China, Japan big sellers of T-Bonds
Further to this morning’s post here, the point I’m making – that nobody, no matter how smart, can manipulate borrowing rates down if some folks would rather row in the opposite direction – has been hammered home by some new data to hand.
I wrote ten hours ago, ‘The entire shtick about ‘interest rates’ is really largely significant in terms of what it costs big Sovereign debtors to borrow’. What now emerges is that the lastest T-Bond figures show very clearly how the biggest selling came from America’s two largest creditors, China and Japan. The more the creditors sell, the more supply exceeds demand, so the higher the yield the US (and us, and the EU) have to offer. Ergo, just as Bernanke gives the ‘tapering off’ hint – and the US deficit resolutely refuses to get any smaller – the Other Side starts hiking up the borrowing cost.
This has been spotted quickly – and resulted in something of a Dow sell-off: less than a quarter of the way through the Wall Street day, the DJIA has fallen more than it did in the three preceding days. Uncle Ben is in a corner, and the markets know it.
Looking at this for a second in the bigger context of just how wonderful and unalternatived this fabbo Globalist financial form of capitalism is, let’s just summarise how well the world – this mythical, risible Global Village of Ted Leveragitt – is pulling together.
First we have the Japanese, those ever-popular people in Asia, screwing the arse off all their neighbours by trying to become a low-cost producer through QE and currency manipulation. So the Chinese and Koreans are buying the Japanese Yen. Then we have the tricksy, overborrowing US employing QE to pump the stock market and devalue the currency, but with China and Japan buying the Dollar to keep it strong, and selling US Bonds to make it tough for them to just keep borrowing and inflate away the debt.
Every time Mario Draghi tries to force down the euro for competitive reasons, the Swiss sell billions of SFr to keep their currency competitive. Every time the UK buys the euro to keep the Pound competitive, the ECB buys the Pound; and when the ECB buys its own currency for confidence-boosting reasons, the BoE flogs it to get the eunatics back to the negotiating table about British EU rights outside the eurozone.
Am I the only one who sees this is a disastrous, unproductive and thus utterly pointless waste of talent and effort? Surely it could be put to far better use designing a communitarian, non-dependent form of self-supporting capitalism with trade in the excess…..rather than this mercantilist war-game? And who is to say, as things get more desperate, it is going to remain a game?
All over my little blogosphere niche, I can hear the scratching of pencils on pigeon coops, as people write “The Slog…idealistic fluffy Red tree-hugger”. Well, please yourselves as Frankie Howerd used to say.