To China, with love

Posted on May 21, 2012 by

I can barely keep up with the bad news, but this tidbit caught my eye and stood out to me as particularly bad. Really bad.

From Zerohedge: China Can Now Monetize US Debt Directly

The Treasury, apparently dissatisfied with the speed of indirect bank and/or Fed-inspired monetization of its exponentially rising debt-load at ever-cheaper costs of funds, decided in June 2011 to allow the Chinese, with their equally large bucket of USDs to bid directly for US Treasuries. As Reuters reports, China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government. The documents, viewed by Reuters, indicate that the US Treasury has given the PBOC a direct computer link to its auction system – which was first used in the 2Y auction of June 2011.