As readers will recall, at the end of July, which was the most recent TIC data update, China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar.
But what about the actual absolute price increase in bonds skeptics will say? Well, since the dollar peak, the 10 Year has increased by "only" 5.75%, meaning that the real loss is more than double the capital appreciation (we ignore the fact that Treasury's expressed in gold have lost 5% year to date: that would really piss of Beijing).
But what about the actual absolute price increase in bonds skeptics will say? Well, since the dollar peak, the 10 Year has increased by "only" 5.75%, meaning that the real loss is more than double the capital appreciation (we ignore the fact that Treasury's expressed in gold have lost 5% year to date: that would really piss of Beijing).
If you owe a loan-shark, say, $15 grand -- and come up short one week -- odds are that three thick-set men wearing leather coats will show up in your living room at 3am. And then the best possible outcome is a broken leg. I mean, I'm just guessing here, not that I know first-hand. Seriously. No, I mean it.
So what happens when your economic policies cost your loan-shark $100 billion, President Obama?
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