financing that much ...

Monday morning links
The Mess That Greenspan Made — ... labors to meet jobless demand - LA Times For Obama, Rare Chance for Bold Start on Big Task - NY Times INTERNATIONAL Britain announces 2nd banking rescue plan - AP Credit eases slightly on U.K. rescue - CNN/Money Spain's credit rating cut by S&P - MarketWatch Monetary union has left half of Europe trapped in depression - Telegraph Gulf states delay projects to lower costs - Business24-7 Don't Worry a fall in China’s demand for Treasuries - Setser, CFR Report: Iran cuts oil supplies ...

vendor finance: pettis v setser
Decline and Fall of Western Civilization — ... (the slowing and halt precipitated the bursting of the housing bubble back in 2005/2006) and further scorned agency debt (precipiating the receivership of fannie mae and freddie mac in 2008). but its purchasing of treasuries has continued at a rate more than compensating for the stoppage of these other avenues of vendor finance as the chinese current account surplus has grown. brad setser has pointed this out in response to the worrying of the new york times, and again more recently militated against some of the implications of a piece in the financial ...

China’s Treasury confidential
FT Alphaville — Brad Setser is no longer around to blog about China’s holdings of US Treasuries, so we are stepping in. For today, anyway. On Monday, the latest TIC data was released. It officially showed that China became a net seller of US Treasuries in June. The news was was pretty much triumphantly heralded by China’s state-owned media. For instance, the People’s Daily published the story under the headline “China massively offloads U.S. debt holdings [for the] first time in 2009″. Here’s an excerpt: According to the data published by the US Treasury Department ...