Thursday, May 23, 2019

China fires a ranging shot

It's been speculated for some time that the reason China has acquired over a trillion dollars in US Treasury bonds and several trillion in cash (not literal cash but bank holdings) is to use it as a weapon. In reality it was just a tool being used to back China's vast trading and asset acquisition policy. They've been buying copper mines, oil fields, ports and well just about anything all over the world for decades. 

It appears that now with a belligerent orange idiot in charge of the US who has been firing the relatively competent people around him and replacing them with sycophants that China may have decided that it's time to hammer the plowshare into a sword. Ever since the Bush Crash the Chinese have been quietly inserting their own currency into trade all over the world. Since China makes everything and the US makes nothing there is no country that isn't willing to trade in Renminbi (the People's currency) instead of insisting on USD.

China typically does its trading of US debt quietly through proxies but this week they dumped $20 billion of US debt for no apparent reason. That is a tiny amount but it was done right in the open, much the way an artillery battery fires a single round deliberately short of the enemy position to test the range. 

Wall St ran for the fox holes but the pundits are mostly saying China isn't really going to do this. Meanwhile in China, President For Life Xi, who Trump thinks is totally in awe of his Orange Greatness, is giving policy speeches at multiple appearances where he is invoking the history of the Great March. He's saying times will be hard for a decade or more but that China will prevail. Yeah....  Have you got your canned goods?  -