tag:blogger.com,1999:blog-2761684730989137546.post5219126648760558222..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Evidence of China's growing sophistication as a money manager in the U.S. marketsmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2761684730989137546.post-31210835430414492052012-05-22T11:47:38.649-04:002012-05-22T11:47:38.649-04:00The Yahoo posse weighs in:
http://finance.yahoo.c...The Yahoo posse weighs in:<br /><br />http://finance.yahoo.com/blogs/daily-ticker/geithner-thinking-treasury-grants-china-direct-access-buy-143939103.html<br /><br />Aron and Henry.<br /><br />Resp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-65460806359217348972012-05-22T08:29:49.308-04:002012-05-22T08:29:49.308-04:00Thanks for your additional comments, Matt. Reuter...Thanks for your additional comments, Matt. Reuters should make you editor of their financial desk - couldn't help but improve their level of expertise.Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-17355908196966327712012-05-22T08:06:27.332-04:002012-05-22T08:06:27.332-04:00Leverage over the United States ... Lol ... As you...Leverage over the United States ... Lol ... As you say, quite correctly, it's a consequence of the trade deficit. Seems to me that the leverage is really the other way. A mercantilist economy requires a manhandled exchange rate in order to not only compete, but to avoid an inevitable social catastrophe the moment growth slows a few percentage points. There is nothing else to take up the slack - nothing. And while they have been buying Treasuries by the tanker load, all the while they are complaining about the deteriorating yields, QE, whatever.<br /><br />As much as I like Setser's analysis along his areas of expertise, there really is no turmoil to be expected. Not only is a Chinese sale of bonds so self-destructive it's scary (and, therefore, as low a probabilty as you can get), but the Fed has got kinda good at buying bonds and increasing system reserves without inflationary impact. I'm sure they can cope with a short term cash infusion, and that markets would see it for what it is, a chance to buy USD temporarily cheaply.<br /><br />The idea that China sells Treasuries is synonymous with exiting USD en masse. Why? Do they think that the 35pc of GDP that is Chinese Consumption can absorb their production? Love to see that.<br /><br />ApjAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74495481101977660842012-05-22T06:39:25.301-04:002012-05-22T06:39:25.301-04:00they are in effect letting the Chinese have access...they are in effect letting the Chinese have access to Treasury Direct.<br /><br />http://www.treasurydirect.gov/<br /><br />Rates for short term USTs are effectively negative when you take into account Dealer spreads (right column):<br /><br />http://online.wsj.com/mdc/public/page/2_3020-treasury.html?mod=mdc_bnd_pglnk<br /><br />So the Chinese would be having to accept a negative yield if they have to go thru Dealers.<br /><br />Different for the Japanese as Treasury has accepted Japanese banks as PDs of USTs:<br /><br />http://www.newyorkfed.org/markets/pridealers_current.html<br /><br />So Japanese pols probably dont complain about the neg yields as they receive kickbacks from the Japanese PDs taking the spreads.<br /><br />Chinese probably complained about this and they let them go Treasury Direct until such time as US would allow Chinese banks to become PDs of USTs.<br /><br />This seems far off as just a few weeks ago, the US has first ever permitted the first Chinese owned US commercial bank.... <br /><br />http://mikenormaneconomics.blogspot.com/2012/05/here-they-come-first-us-approval-for.html<br /><br />The Chinese will have to build up a track record in plain banking for a while before they will let them be a PD of USTs.<br /><br />Resp,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10148542176426783062012-05-22T06:30:49.337-04:002012-05-22T06:30:49.337-04:00Hi Mike
Sorry, to spam this on several of your po...Hi Mike<br /><br />Sorry, to spam this on several of your posts, but have you seen this HBS case study?<br /><br />http://www.scribd.com/doc/94194593/Hayman-Capital-Management<br /><br />This has Kyle Bass and Harvard economics. Will you be having a field day?BfOnoreply@blogger.com