Monday, April 11, 2005

"The Invisible Hand (of the US Government) in Financial Markets - Article,

FSO Realty Reality "The Invisible Hand (of the US Government) in Financial Markets by R. Bell 04/03/2005

“During the past few years the US has become dependent, not so much on millions of investors around the globe but on a few individuals in a few of the world’s central banks.”[2] In 2003 these central bankers bought enough treasuries to cover 83% of the U.S. current account deficit, and 86% of those purchases came from Asian central banks.

The two main sources of money for U.S. Treasuries are the central banks of Japan and China. Japan held about $715 billion in U.S. Treasuries, as of November 2004, and China held about $191 billion.[3] All the other nations’ central banks hold altogether, about the same amount again, roughly another trillion.

As the total of all obligations is about $4 trillion, two central banks obviously hold about one quarter of the total. They are in the position to pump or dump the Treasury market all by themselves. They can sell what they have or simply stop buying when the Treasury sells.

Since the money comes from a handful of foreign central banks, the possible rigging of the Treasury market equals the possible rigging of the foreign exchange markets. These central banks have to buy dollars before they buy Treasuries. Even Alan Greenspan has acknowledged that the two go together, admitting that Asian central banks “may be supporting the dollar and U.S. Treasury prices somewhat.”[4]

Printing Monopoly money to buy Uncle Sam's fake-ass billion dollar IOUs. Keeping the game going a few more rounds so they scoop up a couple more chairs before the music stops and all the suckers bump their asses on harsh, cold ground of reality... - Etienne