Tuesday, February 16, 2010
You've heard that:
Senior Chinese military officers have proposed that their country ... possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.You know that China is dumping American assets, unless backed by the government.
Now, the U.S. is reporting that:
Foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The December drop in treasury holdings pre-dates the recent spat over Taiwan, and is therefore unrelated. However, it does show that China is starting to give up on our "too big to fail" nation (and see this).
And bond auctions are now starting to fail.
Total foreign holdings of U.S. treasuries fell by $53 billion. Japan has now passed China as the largest foreign holder of treasuries.