Ambrose Evans-Pritchard: America no longer needs Chinese money, for now


Submitted by cpowell on 05:49PM ET Monday, August 23, 2010. Section: Daily Dispatches
By Ambrose Evans-Pritchard
The Telegraph, London
Monday, August 23, 2010

http://www.telegraph.co.uk/finance/comment/7958823/America-no-longer-nee...

[my favorite passages from this article..that's right..China is buying the debt of other 3rd world countries rather than U.S. Treasures!!!!!!!!!!!!]

The cacophony of voices in Beijing questioning or mocking the credit-worthiness of the US is now deafening, from premier Wen Jiabao on down. The results are in any case manifest: US Treasury data show that China has cut its holdings of Treasury debt by roughly $100 billion (L65 billion) over the past year to $844 billion.

ZeroHedge reports that net purchases by the big three of China, Japan, and the UK (Mid-East petro-dollars) have been sliding for two years. In August they bought the least amount of US debt this year.

hina is finding other ways to recycle its trade surplus and hold down its currency, buying record amounts of Japanese, Korean, Thai, and no doubt Latin American bonds. "Diversification should be the basic principle," said Yu Yongding, an ex-adviser to the Chinese central bank.
Beijing is buying gold on the dips, or doing so quietly through purchases of scrap ores, or by deals with miners such as Coeur d'Alene in Alaska.

It is building strategic reserves of oil and coal, and probably industrial metals. State entities are buying up natural gas reserves in Africa and Central Asia, or oil sands in Canada, or timber in Guyana. Where this expansion runs into political barriers, they are funding projects -- such as a $10 billion loan to Petrobras for the deep-water oil off Brazil. Where all else fails, they are buying equities. All of this recyles China's reserve surplus away from US debt.

Buffett Preps His Portfolio for Inflation

Just as the specter of deflation is gaining ground, Warren Buffett is taking the contrarian view and positioning Berkshire Hathaway's (NYSE: BRK-A - News; NYSE: BRK-B - News) bond portfolio for higher inflation. Has he lost the plot?

In the second quarter, Buffett continued to rebalance Berkshire's $34.5 billion fixed-income portfolio toward shorter maturity bonds, which bonds are less sensitive to increasing interest rates. When interest rates go up, which, barring a Japanese "lost decade" scenario, will eventually happen, bond values go down -- but the shorter maturity bonds go down less.

Read onward:

http://finance.yahoo.com/news/Buffett-Preps-His-Portfolio-fool-918619435.html?x=0

Paper is poverty... it is only the ghost of money, and not money itself.
- Thomas Jefferson, 1788

Banking was conceived in iniquity and born in sin... Bankers own the Earth. Take it away from them but leave them the power to create money, and, with the flick of a pen, they will create enough money to buy it back again... Take this great power away from them and all the great fortunes like mine will disappear and they ought to disappear, for then this would be a better and happier world to live in... But, if you want to continue to be a slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit.

- Sir Josiah Stamp, President of the Bank of England